Petrochina Shares Fell 2.2 percent, Exxon Mobil Corp. Share Increase 0.7 percent
October 7th, 2009 | File Under : Companies - Mining Stock - Petroleum
Exxon Mobil Corp. regained its ranking as the world’s most valuable company, overtaking PetroChina Co. after Chinese price controls failed to keep pace with rising crude costs, squeezing profits on refined fuels.
State-controlled PetroChina’s Shanghai-traded shares have dropped 2.2 percent since Sept. 2, when the Chinese government last raised domestic prices for gasoline and diesel. Exxon Mobil rose 0.7 percent in the same period to a market capitalization of $330 billion, compared with $325.5 billion for PetroChina.
Irving, Texas-based Exxon Mobil, which traces it roots to the 1880s and John D. Rockefeller’s Standard Oil Trust, lost the top ranking to PetroChina on May 25, after China’s stimulus plan caused a surge in stock prices. PetroChina’s 14 percent return on capital is less than half of Exxon Mobil’s 36 percent, the highest among the world’s biggest 10 oil companies by sales, according to data compiled by Bloomberg.
“Exxon is a solidly run company, one of the best managed companies out there,” said Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on Exxon Mobil shares and owns none. “It’s very conservatively run, has a good solid resource base, generally provides good returns to shareholders.”
Exxon Mobil’s annual sales are more than twice those of PetroChina. The company had $425 billion in sales last year, or $60.45 for every man, woman and child on the planet.
Shares Climb
Exxon Mobil rose $1.08, or 1.6 percent to $68.66 yesterday in New York Stock Exchange composite trading. PetroChina’s Shanghai shares haven’t traded since Sept. 30 because of National Day holidays. The company’s Hong Kong shares climbed 3 percent to HK$8.91.
Year to date, Exxon Mobil is still down 14 percent, the worst performance among seven integrated oil companies in the Standard & Poor’s 500. The company said Sept. 9 that it may fail to meet its 2009 target for 2 percent output growth.
“My general view on Exxon is it represents a nice core holding in any portfolio that wants exposure to energy,” Weiss said. “You’re not going to get the best returns out of Exxon, but you’re not going to get the worst, either.”
Oil futures traded in New York have jumped 59 percent this year, heading for the biggest gain in a decade amid signs that demand for petroleum-based fuels such as gasoline is rebounding after a recession-driven collapse. China has allowed filling stations to raise gasoline and diesel prices this year by 19 percent and 18 percent, respectively.
Price Controls
China, which ranks behind only the U.S. in energy consumption, on Sept. 30 withdrew 37 percent of the fuel-price increase granted on Sept. 2.
The government has raised fuel prices four times and lowered them on three occasions this year under a system introduced in December to take into account fluctuations in the costs for oil purchased by refiners, according to the National Development and Reform Commission. The government policy allows prices to be changed when crude costs fluctuate more than 4 percent over 22 working days.
The Shanghai Composite Index, which jumped 87 percent in this year’s first seven months, has fallen 19 percent since then. The Dow Jones Industrial Average of 30 blue-chip U.S. stocks, including Exxon Mobil, has risen 6.1 percent since the end of July.
source : bloomberg.com
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