PetroChina profits boosted by oil price

Resumen de Prensa            Enervía, jueves, 28 agosto 2003

FUENTE: Financial times


PetroChina, China's leading oil and gas producer, on Wednesday said its net profits doubled in the first half boosted by improved efficiency and a jump in world oil prices.


The company said net profit was a record Rmb38.6bn ($4.66m), slightly higher than analysts' consensus expectation of Rmb35bn and more than double last year's first-half net profit of Rmb19.1bn.

A 40 per cent rise in the realisable oil price from US$20.11 a barrel to $28.08 a barrel contributed directly to the company's 37 per cent year-on-year revenue growth during the half.

The volume of oil and gas production - which accounts for more than 90 per cent of operating profits - was only 2 per cent higher at 444.7m barrels of oil equivalent.

Improved efficiency - brought about partly by staff cuts and a performance-based executive compensation scheme - allowed the company to take advantage of the oil price bonanza.

The largely state-owned behemoth became one of the first partial privatisations in China when it listed a 10 per cent stake on the Hong Kong and New York stock exchanges in April 2000.

Since listing, the company has responded to concerns of sceptical investors by surpassing its promise of laying off 50,000 workers by 2005 and by laying off 60,000 workers by last year.

It has also implemented a performance-based compensation scheme for its top 300
executives - a highly unusual move for state-controlled entities.

These moves contributed to the jump in year-on-year operating margins in the first half, from 28.6 per cent to 37.2 per cent.

"[PetroChina benefited from] not just a higher oil price but from a more efficiently managed operation," said William Kaye, senior managing director of The Pacific Group, the Hong Kong-based hedge fund. "You don't often see this kind of radical surgery in state-owned operations.

"That plus the incentive scheme do put them in a small list of important Chinese companies that have remade themselves."

The company said its controversial east-west natural gas pipeline - stretching 4,000km from Xinjiang province in the north-west to Shanghai on the eastern seaboard - was on track to begin operations by next year. It estimated output of 2.1bn cubic metres by the end of next year, rising to 5bn cubic metres in 2005.

The company said it expected record full-year profits even with a conservative oil price estimate of US$24 a barrel for the second half.

It also announced an interim dividend of Rmb0.098841 a share, maintaining the company's commitment to a 40-50 per cent dividend payout ratio.