PetroChina profit pops as oil rally counters gas, write-downs
HONG KONG (Bloomberg) -- PetroChina, the country’s biggest oil and gas company, said profit almost tripled last year as earnings from exploration and production overcame asset write-downs and losses from importing natural gas.
Net income jumped to 22.8 billion yuan ($3.6 billion) in 2017, it said in a statement to the Hong Kong exchange Thursday. Impairments more than doubled as the Beijing-based company wrote down the value of petrochemical and pipeline assets. Spending, which rose for the first time in five year, overshot the company’s target by 13%.
“Profit could have been very impressive if not for the large asset write-downs,” said Laban Yu, a Hong Kong-based analyst at Jefferies Group LLC. “Efficiency still looks to be an issue, as total production has fallen even as spending exceeded the budget it set at the beginning of last year.”
PetroChina is recovering from its worst-ever performance the previous year as a rally in oil prices bolstered its exploration and production segment. Global benchmark Brent crude averaged 21% higher in 2017 than a year ago as OPEC and its allies cut output. And while the state-owned giant took a 23.9 billion yuan hit from reselling imported gas domestically below cost, those losses are seen having peaked.
As the country’s biggest natural gas producer and importer, PetroChina is key to President Xi Jinping’s campaign to replace coal with the cleaner-burning fuel. The nation’s gas use surged 15% last year, with imports satisfying around 40% of that demand, pushing up global prices this winter while leaving some parts of the country short of supply.
PetroChina’s profit compares with the 23.1 billion yuan median estimate in a Bloomberg survey of 10 analysts. The company had forecast as much as 23.9 billion yuan in January.
The company will hand out a full-year dividend of 0.06074 yuan per share, compared with a 0.036 yuan forecast based on data compiled by Bloomberg. The stock rose 1.1% to HK$5.53 before the earnings announcement, taking gains this year to 1.5%.
Additional PetroChina Information
Revenue rose about 25% to 2.02 trillion yuan. Oil and gas output fell 0.6% to 1.46 Bboe equivalent. Targets 1.48 Bboe in 2018. Crude output dropped 3.7% to 887 MMbbl. 2018 target at 888.2 MMbbl. Natural gas output up 4.5% to 3.42 Tcf, 2018 target at 3.54 Tcf. Asset impairment losses widened to 26.1 billion yuan, from 12.9 billion. 2018 capital expenditures targeted at 225.8 billion yuan. 2017 capex was 216.2 billion yuan, up 25% year-on-year. Company had earlier targeted 2017 capex of 191 billion yuan.
