PetroChina income falls to lowest Since 1999 amid oil crash

PetroChina Co. profit tumbled to the lowest since 1999 as falling crude prices crimped earnings at the country’s biggest oil and gas producer.
Net income at the Beijing-based explorer dropped 67 percent to 35.5 billion yuan (USD5.46 billion) from 107 billion yuan, according to a statement sent to the Hong Kong stock exchange. That compares with a 34.3 billion yuan mean estimate from 11 analysts compiled by Bloomberg. Sales fell 24 percent to 1.73 trillion yuan. The company warned in January that 2015 profit may fall 60 percent to 70 percent.
Brent, the global benchmark, dropped to an average of about $54 a barrel last year, from roughly $99 the year before, prompting global oil energy companies to write down assets, slash earnings and cut capital expenditure plans. Despite the pain, PetroChina and its state-owned parent China National Petroleum Corp. won’t resort to laying off frontline oil and gas workers as a way to cut costs, Chairman Wang Yilin said this month.
“In 2015, the global economic recovery slowed down, the downward pressure on China’s economy continuously intensified, the overall supply in the oil and gas market was sufficient and the international oil prices kept dropping at a low level,” the company said in its earnings release.
Oil has climbed back from a 12-year low this year on speculation that stronger demand and falling U.S. output will ease a global surplus. The Organization of Petroleum Exporting Countries and other producers including Russia plan to meet in Doha next month to discuss limiting output to reduce a global oversupply.
China’s biggest explorers including PetroChina, China Petroleum & Chemical Corp. and Cnooc Ltd. all posted profit or revenue declines for the first nine months of 2015. PetroChina and CNPC sold pipeline assets in November to raise cash to meet their annual profit target. Capital spending this year will be 5 percent lower at 192 billion yuan, following a 31 percent cut last year.
The company rose 0.9 percent to HKD5.37 before the earnings announcement, compared with a 0.3 percent loss in the city’s benchmark Hang Seng Index. Shares are down 35 percent in the past year.
Parent company CNPC will be among the first state-owned companies to undergo government-guided reforms, transforming into a strategic holding company that will not manage day-to-day operations of its subsidiaries, according to people with knowledge of the situation. As part of the overhaul, China’s government is looking to spin off oil and gas pipelines from its energy companies into independent businesses. Aibing Guo, Bloomberg