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PetroChina (PTR) Q3 Earnings Jump on Pipeline Spin-Off Gains
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PetroChina Company Limited recently delivered impressive third-quarter 2020 earnings. However, the robust results could not drive the stock movement much so far as there has been no major price change since the earnings release on Oct 29.
PetroChina announced third-quarter 2020 earnings of RMB 40.1 billion or RMB 0.219 per diluted share compared to profit of RMB 8.8 billion or RMB 0.048 per diluted share a year earlier. Earnings per ADR came in at $3.17.
One of China’s big three oil giants, the other two being Sinopec and CNOOC Limited (CEO - Free Report) , PetroChina’s results were buoyed by higher production, a drop in lifting costs and gains from the spin-off of its pipeline and storage assets.
However, China’s dominant oil and gas producer’s total revenues for the quarter fell 19.6% from the year-ago period to RMB 497.1 billion due to lower commodity prices and a decline in marketing sales volumes.
Meanwhile, the Chinese energy giant reiterated its ambitious plan to achieve near net-zero greenhouse gas emissions by 2050. The company also promised to increase its investments in renewable energy during 2021-2025.
PetroChina Company Limited Price, Consensus and EPS Surprise
Upstream: PetroChina posted higher upstream output during the nine months ended Sep 30, 2020. Crude oil output — accounting for 58% of the total — rose 2.7% from the year-ago period to 701.2 million barrels. Meanwhile, marketable natural gas output increased 6.5% to 3,079.8 billion cubic feet. As a result, PetroChina’s total production of oil and natural gas increased 4.3% year over year to 1,214.6 million barrels of oil equivalent. Of the total, domestic output contributed 1,044.7 million barrels of oil equivalent (up 4% year over year), or roughly 86%.
However, average realized crude oil price during the first three quarters of 2020 was $40.06 per barrel, 34.9% lower than the year-ago period. Natural gas realizations decreased too by 16% year over year to $4.61 per thousand cubic feet.
As a result of lower commodity prices, the upstream (or exploration & production) segment posted an operating income of RMB 20 billion, plunging 74% from the year-ago profit of RMB 76.9 billion despite production growth. A tight leash on oil and gas lifting cost, which decreased 10.7% on a per unit basis compared with the same period of last year, partly supported results.
Downstream: The Beijing-based company’s Refining and Chemicals business recorded an operating loss of RMB 1.7 billion against the year-earlier period’s earnings of RMB 9 billion. The decline in the downstream division’s result was due to depressed domestic product demand, a lower refined products margin and a drop in prices, which more than offset the impacts of strict cost control, optimized resource allocation and increased chemical activities.
PetroChina’s refinery division processed 877.3 MMBbl of crude oil during the nine-month period, down 3.2% from 2019. The company produced 7,637 thousand tons of synthetic resin in the period (up 8.8% year over year), besides manufacturing 4,714 thousand tons of ethylene (up 9.9%). It also produced 80,192 thousand tons of gasoline, diesel and kerosene during the period against 86,583 thousand tons a year earlier.
Natural Gas and Pipeline: Profit from pipeline assets restructuring aided the Chinese behemoth’s earnings in this segment. Further, while PetroChina lost money to the tune of RMB 17.5 billion on sales of imported natural gas and LNG from Central Asia and Myanmar, the losses were RMB 4.2 billion narrower than the first nine months of 2019 on the back of lower procurement cost and volume.
As a result of these factors, the group’s natural gas and pipeline business earned RMB 57.7 billion in the period under review, surging from the year-earlier profit of RMB 22 billion.
Marketing: In marketing operations, the state-owned group sold 120,645 thousand tons of gasoline, diesel and kerosene during the nine-month period, down 13% year over year. The effects of lower volumes were aggravated by the dip in sales price. Consequently, PetroChina posted a loss of RMB 4.9 billion compared to a narrower loss of RMB 1.4 billion recorded in the same period last year.
Liquidity & Capital Expenditure
As of Sep 30, the group’s cash balance was RMB 75.5 billion, while cash flow from operating activities for the first nine months of 2020 was RMB 163.3 billion. Capital expenditure for the first three quarters was RMB 160.8 billion, down 7.8% from the year-ago level.
Zacks Rank & Stock Picks
PetroChina, which aims to trim its 2020 capital spending by 22-25% from last year in response to the bearish energy environment, carries a Zacks Rank #3 (Hold).
A better-ranked player in the energy space is Sunoco LP (SUN - Free Report) which carries a Zacks Rank #1 (Strong Buy).
Over the past 30 days, Sunoco has seen the Zacks Consensus Estimate for 2020 improve 13.8%.
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PetroChina (PTR) Q3 Earnings Jump on Pipeline Spin-Off Gains
PetroChina Company Limited recently delivered impressive third-quarter 2020 earnings. However, the robust results could not drive the stock movement much so far as there has been no major price change since the earnings release on Oct 29.
PetroChina announced third-quarter 2020 earnings of RMB 40.1 billion or RMB 0.219 per diluted share compared to profit of RMB 8.8 billion or RMB 0.048 per diluted share a year earlier. Earnings per ADR came in at $3.17.
One of China’s big three oil giants, the other two being Sinopec and CNOOC Limited (CEO - Free Report) , PetroChina’s results were buoyed by higher production, a drop in lifting costs and gains from the spin-off of its pipeline and storage assets.
However, China’s dominant oil and gas producer’s total revenues for the quarter fell 19.6% from the year-ago period to RMB 497.1 billion due to lower commodity prices and a decline in marketing sales volumes.
Meanwhile, the Chinese energy giant reiterated its ambitious plan to achieve near net-zero greenhouse gas emissions by 2050. The company also promised to increase its investments in renewable energy during 2021-2025.
PetroChina Company Limited Price, Consensus and EPS Surprise
PetroChina Company Limited price-consensus-eps-surprise-chart | PetroChina Company Limited Quote
Segment Performance
Upstream: PetroChina posted higher upstream output during the nine months ended Sep 30, 2020. Crude oil output — accounting for 58% of the total — rose 2.7% from the year-ago period to 701.2 million barrels. Meanwhile, marketable natural gas output increased 6.5% to 3,079.8 billion cubic feet. As a result, PetroChina’s total production of oil and natural gas increased 4.3% year over year to 1,214.6 million barrels of oil equivalent. Of the total, domestic output contributed 1,044.7 million barrels of oil equivalent (up 4% year over year), or roughly 86%.
However, average realized crude oil price during the first three quarters of 2020 was $40.06 per barrel, 34.9% lower than the year-ago period. Natural gas realizations decreased too by 16% year over year to $4.61 per thousand cubic feet.
As a result of lower commodity prices, the upstream (or exploration & production) segment posted an operating income of RMB 20 billion, plunging 74% from the year-ago profit of RMB 76.9 billion despite production growth. A tight leash on oil and gas lifting cost, which decreased 10.7% on a per unit basis compared with the same period of last year, partly supported results.
Downstream: The Beijing-based company’s Refining and Chemicals business recorded an operating loss of RMB 1.7 billion against the year-earlier period’s earnings of RMB 9 billion. The decline in the downstream division’s result was due to depressed domestic product demand, a lower refined products margin and a drop in prices, which more than offset the impacts of strict cost control, optimized resource allocation and increased chemical activities.
PetroChina’s refinery division processed 877.3 MMBbl of crude oil during the nine-month period, down 3.2% from 2019. The company produced 7,637 thousand tons of synthetic resin in the period (up 8.8% year over year), besides manufacturing 4,714 thousand tons of ethylene (up 9.9%). It also produced 80,192 thousand tons of gasoline, diesel and kerosene during the period against 86,583 thousand tons a year earlier.
Natural Gas and Pipeline: Profit from pipeline assets restructuring aided the Chinese behemoth’s earnings in this segment. Further, while PetroChina lost money to the tune of RMB 17.5 billion on sales of imported natural gas and LNG from Central Asia and Myanmar, the losses were RMB 4.2 billion narrower than the first nine months of 2019 on the back of lower procurement cost and volume.
As a result of these factors, the group’s natural gas and pipeline business earned RMB 57.7 billion in the period under review, surging from the year-earlier profit of RMB 22 billion.
Marketing: In marketing operations, the state-owned group sold 120,645 thousand tons of gasoline, diesel and kerosene during the nine-month period, down 13% year over year. The effects of lower volumes were aggravated by the dip in sales price. Consequently, PetroChina posted a loss of RMB 4.9 billion compared to a narrower loss of RMB 1.4 billion recorded in the same period last year.
Liquidity & Capital Expenditure
As of Sep 30, the group’s cash balance was RMB 75.5 billion, while cash flow from operating activities for the first nine months of 2020 was RMB 163.3 billion. Capital expenditure for the first three quarters was RMB 160.8 billion, down 7.8% from the year-ago level.
Zacks Rank & Stock Picks
PetroChina, which aims to trim its 2020 capital spending by 22-25% from last year in response to the bearish energy environment, carries a Zacks Rank #3 (Hold).
A better-ranked player in the energy space is Sunoco LP (SUN - Free Report) which carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 30 days, Sunoco has seen the Zacks Consensus Estimate for 2020 improve 13.8%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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