PetroChina Maintains Stable Improvement in Operational Efficiency in the First Three Quarters Achieving Better-than-expected Results

PetroChina Company Limited (“PetroChina” or “the Company”, HKSE: 0857; NYSE: PTR; SSE: 601857) today announced that in the face of a challenging operating environment, the Company adhered to its principle of steady development, deepened reform and innovation, and maintained its efforts to broaden revenue sources, reduce costs and improve profitability. The Company proactively adapted to market changes, optimized oil and gas production, strengthened the balance of resources and coordination of operations, resulting in the stabilization of production and operations and seeing relatively significant increase in operational performance.

In the first three quarters ended 30 September 2017, based on the International Financial Reporting Standards (“IFRS”), the Company recorded revenue of RMB1,457.704 billion, representing an increase of 26.7% compared to the same period in 2016. The net profit attributable to shareholders of the Company reached RMB17.366 billion, representing an increase of RMB15.635 billion compared to the same period in 2016. The Company’s financial position remained stable, while interest-bearing debts and debt-to-capital ratio both decreased, and cash flow was in good condition with free cash flow still positive.

Exploration and Production

For the Exploration and Production segment, the Company optimized the way in which exploration was deployed, strengthened the resources base with sustainable development and kept advancing unconventional oil and gas exploration. The Company placed emphasis on efficiency in oil and gas exploration. For domestic crude oil production, the Company continued to optimize its production plans and output structure. It managed its domestic natural gas production in an orderly manner. For overseas business, the Company proactively adjusted production output according to the trends of oil prices. In the first three quarters of 2017, the Company recorded a crude oil output of 660.1 million barrels, down 5.2% year-on-year; while marketable natural gas output was 2,539.2 billion cubic feet, up 4.5% year-on-year. Oil and gas equivalent output reached 1,083.4 million barrels, representing a decrease of 1.6% compared to the same period in 2016. Of this amount, the domestic oil and gas equivalent output recorded 944.7 million barrels, down 0.2% year-on-year. Overseas oil and gas equivalent output was 138.7 million barrels, representing a decrease of 10.3% compared to the same period in 2016 (Due to the year-on-year increase of crude oil prices, the net oil production derived from attributable overseas projects recorded a decrease.) Strongly adhering to a low-cost strategy, the exploration and production segment actively broadened revenue sources, reduced costs and improved efficiency. The oil and gas lifting cost was USD11.34 per barrel, down 1.9% year-on-year. On the back of the year-on-year increase of crude oil prices and strengthening of cost control, the segment’s profit from operations was RMB10.983 billion, representing a profit turnaround and an increase of RMB14.932 billion compared to the same period in 2016.

Refining and Chemicals

The segment consistently adhered to the principle of market orientation and efficiency. It continuously optimized resource allocation and product structure, increased the output of marketable products that had a high efficiency. The diesel-gasoline ratio reduced from 1.41 of the first three quarters of 2016, to 1.31 of the same period in this year. It strengthened cost control and maintained the efforts to reduce costs and improve profitability. In the first three quarters of 2017, the Company processed 744.5 million barrels of crude oil, representing an increase of 5.2% compared to the same period in 2016. It produced a total of 67.591 million tons of gasoline, diesel and kerosene, representing an increase of 6.2% compared to the same period in 2016. The output of chemical products rose 3.4% year-on-year. Due to strict cost control of the Refining and Chemicals segment, the cash processing cost of refineries was RMB163.77 per ton, representing a decrease of 6.3% compared to the same period in 2016. The segment recorded an operating profit of RMB27.732 billion; in which, the refining operations generated an operating profit of RMB16.795 billion, and the chemicals operations generated an operating profit of RMB10.937 billion as a result of increased production and sales of products with high profitability, representing an increase of RMB2.342 billion over the same period in 2016.

Marketing

In the face of unfavorable conditions such as the easing of the supply-demand gap and the fierce competition in the domestic market for refined oil products, the Marketing segment undertook business development through various channels, strengthened the control and coordination of refined oil resources, and proactively optimized its sales structure. International trading business made a positive contribution in terms of resources adjustment and profitability. It tapped into overseas markets with high efficiency and expanded the export of refined oil products, which ensured an unimpeded business chain and strengthened overall profitability. The marketing segment sold a total of 125.968 million tons of gasoline, kerosene and diesel in the first three quarters of 2017, representing an improvement of 6.1% over the same period in 2016; and recorded a profit from operations of RMB5.734 billion.

Natural Gas and Pipeline

The Natural Gas and Pipeline segment gave full play to the advantages of specialized marketing following the adjustment of the management system. It continuously enhanced the efficiency and profitability of its pipeline network, optimized the sales regime and resources allocation. It strengthened its efforts in market development and proactively explored high-end markets in eastern and southwestern China, and providing direct supply and direct sales to some major customers in southeastern coastal cities. As a result, both the sales volume and efficiency of natural gas business achieved growth. In the first three quarters of 2017, on the back of the increased natural gas prices and sales volume over the same period in 2016, the natural gas and pipeline segment recorded a profit from operations of RMB18.045 billion, representing an increase of RMB188 million over the same period in 2016.

Outlook

Looking ahead to the fourth quarter, with focuses on the two key business chains of oil and gas, the Company will give free rein to the advantages of the planning as a whole for these two resources and markets. By means of optimizing resources allocation, linkage between production and sales, strengthening the overall balance and operational coordination, broadening sources of income, reducing expenditure, controlling cost and improving efficiency, focusing on safety and environmental protection, exploring markets, as well as implementing measures of reforms and innovation, the Company will facilitate growth in corporate value driven by various business operations, achieve maximum efficiency, maintain favorable economic benefits, in order to accomplish targets of production and operation for the year and promote the steady development of the Company.