PetroChina slides af­ter profit alert

The Pak Banker - - BUSINESS -

PetroChina Co, the coun­try's big­gest oil and gas pro­ducer, fell in Hong Kong af­ter say­ing 2015 profit may have fallen 60 per­cent to 70 per­cent from a year ear­lier be­cause of the slump in en­ergy prices.

The stock closed down 3 per­cent at HK$4.61 in Hong Kong, af­ter ear­lier fall­ing as much as 4.2 per­cent. The city's bench­mark Hang Seng In­dex lost 0.45 per­cent. PetroChina cited crude's fall and lower do­mes­tic nat­u­ral gas prices for the es­ti­mated drop in full-year earn­ings, es­ti­mates for which were com­piled ac­cord­ing to Chi­nese ac­count­ing stan­dards, it said on Fri­day in a state­ment to the Hong Kong Stock Ex­change.

The com­pany sees the oil mar­ket con­tin­u­ing to be weak this year and is seek­ing to cut costs. It re­ported net in­come of 107.2 bil­lion yuan ($16.3 bil­lion) for 2014. Profit is seen drop­ping by 59 per­cent, ac­cord­ing to the me­dian of 22 fore­casts com­piled by Bloomberg, based on in­ter­na­tional ac­count­ing stan­dards.

"What likely mat­ters for the bulk of PetroChina's share price move­ment over the next few months is oil prices, any news on gas pipe­line sub­sidiary sale and, to a lesser ex­tent, any an­nounce­ment of fur­ther capex cuts," James Hub­bard, a Hong Kong­based an­a­lyst at Mac­quarie Cap­i­tal Se­cu­ri­ties Ltd, said in an re­search note af­ter PetroChina is­sued its state­ment.

"PetroChina is a geared play on oil prices that is 'safe' from the per­spec­tive that it has ac­cess to low cost State fund­ing if it ever needs it." Brent crude, the bench­mark for more than half the world's oil, plunged 35 per­cent last year, pun­ish­ing pro­duc­ers and forc­ing drillers from the United States to Asia to slash spend­ing and cut staff.

PetroChina's State-owned par­ent China Na­tional Pe­tro­leum Corp plans to keep oil pro­duc­tion steady and boost gas out­put with only "lim­ited amount" of money to in­vest this year, Deputy Gen­eral Man­ager Wang Dongjin said last month. Fel­low State-run en­ergy com­pany China Pe­tro­leum & Chem­i­cal Corp said on Wed­nes­day that oil and gas out­put in 2015 fell for the first time in 16 years as a slump in do­mes­tic crude pro­duc­tion out­weighed record vol­umes of nat­u­ral gas.

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