PetroChina Helps Lead Oil Companies Lower as OPEC Holds Output

PetroChina Co., Asia’s biggest energy producer, fell the most in more than a year and helped lead declines among the region’s oil producers after OPEC maintained output in the face of a supply glut.

As a low-margin producer, PetroChina is one of the companies with the highest sensitivity in terms of earnings and market value to oil price moves, according to a research note today from Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co.

The company fell as much as 5.6 percent to HK$8.21 in Hong Kong, its biggest intraday decline since August last year.

The impact on earnings of Asian oil and gas companies will be significant if current prices of around $70 a barrel are sustained over the next year, according to Beveridge. West Texas Intermediate crude was down 6.6 percent at $68.86 a barrel at 11:04 a.m. in Tokyo. The price has fallen 30 percent in 2014.

“Oil prices at this level will worsen PetroChina’s profitability in the first half of 2015,” said Terry Zhou, an analyst with UOB Kay Hian Ltd. in Shanghai.

At a meeting in Vienna yesterday, the 12-nation group ignored the biggest slump in oil since the global recession to keep its output target unchanged. The decision leaves oil prices to respond to a surplus that Venezuela yesterday estimated at 2 million barrels a day, equal to or more than the production of six OPEC nations.

Other Asian producers flagged by Bernstein’s Beveridge as particularly sensitive to oil price declines include Japan’s Inpex Corp., which fell as much as 6.6 percent in Tokyo, and Australia’s Santos Ltd., down 10 percent in Sydney.

PetroChina’s smaller state-owned rivals, China Petroleum & Chemical Corp. and Cnooc Ltd., dropped as much as 4.8 percent and 6.8 percent respectively.

— With assistance by Helen Yuan

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE