Cnooc Shares Rise on Record Profit; PetroChina Drops

By Winnie Zhu and Wang Ying

Aug. 28 (Bloomberg) -- Cnooc Ltd., China's third-largest oil company, rose to the highest in more than a month in Hong Kong trading after first-half profit climbed to a record, beating estimates, because of higher output and oil prices.

The oil producer's shares advanced as much as 6.4 percent to HK$12.36, the highest since July 15, and closed at HK$11.96. PetroChina Co., the nation's biggest oil company, fell 3.3 percent to close at HK$9.96 after posting its steepest semi- annual profit decline in more than six years on refining losses.

Cnooc, which doesn't run refineries, said yesterday profit surged 89 percent to 27.54 billion yuan ($4 billion), more than triple the earnings growth of Exxon Mobil Corp. and Royal Dutch Shell Plc. PetroChina, overtaken by Exxon as the world's most valuable company during the half, said net income fell 35 percent after government fuel-price caps undermined crude gains.

``Cnooc earnings are much higher than the street consensus on strong second-quarter production growth, good cost control and pricings,'' Graham Cunningham, a Hong Kong-based oil analyst at Citigroup Inc., said in a research report today. ``The second-quarter production surged 11.8 percent, the strongest growth since 2005, which alleviates market concern over its full-year target.''

Record Crude

Crude prices reached a record $147.27 a barrel on July 11. Prices have dropped 18 percent since then and are still 66 percent higher than a year ago.

Total oil and gas production climbed 8 percent to the equivalent of 92 million barrels of oil, Cnooc said yesterday. It said on Jan. 29 it plans to increase crude oil and natural gas output by as much as 18 percent to between 195 million and 199 million barrels of oil equivalent this year.

PetroChina's refining business posted a loss of 59 billion yuan between January and June this year, compared with a year- earlier profit of 3.9 billion yuan, the company said yesterday.

``We don't expect enough of a turnaround though to turn positive on PetroChina, and maintain our view that earnings will continue to be relatively weak,'' JPMorgan Chase & Co. analyst Brynjar Eirik Bustnes said in a research note today. ``Cash flow could become a problem and require raising cash.''

PetroChina's first-half net income dropped to 53.6 billion yuan, the company said yesterday.

Exxon's earnings climbed 16 percent in the first six months while Shell's profit rose 29 percent, according to data compiled by Bloomberg. The companies struggled to boost output as countries from Kazakhstan to Venezuela cut access to oil.

To contact the reporters on this story: Winnie Zhu in Hong Kong at wzhu4@bloomberg.netWang Ying in Hong Kong at wang30@bloomberg.net;