PetroChina, Cnooc Downgraded by Goldman on Oil Drop

By Chua Kong Ho and Winnie Zhu

Dec. 12 (Bloomberg) -- PetroChina Co. and Cnooc Ltd. had their stock ratings downgraded by Goldman Sachs Group Inc., which cited lower profit estimates because of a decline in oil prices. The shares fell in Hong Kong.

PetroChina, the nation’s largest oil company, was cut to “sell” from “neutral,” according to a note today. Goldman Sachs cut its share-price estimate for PetroChina’s Hong Kong- traded shares by 45 percent to HK$4.10, and by 5.6 percent to 5.85 yuan for its Shanghai-traded stock. Cnooc was lowered to “neutral” from “buy” and its share-price estimate cut 34 percent to HK$5.90.

Crude oil has slumped more than 60 percent from the July record of $147.27 a barrel in New York as the global economic recession cuts demand for fuels.

“The oil industry’s profitability in 2009 is likely to re- test 1998 lows when oil prices fell below cash costs for non- OPEC producers and refining margins fell below refiners’ variable costs,” Goldman analysts, led by Kelvin Koh, said in a research report.

PetroChina shares declined 3.2 percent to HK$7.03 at 10:21 a.m. in Hong Kong, snapping five days of gains. Cnooc fell 2 percent to HK$7.53. The benchmark Hang Seng Index dropped 1.5 percent.

To contact the reporters responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Winnie Zhu in Shanghai at wzhu4@bloomberg.net