(Bloomberg) -- PetroChina Co. rose to a two-week high after announcing plans to sell pipeline stakes for as much as 15.5 billion yuan ($2.4 billion) as the nation’s biggest oil and gas producer seeks to meet year-end profit targets amid a drive to reform state-owned enterprises.
Beijing-based PetroChina’s board approved a plan to sell a 50 percent stake in Trans-Asia Gas Pipeline Co. to a unit of state-owned China Reform Holdings Corp., according to a statement to the Shanghai stock exchange on Wednesday. The company also announced a new chief financial officer and moved to inject new assets into its gas subsidiary Kunlun Energy Co. Shares rose as much 1.9 percent to HK$5.84, the highest intraday level since Nov. 12, and were trading at HK$5.81 at 9:44 a.m. in Hong Kong. The city’s Hang Seng Index rose 1 percent.
PetroChina and its parent company, China National Petroleum Corp., are seeking to complete asset sales before the end of the year to help meet government-set annual profit goals, people with knowledge of situation said earlier this week. The government is also looking to spin off oil and gas pipelines from its energy companies into independent businesses as part of a President Xi Jinping’s sweeping overhaul of the country’s state-owned industries.
“Raising cash from the listed company will help the state- owned company meet profit targets,” Neil Beveridge, a Hong Kong- based analyst at Sanford C. Bernstein & Co., said by phone. “It also allows PetroChina to raise capital to shore up its balance sheet and refocus more on its core upstream business.”
Efforts to meet the profit goals are complicated by China’s slowest economic growth in more than two decades and a global crude glut that has nearly halved prices over the past year. Oil is poised to spend a fourth month averaging below $50 a barrel, the longest stretch since the global financial crisis.
Income at PetroChina and its state-owned parent China National Petroleum Corp. has dropped “dramatically” this year, Wang Dongjin, a deputy general manager at CNPC and president of PetroChina, said in a statement on CNPC’s website this month.
The company appointed Zhao Dong as chief financial officer to replace Yu Yibo, who has resigned, and transferred 3.5 billion yuan of assets to units owned by CNPC, it said in statements to the Hong Kong stock exchange on Wednesday. PetroChina’s board also approved a merger plan of subsidiaries Kunlun Energy Co. and PetroChina Kunlun Gas Co., it said in a separate release to the Shanghai stock exchange.
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Copyright 2016 Bloomberg News.
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