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PetroChina (PTR) Wraps Up 2016 with Record Low Earnings
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Chinese energy giant PetroChina Co. Ltd. announced 2016 earnings of RMB 7,900 million or RMB 0.04 per diluted share – the lowest on record –compared with RMB 35,653 million or RMB 0.19 per diluted share a year earlier.
Earnings per ADR came in at 22 cents, nowhere near the Zacks Consensus estimate of 75 cents. Moreover, China’s dominant oil and gas producer’s total revenue for the year fell 6% from 2015 to RMB 1,616,903 million.
The negative comparisons can be primarily attributable to the multi-year collapse in oil prices, which pummeled PetroChina's biggest unit – exploration and production – to a meagre profit.
PetroChina followed another big energy name from the country – CNOOC Ltd. (CEO - Free Report) – in reporting dismal results. However, the third state-backed oil and gas firm, Sinopec saw its profits soar on refining gains.
Despite the poor showing, PetroChina has decided to follow its state-owned rivals in boosting 2017 capital expenditure. The group pegged its 2017 capital budget at RMB 191.3 billion, up 11% from what it invested in 2016 as it focuses to cash in on the recovery in crude prices. PetroChina also expects oil production to fall around 4.5% this year.
12-Month Segment Performance
Upstream: PetroChina, one of the world's largest oil company by market value and 60% the size of ExxonMobil Corp. (XOM - Free Report) , posted disappointing upstream output during the twelve months ended Dec 31, 2016. In particular, crude oil output – accounting for 63% of the total – fell 5.3% from the year-ago period to 920.7 million barrels (MMBbl). This was partly offset by marketable natural gas output, which was up 4.6% to 3,274.5 billion cubic feet (Bcf). As a result, PetroChina’s total production of oil and natural gas declined 1.8% year over year to 1,466.6 million barrels of oil equivalent.
Moreover, average realized crude oil price during 2016 was $37.99 per barrel, representing a 21.4% decline from the year-ago period. This affected the upstream (or exploration & production) segment results, which posted an operating income of just RMB 3,148 million compared to a much larger operating profit of RMB 33,961 million in 2015.
Downstream: The Beijing-based company’s ‘Refining & Chemicals’ business generated an operating income of RMB 39,026 million. This marks a significant increase from the year-earlier period earnings of RMB 4,883 million. The improvement in the downstream division was due to cost control initiatives, higher share of high valued-added chemical products and operational flexibility to adjust to market conditions.
PetroChina’s refinery division processed 953.3 MMBbl of crude oil during the twelve-month period, down 4.5% from 2015. The company produced 9.078 million tons of synthetic resin in the period (a rise of 10.5% year over year), besides manufacturing 5.589 million tons of ethylene (up 11.1%). It also produced 86.022 million tons of gasoline, diesel and kerosene during the period against 91.933 million tons a year earlier.
Natural Gas & Pipelines: Revenue fell 12% to RMB 247,477 million on a sharp drop in natural gas prices, which was partly offset by improved pipeline transportation profitability. To combat the pricing woes, the Chinese behemoth enforced strict control in natural gas import costs, improved operating efficiency and adjusted its marketing strategy.
However, PetroChina lost money to the tune of RMB 14,884 million on the sales of imported natural gas and liquefied natural gas (LNG) from Central Asia and Burma. This pulled down the Zacks Rank #5 (Strong Sell) group’s natural gas business’ income to RMB 17,885 million in 2016, a substantial decline from the year-earlier profit of RMB 51,231 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marketing: In marketing operations, the state-owned group sold 159.11 million tons of gasoline, diesel and kerosene during Jan–Dec 2016, a modest decrease of 0.6% year over year. Lower volumes were accompanied by a decrease in product prices due to which sales for the division were down 6% to RMB 1,301,616 million.
However, PetroChina was able to counter the adverse factors – slow domestic refined products demand growth and fierce competition – by exploiting numerous marketing channels, optimizing the sales structure and utilizing international trade practices to its benefit. This meant that the segment swung to a profit of RMB 11,048 million from an operating loss of RMB 500 million last year.
Liquidity & Capital Expenditure
At the end of 2016, the stock’s cash balance was RMB 97,931 million, while cash flow from operating activities was RMB 265,179 million. Capital expenditure for the year was RMB 172,386 million, down 15% from the year-ago level.
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PetroChina (PTR) Wraps Up 2016 with Record Low Earnings
Chinese energy giant PetroChina Co. Ltd. announced 2016 earnings of RMB 7,900 million or RMB 0.04 per diluted share – the lowest on record –compared with RMB 35,653 million or RMB 0.19 per diluted share a year earlier.
Earnings per ADR came in at 22 cents, nowhere near the Zacks Consensus estimate of 75 cents. Moreover, China’s dominant oil and gas producer’s total revenue for the year fell 6% from 2015 to RMB 1,616,903 million.
The negative comparisons can be primarily attributable to the multi-year collapse in oil prices, which pummeled PetroChina's biggest unit – exploration and production – to a meagre profit.
PetroChina followed another big energy name from the country – CNOOC Ltd. (CEO - Free Report) – in reporting dismal results. However, the third state-backed oil and gas firm, Sinopec saw its profits soar on refining gains.
Despite the poor showing, PetroChina has decided to follow its state-owned rivals in boosting 2017 capital expenditure. The group pegged its 2017 capital budget at RMB 191.3 billion, up 11% from what it invested in 2016 as it focuses to cash in on the recovery in crude prices. PetroChina also expects oil production to fall around 4.5% this year.
12-Month Segment Performance
Upstream: PetroChina, one of the world's largest oil company by market value and 60% the size of ExxonMobil Corp. (XOM - Free Report) , posted disappointing upstream output during the twelve months ended Dec 31, 2016. In particular, crude oil output – accounting for 63% of the total – fell 5.3% from the year-ago period to 920.7 million barrels (MMBbl). This was partly offset by marketable natural gas output, which was up 4.6% to 3,274.5 billion cubic feet (Bcf). As a result, PetroChina’s total production of oil and natural gas declined 1.8% year over year to 1,466.6 million barrels of oil equivalent.
Moreover, average realized crude oil price during 2016 was $37.99 per barrel, representing a 21.4% decline from the year-ago period. This affected the upstream (or exploration & production) segment results, which posted an operating income of just RMB 3,148 million compared to a much larger operating profit of RMB 33,961 million in 2015.
Downstream: The Beijing-based company’s ‘Refining & Chemicals’ business generated an operating income of RMB 39,026 million. This marks a significant increase from the year-earlier period earnings of RMB 4,883 million. The improvement in the downstream division was due to cost control initiatives, higher share of high valued-added chemical products and operational flexibility to adjust to market conditions.
PetroChina’s refinery division processed 953.3 MMBbl of crude oil during the twelve-month period, down 4.5% from 2015. The company produced 9.078 million tons of synthetic resin in the period (a rise of 10.5% year over year), besides manufacturing 5.589 million tons of ethylene (up 11.1%). It also produced 86.022 million tons of gasoline, diesel and kerosene during the period against 91.933 million tons a year earlier.
Natural Gas & Pipelines: Revenue fell 12% to RMB 247,477 million on a sharp drop in natural gas prices, which was partly offset by improved pipeline transportation profitability. To combat the pricing woes, the Chinese behemoth enforced strict control in natural gas import costs, improved operating efficiency and adjusted its marketing strategy.
However, PetroChina lost money to the tune of RMB 14,884 million on the sales of imported natural gas and liquefied natural gas (LNG) from Central Asia and Burma. This pulled down the Zacks Rank #5 (Strong Sell) group’s natural gas business’ income to RMB 17,885 million in 2016, a substantial decline from the year-earlier profit of RMB 51,231 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marketing: In marketing operations, the state-owned group sold 159.11 million tons of gasoline, diesel and kerosene during Jan–Dec 2016, a modest decrease of 0.6% year over year. Lower volumes were accompanied by a decrease in product prices due to which sales for the division were down 6% to RMB 1,301,616 million.
However, PetroChina was able to counter the adverse factors – slow domestic refined products demand growth and fierce competition – by exploiting numerous marketing channels, optimizing the sales structure and utilizing international trade practices to its benefit. This meant that the segment swung to a profit of RMB 11,048 million from an operating loss of RMB 500 million last year.
Liquidity & Capital Expenditure
At the end of 2016, the stock’s cash balance was RMB 97,931 million, while cash flow from operating activities was RMB 265,179 million. Capital expenditure for the year was RMB 172,386 million, down 15% from the year-ago level.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>