HONG KONG, Aug 23 (Reuters) - PetroChina Co. Ltd. (0857.HK: Quote, Profile, Research) beat first-half earnings forecasts as an unexpected one-off gain offset lower oil prices and higher costs, and the company foresaw a better second half as prices and output rebound.
The largest of China's energy triumvirate, which includes top Asian oil refiner Sinopec Corp. (0386.HK: Quote, Profile, Research) (SNP.N: Quote, Profile, Research) (600028.SS: Quote, Profile, Research) and offshore specialist CNOOC Ltd. (0883.HK: Quote, Profile, Research) (CEO.N: Quote, Profile, Research), is heeding calls to wean itself off a dependency on imports from the volatile Middle East.
PetroChina said on Thursday it was making progress with securing resources abroad, having struck a production-sharing deal with Turkmenistan. It plans to build a pipeline to pump 30 billion cubic metres of gas a year from the central Asian state.
The company (PTR.N: Quote, Profile, Research) said its Turkmen output would reach 13 bcm a year and that it would buy a further 17 bcm a year from Turkmenistan for 30 years, although declining to give the price. It is examining the idea of extending the pipeline as far as Shanghai in the east and Shenzhen in southern China, or even Hong Kong.
Its net profit rose to 81.83 billion yuan ($10.8 billion) for January to June, from 80.68 billion a year earlier and beat an average forecast of 76.7 billion in a Reuters poll of six analysts.
Profit was boosted by a 4.482 billion yuan reduction in tax charges in the first six months because of a change in tax rules. PetroChina also paid 14.9 billion yuan in a windfall tax during the period.
Citigroup analyst Graham Cunningham said in a note that excluding the windfall tax, exploration and production costs fell to $20.8 per barrel from $22.3 in the same period of 2006.
Despite that cost control and a good performance in the refining, chemicals and pipeline divisions, he still saw few share-price drivers for PetroChina in the near term.REBOUNDING CRUDE
Resurgent crude prices (CLc1: Quote, Profile, Research), which peaked at a record $78.77 at the beginning of this month, may give the firm some uplift in the second half, compared with the first half when they reached a 19-month low in January below $50 a barrel.
To fill its expansion war chest, the world's second-largest oil and gas producer plans to sell up to 4 billion shares in Shanghai, potentially raising 42 billion yuan ($5.5 billion) based on its Hong Kong share price on Tuesday.
Analysts hope acquisitions will help revitalise its output and earnings growth. The Beijing-backed firm pumped 3.7 percent more oil and gas in the first six months of this year, lagging its own target of 5.3 percent growth for the full year.
But Chairman Jiang Jiemin expected the pace of crude oil production to accelerate in the second half, saying its 0.1 percent output expansion in the first six months was an anomaly.
In May, PetroChina surprised the market when it said its Jidong Nanpu discovery in the shallow waters off Bohai Bay contained proven reserves of 405.07 million tonnes of oil equivalent, nearly 3 billion barrels.
But the Chinese agency that certifies reserves revealed this month that economically recoverable oil reserves at the field -- hailed as the country's biggest discovery in decades -- came to only about 86.6 million tonnes, or 632 million barrels.
The new Nanpu figures mean a recovery rate of just 19 percent by economic standards, sharply lower than a 40 percent target the company gave months ago.
Warren Buffett, the world's second-richest person, sold 16.9 million PetroChina shares in July, trimming his share of freely tradable shares to 10.96 percent from 11.05 percent.He remains the firm's No.2 shareholder, and Jiang said he was unfazed by Buffett's sale of some shares.
"Warren Buffett has given much support to our company and we really appreciate that support. But if he sells more shares, I think there will be lots of people prepared to buy," he told a news briefing.
Shares in PetroChina rose 4.5 percent in January-June, lagging Sinopec's and CNOOC's 20 percent gain and a 16 percent rise in the index of Chinese stocks listed in Hong Kong (.HSCE: Quote, Profile, Research).
The firm trades at above 12 times forecast earnings, in line with Exxon Mobil's (XOM.N: Quote, Profile, Research) 12 times and BP's (BP.L: Quote, Profile, Research) 10 times. ($1=7.591 Yuan)
For a full first-half earnings statement, please click on http://main.ednews.hk/listedco/listconews/sehk/20070823/LTN2007082316