CIMB Research cut its target price for PTT Exploration and Production Pcl to 165 baht ($5.33) from 195 baht ($6.30), reflecting a possible capital increase by Thailand's second-largest energy firm expected to help fund a bid for Cove Energy.

The brokerage downgraded its rating on the company to neutral from trading buy.

PTTEP shares were down 0.6 percent at 175.50 baht, with around 1.4 million shares traded, about 0.4 times their average full-day volume over the last 30 sessions. The stock has risen 4.2 percent so far this year.

"While first quarter earnings outdid expectations due to surprisingly low exploration expenses, PTTEP's share price upside is limited as Shell's counterbid for Cove Energy ratchets up the risk of a bidding war, which could entail a capital increase for PTTEP," CIMB said in a research note.

The broker said it raised its fiscal year 2012 earnings per share forecast but cut its target price due to higher discount cash flow from 10 percent to 25 percent that reflected the higher risk from the Cove bid.

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1222 (0522 GMT)

(Reporting by Viparat Jantraprap in Bangkok; viparat.jantraprapaweth@thomsonreuters.com)