Shares in Citic Resources Holdings, the resource flagship of state-backed conglomerate Citic Group, slumped 5.9 per cent yesterday after first-half output of its mainstay oil field in Kazakhstan fell short of expectations.
While the disappointing production prompted a major brokerage to cut its profit forecast on the company, Citic Resources has maintained its full-year output target, saying that it planned to take up the slack in the second half.
Kazakhstani state oil and gas firm Kazmunaigaz last Friday announced that its 50 per cent-held Karazhanbasmunai oil field produced 430,000 tonnes of oil in this year's first six months. Citic Resources owns the other half of the field.
The amount, which translates to 34,877 barrels a day, is lower than the company's estimate of 40,000 barrels a day for this year, according to a research report by Citi analyst Howard Pang.
He said the shortfall meant the field would need to pump 45,400 barrels a day in the second half, 31 per cent more than the first half, to achieve its 40,000 barrels a day target.
'Given that its oil business drives more than 68 per cent of this year's earnings, we would need to get more visibility over the operations in Kazakhstan before turning more positive,' Mr Pang wrote.
He also said it would be 'challenging' for the company to reach its target of keeping its total production costs at not more than US$31 a barrel under the existing inflationary environment.