China / Business

PetroChina slides after profit alert

By Bloomberg (China Daily) Updated: 2016-02-02 08:16

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 Kong-based 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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