China's state-owned energy conglomerate
PetroChina Company Limited
) is looking forward to invest an additional $3.7 billion in
Australian oil and natural gas assets. In fact, the company is
looking to put in about $60 billion in the next 10 years for the
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China's biggest oil and gas producer has planned this move to
provide for the country's growing energy demand. This will also
boost PetroChina's growth prospects in Australia by adding to its
already significant interests in the country.
In Dec 2012, PetroChina entered into a deal with
BHP Billiton Ltd.
) to acquire some stake in the Browse liquefied natural gas (LNG)
venture in Western Australia. The contract will result in
PetroChina getting an estimated 10.23% interest in the overall
Browse LNG project for $1.63 billion.
Last month, PetroChina also acquired stakes in 2 exploration
assets in Western Australia from
). In the first set of accords, ConocoPhillips will offload a 20%
working interest in the Poseidon offshore discovery in the Browse
Basin. The second set involves the divestment of a 29% working
interest in the Goldwyer Shale, onshore Canning Basin.
But we remain concerned by PetroChina's high-priced gas imports
in the face of artificially low domestic gas sale prices.
Sluggish oil production growth prospects and heavy exposure to
significantly mature producing areas remain near-term headwinds
as well, in our view.
Additionally, PetroChina's results are heavily levered to changes
in the overall energy price environment, which are inherently
volatile and subject to complex market forces. Realized prices
could differ significantly from our estimates, thereby affecting
the company's revenues, earnings and cash flows.
PetroChina retains a Zacks Rank #4 (Sell). However, there is
another stock in the oil and gas industry,
), which holds a Zacks Rank #2 (Buy) and appears more