By Yantoultra Ngui
KUALA LUMPUR, Malaysia--Malaysia's national oil company Petroliam Nasional Bhd. reported a surge in net profit for the second quarter, mainly driven by lower net impairment on assets and well costs as well as higher gross profit.
Net profit for the April-June period surged to 7.06 billion ringgit ($1.65 billion) from MYR1.68 billion in the same period a year ago, the state-run firm, known as Petronas, said Friday.
Quarterly revenue rose 10% to MYR51.63 billion from MYR46.95 billion a year earlier, due largely to higher average realized prices across all products and a weakening ringgit.
Petronas is recovering from the slide in oil prices over the past two years and is looking for new ways to boost revenue after cutting costs. It announced in January last year that it would slash spending by as much as MYR50 billion over the next four years. Petronas President and Chief Executive Wan Zulkiflee Wan Ariffin said the company has cut 2,300 jobs, mostly contract employees, since last year.
"Despite higher oil prices compared to a year ago and overall stronger financial and operational performance, the industry remains volatile, and we are tempering our optimism," Mr. Wan Zulkiflee told reporters at an earnings briefing.
He said the company needs to accept the current $50-a-barrel level for oil as the new norm. Petronas said its board expects the overall year end-performance to be fair.
Last month, Petronas sold a 10% stake in a liquefied-natural-gas project in the country to PTT Exploration & Production PCL (PTTEP.TH), Thailand's flagship petroleum explorer, for $500 million. This came after it cancelled a $28 billion plan to build a natural-gas-export terminal on Canada's west coast amid oversupply pressures and low LNG prices.
"The total impact of [the Canada project] decision to Petronas is MYR1.5 billion, net of tax," Mr. Wan Zulkiflee said. The value includes a MYR700 million impairment and the estimated termination costs due to TransCanada Corp. (TRP.T) for the construction of a pipeline that was integral to the project.
Mr. Wan Zulkiflee said Petronas remains committed to its business in Canada, and is looking to monetize its assets there "at the right price at the right time."
Petronas said it paid the government a dividend of MYR6.5 billion during the first half of the year, and will pay another MYR6.5 billion in installments between July and September. This is on top of another MYR3 billion dividend payment Petronas will make this year. The expected dividend payout of MYR16 billion this year is unchanged from 2016.
Looking ahead, Mr. Wan Zulkiflee said the company expects year-end dated Brent to be just under $50 a barrel, a level it expects to be maintained next year.
Write to Yantoultra Ngui at firstname.lastname@example.org
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