Chinese oil producers were hit hard by weak crude oil prices as the latest financial reports of China's top oil firms revealed a plunge in earnings for the first nine months of the year.
PetroChina, China's largest oil and gas producer, saw its net profits slump 68.1 percent year on year from January to September. In the meantime, Sinopec Corp. China's top refiner, saw its net profits nearly halved.
--Profits plunge in first 3 quarters
PetroChina's net profits slumped 81.4 percent year on year in the third quarter of 2015 to 5.195 billion yuan under the International Financial Reporting Standards (IFRS). Its net profits fell 81.4 percent to 5.194 billion yuan under the Chinese Accounting Standards (CAS).
In the first three quarters of 2015, PetroChina's net profits decreased 68.1 percent year on year to 30.601 billion yuan under the IFRS and 30.598 billion yuan under the CAS. Sinopec Corp.'s net profits fell 47.82 percent year on year in the first nine months of 2015 to 27.030 billion yuan under the IFRS.
In accordance with the CAS, the company's net profits stood at 25.848 billion yuan, down 49.49 percent year on year. The oil and gas sales revenue of China National Offshore Oil Corp. Ltd (CNOOC), China's largest offshore oil and gas developer, reached approximately 36.25 billion yuan for the third quarter of 2015, down 32.3 percent year on year.
--Weak crude prices hurt earnings
International crude oil prices fluctuated at a low level in the third quarter of this year, at around half of the prices over the same period of last year. In the first three quarters of 2015, the average realized price for crude oil of PetroChina was 51.16 US dollars per barrel, down 48.8 percent year on year.
Due to the significant drop in crude oil prices, the company's exploration and production segment achieved operating profits of 46.513 billion yuan, representing a decrease of 68.1 percent from 145.954 billion yuan in the same period of last year.
Compared with PetroChina, Sinopec Corp. fared a little better as the refiner benefited from lower refining costs. The company's refining sector realized operating profits of 14.905 billion yuan in the first three quarters of 2015, up 34.3 percent year on year. CNOOC Ltd's oil and gas sales revenues fell 32.3 percent year on year in the third quarter of 2015.
The company attributed it to the significant decrease in the average realized oil price. During the period, the company's average realized oil price decreased 50.7 percent year on year to 48.84 US dollars per barrel.
--Production performance mixed
In the first three quarters of 2015, PetroChina's crude oil output amounted to 722.9 million barrels, representing an increase of 3.3 percent as compared with the same period last year, of which the domestic crude oil output was 606.2 million barrels, down 1.5 percent year on year.
Marketable natural gas output of PetroChina amounted to 2,289 billion cubic feet, up 4.3 percent year on year. PetroChina's oil and gas equivalent output was 1,104.5 million barrels from January to September, up 3.6 percent year on year, of which the overseas oil and gas equivalent output was 143.6 million barrels, up 41.2 percent year on year.
Sinopec Corp.'s oil and gas output reached 350.82 million barrels in the first three quarters of 2015, down 1.84 percent year on year. The company produced 262.38 million barrels of crude oil and 530.14 billion cubic feet of natural gas from January to September, down 2.41 percent and 0.12 percent respectively from the same period of last year.
CNOOC Ltd's net production reached 127.5 million barrels of oil equivalent (BOE) in the third quarter of 2015, representing a significant increase of 23.8 percent year on year. CNOOC Ltd said that production from offshore China increased 28.2 percent year on year to 83.3 million BOE in the third quarter, mainly attributable to the production contribution from new projects in Bohai and Eastern South China Sea.
Overseas production increased 16.5 percent year on year to 44.3 million BOE in the third quarter, mainly because of maintenance at Buzzard oilfield during the same period last year and new production from Golden Eagle project in the U.K.'s North Sea.