PetroChina profit almost triples to Dh13bn

Results would have been even better bar impairments that more than doubled as the Beijing-based company wrote down the value of petrochemical and pipeline assets

A gas injection site of Xiangguosi underground storage run by PetroChina in Chongqing, China. The country's biggest energy firm was hit by impairments. Chen Aizhu/Reuters

PetroChina, the country’s biggest oil and gas company, said profit almost tripled last year as earnings from exploration and production overcame asset writedowns and losses from importing natural gas.

Net income jumped to 22.8 billion yuan (Dh13.22bn) in 2017, it said in a statement to the Hong Kong exchange Thursday. Impairments more than doubled as the Beijing-based company wrote down the value of petrochemical and pipeline assets. Spending, which rose for the first time in five year, overshot the company’s target by 13 per cent.

“Profit could have been very impressive if not for the large asset writedowns,” said Laban Yu, a Hong Kong-based analyst at Jefferies. “Efficiency still looks to be an issue, as total production has fallen even as spending exceeded the budget it set at the beginning of last year.”

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PetroChina is recovering from its worst-ever performance the previous year as a rally in oil prices bolstered its exploration and production segment. Global benchmark Brent crude averaged 21 per cent higher in 2017 than a year ago as Opec and its allies cut output. And while the state-owned giant took a 23.9bn yuan hit from reselling imported gas domestically below cost, those losses are seen having peaked.

As the country’s biggest natural gas producer and importer, PetroChina is key to President Xi Jinping’s campaign to replace coal with the cleaner-burning fuel. The nation’s gas use surged 15 per cent last year, with imports satisfying around 40 per cent of that demand, pushing up global prices this winter while leaving some parts of the country short of supply.

PetroChina’s profit compares with the 23.1bn yuan median estimate in a Bloomberg survey of 10 analysts. The company had forecast as much as 23.9bn yuan in January.

The company will hand out a full-year dividend of 0.06074 yuan per share, compared with a 0.036 yuan forecast based on data compiled by Bloomberg. The stock rose 1.1 per cent to HK$5.53 before the earnings announcement, taking gains this year to 1.5 percent.

PetroChina also reported revenue rose about 25 per cent to 2.02 trillion yuan while oil and gas output fell 0.6 per cent to 1.46 billion barrels of oil equivalent.

Crude output dropped 3.7 per cent to 887 million barrels and the company set its 2018 target at 888.2 million barrels.

Natural gas output up 4.5 per cent to 3.42 trillion cubic feet with a 2018 target at 3.54 trillion cu ft.