PetroChina Co.’s (PTR) profit plummeted to its lowest level in 17 years after posting a 25 billion yuan (or USD$3.8 billion) writedown amidst an energy price slump. China’s biggest gas and oil producer’s net income tumbled 67% from 107 billion yuan to 35.5 billion yuan, according to the Hong Kong stock exchange’s statement.
Sales at PetroChina fell 24% to 1.73 trillion yuan. PetroChina cautioned in January that profit in 2015 may decline 60%-70%.
Brent slid to $54 a barrel on average in 2015, down from about $99 a barrel the previous year. The slump prompted oil energy companies to write down assets, cut capital spending plans and cut earnings.
Chairman Wang Yilin said the company will not resort to laying off any frontline gas and oil workers to cut back on costs.
PetroChina’s writedowns were derived from its upstream sector, which includes gas and oil assets. The company will close down any gas and oil fields that have no chance of turning a profit under the current oil prices. Redundant workers will be given the option to retire early, or to be transferred to a different position.
Oil has rebounded from a 12-year low in 2016 amid speculation of falling U.S. production and stronger demand easing a global oversupply. OPEC and non-OPEC producers are expected to meet in April to discuss the possibility of freezing output at January’s levels.
PetroChina, Cnooc Ltd. (CEO), and China Petroleum & Chemical Corp. (SNP) all posted declines in profit or revenue for the first nine months of last year. CNPC and PetroChina both sold pipeline assets before the year’s end to boost cash and reach their profit target for the year. Capital spending will be 192 billion yuan, 5% lower, after a 31% decline last year.
PetroChina expects total production to fall 2.7% this year to the equivalent of 1.45 billion barrels.