PetroChina Posts First-Ever Quarterly Loss Amid Oil's Crash

  • Loss is the first since PetroChina's public listing in 2000
  • Oil, gas output forecast to fall for first time in 17 years

PetroChina Co. posted its first-ever quarterly loss as falling prices for global crude and domestic gas wiped out earnings.

China’s biggest oil and gas producer reported a 13.8 billion yuan ($2.1 billion) loss in the three months ended March 31 from a 6.15 billion yuan profit a year ago, Beijing-based PetroChina said Thursday in a statement to the Hong Kong stock exchange. It’s the first quarterly loss since the company was listed in 2000.

PetroChina’s oil and gas output is expected to fall for the first time in 17 years in 2016 as it shuts high-cost fields that have “no hope” of making profits at current prices, President Wang Dongjin said last month in Hong Kong. China’s decision to cut natural gas prices for industrial users in November further reduced margin in PetroChina’s gas-wholesale business.

“Significant losses in the upstream sector are being partially offset by much better performance in refining, which was helped by the windfall gains for gasoline and diesel prices,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co. “Higher oil prices will certainly benefit the oil company in the second quarter. It’s still got a lot to do with cutting cost further.”

Average realized crude price fell to $27.27 a barrel during the quarter. Brent oil, the global benchmark, averaged about $35 a barrel in the first quarter, from about $55 a year ago. Prices hit a 12-year low in January. While the crash in prices hurt the exploration and production division of the company, cheaper oil was a boon for the company’s refining operations.

Refining Gains

The company’s refining and chemicals division swung to an operating profit of 11.5 billion yuan during the quarter, from a loss of 3.8 billion yuan the previous year. Capital spending fell almost 6 percent to 50.5 billion yuan, while revenue dropped 14 percent to 352.8 billion yuan.

"Gains in refining and chemical weren’t enough to offset weaker oil prices, which dragged exploration and production into losses,” said Lu Wang, a Bloomberg Intelligence analyst in Hong Kong. “Ample gas supply this year may encourage a gas price cut in the second half of the year, which is likely to be the biggest headwind for PetroChina. "

Oil and gas output rose 2.6 percent 391.3 million barrels of oil equivalent in the first quarter, boosted by a 22 percent jump in overseas production. Crude output rose 1.4 percent to 242.7 million barrels, while marketable natural gas production rose 4.8 percent to 891.4 billion cubic feet.

The company’s shares in Hong Kong closed 1.9 percent higher at HK$5.92, rising for a sixth day to the highest since November, before the earnings were released.

— With assistance by Guo Aibing, and Jing Yang

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