Chinese energy giant
PetroChina Co. Ltd.
) announced its first quarter 2013 earnings of RMB 36.0 billion
or RMB 0.20 per diluted share, compared with RMB 39.2 billion or
RMB 0.21 per diluted share a year earlier. Earnings per ADR came
in at $3.17 (exchange rate: US$1.00 = RMB 6.3, 1 ADR = 100
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The negative comparisons can be primarily attributable to high
natural gas import prices, lower crude realization, as well as
weak oil product demand.
However, PetroChina's total revenue for the three months
increased 2.8% from the year-earlier period to RMB 540.3 billion,
driven by higher output.
PetroChina, the world's biggest listed oil producer by volume
Exxon Mobil Corp.
), posted strong upstream output growth during the three months
ended Mar 31, 2013. Crude oil output - accounting for 65% of the
total - rose 1.8% from the year-ago period to 231.0 million
barrels (MMBbl), while marketable natural gas output was up 4.8%
to 745.3 billion cubic feet (Bcf).
Average realized natural gas price was $5.07 per thousand cubic
feet (Mcf), 4.1% above the year ago level of $4.87. But average
realized crude oil price during the first three months of 2013
was $103.08 per barrel, representing a decrease of 2.3% from
$105.48 per barrel in the corresponding period of the previous
year. This pulled down the upstream (or exploration &
production) segment profit by 5.6% to RMB 57.0 billion.
The Beijing-based company's 'Refining & Chemicals' business
registered an operating loss of RMB 4.7 billion, considerably
narrower than the year-earlier period loss of RMB 10.8 billion.
This was mainly possible due to PetroChina's ability to take
advantage of the newly launched market-friendly fuel pricing
policy that better reflects changes in global oil prices.
PetroChina's refinery division processed 253.5 MMBbl during the
three-month period, down from 257.1 MMBbl in 2012. The company
produced 1.762 million tons of synthetic resin in the period (a
rise of 14.7% year over year), besides manufacturing 1.071
million tons of ethylene (up 16.3%). It also produced 22.76
million tons of gasoline, diesel and kerosene during the period,
as against 23.03 million tons a year earlier.
Natural Gas & Pipelines:
While stronger gas demand led to a rise in imports, these came at
high global prices. Moreover, the company was forced to sell the
commodity at controlled domestic prices. As a result,
PetroChina's natural gas business incurred a profit of RMB 1.1
billion in the first quarter, down almost 50% from the
year-earlier level of RMB 2.0 billion.
In marketing operations, the state-owned group sold 37.44 million
tons of gasoline, diesel and kerosene during Jan-Mar 2013, an
increase of 2.6% year over year. However, domestic refined
products demand was down 4.3% from the year-ago period, which
translated into lower sales and gross profit. This meant that
PetroChina's segment earnings fell 65.0% year over year to RMB
Liquidity & Capital Expenditure
As of Mar 31, 2013, PetroChina's cash balance was RMB 113.5
billion, while net cash flow from operating activities was RMB
17.1 billion. Capital expenditure for the period reached RMB 65.6
billion, down 7.6% from the year-ago level.
PetroChina currently carries a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next one to three months.
Meanwhile, one can look at other international integrated energy
) as attractive investments. Both these firms - sporting a Zacks
Rank #2 (Buy) - offer value and are worth accumulating at current