Petronas Q3 net profit 12% down due to lower oil prices

PETROLIAM Nasional Bhd (Petronas) president and chief executive Tan Sri Shamsul Azhar Abbas’ presage has materialised as the oil major’s top and bottom line took a beating for its third quarter ended Sept 30 in tandem with crude oil prices that fell some 15% for the three months.

Revenue for the quarter fell 1% to RM80.4bil compared to a year earlier while net profit declined 12% to RM15.1bil.

The lower performance was mainly due to lower crude oil prices, unfavourable exchange rates and lower liquefied natural gas sales volume.

Shamsul had warned of higher costs and supply earlier this year.

Its capital investments for the quarter stood at RM16.3bil compared to RM16.1bil last year.

In comparison with the preceding quarter, revenue fell 6% from RM85.4bil while net profit fell 28% from RM21bil in the second quarter. For the first nine months, revenue increased 7% to RM249.8bil whereas net profit climbed 4% to RM54.9bil, which were boosted by the better performance in the first half.

Its group chief financial officer Datuk George Ratilal took a deep breath before announcing the results in a room that was filled with anticipation.

“We have mixed messages to convey. Some are good and some are bad and they all have to do with oil prices.”

The quarter-on-quarter decrease in its financial numbers was largely attributed to the slump in crude oil prices but that was mitigated by higher production and sales.

Compared to last year, its total production increased marginally from 2.06 million barrels of oil equivalent (boe) per day to 2.08 million in the latest quarter.

To date, the 2.18 million boe production per day is 4% higher than that in 2013 due to new oil and gas production from Iraq and Malaysia.

In South Sudan, the national oil company continued to ramp up operations while its asset in Canada had performed well.

Another good news is the stronger exchange rate of the greenback against ringgit that is 4% higher versus 2013.

It has invested RM42.7bil to date, of which 56% are local investments and the remaining 44% international investments.

Outflows exceeded inflows slightly at RM300mil.

According to George, its gearing reduced 1.7% to 9.4% as it paid off loans worth US$1.5bil this year.

Its assets increased by 16.4% from RM528.7bil last year to RM545.1bil as at end-September. Cash balances slipped 0.3% to RM140.6bil to date.

Petronas expected its fourth quarter operational earnings to be “considerably lower” than the current quarter.