State Firm PetroChina Pays Entire H1 $1.9B Profit As Dividends

China’s biggest oil and gas producer, state-held PetroChina, said on Thursday that it would be paying its entire first-half net profit in interim dividends to shareholders, in a move seen as a one-time event that sparked speculation over upcoming ownership changes.

Another state-held company, China National Petroleum Corporation (CNPC), holds 86 percent in PetroChina, and in view of the 100-percent dividend payout, it would get the bulk of the interim dividends, which are a total of US$1.9 billion (12.68 billion Chinese yuan)—the net profit that PetroChina reported for H1 2017.

According to Nikkei Asian Review, the 100-percent dividend payment ratio comes as the Chinese government is studying “mixed-ownership” reforms designed to attract private investors in state firms.

In its press statement, PetroChina said that the dividend payout was aimed at improving returns for the shareholders “in overall consideration of the good fundamentals of development, financial condition and cash flow.”

The large dividend distribution was only the result of “improving business operations and cash positions”, the company’s vice chairman and executive director Wang Dongjin told reporters in Hong Kong, as quoted by Nikkei.

In the future, PetroChina will have a more “flexible” approach to distributing cash to shareholders, according to the manager.

PetroChina’s key financial data under IFRS standards showed that profit attributable to owners of the company soared to US$1.9 billion (12.68 billion Chinese yuan) in the first half of 2017 from US$80 million (531 million Chinese yuan) in the same period last year. The H1 2017 results were boosted by the higher average oil prices compared to the first half of 2016, growing demand for natural gas, and optimizations of operations. 

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The first-half profit this year was PetroChina’s strongest first-half profit since 2015. The figure easily beat the analyst range of expectations of between US$1.35 billion and US$1.65 billion (9 billion-11 billion Chinese yuan).

PetroChina’s total revenues in H1 2017 jumped by 32 percent on the year, while net cash flows from operating activities increased by 29.5 percent.

By Tsvetana Paraskova for Oilprice.com

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