PetroChina posts record-low profit in third year of oil pain
HONG KONG (Bloomberg) -- PetroChina Co.’s profit fell 78% to the lowest on record as the energy price crash punished the country’s biggest oil and gas producer for a third year.
Net income dropped to 7.86 billion yuan ($1.1 billion USD), the Beijing-based company said in a statement to the Hong Kong stock exchange Thursday. That compares with an 8.8 billion yuan mean of 12 estimates compiled by Bloomberg. Revenue fell 6.3% to 1.62 trillion yuan. PetroChina warned in January profit might fall by as much as 80%.
The energy price slump has forced global oil and gas producers to reduce spending, cut workers and write down the value of assets. While PetroChina expects to see its crude production fall a second year in 2017, it’s sustaining natural gas output. It sees gas sales rising 10% this year and to be its main growth driver to the end of the decade, President Wang Dongjin said during an earnings briefing. Oil will trade between $50 and $58/bbl this year, he said, versus Brent crude’s $45 average in 2016.
“PetroChina’s profit was badly hit by the oil price crash last year,” said Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd. “We’re expecting better results from the company this year with the rebound in international crude prices.”
PetroChina issued a final dividend of 0.038 yuan per share, which includes a 0.02 special dividend, compared with a forecast of about 0.025 yuan in data compiled by Bloomberg. The company’s shares rose 0.2% to HK$5.76 before the earnings statement, compared with a 0.4% loss in the city’s benchmark Hang Seng Index.
Squeezing Cash
China’s state-asset regulators are squeezing companies for cash, Laban Yu, an analyst with Jefferies Group LLC in Hong Kong said in a March 27 research note. Despite reporting its worst-ever annual results, Cnooc Ltd. issued a HK$0.23 dividend, compared with a forecast for HK$0.17. China Petroleum & Chemical Corp., known as Sinopec, issued a final payout of 0.17 yuan, compared with a 0.08 yuan forecast.
PetroChina faced “serious and unprecedented” pressures last year, Chairman Wang Yilin said at an earnings briefing Thursday in Hong Kong. “There are more opportunities than challenges and we’re bullish on PetroChina.
While the company cut spending last year by 15% to 172.4 billion yuan, below its 192 billion yuan target, it plans to raise it to 191.3 billion yuan this year. Both of its state-owned rivals said last week that they intend to boost capital expenditure by more than 40% each.
Investors are focusing on how long-awaited energy reforms from President Xi Jinping’s government may transform the nation’s energy giants, raising speculation that PetroChina and its parent, China National Petroleum Corp., may spin off its massive pipeline system.
Vice President Huang Weihe said Thursday that the pipelines are worth about 500 billion yuan ($72.6 billion) and that storage facilities wouldn’t be included in any restructuring. That’s below estimates from analysts who put a value of at least $85 billion on the pipeline units. Its natural gas and crude oil transportation system stretches from the country’s remote borders with Central Asia to major coastal cities.
Production Details
Total oil and gas production fell 1.8% to 1.47 billion boe. Domestic and overseas crude output both fell 5.3% to 764 million and 157 million bbl, respectively Natural gas output in 2016 rose 4.6% to almost 3.275 trillion cubic feet PetroChina sees its 2017 global crude production at 879 million bbl, down 4.5%, Bloomberg calculations show. Natural gas this year will be little changed at 3.276 trillion cubic feet.
