PetroChina, Sinopec third quarter profits hit by oil price rout

Earnings at China's two main petroleum companies were battered by low oil prices in the third quarter. PetroChina, the nation's largest oil and gas producer, warned of more trouble if oil prices remain low, after posting a steep 81.4 per cent drop in third-quarter profit. Rival China Petroleum & Chemical (Sinopec), meanwhile, posted a 91.5 per cent drop in quarterly profit.

Net profit for the three months to September plunged to 5.2 billion yuan (HK$6.3 billion) from 27.92 billion yuan in the same period last year, as turnover fell 28.8 per cent to 427.48 billion yuan, PetroChina said in a filing yesterday.

"If [oil] prices in [the year's] fourth quarter still remain at a low level, the realised price for crude oil of the company is expected to decrease a lot ... and the net profit ... of the company [for the whole year] is also expected to decrease substantially," it said.

Profit for the year's first nine months dropped 68.1 per cent year on year to 30.6 billion yuan, led by a 68 per cent decline in its oil and gas production division's operating profit to 46.5 billion yuan.

A 48.8 per cent year-on-year drop in its nine-month average crude oil selling price to US$51.2 a barrel more than offset a 3.6 per cent rise in oil and gas output and the benefit of a 3.3 per cent fall in cash-based operating cost.

Sales and administration costs fell 4.8 per cent year on year to 75.7 billion yuan in the nine months.

"With the disappointing cost control and looming gas price cut, there remains little to excite about the stock," wrote Sanford Bernstein senior analyst Neil Beveridge in a note, adding its third-quarter profit was 52 per cent below analysts' average estimate.