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PetroChina (PTR) Q1 Earnings Show Signs of a Turnaround

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Chinese energy giant PetroChina Company Limited (PTR - Free Report) announced first-quarter 2021 earnings of RMB 27.7 billion or RMB 0.151 per diluted share against loss of RMB 16.2 billion or RMB 0.089 per diluted share a year earlier.

Earnings per ADR came in at around $2.33. Moreover, China’s dominant oil and gas producer’s total revenues for the quarter rose 8.4% from the year-ago period to RMB 551.9 billion.

One of China’s big three oil giants, the other two being Sinopec (SNP - Free Report) and CNOOC Limited (CEO - Free Report) , PetroChina’s results were buoyed by a rebound in commodity prices and domestic fuel demand, in tandem with the lower cost of imported natural gas.

 

PetroChina Company Limited Price, Consensus and EPS Surprise

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 marginally higher upstream output during the three months ended Mar 31, 2021. Crude oil output – accounting for 53% of the total – fell 4.9% from the year-ago period to 221.4 million barrels. However, this was more than offset by marketable natural gas output that was up by 8% to 1,173.9 billion cubic feet. As a result, PetroChina’s total production of oil and natural gas edged up 0.8% year over year to 417.1 million barrels of oil equivalent.

Despite producing slightly more and keeping a tight leash on oil and gas lifting cost, that decreased 1% on a per unit basis compared with the same period of last year, the upstream (or exploration & production) segment posted an operating income of RMB 12.9 billion, declining 13.4% from the year-ago profit of RMB 14.9. This was primarily due to the lower average realized crude oil price in China (down 1.4% year over year to $55.62 per barrel) and the increase in depreciation and depletion costs.

Nevertheless, on a bullish note, the average realized crude oil price for the energy titan during the first quarter of 2021 was $55.70 per barrel, 2.4% higher than the year-ago period. Natural gas realizations – at $6.56 per thousand cubic feet – increased 28.6%.

Downstream: The Beijing-based company’s Refining & Chemicals business recorded an operating profit of RMB 14.7 billion as against the year-earlier period loss of RMB 8.7 billion. The turnaround in the downstream division result was due to robust margins, higher refined and chemical products sales, and drop in refinery cash processing costs.

PetroChina’s refinery division processed 298 MMBbl of crude oil during the three-month period, up 7.8% from 2020. The company produced 2,642 thousand tons of synthetic resin in the period (a rise of 6.8% year over year), besides manufacturing 1,609 thousand tons of ethylene (up 4.5%). It also produced 26,946 thousand tons of gasoline, diesel and kerosene during the period against 25,208 thousand tons a year earlier.

Natural Gas & Pipelines: Higher sales volume and lower cost of imported natural gas and liquefied natural gas from Central Asia and Myanmar lifted the Chinese behemoth’s segment earnings.

As a result of these factors, the group’s natural gas business earned RMB 18.5 billion in the period under review, surging from the year-earlier profit of RMB 11.4 billion.

Marketing: In marketing operations, the state-owned group sold 36,248 thousand tons of gasoline, diesel and kerosene during the quarter, up 2.2% year over year. The effects of higher volumes were magnified by the strength in refined products gross profit. Consequently, PetroChina posted an income of RMB 3.3 billion against a loss of RMB 16.6 billion recorded in the same period last year.

Liquidity & Capital Expenditure

At the end of the quarter, the group’s cash balance was RMB 111.8 billion, while cash flow from operating activities was RMB 3.4 billion. Capital expenditure for the three months reached RMB 37 billion.

Guidance

For 2021, the Chinese energy giant reiterated its capital spending plans of RMB 239 billion. PetroChina believes that it can generate 1.5% production growth and 5.9% increase in crude processing volumes this year.

Zacks Rank & Stock Pick

PetroChina currently carries a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Apart from PetroChina, investors interested in the energy might look at Suncor Energy (SU - Free Report) . The company also sports a Zacks Rank of 1.

Suncor Energy has an expected earnings growth rate of 248.18% for the current year.

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