PetroChina pays out lucky 8s as oil’s rally doubles profits

Bloomberg

PetroChina Co. is rewarding shareholders with a higher — and symbolic — payout after its best half-year profit in more than three years.
The nation’s biggest oil and gas producer raised total dividends for the first six months by almost one-third to 0.0888 yuan per share. The lucky payout — eight is widely considered an auspicious number in China like seven is in the US — rounds out a banner earnings season for China’s three oil majors as crude’s rally allowed them to return more money to shareholders.
PetroChina’s earnings follow higher results from state-owned peers China Petroleum & Chemical Corp. and Cnooc Ltd., driven by a global crude price rally and deep cost cuts. Benchmark Brent crude averaged 35 percent higher in the first six months at $71 a barrel.
“The recovery of crude price was the biggest driver for its strong performance,” said Tian Miao, a Beijing-based analyst at Everbright Sun Hung Kai Co. “PetroChina may continue to benefit from a rise in the price in the second half.”
While PetroChina did raise its dividend, the increase trailed its peers and only used up about one-third of its free cash flow, according to Neil Beveridge at Sanford C. Bernstein Co. in Hong Kong. China Petroleum, known as Sinopec, boosted dividends by 60 percent to 0.16 yuan a share when it announced record earnings. Cnooc will pay HK$0.30 a share, 50 percent more than the previous year. Shares on Friday fell 4.5 percent to HK$5.80 in Hong Kong before paring losses to 3.5 percent, compared with a 1.4 percent slide in the city’s Hang Seng Index.

Marching Orders
Parent China National Petroleum Corp., along the other two state giants, are under a mandate by President Xi Jinping to ramp up domestic oil and gas output amid a trade dispute that threatens to curb shipments from the US. For the first six months of the year, oil and natural gas output increased 1.5 percent to 736.3 million barrels of oil equivalent from a year ago.
PetroChina is “born with a mission” to produce oil and gas for China and will “spare no efforts” in fulfilling that goal, Vice Chairman Zhang Jianhua said at a briefing in Hong Kong. The company aims to expand natural gas output annually by 4 to 5 percent, and oil production by 1 percent, from next year, he said.
PetroChina said net income jumped to $3.96 billion in the first six months, from 12.7 billion a year ago, according to a filing to the Hong Kong stock exchange. That’s the highest semi-annual profit since the second half of 2014, according to data compiled by Bloomberg.
The company had already flagged last month that profits would more than double, citing improved operations and higher realised prices of crude oil, products and natural gas.
The Beijing-based energy giant will pay out an interim dividend of 0.0666 yuan per share, as well as a special dividend of 0.0222 yuan. Last year, it declared a total of 0.069 yuan a share for the first half.
While the company’s dominance in the world’s top energy user allows it to better benefit from higher oil prices and a nationwide drive to boost gas demand, it also bears the burden of having to resell overseas gas supply domestically at lower
regulated rates.