11. Financial Position and Result of Operation

1.  Summary of Financial Information

  -------------------------- -------------- ------- ------------- ------- ------------- -------
                             PTT                                                        
                             Exploration an                                             
                             Production                                                 
                             Public Company                                             
                             Limited and                                                
                             Subsidiaries                                               

                             Balance Sheets                                             

                             As at December                                             
                             31,                                                        

                             2007                   2008                  2009          

                             Thousand Baht  %       Thousand Baht %       Thousand Baht %

  Assets                                                                                

  Current Assets                                                                        

  Cash and cash equivalents  24,012,741     12.6    43,994,690    18.5    48,677,769    16.2

  Trade receivable - parent  10,480,295     5.5     9,939,682     4.2     10,918,593    3.6
  company                                                                               

  Trade receivables          2,206,716      1.2     1,586,943     0.7     3,345,572     1.1

  Inventories                360,988        0.2     320,368       0.1     1,048,974     0.3

  Materials and supplies-net 4,222,010      2.2     6,414,793     2.7     8,145,572     2.7

  Other current assets       2,972,082      1.6     4,695,556     2.0     6,647,377     2.2

  Total Current Assets       44,254,832     23.3    66,952,032    28.1    78,783,857    26.2

  Non-current assets                                                                    

  Investments accounted for  396,739        0.2     384,337       0.2     922,311       0.3
  under equity method                                                                   

  Long-term loans to related 600,000        0.3     1,835,000     0.8     504,738       0.2
  party                                                                                 

  Property, plant and        143,004,876    75.3    167,326,087   70.2    206,705,302   68.7
  equipment-net                                                                         

  Intangible assets          350,592        0.2     418,344       0.2     3,977,380     1.3

  Deferred income taxes      -              -       6,996         0.0     8,543,179     2.8

  Other non-current assets   1,432,098      0.8     1,332,620     0.6     1,273,843     0.4

  Total non-current assets   145,784,305    76.7    171,303,384   71.9    221,926,753   73.8

  Total Assets               190,039,137    100.0   238,255,416   100.0   300,710,610   100.0

  Liabilities and                                                                       
  Shareholders' Equity                                                                  

  Current Liabilities                                                                   

  Accounts payables          1,682,890      0.9     2,245,413     0.9     918,726       0.3

  Current portion of         -              -       -                     10,327,578    3.4
  long-term loan                                                                        

  Bills of exchange          -              -       2,985,957     1.25    1,934,955     0.6

  Working capital to         1,420,939      0.7     983,840       0.4     652,234       0.2
  co-venturers                                                                          

  Accrued expenses           13,340,731     7.0     15,960,297    6.7     20,726,275    6.9

  Accrued interest payable   110,722        0.1     109,835       0.0     238,509       0.1

  Income tax payable         16,320,076     8.6     26,048,879    10.9    19,037,506    6.3

  Short-term provision       -              0.0     -             0.0     873,418       0.3

  Other current liabilities  1,581,244      0.8     1,115,673     0.5     1,486,391     0.5

  Total Current Liabilities  34,456,602     18.1    49,449,894    20.8    56,195,592    18.7

  Non-current liabilities                                                               

  Bonds                      18,500,000     9.7     18,488,054    7.8     48,951,198    16.3

  Finance lease liabilities  -                      -                     10,556,721    3.5

  Deferred income taxes      14,509,607     7.6     15,232,222    6.4     14,992,994    5.0

  Other non-current                                                                      
  liabilities                                                                           

  Deferred income            3,059,663      1.6     2,534,432     1.1     2,608,737     0.9

  Provision for              10,990,905     5.8     16,309,665    6.8     22,821,103    7.6
  decommissioning costs                                                                 

  Other non-current          1,735,537      0.9     2,137,323     0.9     1,583,498     0.5
  liabilities                                                                           

  Total non-current          48,795,712     25.7    54,701,696    23.0    101,514,251   33.8
  liabilities                                                                           

  Total Liabilities          83,252,314     43.8    104,151,590   43.7    157,709,843   52.4

  Shareholders' Equity                                                                  

  Share capital                                                                         

  Share capital issued and   3,297,420      1.7     3,307,084     1.4     3,312,561     1.1
  fully paid-up capital                                                                 

  Share premium              12,859,031     6.8     13,423,109    5.6     13,784,669    4.6

  Currency translation       (2,315,109)    (1.2)   (2,281,147)   (1.0)   (2,537,666)   (0.8)
  differences                                                                           

  Retained earnings                                                                     

  Appropriated                                                                          

  Legal reserve              332,200        0.2     332,200       0.1     332,200       0.1

  Reserve for expansion      16,900,000     8.9     16,900,000    7.1     16,900,000    5.6

  Unappropriated             75,713,281     39.8    102,422,580   43.0    111,209,003   37.0

  Total Shareholders' Equity 106,786,823    56.2    134,103,826   56.3    143,000,767   47.6

  Total Liabilities and      190,039,137    100.0   238,255,416   100.0   300,710,610   100.0
  Shareholders' Equity                                                                  

  Book value per share       32.38                  40.55                 43.17         
  (Baht)                                                                                

  Issued and fully paid-up   3,297,420              3,307,084             3,312,561     
  capital at the end of year                                                            
  (Thousand share)                                                                      
  -------------------------- -------------- ------- ------------- ------- ------------- -------

  ----------------------------------- -------------- -------------- --------------
                                      PTT                           
                                      Exploration an                
                                      Production                    
                                      Public Company                
                                      Limited and                   
                                      Subsidiaries                  

                                      Statement of                  
                                      Cash flows                    

                                      For the years                 
                                      ended December                
                                      31,                           

                                      2007           2008           2009

                                      Thousand Baht  Thousand Baht  Thousand Baht

  Cash flows from operating                                         
  activities                                                        

  Income before income taxes          51,401,084     74,177,065     40,412,837

  Adjustment to reconcile net income                                 
  to net cash provided by (used in )                                
  operating activities                                              

  Loss from the investment in         21,965         12,402         17,864
  associates                                                        

  Depreciation, depletion and         16,365,065     23,285,725     29,856,004
  amortization                                                      

  Amortization of prepaid expenses    241,505        91,104         71,899

  Amortization of exploration         1,959,864      6,306,832      5,671,138
  expenses                                                          

  (Gain) loss on disposal of assets   11,650         3,945          3,498,914

  Income recognized from deferred     (951,082)      (531,164)      87,428
  income                                                            

  Derivative loss on hedging          479,855        -              -

  Loss from Montara incident          -              -              3,105,525

  Employee benefits                   79,729         383,994        401,328

  (Gain) loss on foreign exchange     (1,179,352)    404,138        (844,492)

  Interest income (higher) less than  72,711         (112,276)      1,390,664
  interest expenses                                                 

                                      68,502,994     104,021,765    83,669,109

  Changes in operating assets and     (22,430,381)   (21,756,906)   (40,782,624)
  liabilities                                                       

  Net cash provided by operating      46,072,613     82,264,859     42,886,485
  activities                                                        

  Cash flows from investing                                         
  activities                                                        

  Net lending of loan to related      (600,000)      (1,235,000)    1,330,262
  parties                                                           

  Increase in investments accounted   -              -              (555,838)
  for under equity method                                           

  Interest received from loans        20,322.00      82,624.00      44,559

  Increase in property, plant and     (39,051,654)   (48,983,885)   (59,388,766)
  equipment                                                         

  Increase in intangible assets       (56,888)       (140,377)      (3,633,423)

  Net cash used in investing          (39,688,220)   (50,276,638)   (62,203,206)
  activities                                                        

  Cash flows from financing                                         
  activities                                                        

  Cash received from short-term loan  -              2,905,842      (1,360,717)

  Redemption of bonds                 (6,629,078)    -              -

  Proceeds from issuances of bonds    16,383,820     -              39,950,119

  Increase in bonds issuing expenses  (18,881)       -              -

  Interest paid                       (951,284)      (750,726.00)   (1,439,081)

  Proceeds from common stock          562,861        573,743        367,036

  Dividend paid                       (10,235,420)   (14,963,995)   (13,366,260)

  Net cash provided from (used in)    (887,982)      (12,235,136)   24,151,097
  financing activities                                              

  Net increase in cash and cash       5,496,411      19,753,085     4,834,376
  equivalents                                                       

  Cash and cash equivalents at the    18,520,906     24,012,741     43,994,690
  beginning of the year                                             

                                      24,017,317     43,765,826     48,829,066

  Effect of exchange rate changes on  (4,576)        228,864        (151,297)
  cash and cash equivalents                                         

  Cash and cash equivalents at the    24,012,741     43,994,690     48,677,769
  end of the year                                                   
  ----------------------------------- -------------- -------------- --------------

  --------------------------- -------------- ------- ------------- ------- ------------- -------
                              PTT                                                        
                              Exploration an                                             
                              Production                                                 
                              Public Company                                             
                              Limited and                                                
                              Subsidiaries                                               

                              Statement of                                               
                              Income                                                     

                              For the years                                              
                              ended December                                             
                              31,                                                        

                              2007                   2008                  2009          

                              Thousand Baht  %       Thousand Baht %       Thousand Baht %

  Revenues                                                                               

  Sales                       90,763,840     93.8    132,620,657   94.7    115,547,525   96.0

  Revenue from pipeline       3,295,047      3.4     4,131,145     3.0     3,762,604     3.1
  transportation                                                                         

  Gain on foreign exchange    915,590        0.9     117,995       0.1     -             -

  Interest income             810,016        0.8     942,229       0.7     376,274       0.3

  Other revenues              988,531        1.0     2,195,117     1.6     651,837       0.5

  Total Revenues              96,773,024     100.0   140,007,143   100.0   120,338,240   100.0

  Expenses                                                                               

  Operating expenses          7,803,175      8.1     10,528,530    7.5     11,926,257    9.9

  Exploration expenses        3,542,833      3.7     8,273,389     5.9     7,377,274     6.1

  Administrative expenses     3,206,860      3.3     4,497,136     3.2     5,061,923     4.2

  Petroleum royalties and     12,529,164     12.9    17,328,158    12.4    14,065,574    11.7
  remuneration                                                                           

  Depreciation, depletion and 16,359,953     16.9    23,285,725    16.6    29,856,004    24.8
  amortization                                                                           

  Loss on Oil Price Hedging   857,515        0.9     904,488       0.6     -             -

  Loss from Montara incident  -              -       -             -       9,085,876     7.6

  Managements' remuneration   146,410        0.2     159,426       0.1     156,084       0.1

  Loss from foreign exchange  -              -       -             -       508,219       0.4

  Total Expenses              44,445,910     46.0    64,976,853    46.4    78,037,211    64.8

  Loss from the investment in 21,965         0.0     12,402        0.0     17,864        0.0
  associates                                                                             

  Income before finance costs 52,305,149     54.0    75,017,888    53.6    42,283,165    35.2
  and income taxes                                                                       

  Finance costs               904,066        0.9     840,823       0.6     1,870,328     1.6

  Income taxes                22,945,693     23.7    32,502,229    23.2    18,259,240    15.2

  Net income                  28,455,390     29.4    41,674,836    29.8    22,153,597    18.4

  Basic earning per share     8.65                   12.62                 6.69          
  (Baht)                                                                                 

  Diluted earning per share   8.63                   12.60                 6.69          
  (Baht)                                                                                 

  Weighted average number of  3,290,408              3,301,731             3,309,078     
  outstanding ordinary shares                                                            
  (Thousand share)                                                                       
  --------------------------- -------------- ------- ------------- ------- ------------- -------

  Summary information of subsidiary companies

  -------------------------------- --------------- ------------ ------------
                                   Summary                      
                                   Financial                    
                                   Position and                 
                                   Result of                    
                                   Operations                   

                                   As at December               
                                   31,                          

                                   PTTEP                        
                                   International                
                                   Company Limited              

                                   2007            2008         2009

                                   Million Baht    Million Baht Million Baht

  Total Assets                     44,082          54,963       73,267

  Total Liabilities                10,515          19,763       37,448

  Total Shareholders' Equity       33,567          35,200       35,819

  Sales                            10,937          14,059       12,484

  Total Revenues                   12,176          16,337       11,786

  Net Income                       3,063           2,625        683

                                                                

                                   PTTEP Offshore               
                                   Investment                   
                                   Company Limited              

                                   2007            2008         2009

                                   Million Baht    Million Baht Million Baht

  Total Assets                     43,645          52,361       81,168

  Total Liabilities                24,936          26,246       60,372

  Total Shareholders' Equity       18,709          26,115       20,796

  Total Revenues                   8,537           10,986       (2,355)

  Net Income (Loss)                4,358           7,372        (5,063)

                                                                

                                   PTTEP Kim Long               
                                   Vietnam Company              
                                   Limited                      

                                   2007            2008         2009

                                   Million Baht    Million Baht Million Baht

  Total Assets                     274             300          303

  Total Liabilities                581             715          731

  Total Shareholders' Equity       (307)           (415)        (428)

  Net Loss                         (22)            (109)        (12)

                                                                

                                   PTTEP Southwest              
                                   Vietnam Company              
                                   Limited                      

                                   2007            2008         2009

                                   Million Baht    Million Baht Million Baht

  Total Assets                     204             227          236

  Total Liabilities                387             465          484

  Total Shareholders' Equity       (183)           (238)        (248)

  Net Loss                         (13)            (54)         (10)
  -------------------------------- --------------- ------------ ------------

  -------------------------------- ------------ ------------ ------------
                                   Summary                   
                                   Financial                 
                                   Position and              
                                   Result of                 
                                   Operations                

                                   As at                     
                                   December 31,              

                                   PTTEP                     
                                   Hong-Long                 
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     2,672        2,570        2,940

  Total Liabilities                5,945        9,313        9,706

  Total Shareholders' Equity       (3,273)      (6,743)      (6,766)

  Net Loss                         (1,355)      (3,470)      (23)

                                                             

                                   PTTEP                     
                                   Hoan-Vu                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     3,906        6,398        5,696

  Total Liabilities                5,788        8,377        6,864

  Total Shareholders' Equity       (1,882)      (1,979)      (1,168)

  Sales                             -           1,472        2,455

  Total Revenues                    -           1,181        2,769

  Net Income (Loss)                (124)        (97)         811

                                                             

                                   PTTEP Oman                
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     5,769        6,639        5,679

  Total Liabilities                5,972        4,950        6,459

  Total Shareholders' Equity       (203)        1,689        (780)

  Sales                             -           3,976        2,349

  Total Revenues                    -           3,782        552

  Net Income (Loss)                664          1,893        (2,469)

                                                             

                                   PTTEP                     
                                   Algeria                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     1,984        2,350        3,765

  Total Liabilities                3,203        4,571        6,204

  Total Shareholders' Equity       (1,219)      (2,221)      (2,439)

  Net Loss                         (533)        (1,002)      (218)

                                                             

                                   PTTEP                     
                                   Services                  
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     237          385          331

  Total Liabilities                136          253          320

  Total Shareholders' Equity       101          132          11

  Net Income                       51           30           23

                                                             

                                   Summary                   
                                   Financial                 
                                   Position and              
                                   Result of                 
                                   Operations                

                                   As at                     
                                   December 31,              

                                   PTTEP                     
                                   (Thailand)                
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     127          167          228

  Total Liabilities                147          188          269

  Total Shareholders' Equity       (20)         (21)         (41)

  Sales                            -            -            7

  Total Revenues                   -            -            6

  Net Income (Loss)                26           (1)          (20)

                                                             

                                   PTTEP Siam                
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     16,413       19,772       18,241

  Total Liabilities                7,674        10,308       8,154

  Total Shareholders' Equity       8,739        9,464        10,087

  Sales                            15,045       19,254       12,816

  Total Revenues                   15,239       19,424       13,014

  Net Income                       5,424        7,775        4,523

                                                             

                                   PTTEP Iran                
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     282          955          188

  Total Liabilities                621          1,402        2,311

  Total Shareholders' Equity       (339)        (447)        (2,123)

  Net Loss                         (73)         (109)        (1,676)
  -------------------------------- ------------ ------------ ------------

  -------------------------------- ------------ ------------ ------------
                                   Diamond                   
                                   Petroleum                 
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     1            -            -

  Total Liabilities                 -           -            -  

  Total Shareholders' Equity       1            -            -

  Net Loss                         (0.2)        -            -

                                                             

                                   PTTEP                     
                                   Merangin                  
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     137          35           36

  Total Liabilities                307          499          504

  Total Shareholders' Equity       (170)        (464)        (468)

  Net Loss                         (115)        (293)        (5)

                                                             

                                   Summary                   
                                   Financial                 
                                   Position and              
                                   Result of                 
                                   Operations                

                                   As at                     
                                   December 31,              

                                   PTTEP                     
                                   Bahrain                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     2            17           66

  Total Liabilities                0.05         47           442

  Total Shareholders' Equity       1            (30)         (376)

  Net Loss                         (0.2)        (32)         (345)

                                                             

                                   PTTEP                     
                                   Holding                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     3            4            3

  Total Liabilities                146          442          9,330

  Total Shareholders' Equity       (143)        (438)        (9,327)

  Net Loss                         (144)        (295)        (8,890)

                                                             

                                   PTTEP                     
                                   Indonesia                 
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     -            -            -

  Total Liabilities                141          185          450

  Total Shareholders' Equity       (141)        (185)        (450)

  Net Loss                         (142)        (44)         (264)

                                                             

                                   PTTEP                     
                                   Bengara I                 
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     40           66           62

  Total Liabilities                180          247          349

  Total Shareholders' Equity       (140)        (181)        (287)

  Net Loss                         (142)        (41)         (105)

                                                             

                                   PTTEP Thai                
                                   Project                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     8            12           10

  Total Liabilities                7            17           24

  Total Shareholders' Equity       1            (5)          (16)

  Net Loss                         (0.1)        (6)          (12)
  -------------------------------- ------------ ------------ ------------

  -------------------------------- ------------ ------------ ------------
                                   Summary                   
                                   Financial                 
                                   Position and              
                                   Result of                 
                                   Operations                

                                   As at                     
                                   December 31,              

                                   PTTEP                     
                                   Andaman                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     0.3          0.2          0.2

  Total Liabilities                0.1          0.1          0.1

  Total Shareholders' Equity       0.2          0.1          0.1

  Net Loss                         (0.1)        -            -

                                                             

                                   PTTEP                     
                                   Australia                 
                                   Pty Limited               

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     -            157          1,653

  Total Liabilities                1            327          3,152

  Total Shareholders' Equity       (1)          (170)        (1,499)

  Net Loss                         (1)          (171)        (1,329)

                                                             

                                   PTTEP                     
                                   Australia                 
                                   Offshore Pty              
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     -            672          241

  Total Liabilities                0.05         840          1,733

  Total Shareholders' Equity       (0.05)       (168)        (1,492)

  Net Loss                         (0.05)       (170)        (1,324)

                                                             

                                   PTTEP Egypt               
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     5            1            -

  Total Liabilities                4            73           721

  Total Shareholders' Equity       1            (72)         (721)

  Net Loss                         (0.3)        (73)         (649)

                                                             

                                   PTTEP                     
                                   Rommana                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     2            93           91

  Total Liabilities                -            90           125

  Total Shareholders' Equity       2            3            (34)

  Net Income (Loss)                (0.1)        1            (36)
  -------------------------------- ------------ ------------ ------------

  -------------------------------- ---------------- ------------ ------------
                                   Summary                       
                                   Financial                     
                                   Position and                  
                                   Result of                     
                                   Operations                    

                                   As at December                
                                   31,                           

                                   PTTEP Sidi Abd                
                                   El Rahman                     
                                   Company Limited               

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     2                142          153

  Total Liabilities                -                139          762

  Total Shareholders' Equity       2                3            (609)

  Net Income (Loss)                (0.1)            1            (612)

                                                                 

                                   PTTEP Bangladesh              
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     2                322          -

  Total Liabilities                -                326          338

  Total Shareholders' Equity       2                (4)          (338)

  Net Loss                         (0.04)           (5)          (334)

                                                                 

                                   PTTEP Myanmar                 
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                2            1

  Total Liabilities                -                -            -

  Total Shareholders' Equity       -                2            1

                                                                 

                                   PTTEP New                     
                                   Zealand Limited               

                                   2007             2007         2007

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                2            194

  Total Liabilities                -                -            671

  Total Shareholders' Equity       -                2            (477)

  Net loss                         -                -            (36)

                                                                 

                                   PTTEP Semai II                
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                129          145

  Total Liabilities                -                131          305

  Total Shareholders' Equity       -                (2)          (160)

  Net Loss                         -                (3)          (159)

                                                                 

                                                                 

                                                                 

                                                                 

                                                                 

                                                                 

                                   Summary                       
                                   Financial                     
                                   Position and                  
                                   Result of                     
                                   Operations                    

                                   As at December                
                                   31,                           

                                   PTTEP Australia               
                                   Perth Pty                     
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                2            -

  Total Liabilities                -                1            -

  Total Shareholders' Equity       -                1            -

                                                                 

                                   PTTEP Australia               
                                   Browse Basin Pty              
                                   Limited                       

                                   2007             2008         2009

  Total Assets                     Million Baht     Million Baht Million Baht

  Total Liabilities                -                1            -

  Total Shareholders' Equity       -                -            -

  Total Assets                     -                1            -

                                                                 

                                   Andaman                       
                                   Transportation                
                                   Limited                       

                                   2007             2008         2009

  Total Assets                     Million Baht     Million Baht Million Baht

  Total Liabilities                -                -            1

  Total Shareholders' Equity       -                -            -

  Total Assets                     -                -            1

                                                                 

                                   PTTEP                         
                                   Australasia Pty               
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                -            47,934

  Total Liabilities                -                -            53,430

  Total Shareholders' Equity       -                -            (5,495)

  Sales                                                          2,048

  Total Revenues                                                 2,996

  Net loss                         -                -            (5,497)

                                                                 

                                   PTTEP West                    
                                   Africa Company                
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     -                -            2

  Total Liabilities                -                -            -

  Total Shareholders' Equity       -                -            2
  -------------------------------- ---------------- ------------ ------------

  Summary Information of Jointly Controlled Entities

  -------------------------------- ---------------- ------------ ------------
                                   Summary                       
                                   Financial                     
                                   Position and                  
                                   Result of                     
                                   Operations                    

                                   As at December                
                                   31,                           

                                   Carigali -                    
                                   PTTEPI Operating              
                                   Company Sdn Bhd.              

                                   2007             2008         2009

                                   Thousand Baht    Thousand     Thousand
                                                    Baht         Baht

  Total Assets                     559              1,308        622

  Total Liabilities                558              1,307        620

  Total Shareholders' Equity       1                1            2

                                                                 

                                   Moattama Gas                  
                                   Transportation                
                                   Company                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     3,862            4,094        3,513

  Total Liabilities                2,017            1,826        1,765

  Total Shareholders' Equity       1,845            2,268        1,748

  Sales                            4,005            4,950        4,498

  Total Revenues                   4,012            4,956        4,502

  Gross Profit                     3,763            4,673        4,229

  Net Income                       2,715            3,296        2,982

                                                                 

                                   Taninthayi                    
                                   Pipeline LLC                  

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     2,209            2,278        1,944

  Total Liabilities                623              637          586

  Total Shareholders' Equity       1,586            1,641        1,358

  Sales                            2,594            2,935        2,927

  Total Revenues                   2,594            2,935        2,927

  Gross Profit                     2,413            2,728        2,737

  Net Income                       1,722            1,897        1,911

                                                                 

                                   Orange Energy                 
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     10,163           11,100       9,306

  Total Liabilities                5,394            5,785        4,102

  Total Shareholders' Equity       4,769            5,315        5,204

  Sales                            9,716            10,997       8,138

  Total Revenues                   9,827            11,048       8,368

  Gross Profit                     3,588            4,253        2,580

  Net Income                       1,815            2,132        1,324

                                                                 

                                                                 

                                                                 

                                   Summary                       
                                   Financial                     
                                   Position and                  
                                   Result of                     
                                   Operations                    

                                   As at December                
                                   31,                           

                                   B8/32 Partners                
                                   Limited                       

                                   2007             2008         2009

                                   Million Baht     Million Baht Million Baht

  Total Assets                     3,834            3,607        3,172

  Total Liabilities                1,875            1,832        1,210

  Total Shareholders' Equity       1,959            1,775        1,962

  Sales                            3,515            3,973        2,753

  Total Revenues                   3,533            4,032        2,796

  Gross Profit                     1,422            1,528        861

  Net Income                       734              805          519
  -------------------------------- ---------------- ------------ ------------

  Summary Information of Associated Companies

  -------------------------------- ------------ ------------ ------------
                                   Summary                   
                                   Financial                 
                                   Position and              
                                   Result of                 
                                   Operations                

                                   As at                     
                                   December 31,              

                                   Energy                    
                                   Complex                   
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     2,274        5,205         7,811

  Total Liabilities                1,544        4,530         6,280

  Total Shareholders' Equity       730          675           1,608

  Net loss                         (48)         (55)          (67)

                                                             

                                   PTT ICT                   
                                   Solution                  
                                   Company                   
                                   Limited                   

                                   2007         2008         2009

                                   Million Baht Million Baht Million Baht

  Total Assets                     691          840           882

  Total Liabilities                531          607           682

  Total Shareholders' Equity       160          233           200

  Net Income (Loss)                11           73            (32)
  -------------------------------- ------------ ------------ ------------

  Summary significant financial ratio table

  ----------------------------------- --------- ----------- ---------- --------
                                                Financial              
                                                Ratio                  

                                                2007        2008       2009

  Liquidity Ratio                                                      

  Current Ratio                       (times)   1.28        1.35       1.40

  Quick Ratio / Acid Ratio            (times)   1.07        1.12       1.12

  Cash flow from Operations to        (times)   1.26        1.96       0.81
  current liabilities ratio                                            

  Account Receivable Turnover         (times)   8.37        11.30      9.25

  Collection Period                   (days)    43.01       31.87      38.91

  Profitability Ratio                                                   

  Profit Margin                       (%)       30.25       30.47      18.57

  Return on Equity ( ROE )            (%)       29.14       34.60      15.99

  Efficiency Ratio                                                      

  Return on Assets                    (%)       16.36       19.46      8.22

  Return on Fixed Assets              (%)       33.89       41.87      27.81

  Assets Turnover                     (times)   0.54        0.64       0.44

  Financial Policy Ratio                                                

  Debt - to -Equity                   (times)   0.78        0.78       1.10

  Times Interest Earned               (times)   79.19       137.49     33.69

  Times Burden Covered                (times)   0.67        0.98       0.28

  Dividend Ratio                      (%)       38.01       43.01      40.07

  Data Per Share                                                        

  Book value per share                (Baht)    32.38       40.55      43.17

  Net Profit per share                (Baht)    8.65        12.62      6.69

  Dividend per share                  (Baht)    3.28        5.42       2.68

  Growth Rate                                                           

  Total Asset                         (%)       20.42       25.37      26.21

  Total Liabilities                   (%)       20.15       25.10      51.42

  Sales                               (%)       5.12        46.12      -12.87

  Net Profit                          (%)       1.46        46.46      -46.84
  ----------------------------------- --------- ----------- ---------- --------

2.  Management Discussion and Analysis of Operation Results in 2009

    1.  PTTEP Performance

Two thousand nine was a difficult year for conducting business. The
economic recession at the beginning of the year resulted in a
significant downturn in global oil prices and energy demand. Though
there have been positive signs of economic recovery in the latter half
of the year, future trends are still unstable and unpredictable.
However, amidst a highly volatile business environment, PTTEP has been
quite successful in adapting to dynamic business changes by adhering to
prudent business philosophy, making strategic investments, and
continuing improvements on organizational capability and internal
efficiency. In 2009, PTTEP met its business objectives by being able to
maintain good business performance, adding value to its assets, and
continuously expand in strategic investment areas. Key business results
in 2009 are summarized below:

Exploration and Appraisal: PTTEP succeeded in discovering petroleum in
18 wells out of a total of 28 exploration and appraisal wells drilled in
2009, which is equivalent to a drilling success rate of 64%. A key
exploration success in 2009 was the Arthit and Pailin projects, where
petroleum was discovered in all exploration and appraisal wells drilled
in 2009. However, a total of 10 wells were written off in 2009 with a
total expenditure amounting to Baht 5,671 million. This amount included
the write-off expense of Iran Saveh’s Silak-1 exploration well, where
drilling commenced in May 2008. In December 2009, during the second
sidetrack drilling attempt at the depth of 4,738 meters, the drilling
pipe stuck at the depth of 4,480 meters and then was recovered at the
depth of 3,300 meters. However, considering the safety and the
possibility of success for sidetrack drilling at 3,300 meters, PTTEP in
conjunction with National Iranian Oil Company (NIOC) decided to plug and
abandon the well. PTTEP has proceeded to write-off this well in the
accounting period of the fourth quarter of 2009 with the approximate
total cost for PTTEP of Baht 1,597 million. However, due to a proven
petroleum system, PTTEP has planned to pursue a feasibility study of
this area together with detailed well evaluation for further
consideration.

Development: PTTEP has been successful in production development and in
adding more proved reserves from key projects including Myanmar M9 &
M11, PTTEP Australasia, and MTJDA B-17. At the end of 2009, PTTEP’s
total proved reserves stood at 1,099 million barrels. In addition, PTTEP
has completed the holistic development master plan for PTTEP Thailand’s
offshore and onshore assets, which optimizes utilization of resource
potential of PTTEP concession areas for the utmost benefit.

As for project development, PTTEP started up production from Arthit
North Project, with a current production rate of around 120 MMSCFD of
natural gas and 3,000 barrels per day (BPD) of condensate. For MTJDA
B-17 Project, major facilities have been successfully installed,
including the central processing platform, living quarters platform,
flare platform, bridges, wellhead platforms, intra-field pipelines, and
floating storage and offloading unit (FSO). The project is now
undergoing production testing and commissioning work. Production is
expected to start in the first quarter of 2010. However, the first gas
from MTJDA B-17 Project was delayed from the Contractual Delivery Date.
Under the MTJDA B-17 Gas Sales Agreement, if the seller fails to deliver
on the Contractual Delivery Date, the buyer is entitled to take a
deficient quantity (“shortfall”) at a price equal to 75% of the current
price applicable at the time the shortfall occurred. In this case, PTT
Public Company Limited (PTT), as the buyer, had notified the seller
about the Daily Contractual Quantity (DCQ) in late December 2009. PTTEP
and its joint venture partner, however, could not deliver the nominated
quantity. PTTEP, therefore, may have an obligation for the shortfall by
selling the deficient amount of gas at discounted prices under the Gas
Sales Agreement (GSA). At present, PTTEP and its joint venture partners
are negotiating with the buyer to resolve the issues and minimize the
impact of the situation.

Regarding Bongkot South Field, PTTEP and its joint-venture partners, the
sellers, have officially signed a GSA with PTT, the buyer, with a DCQ of
320 MMSCFD of natural gas. The signing of the GSA will raise the total
DCQ of the Bongkot Project to 870 MMSCFD. The project is in the detailed
engineering phase and construction of platforms and production
facilities has started. Production start-up is expected to be between
mid-2012 and mid-2013 as stated in the GSA. For Myanmar M9 & M11, PTTEP
succeeded in reaching an agreement with PTT and Myanmar government on
the terms and conditions of the GSA with an expected DCQ of 300 MMSCFD
of natural gas. The GSA is now obtaining the official approval from the
Myanmar government.

As regards Montara field development by PTTEP Australasia in 2009, PTTEP
had proceeded with production platform and associated facilities
installation as planned. However, there was an incident of oil and gas
leakage during Montara H1 development well drilling. There was a
subsequent fire at the contractor’s West Atlas drilling rig and at
PTTEP-owned wellhead platform. This caused the delay of production
start-up from the initial plan. Nevertheless, PTTEP has already put the
situation under control and stopped oil and gas leakage in November
2009. Thereafter, there has been no sign of oil slick in the sea
anymore. PTTEP has still been researching and monitoring the
environmental impact. For well controlling and damaged production
facilities, PTTEP has closed out Montara development (H1) since early
January 2010. Currently, PTTEP is coordinating with the drilling rig
owner to demolish the West Atlas rig, and is also contacting contractor
to remove and rebuild the damaged topside of the wellhead platform. For
Montara field development, PTTEP is undertaking engineering design and
preparing for wellhead platform construction. This should allow the
start-up of Montara field production in mid 2011.

For this incident, PTTEP has estimated the overall expenditures. In the
third quarter of 2009, the Company had recorded the expenses, prior to
the fire incident, of Baht 5,174 million. And in the fourth quarter of
2009, the Company had estimated an additional Baht 5,253 million to
reflect the long-term monitoring and the fire in November 2009. The
latter expense had already included the damaged wellhead platform
write-off of Baht 3,325 million. As this incident had insurance coverage
and PTTEP received an agreement from the insurers to make payment on
account (the interim payment) of Baht 1,341 million, PTTEP thus recorded
such payment in the financial statements in the fourth quarter of 2009,
which offset the total incident expenditures. The net expenditure is
tax-deductible.

The current estimation of the total amount to be recovered under the
insurance policies is approximately USD 270 million or Baht 9,000
million (including the first interim payment of Baht 1,341 million).
However, the actual amount ultimately recoverable under the insurance
policies is dependent upon costs actually incurred and the Terms and
Conditions of the policies. The Company is now in the claim process with
the insurers for the remaining recoverable amounts.

Production and Efficiency Improvement: In 2009, PTTEP managed its
projects to meet production targets. One of the key successes was the
Arthit project, where the average export production in 2009 of
approximately 330 MMSCFD of natural gas and 17,000 BPD of condensate
exceeded the production target of 2009. In addition, PTTEP was
successful in cost reduction and efficiency improvement through a number
of initiative programs including Operational Excellence and Procurement
Plus, which yielded tangible outcomes that improved the Company’s
performance.

Sales: PTTEP’s sales volume averaged 233,756 barrels of oil equivalent
per day (BOED) in 2009, approximately 7% higher than that of 2008 of
219,314 BOED. This increase mainly came from the full-year production of
Arthit Project and the Vietnam 9-2 Project, together with the increased
petroleum sales volume of the projects which started sales this year,
e.g., natural gas from Arthit North Project and crude oil from PTTEP
Australasia Project. However, the average sales volume of 2009, that is,
233,756 BOED, was still lower than the sales target of 240,240 BOED, set
at the beginning of 2009. The deviation from the sales target was mainly
caused by technical problems in Arthit North.

Investment: In 2009, PTTEP conducted a study and detailed evaluation of
PTTEP competitive acreage in selected countries and business/ technology
to develop a country strategy and targeted business areas. In the study,
factors like opportunity attractiveness and PTTEP competitiveness were
taken into account. The result of the study was consequently integrated
into PTTEP’s overall growth strategy roadmap with prioritized countries
and technology to be pursued. This strategy roadmap will contribute to
PTTEP achieving its long-term target.

In 2009, PTTEP continued to expand its investment in line with the
growth strategy. In Thailand, PTTEP participated in Petroleum Concession
Block G4/48 in the Gulf of Thailand. In Algeria, PTTEP and its
joint-venture partners were selected as the successful bidders of block
Hassi Bir Rekaiz in Algeria. The consortium consists of PTTEP (the
Operator) and CNOOC International Limited. In Australia, PTTEP also
succeeded in expanding the operation base in Australia starting with the
purchasing of 100% equity in Coogee Resources Limited (CRL), which was
engaged in oil and gas exploration and production projects including
Jabiru & Challis Fields and Montara Field. PTTEP purchased 100%
shareholders’ equity in OMV Timor Sea Pty Ltd, which has participation
interests in Audacious and Tenacious offshore fields and held an 18.75%
participation interest in Jabiru and Challis Fields. In addition, PTTEP
has participated with a 20% interest in the Petroleum Exploration Permit
WA-378-P, WA-396-P, and WA-397-P, where Woodside Energy Limited will be
the operator. Finally, PTTEP wholly invested in Petroleum Permits AC/P
33 (Oliver block). The agreement on the WA-378-P, WA-396-P, and WA-397-P
(Woodside) and AC/P 33 (Oliver block) participation will be fully
effective upon receiving approvals from the Australian government. PTTEP
investment in Australia is in line with PTTEP’s strategic objectives and
supporting future development of Floating LNG (FLNG) business.

Capability Development: In 2009, PTTEP was engaged in a Capability
Strategy study to define long-term capability development master plan to
support business expansion and long-term growth. In addition, PTTEP has
fully implemented a Technical Career Ladder (TCL) system to improve the
career development of technical professionals and enable them to
progress in their professional career in a way equivalent to the
management career path. The Accelerate Development Program (ADP) has
also been launched for fast-track development of new technical graduates
to reduce the time for them to reach the level of autonomy?? (action and
decision-making?). Leadership development and succession planning were
also the key focus of PTTEP in 2009. Selected Management members are
assigned to drive certain initiatives to leverage business performance
and prepare them for a higher responsibility/ position.

To strengthen the organization to support business expansion and
long-term growth, the organization structure and key business processes
were reviewed and streamlined. These included the procurement process,
the investment process (PTTEP Project Realization Process), and the
portfolio management process. In addition, PTTEP was engaged in a
country strategy study to set comprehensive investment strategies for
its growth.

Results of Operations

Detailed discussion of financial results for the two years ended 31
December 2009 is below:

  Results of Operations – Full-Year Comparison

  ----------------------------------------------- ----------- -----------
  Earnings summary                                For the     
                                                  year        

  (Unit : Millions of Baht except for Baht per    2009        2008
  share amounts)                                              

  Income from continuing operations                           

  Exploration and production                      20,009      36,631

  Pipelines                                       4,890       5,186

  Others                                          (2,745)     (142)

  Total net income                                22,154      41,675

  Diluted earnings per share – from continuing    6.69        12.60
  operations                                                  

  Total revenue - from continuing operations      120,338     140,007

  Sales revenue                                   115,548     132,621
  ----------------------------------------------- ----------- -----------

  For the results of operations (Unaudited) for 2009, PTTEP and its
  subsidiaries’ totaled a net profit of Baht 22,154 million or Baht 6.69
  per share-diluted, a decrease of Baht 19,521 million or 47% from
  2008’s net profit of Baht 41,675 million or Baht 12.60 per
  share-diluted. The return on shareholder’s equity for 2009 was 16%.

  For 2009, the total revenues of PTTEP and its subsidiaries amounted to
  Baht 120,338 million, a decrease of Baht 19,669 million or 14% from
  last year (Baht 140,007 million). This decrease was mainly due to Baht
  17,073 million or 13% lower sales of petroleum, resulting from (1) the
  lower average petroleum sales price for 2009, which fell to USD 39.53
  per BOE from last year at USD 49.69 per BOE; however the average sales
  exchange rate for this year increased to Baht 34.26 per USD from last
  year’s Baht 33.25 per USD as a result of the weakened Baht; however,
  (2) the higher sales volume for this year rose to 233,756 (BOED from
  last year’s sales volume of 219,314 BOED. This increase mainly came
  from (1) natural gas and condensate from Arthit Project and the
  natural gas and crude oil from the Vietnam 9-2 Project, which started
  production in the previous year, (2) increased petroleum sales volume
  of the projects which started sales this year, e.g., natural gas from
  Arthit North Project and crude oil from PTTEP Australasia Project,
  while (3) the natural gas and condensate sales volume from Bongkot and
  Pailin projects decreased.

  PTTEP and its subsidiaries collected lower revenue from pipeline
  transportation, which was proportionally recorded from Moattama Gas
  Transportation Company (MGTC) and Taninthayi Pipeline Company LLC
  (TPC). In addition, there was decreased other income from construction
  service on the Arthit gas export pipeline to customers.

  PTTEP and its subsidiaries recognized a foreign-exchange loss of Baht
  508 million for the year 2009, while last year there was a gain of
  Baht 118 million because of the change in the value of the Baht
  against the USD.

  PTTEP and its subsidiaries incurred expenses for 2009 amounting to
  Baht 78,037 million, an increase of Baht 13,060 million or 20%, from
  Baht 64,977 million for last year. This increase was the result of the
  following:

(1) Losses from the incident in Montara Field of the PTTEP Australasia
    Project, which was based upon an assessment of information currently
    available. Such losses mainly included the costs of drilling a
    relief well, clean-up, any costs in relation to other delayed
    project activities, and the damaged topside wellhead platform
    write-off, amounting to Baht 3,325 million. As this incident has
    insurance coverage and PTTEP received an agreement from the insurers
    to make payment on account (the interim payment) of Baht 1,341
    million, PTTEP thus recorded the payment in the financial statements
    of the fourth quarter of 2009, which offset the total incident
    expenditures.

(2) Higher depreciation and amortization expenses, mainly from Arthit
    Project as a result of an increase in additional completed oil and
    gas properties, as well as increased depreciation of Arthit North,
    PTTEP Australasia and Vietnam 9-2 projects as a result of their
    production volume increases.

(3) Increased operating expenses, mainly due to (1) the operating
    expenses, well repair and maintenance costs of the PTTEP Australasia
    Project, (2) the operating expenses of the Arthit and Arthit North
    projects as a result of increased production activities, whereas (3)
    operating expenses from the construction of the Arthit gas export
    pipeline dropped because it had been completed at the end of last
    year.

(4) Increased administrative expenses, mainly due to the compensation
    charge for the gas pipeline of Yetagun Project, as well as an
    increase in administrative expenses of PTTEP Australasia Project in
    line with its increased activities.

(5) Decreased petroleum royalties and remuneration, resulting from
    decreased sales revenues.

(6) Decreased exploration expenses, mainly due to the write-off of the
    dry wells from Iran Saveh, Australia AC/P36, PTTEP Australasia, and
    Oman 44 projects, while in the previous year, there were higher
    write-off costs under the projects in Myanmar, Vietnam 16-1 and
    Algeria 433a&416b projects.

  PTTEP and its subsidiaries incurred Baht 14,243 million lower income
  tax expenses because of lower petroleum taxable profits. In addition,
  income tax expenses for the PTTEP Australasia Project decreased due to
  losses resulting from the crude oil and gas leak and fire incident.

  PTTEP and its subsidiaries collected lower revenue from pipeline
  transportation, which was proportionally recorded from MGTC and TPC.
  In addition, a decrease was seen in other income from construction
  service on the Arthit gas export pipeline to customers.

Financial position

  ---------------------------------- ------------------ ------------------
                                     31 December        

  (Unit: Million Baht)               2009               2008

  Total Assets                       300,711            238,255

  Total Liabilities                  157,710            104,151

  Total Shareholders’ Equity         143,001            134,104
  ---------------------------------- ------------------ ------------------

  As of 31 December 2009, PTTEP and its subsidiaries commanded total
  assets of Baht 300,711 million, an increase of Baht 62,456 million, or
  26% higher than the total at the end of 2008. This increase was mainly
  due to (1) an increase of Baht 39,379 million in oil and gas
  properties, mainly from the ongoing construction of the Montara area
  in the PTTEP Australasia Project, oil and gas properties for
  production of the MTJDA-B17 and Bongkot projects; (2) an increase in
  deferred income taxes and intangible assets of Baht 8,536 and 3,559
  million which mainly were the assets of PTTEP Australasia Pty Limited;
  and (3) an increase in cash and cash equivalent of Baht 4,683 million
  as a result of operations, including debenture issuance, whereas there
  were cash out-flows from the purchase of Coogee Resources Limited,
  investment in oil and gas properties for petroleum exploration and
  production, income tax, and dividend payments.

  On 4 February 2009, PTTEP acquired 100% of the ordinary shares of
  Coogee Resources Limited or CRL (which was later changed to PTTEP
  Australasia Pty Limited or PTTEP AA) amounting to approximately Baht
  5,475 million. PTTEP AA is engaged in investment and development of
  oil and gas exploration and production in Australia. The the results
  of operation from 4 February to 31 December 2009, and the financial
  position of PTTEP AA were proportionately consolidated in PTTEP’s
  consolidated financial statements. In April 2009, PTTEP AA fully made
  the payment of total debt after deducting cash and cash equivalent
  (Net Debt) amounting to approximately Baht 11,981 million.

  PTTEP and subsidiaries had total liabilities of Baht 157,710 million
  or Baht 53,559 million, which was higher than that at the end of 2008,
  mainly due to (1) an increase of Baht 40,791 million in debentures and
  the current portion of long-term loans; (2) an increase of Baht 10,557
  million in finance-lease liabilities from using the Floating
  Production Storage and Offloading (FPSO) of PTTEP Australasia Pty
  Limited; however, (3) there was a decrease of income tax payable of
  Baht 7,011 million.

  On 29 May 2009, PTTEP issued and offered Baht 40,000 million of
  debentures which comprised 4 tranches. Two tranches were sold to
  retail investors: three years in the amount of Baht 18,300 million at
  3.25% per annum, and five years in the amount of Baht 11,700 Million
  at 4.00% a year. The other two tranches were sold to institutional
  investors: four years in an amount of Baht 5,000 million with interest
  rate fixed at 3.00% per annum for the first two years; thereafter,
  investors can switch to either a fixed rate at 4.00% per annum or a
  floating rate at 6MTHBFIX + 1.25% (CAP 6.00% and Floor 3.25%) per
  annum for the last two years, and 10 years in the amount of Baht 5,000
  million at 4.80% per annum.

  PTTEP maintains its Short-term Financing Program (“PF”), which
  involves its monthly issuance of Bills of Exchange (B/Es) via Public
  Offering to institutional and high net-worth investors. B/Es are to be
  issued monthly on a revolving basis with a total revolving credit of
  up to Baht 30,000 million, which was approved by the Board of
  Directors in February 2009. As of 31 December 2009, the outstanding
  face value of B/Es was Baht 1,000 million with a weighted average
  discounted rate of 1.162%.

  PTTEP issued warrants to directors, management and employees of 2
  million units on 1 August, 2002; 2 million units on 1 August 2003; 2.8
  million units on 1 August 2004; 2.8 million units on 1 August 2005;
  and 2.8 million units on 1 August 2006, with the exercise prices of
  Baht 111, Baht 117, Baht 183, Baht 278 and Baht 456 per share,
  respectively. As of 12 April 2006, the Company registered a change in
  its par value from Baht 5 each with 664.40 million ordinary shares to
  Baht 1 each with 3,322 million ordinary shares. The change affected
  the exercise ratio of the warrants from 1:1 to 1:5, including the
  exercise price from Baht 111, Baht 117, Baht 183, Baht 278 and Baht
  456 to Baht 22.20, Baht 23.40, Baht 36.60, Baht 55.60 and Baht 91.20,
  respectively. As of 31 December 2009, the total number of shares
  exercised was 52.56 million and the outstanding number of warrants was
  1.7 million units.

  For the year ended 31 December 2009, PTTEP and subsidiaries had a net
  cash flow from operations of Baht 42,735 million.

  PTTEP and its subsidiaries commanded a net cash flow of Baht 62,203
  million used in investment activities, mainly resulting from the
  higher investment in oil and gas properties for exploration and
  production and intangible assets from PTTEP Australasia.

  PTTEP and its subsidiaries had a net cash flow of Baht 24,151 million
  from financing activities, mainly due to (1) the cash received from
  the issuance of debentures of Baht 39,950 million, (2) the cash
  received from the issuance of common stock through ESOP of Baht 367
  million, whereas (3) the net cash paid for Baht 1,361 million in
  short-term loans, which were mainly for the B/E issuance, (4) the
  dividend payments to shareholders for the second half of 2008 at Baht
  2.56 per share and for the first half of 2009 at Baht 1.48 per share,
  totaling Baht 13,366 million, and (5) the interest payment of Baht
  1,439 million.

  As of 31 December 2009, PTTEP and subsidiaries had Baht 48,678 million
  in cash and cash equivalents, an increase of Baht 4,683 million from
  the end of 2008.

Impact on Operating results

  Factors which have impacted PTTEP operating results in 2009 consist of
  both internal and external ones. Regarding external factors, the US
  financial crisis in the latter half of 2008 resulted in a weakening of
  the US dollar and a global economic recession. It also consequently
  caused a decrease in oil prices and demand all over the world. On the
  other hand, the world financial crisis and the slump in petroleum
  demand and product prices also caused a decrease in market values of
  companies and a fall in oil field services prices, which presented
  opportunities for PTTEP to acquire assets and build value.

  As for Thailand, this situation resulted in an economic slowdown,
  leading to lower domestic energy demand. Even though there were
  positive signs of economic recovery and oil prices started to rebound
  in the second half of 2009, the future trend of Thailand’s economy is
  still unclear because of the unresolved political situation and the
  high volatility of oil prices and Thai Baht values.

  As for internal factors, as PTTEP has been expanding its investment in
  various regions, i.e., acquiring Coogee Resources Limited and entering
  into new businesses, i.e., the FLNG, development of its capability
  into a recognized international operator has become a real challenge.
  PTTEP thus needs to enhance its organizational capability to prepare
  for this changing work environment.

  In order to respond to the dynamic business environment, in 2009,
  PTTEP has done the following:

1.  In order to manage risk from oil price volatility and the effect of
    the unsteady economy on the oil price, PTTEP conducted oil price
    hedging for the petroleum products derived from the PTTEP group,
    using the Brent crude oil price as a reference. So far, PTTEP has
    made a commitment on such hedging contracts for the period of July
    to December 2009 for 3.6 million barrels at a guaranteed price range
    of between 55-86 USD per barrel.

2.  In response to the economic recession and lower prices in the E&P
    supply market, in 2009, PTTEP has engaged itself in cost reduction
    and efficiency improvement programs to maximize values from existing
    assets. Its procurement strategy has been adjusted to market
    situations by utilizing “Procurement Plus”, a program which seeks
    alternative suppliers and reviews the terms and conditions of
    contracts for mutual benefits for both PTTEP and business partners.
    In addition, PTTEP has carried out an “Operational Excellence”
    Program to improve operation efficiency and promote synergy among
    assets. The “Capital Project Management” Program has also been
    implemented on development projects to ensure that they meet time,
    cost, and quality objectives. These programs resulted in concrete
    cost reductions which consequently contribute to operation cash
    flow.

  The financial crisis in of 2008 and the slump in oil prices have also
  provided a good buying opportunity for PTTEP, enabling it to expand
  the business through strategic mergers and acquisitions of projects or
  businesses aligning with its strategy to create value in the long
  term. So far, PTTEP has been successful in expanding business in
  focused regions especially in Australia.

3.  To respond to the dynamics of energy demand, PTTEP has closely
    monitored petroleum demand and has been coordinating with PTT and
    related government agencies to collectively outline an optimal
    supply plan. It has reviewed and adjusted its production as well as
    project development plans to match energy requirements. This also
    included the development of a holistic development master plan to
    optimize reserves and resources of existing assets to match the
    country’s energy demand.

4.  With noticeably high growth aspiration internationally and
    domestically, the readiness of corporate capabilities is a major
    factor for future success for PTTEP. To manage this issue, PTTEP has
    been engaged in the Capability Strategy Study to evaluate the
    capability requirements and establish a capability development
    master plan to match business requirements. The Company has also
    accelerated the technical capability building of its personnel
    through the Technical Career Ladder and the Accelerated Development
    Program.

  In the long term, in order to meet the vision of PTTEP as a leading
  Asian exploration and production company, PTTEP has formulated a clear
  strategy for growth, focusing on countries and businesses where PTTEP
  has competitive advantage. With regard to existing assets, PTTEP
  focuses on managing its production to meet the national energy
  requirements and maximizing values of assets through integrated and
  lean operating models, continuous efficiency improvement, effective
  portfolio management, and prioritized capital allocation. As regards
  capability, PTTEP will continue to accelerate capability development
  as well as improving the organization and process to support
  international business expansion. These overall strategies will enable
  PTTEP to achieve its business goals.

  ----------------------------- ---------------- ---------------- ----------------- -----------------
  PTT EXPLORATION AND                                                               
  PRODUCTION PUBLIC COMPANY                                                         
  LIMITED AND SUBSIDIARIES                                                          

  STATEMENTS OF INCOME                                                              
  (UNAUDITED)                                                                       

  Unit : Baht                                                                       

                                Consolidated                                        

                                For the fourth                    For the year      
                                quarter                                             

                                2009             2008             2009              2008

                                                                                    

  Revenues                                                                          

  Sales                         33,440,677,191   28,745,989,777   115,547,525,128   132,620,657,176

  Revenue from pipeline         737,604,203      1,178,540,698    3,762,603,676     4,131,144,739
  transportation                                                                    

  Other revenues                                                                    

  Gain on foreign exchange      275,114,592      -                -                 117,995,132

  Interest income               74,770,182       302,663,674      376,273,736       942,229,325

  Other revenues                76,527,153       1,080,230,623    651,837,175       2,195,116,629

  Total revenues                34,604,693,321   31,307,424,772   120,338,239,715   140,007,143,001

  Expenses                                                                          

  Operating expenses            4,529,937,954    3,266,893,703    11,926,256,536    10,528,529,760

  Exploration expenses          2,764,631,304    3,590,006,659    7,377,274,117     8,273,388,955

  Administrative expenses       1,642,415,682    1,509,484,864    5,061,922,671     4,497,136,341

  Petroleum royalties and       3,825,295,862    3,399,310,808    14,065,574,385    17,328,157,956
  remuneration                                                                      

  Depreciation, depletion and   8,201,224,884    6,336,717,330    29,856,004,386    23,285,725,104
  amortization                                                                      

  Other expenses                                                                    

  Loss on foreign exchange      -                243,506,721      508,219,408       -

  Loss from incident in Montara 3,912,298,181    -                9,085,875,964     -

  Derivative loss (gain) on     -                (9,433,044)      -                 904,488,124
  hedging                                                                           

  Management's remuneration     48,140,864       57,308,238       156,083,519       159,426,460

  Total expenses                24,923,944,731   18,393,795,279   78,037,210,986    64,976,852,700

  Gain (loss) from the          (22,398,683)     5,490,759        (17,863,550)      (12,402,173)
  investment in associates                                                          

  Income before finance costs   9,658,349,907    12,919,120,252   42,283,165,179    75,017,888,128
  and income taxes                                                                  

  Finance costs                 621,511,794      220,253,629      1,870,328,040     840,822,921

  Income before income taxes    9,036,838,113    12,698,866,623   40,412,837,139    74,177,065,207

  Income taxes                  4,384,826,843    5,909,564,535    18,259,240,291    32,502,229,315

  Net income                    4,652,011,270    6,789,302,088    22,153,596,848    41,674,835,892

                                                                                    

  Earnings per share                                                                

                                                                                    

  Basic earnings per share      1.40             2.05             6.69              12.62

  Diluted earnings per share    1.40             2.05             6.69              12.60
  ----------------------------- ---------------- ---------------- ----------------- -----------------

1.  

3.  Auditor and Significant Accounting Policies

    1.  Auditor

  PTTEP has appointed Office of the Auditor General, as the external
  auditor of the Company and its subsidiaries and the appointment has
  been approved by the Office of Securities and Exchange Commission. 
  PTTEP and its subsidiaries have always appointed the Office of The
  Auditor General to serve as its independent auditor. There are no
  relationships or conflicts of interest among the independent auditor,
  the Company and its subsidiaries, the executives, the shareholders, or
  others related to those parties.   It was also approved by the Annual
  General Shareholders’ meeting with the audit fee of Baht 1.1 million
  which is higher than the fee for the years 2008 and 2007.

  In addition, the Office of The Auditor General has serves as the
  independent auditor for Company subsidiaries of 32 companies with an
  audit fee for the year 2008 amounting to Baht 3.40 million. There was
  no non-audit services fee for the previous year because no other
  services were received from the independent auditor.

2.  Summary Auditors’ Report in the past 3 years

  The auditor expressed clean opinion in the Auditors’ Report in the
  past 3 years and expressed the additional opinion that assets,
  liabilities and expenses of the joint venture have not been audited by
  the Company’s auditor; however they have been audited by the joint
  ventures’ auditors.