Beijing: PetroChina Co, the nation’s biggest oil and gas producer, posted a 63 per cent decline in first-half profit as oil prices slumped, lagging analyst estimates.
Net income dropped to 25.4 billion yuan ($4 billion), or 0.14 yuan a share, in the six months ended June 30, from 68.1 billion yuan, or 0.37 yuan, a year earlier, the Beijing-based company said Thursday in a statement to the Hong Kong stock exchange. The average of three analysts estimates compiled by Bloomberg was a profit of 30.3 billion yuan.
PetroChina is suffering amid the collapse in oil prices as it depends on exploration and production for most of its revenue. Crude has tumbled as producers sustain output to protect market share, worsening a global oversupply, amid concern that demand growth from China is stalling. Brent, the benchmark for about half the world’s crude, averaged about $59 a barrel in the first half of the year, down 45 per cent from the same period in 2014.
“The global oil price is likely to keep fluctuating at a low level,” the company said in its earnings release. “The growth of domestic demand for oil and gas will slow down and the market competition will get tougher.”
Falling Sales
PetroChina produced 736 million barrels of oil equivalent in the first half, up 2.9 per cent from a year earlier. The company’s average realised crude price fell 45 per cent, while average natural gas prices rose 0.4 per cent. Sales dropped 24 per cent to 878 billion yuan, according to the statement. Capital expenditure declined 33 per cent to 61.7 billion yuan.
The Bloomberg Commodity Index of 22 raw materials fell to a 16-year low this month and is down 17 per cent this year as a glut of raw materials from oil to iron ore meet cooling demand from China, the world’s biggest consumer of energy, metals and grains.
PetroChina’s domestic rivals were also struck by oil’s fall. Cnooc Ltd.’s first-half income dropped 56 per cent, while the decline at China Petroleum & Chemical Corp., Asia biggest refiner and known as Sinopec, was softened to 22 per cent because of better fuel-making margins over the period.
