Can Natural Gas Development Drive PetroChina Further?
Stephen Simpson, CFA
Stephen Simpson, CFA
Apr. 27, 2015, 12:49 PM
- PetroChina (PTR +3.2%) is higher even after reporting a larger than expected 82% drop in Q1 profit due to lower international crude prices and inventory writedowns at its refining division.
- PTR's Q1 net profit tumbled to 6.15B yuan ($989M), its lowest since Q3 2007, from 34.2B in the year-ago period and well below the analyst consensus average of 9.98B yuan.
- Q1 sales fell 22% to 410B yuan and the average realized crude price was halved to $48.87/bbl from a year ago; oil and gas output rose 4.9% to 381M boe.
- Earlier: PetroChina, Sinopec surge on industry merger speculation
Apr. 27, 2015, 11:48 AM
- Sinopec (SNP, SHI) and PetroChina (NYSE:PTR) are dismissing reports that their parent companies could merge to create a state giant, saying they have never received any official information about such a restructuring.
- It is the first time Sinopec and PTR have formally downplayed Chinese and foreign media reports in recent months that the government is considering merging Sinopec's parent with China National Petroleum, which controls PTR.
- Shares are off earlier highs but still sport strong gains, particularly SHI, up nearly 15% in U.S. trading.
Apr. 27, 2015, 8:15 AM
- PetroChina (NYSE:PTR) and Sinopec (SNP, SHI), China’s two largest oil explorers, jumped by their daily trading limit in Shanghai on speculation the government is considering consolidating the industry.
- PTR jumped 10% to 14.65 yuan, the highest in more than five years, and SNP also surged 10% to 8.56 yuan at the close in Shanghai; in U.S. premarket action, PTR +5%, SNP +5.7%, SHI +17.1%.
- A report also said China’s state-assets regulator may cut the number of government-owned enterprises to 40 from 112 through mergers and restructuring.
- Earlier: Chinese shares continue powerful ascent
Apr. 7, 2015, 2:52 PM
- Iranian oil officials are in Beijing this week to discuss oil sales and Chinese investments in Iran, with Iran's oil minister set to make his first trip to Beijing since joining the then new government two years ago.
- Officials from state-run National Iranian Oil Company are expected to meet with Sinopec (NYSE:SNP) trading arm Unipec and state trader Zhuhai Zhenrong; a new condensate deal with the latter is set to lift China's total crude oil contract volumes to above 600K bbl/day later this year.
- SNP, Cnooc (NYSE:CEO) and CNPC (NYSE:PTR) signed preliminary pacts with Iran before 2010 on development projects worth tens of billions of dollars, but Chinese firms slowed or scaled back activities on worries that U.S. sanctions on Iran would hurt their businesses in the U.S.
Mar. 27, 2015, 2:56 PM
- Cnooc (CEO +4.8%) says it will shelve its shale gas project in Anhui province, in the latest sign that the U.S. shale gas revolution is unlikely to replicate itself in China.
- CEO Li Fanrong says the company had drilled near Wuhu, in southern Anhui, since late 2011, but decided the block is not suitable for development on a large scale.
- Cnooc joins PetroChina (NYSE:PTR), which has already sharply cut back on a shale project in Sichuan province it was developing with Royal Dutch Shell.
- Cnooc tried but failed to interest foreign investors in the Wuhu block, but potential partners have shied away in part because of the dense population in the area; similar concerns held back the PetroChina-Shell project in Sichuan.
- Earlier: Cnooc surprises with 6.5% profit gain despite oil price plunge
Mar. 27, 2015, 11:57 AM
- PetroChina (NYSE:PTR) says it is actively involved in talks with international oil companies about swapping assets in North America to help it ride out lower crude oil prices.
- Because of weak oil prices, "any asset disposal will lead to big losses for any big international oil companies. If we could strengthen co-operation and swap assets, it will help us restructure overseas assets and complement each other,” Vice Chairman Wang Dongjin says, without naming the companies involved in the negotiations.
- PTR plans to cut nearly 10% from E&P spending compared with last year, joining the rest of the industry in trimming budgets in response to the nearly 50% plunge in oil prices since last summer.
Mar. 26, 2015, 8:49 AM
- PetroChina (NYSE:PTR) says its net profit fell 17.3% last year to its lowest annual profit in five years, as falling crude oil prices squeezed earnings.
- PTR says its net income dropped to 107.2B yuan ($17.2B) from 129.6B yuan a year earlier, while revenue rose 1.1% to 2.28T yuan from 2.25T a year earlier.
- Capital spending for 2015 will be reduced by 8.8% at 266B, adding to last year's 8.4% reduction; the move follows similar cuts by Chinese state-owned rivals Sinopec (NYSE:SNP) and Cnooc (NYSE:CEO).
- Oil and gas production rose 3.6% to 1.45B boe in 2014, and realized crude oil price fell 13% to 3,939 yuan/ton.
Mar. 25, 2015, 8:16 AM
- Petrobras (NYSE:PBR) says it hit good quality oil in a second appraisal well drilled at the giant Libra field in Brazil's offshore Santos basin.
- PBR says the well confirmed a column of hydrocarbons of ~656 ft. in the central block of Libra.
- The Libra consortium consists of PBR with a 40% stake, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) with 20% each, and China National Petroleum (NYSE:PTR) and Cnooc (NYSE:CEO) with 10% each.
- PBR +1% premarket.
Mar. 16, 2015, 9:54 AM
- PetroChina's (NYSE:PTR) vice chairman has been placed under investigation by Communist Party discipline officials on allegations of "serious law and discipline violations."
- Liao Yongyuan also is general manager at PTR's state-owned parent company, China National Petroleum Corp.
- Separately, a report on the contamination of drinking water in the Chinese industrial city Lanzhou last year faults a PTR subsidiary for causing the pollution and recommends PTR pay more than 100M yuan ($16M) in reparations.
Mar. 3, 2015, 11:27 AM
- Athabasca Oil (OTCPK:ATHOF) says it has received the first of three payments owed to it by PetroChina’s (NYSE:PTR) Canadian subsidiary, part of a deal announced last summer to complete the sale of the Dover oil sands operation in Alberta.
- Athabasca says it was paid C$302.5M ($241.2M), the largest of three interest-bearing promissory notes toward a C$1.18B purchase price for its stake in the Dover project.
- The company has said it expects to use the proceeds to develop its core light oil shale assets in the Kaybob Duvernay area of Alberta as well as its Hangingstone oil sands project southwest of Fort McMurray, Alberta.
Feb. 18, 2015, 11:27 AM
- WSJ’s report that China’s government is considering merging some of its big oil companies has caught the attention of Asia’s energy analysts, but Jefferies analysts doubt that the leadership actually will pull the trigger, saying the merger talk is "more brainstorming and thinking outside the box rather than feasible proposals.”
- The firm notes that CNPC (NYSE:PTR) already is plenty big enough to compete with Exxon Mobil (NYSE:XOM): It is bigger than XOM on an asset basis, production at the group level exceeded XOM in 2013, and the value of CNPC's proved reserves at year-end 2013 likely exceeded XOM's by ~50%.
- Jefferies also notes that Sinopec’s (NYSE:SNP) production and value of in-ground reserves exceeds that of ConocoPhillips (NYSE:COP).
- A merger between Cnooc (NYSE:CEO) and SinoChem could make sense, as it would create a fully integrated, 1M bbl/day company spanning upstream and downstream operations.
- WSJ's Liam Denning writes that any such merger would be a step backward because smaller companies offer a better chance for growth, and supermajors such as XOM and COP mostly have struggled to increase their production.
Feb. 17, 2015, 3:31 PM
- China may merge its state-owned oil companies to create giants that will be more efficient and capable of taking on big overseas rivals, WSJ reports.
- One plan reportedly would combine the country’s largest oil companies, CNPC (PTR +2%) and Sinopec (SNP +4.2%), while other options include merging Cnooc (CEO +1.8%) with Sinochem.
- The firms have expanded into each others’ turf over the years, creating overlapping operations that span everything from exploration to refining to running gas pumps.
- No timetable is set for a decision on whether or when to proceed with the mergers, WSJ says.
Feb. 6, 2015, 10:59 AM
- China's three major national oil companies - China National Petroleum (NYSE:PTR), Sinopec (NYSE:SNP) and Cnooc (NYSE:CEO) - may be largely immune to the global energy rout, according to recent reports.
- Government fiscal incentives in the form of tax breaks for exploration businesses will provide relief for Chinese national oil companies, Wood Mackenzie notes.
- CNPC is best positioned to weather the oil price decline because of its lower E&P production cost, larger natural gas businesses and diversification into downstream businesses, according to Moody's.
- Barclays believes Cnooc is a winner since it boasts the strongest balance sheet among Chinese state-owned enterprises, but a sharp earnings decline will be unavoidable if oil remains lower for longer.
Feb. 3, 2015, 7:59 AM
- Cnooc (NYSE:CEO) says it plans to cut capital spending by 26%-35% in 2015 compared with a year earlier, as China’s biggest energy companies tighten their belts amid plunging oil prices.
- Cnooc says that despite the capex cuts, it would still meet oil production growth targets through “cost control and efficiency enhancement,” forecasting output of 475M-495M boe in 2015, up from ~432M boe last year.
- Cnooc could be facing writedowns of more than $5B related to its 2013 acquisition of Canada’s Nexen, according to J.P. Morgan.
- Larger rival China National Petroleum (NYSE:PTR) is pledging “revolutionary measures” to cut costs, and a joint venture between Sinopec (NYSE:SNP) and Canada’s Talisman Energy (NYSE:TLM) is laying off several hundred staff and contractors in the U.K.
Jan. 30, 2015, 12:26 PM
- PetroChina (PTR -1.1%) reportedly has started trial operations at a crude pipeline in Myanmar that could shorten the time for shipments to reach refineries.
- A VLCC capable of hauling 300K metric tons discharged oil into tanks at Myanmar’s Ma-de island port, the pipeline’s starting point, facility operator China National Petroleum says on its website.
- The project will help CNPC’s listed unit to take delivery of crude bought from the Middle East and Africa; China is seeking to diversify its sources of crude supply to improve energy security, as the share of imports needed to meet domestic demand is forecast to surpass 60% this year for the first time ever.
Jan. 2, 2015, 2:30 PM
- As many as 16 oil sands’ projects worth nearly $60B that have not yet received corporate sanctioning may be deferred if current oil prices persist, according to upstream research analysts at Wood Mackenzie.
- Key projects the firm expects to come on line by 2017 include the 165K bbl/day Fort Hill venture owned by Suncor (NYSE:SU), Total (NYSE:TOT) and Teck Resources (NYSE:TCK); Canadian Oil Sands' (OTCQX:COSWF) 100K bbl/day Mildred Lake replacement project; Imperial Oil’s (NYSEMKT:IMO) 110K bbl/day Kearl Phase 2; ConocoPhillips' (NYSE:COP) 109K bbl/day Surmont Phase 2; and Shell’s (RDS.A, RDS.B) 100K bbl/day Jackpine expansion.
- Projects expected to face delays include Cenovus Energy’s (NYSE:CVE) Christina Lake Phase H and its Narrows Lake Phase A; expansion work at Husky Energy's (OTCQB:HUSKF) Sunrise SAGD plant; and PetroChina’s (NYSE:PTR) MacKay River project.
- Most analysts expect a 10%-15% drop in capex for Canadian energy producers in 2015, with bigger cuts perhaps coming as the year unfolds to rival 2009's 20% capex decline.
PetroChina Co. Ltd. engages in the exploration, development, production and sale of crude oil and natural gas. The company also involves in the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative chemical products and other... More
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Industry: Major Integrated Oil & Gas
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