China's Biggest Oil Company 1st To Be Worth $1 Trillion In IPO Debut, Surpasses Exxon

Xerafin · Nov 5, 2007

PetroChina Triples in Shanghai IPO
Monday November 5, 1:06 pm ET
By Elaine Kurtenbach, AP Business Writer
PetroChina Becomes World's 1st Company Worth $1 Trillion After Shanghai Stock Debut

SHANGHAI, China (AP) -- China's biggest oil and gas company, PetroChina, surged past Exxon Mobil on Monday to become the world's first company worth more than $1 trillion, though most of the company remains in government hands.

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The publicly listed unit of state-owned China National Petroleum Corp. saw its shares nearly triple in value in their first day of trading in Shanghai, following an initial public offering that raised 66.8 billion yuan ($8.94 billion) -- record for a mainland exchange.

The 4 billion new shares listed in Shanghai surged to 43.96 yuan ($5.90) in the first day of trading Monday, nearly triple the IPO price of 16.70 yuan ($2.24).

Those shares are meant for domestic investors and are generally off-limits to would-be foreign buyers. Chinese investors likewise have limited access to overseas-traded shares -- crimping the leeway for arbitrage between the markets.

Adding the value of PetroChina shares traded in Shanghai, Hong Kong and New York, and the 157.9 billion shares held by CNPC, the company's total market capitalization rose to just over $1 trillion, compared with Exxon Mobil Corp.'s $488 billion.

By other measures, such as earnings, Exxon remains a much larger company. Its $9.41 billion in third-quarter net profit, though down 10 percent from a year earlier, nearly matched PetroChina's net profit of 81.8 billion yuan ($10.8 billion) for the entire first half of the year.

Exxon's oil and gas reserves stood at 22.7 billion barrels by the end of 2006, compared with PetroChina's 20.5 billion barrels.

The Chinese company has seen revenues soar amid surging oil prices but has struggled to boost production from its aging domestic oil fields. Like rival Sinopec, it has been squeezed by a widening gap between soaring world crude oil prices and state-controlled prices for oil products in the domestic market.

But PetroChina's strong showing was expected all the same. Chinese investors have shown a huge appetite for elite government giants that are seen as proxies for the country's economic boom.

However, more than 86 percent of the company's shares outstanding are held by PetroChina's parent company -- part of the government's policy of retaining state ownership of strategically vital industries such as energy.

Those shares are unlikely to trade on the market anytime soon.

And with only 2.18 percent of the company's 183.02 billion shares available to Chinese domestic investors, demand far exceeds supply.

As of Friday, PetroChina's market value was $456.6 billion. That was based on the company's share price in Hong Kong, where it has listed 21.09 billion shares, or about 11.5 percent of its total stock. Those shares closed Monday at 18 Hong Kong dollars ($2.31).

PetroChina's shares closed Monday in Shanghai at a much higher $5.90, lifting the value of company's remaining 162 billion shares -- mostly held by CNPC -- to $955 billion.

Adding the value of PetroChina's Hong Kong shares, worth about $49 billion, the company's total market capitalization rose to more than $1 trillion.

The company's luster appears to have been undimmed by a decision by Berkshire Hathaway Inc.'s decision to sell off all its 2.3 billion PetroChina shares. The U.S. investment company made about $3.5 billion on the sale of that $488 million investment, Berkshire Hathaway Chairman and Chief Executive Warren Buffett has said in interviews.

Until Monday, coal producer China Shenhua Energy Co.'s debut in Shanghai in September was the largest for a domestic exchange, raising 66.58 billion yuan ($8.91 billion).

But there are plenty more big IPOs in the pipeline.

China Mobile Corp., whose shares traded in Hong Kong are valued at HK$3.05 trillion ($391 billion), is among several other big names planning IPOs in coming months.

PetroChina will account for nearly a quarter of Shanghai's total market capitalization, displacing banks and other major financial companies, analysts said Monday.

Reflecting that expectation, the benchmark Shanghai Composite Index fell 2.5 percent to 5,634.45 Monday as institutional investors cut holdings in heavyweight financial companies and other energy giants to buy into PetroChina.

Shanghai's benchmark has more than doubled in value this year as investors chased a slew of IPOs by big-name companies, hoping for higher returns than they can earn on bank savings.

But the authorities appear ambivalent over the gains.

While the state-run Xinhua News Agency rushed out headlines proclaiming PetroChina the world's most valuable company on Monday, other reports cited top officials expressing alarm over precipitous share-price gains.

A notice by the China Securities Regulatory Commission, issued over the weekend, ordered securities funds to avoid "blind expansion" or speculative activities. It urged funds to tighten risk controls.
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Sure, there is no doubt that this company is waaaay overvalued at this point and will fall, especially comparing earnings between Exxon and this company, but there is also no doubt in my mind that China is quickly ascending the economic ladder and will be challenging our economic power in no time at all...

JUSTLEE · Nov 5, 2007

Re: China's Biggest Oil Company 1st To Be Worth $1 Trillion In IPO Debut, Surpasses E

Nuke 'em.

Ward · Nov 5, 2007

Re: China's Biggest Oil Company 1st To Be Worth $1 Trillion In IPO Debut, Surpasses E

Too many zeros in $1 Trillion for just one thread?

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China's Biggest Oil Company 1st To Be Worth $1 Trillion In IPO Debut, Surpasses Exxon

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China's Biggest Oil Company 1st To Be Worth $1 Trillion In IPO Debut, Surpasses Exxon

Xerafin Unmoderated & off-center

JUSTLEE The Ancient Starfighter

Ward A Stepford Husband

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