PetroChina : Responds to Low Oil Price Main Businesses Remain Profitable in the First Half of 2015

27 August, 2015 - PetroChina Company Limited ("PetroChina" or "the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) today announced that the Company achieved operating results exceeding expectation in the first half of 2015 amid the challenging environment arising from global oil prices hovering at low levels, increasing downward pressure on the domestic economy, the weak market demand for oil and gas, and the unbalanced gas production and sales. The Company focused on quality and profitability. As a result, the Company's production and operation remained stable and under control.

As of 30 June, 2015, based on International Financial Reporting Standards, the Company's turnover was RMB877.624 billion, representing a decrease of 23.9% over the same period in 2014; net profit attributable to the shareholders of the Company was RMB25.406 billion, representing a decrease of 62.7% over the same period in 2014; and basic earnings per share were RMB0.14, representing a decrease of RMB0.23 over the same period in 2014.

Exploration and Production

In the first half of 2015, the Company strived to obtain available large-scale reserves and economically recoverable reserves, enjoying strong momentum in its oil and gas exploration operations. In terms of oil exploration, large-scale reserves at the levels of hundred or ten million tons were discovered at Jiyuan and Zhenbei of Erdos, Junggar Basin and Tarim Basin as well as other regions. In terms of natural gas exploration, a number of large-scale reserves at the levels of hundred billion cubic meters were proven in the east of Erdos, Sulige, Sichuan Basin and Tarim Basin as well as other regions. New major breakthroughs were also made in the exploration of tight oil. In the development of oil and gas fields, the Company emphasized efficient production, controlled the scale and pace of development, and carried out the building of key production capacity in an orderly way, through which the profitability of its overall development kept improving. In the first half of 2015, the Company recorded a crude oil output of 477.5 million barrels, representing an increase of 2.6% as compared with the same period in 2014, a marketable natural gas output of 1,549.6 billion cubic feet, representing an increase of 3.6% as compared with the same period in 2014, and an oil and natural gas equivalent output of 735.9 million barrels, representing an increase of 2.9% as compared with the same period in 2014.

For its Exploration and Production segment, the Company continued to transform its mode of development, emphasized technological innovation for better results, and strengthened its control over investments. The Company proactively responded to the adverse impact caused by the significant drop in international crude oil prices and recorded profit from operations of RMB32,917 million, representing a decrease of 67.8% as compared with the same period in 2014. The Exploration and Production segment remained a key profit contributor to the Company.

Refining and Chemicals

In the first half of 2015, the Company closely tracked market changes and organized the production and operation in a flexible manner. The Company optimized its resources allocation and products structure, moderately raised its gasoline and diesel ratio and increased chemicals production workload in order to produce more marketable and profitable products. The Company achieved safe and steady operations by organizing the overhaul of facilities in an orderly manner. The Company also accelerated the implementation of the quality upgrading project of the national standard V gasoline and diesel. In the first half of 2015, the Company processed 495.7 million barrels of crude oil, representing a decrease of 0.9% as compared with the same period in 2014, and produced 46.475 million tons of refined oil products, representing an increase of 1.0% as compared with the same period in 2014.

In the first half of 2015, the Refining and Chemicals segment became profitable for the first time since 2011. This was achieved by emphasizing the principles of market orientation and profitability, strengthening production and operation analysis, continuously optimizing the structure of products, and stepping up control of costs and expenses. In the first half of 2015, the Refining and Chemicals segment achieved a profit from operations of RMB4,657 million, an improvement of RMB8,092 million over the same period in 2014. The refining operations generated a profit from operations of RMB5,550 million, representing an increase of RMB1,195 million as compared with the same period in 2014, and the chemical operations incurred an operating loss of RMB893 million, narrowing the loss by RMB6,897 million as compared with the same period in 2014.

Marketing

In the first half of 2015, despite exposure to slowing growth in demand for refined oil, the Company adhered to its market-oriented principle in its marketing operations, and focused on resources allocation in profitable markets. The Company also kept enhancing its sales capabilities to end customers and grew its sales and profitability. Meanwhile, the Company accelerated the efficient integration of internet and conventional sales models and the breeding of non-oil businesses as new growth drivers. In its international trading operations, the Company focused on synergies and pursued innovation in trading, actively explored high-end and high-profit markets, and strived to enhance operating quality, resulting in stable growth in scale. In the first half of 2015, the Company sold a total of 77.815 million tons of gasoline, kerosene and diesel, representing an increase of 3.4% as compared with the same period in 2014.

In the first half of 2015, due to the adverse impact caused by the significant drop of refined product prices, the slowing growth in demand in the domestic refined product market and fiercer competition, the Marketing segment achieved a profit from operations of RMB2,783 million, representing a decrease of 65.8% as compared with the same period in 2014.

Natural Gas and Pipeline

In the first half of 2015, the Company coordinated and optimized the utilization of domestic and imported gas resources for its natural gas business, and implemented a proactive marketing strategy, which resulted in steady increase in profitability. The Company also leveraged the advantages of its centralized control to optimize the operation deployment of its pipeline networks, with a view to keeping the general balance among production, transmission, sales and storage. The construction of key projects saw steady progress. The Mohe-Daqing transmission capacity expansion project and some other projects were completed and put into operation. The construction of the East Section of the Third West-East Gas Pipeline, the Jinzhou-Zhengzhou refined products pipeline and some other projects progressed smoothly.

In the first half of 2015, the Natural Gas and Pipeline segment optimized resources allocation, reduced comprehensive purchase costs, intensified marketing efforts, and improved the operating efficiency and overall profitability of the business chain. This resulted in a profit from operations of RMB14,867 million, representing an increase of 264.1% as compared with same period in 2014. In the first half of 2015, the Natural Gas and Pipeline segment recorded a net loss of RMB10,626 million on the sales of imported natural gas and LNG, narrowing the loss by RMB9,734 million as compared with the same period in 2014.

Overseas Oil and Gas Operations Note

In the first half of 2015, the Company seized favorable opportunities to optimize its assets structure, and strengthened its risk control of the overseas oil and gas operations. Based on the oil price sensitivity of different types of contract, the Company formulated different operational strategies for its projects accordingly. The Company put considerable efforts into promoting the secondary development of oil fields, and the Rumaila project and other projects saw continuous improvements in outputs and profitability. In the first half of 2015, the oil and natural gas equivalent output from overseas operations amounted to 92.8 million barrels, representing an increase of 38.3% as compared with the same period in 2014 and accounting for 12.6% of the Company's total oil and gas equivalent output.

In the first half of 2015, the Company's overseas operations achieved a turnover of RMB280,504 million. Profit before income tax was RMB1,676 million. The Company maintained healthy growth of its overseas operations and further improved its international operation capabilities.

Outlook

Looking ahead to the second half of 2015, the Company is seeking to "inspire enthusiasm, redefine the corporate image and promote the steady development". The Company will hold a brainstorming session to let all staff share their views on the ways to "promote finest traditions and rebuild a good corporate image", as well as to mobilize all business units and their employees to take the initiative to identify and solve problems. Moreover, the Company will take this opportunity to address bottlenecks and rally its staff to see through corporate reforms, and drive its business through innovation, to turn PetroChina into a company that is "honest, accountable, law-abiding, stable and harmonious".

In terms of exploration and production, the Company will continue to strengthen its efforts for oil and gas exploration, expand large-scale economically recoverable reserves and transform them into available reserves. The Company will organize its crude oil and natural gas production in a scientific manner based on the contribution to efficiency, with a view to maintaining the steady and balanced development of its oil and gas production.

In terms of refining and chemicals operations, the Company will optimize its allocation of crude oil resources and products structure, increase its output of marketable and high-profitability products, and strive to increase profits.

In terms of the sales of refined products, the Company will keep optimizing its sales structure, strengthen the core position of its retail operations, increase the sales volume of high value-added products, and strive to improve the overall profitability.

In terms of natural gas and pipeline operations, the Company will effectively promote market development and strive to improve the profitability of natural gas sales. The Company will also improve the planning of the pipeline operations, complete and put into operation a batch of key projects such as the East Section of the Third West-East Gas Pipeline.

In terms of overseas operations, the Company will further optimize business structure and regional deployment based on projected oil prices and development prospects, and continue to improve the profitability of major oil and gas production areas and key projects.

Note: The four operating segments of the Company are namely Exploration and Production, Refining and Chemicals, Marketing as well as Natural Gas and Pipeline. Overseas operations do not constitute a separate operating segment of the Company. The financial data of overseas operations are included in the financial data of the respective operating segments mentioned above.

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Additional information on PetroChina is available at the Company's website: http://www.petrochina.com.cn
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