Everbright Securities has issued a research report maintaining its "Buy" rating on PetroChina (00857), citing the company's record-high performance in the first quarter of 2026 which met expectations. The firm reaffirmed its profit forecasts, projecting net profits attributable to shareholders of 190.2 billion yuan, 195.9 billion yuan, and 201.8 billion yuan for 2026-2028, respectively. Corresponding earnings per share are estimated at 1.04 yuan, 1.07 yuan, and 1.10 yuan per share. The report expresses optimism regarding PetroChina's potential for reserve growth and production increases, as well as the long-term growth prospects of its natural gas business. The "Buy" rating applies to both its A-shares (601857.SH) and H-shares.
Key points from Everbright Securities' analysis are as follows:
PetroChina released its first-quarter 2026 report, showing total operating revenue of 7.364 trillion yuan, a decrease of 2.2% year-on-year but an increase of 5.9% quarter-on-quarter. Net profit attributable to shareholders reached 48.3 billion yuan, up 1.9% year-on-year and surging 55.8% quarter-on-quarter.
The advantages of its integrated industrial chain were prominently displayed, leading to record Q1 2026 performance. In the first quarter, international oil prices fluctuated upwards due to Middle East geopolitical conflicts, with the average Brent crude price at $78.38 per barrel, a 4.5% year-on-year increase. However, oil prices faced阶段性 pressure in January-February 2026, impacting oil company operations. Domestic natural gas consumption grew by 3.1% year-on-year. Domestic demand for refined oil products fell by 2.3%, primarily affected by alternative energy sources. Demand for major chemical products remained growth-oriented, with ethylene equivalent consumption increasing by 1.0%. The company proactively responded to market changes by intensifying exploration and development efforts and advancing the transformation and upgrading of its refining and chemical operations. Leveraging its full industrial chain helped mitigate oil price volatility, resulting in the record quarterly performance. Operating cash flow was 84.5 billion yuan, a decrease of 39.4% year-on-year, mainly due to increased cash usage from rising crude oil and petrochemical product prices.
In Q1 2026, the upstream segment reported an operating profit of 41.0 billion yuan, down 11.0% year-on-year, impacted by lower oil and gas sales prices and reduced crude oil sales volume. Benefiting from increased natural gas sales volume and lower import costs, the natural gas marketing business achieved an operating profit of 18.9 billion yuan, a significant increase of 39.7% year-on-year. The refining segment reported an operating profit of 7.2 billion yuan, up 57.7% year-on-year, driven by inventory gains improving product margins. The chemical business achieved an operating profit of 1.1 billion yuan, rising 32.3% year-on-year. The marketing segment reported an operating profit of 6.5 billion yuan, an increase of 28.3% year-on-year.
**Segment Review: Upstream Focuses on Reserve Growth and Production, Natural Gas Profitability Surges**
Oil and gas equivalent production continued to grow, while new energy business developed rapidly. The oil, gas, and new energy segment's operating profit was 41.0 billion yuan in Q1 2026, down 11.0% year-on-year. The realized crude oil price was $64.08 per barrel, down 8.5% year-on-year. The realized natural gas price was $8.96 per thousand cubic feet, down 0.8% year-on-year. The unit operating cost for oil and gas was $9.82 per barrel, a slight increase of 0.6% year-on-year. The company adhered to efficient exploration and profitable development, continuously promoting reserve growth and production increases. Domestically, it strengthened the exploration and development of both conventional and unconventional resources. Internationally, it actively pursued high-quality exploration and operator projects, vigorously controlled production costs, and coordinated efforts to acquire, convert, and construct new energy projects. In Q1 2026, oil and gas equivalent output reached 470 million barrels, up 0.7% year-on-year. Domestic crude oil production was 198 million barrels, flat year-on-year. Domestic natural gas production reached 135.3 billion cubic meters, up 2.4% year-on-year. Wind and solar power generation reached 2.33 billion kWh, a substantial increase of 38.5% year-on-year.
The natural gas sales business achieved both volume and efficiency growth, leading to a major profit increase. Operating profit for this segment reached 18.9 billion yuan in Q1 2026, up 39.7% year-on-year. The company optimized its natural gas resource structure and worked to control procurement costs. It enhanced marketing efforts, actively developed direct customers and high-efficiency markets, and strived to expand domestic sales volume. Natural gas sales volume totaled 93.9 billion cubic meters in the quarter, up 6.9% year-on-year, with domestic sales accounting for 73.8 billion cubic meters, a 3.5% increase.
**Refining Transformation Projects Advance, New Materials Output Jumps 53.5%**
The refining, chemical, and new materials segment reported an operating profit of 8.3 billion yuan in Q1 2026, surging 53.7% year-on-year. This included a 7.2 billion yuan profit from refining (up 57.7% year-on-year) and a 1.1 billion yuan profit from chemicals (up 32.3% year-on-year). The company enhanced integrated operations across supply, production, and sales, increasing the output and sales of high-value-added refining and chemical products. Adhering to green and intelligent development directions, it progressed orderly with transformation projects such as the second phase of the Dushanzi Petrochemical Tarim Ethane-to-Ethylene project and the Lanhai New Materials high-end polyolefins project. In Q1 2026, the company processed 343 million barrels of crude oil, up 1.7% year-on-year. It produced 28.55 million tonnes of refined oil products, down 0.1% year-on-year. Ethylene production reached 2.76 million tonnes, up 21.4% year-on-year. Chemical product output was 10.78 million tonnes, up 8.2% year-on-year. New materials output reached 1.23 million tonnes, a significant increase of 53.5% year-on-year.
**Marketing Segment Expands EV Charging and LNG Services, Profits Grow Against Trend**
The marketing segment achieved an operating profit of 6.5 billion yuan in Q1 2026, up 28.3% year-on-year. The company coordinated the allocation of refined oil resources, marketing, and inventory management. It implemented refined marketing strategies by region and product type, working to stabilize and increase domestic sales volume and market share, ensuring the smooth and efficient operation of the crude oil industrial chain. It actively expanded into vehicle LNG refueling, electric vehicle charging/battery swap services, and non-fuel businesses. Total sales of gasoline, kerosene, and diesel reached 38.53 million tonnes in the quarter, up 4.8% year-on-year. Domestic sales of these products were 28.02 million tonnes, a 1.8% increase.
**Leveraging Integrated Chain to Navigate Cycles; Strategic Value of Energy Security Amid Geopolitical Uncertainty**
The company will continue to maintain high capital expenditure, with upstream capital expenditure planned at 220.8 billion yuan for 2026, a 7.7% increase over the 2025 actual figure. This substantial investment will strongly support growth in upstream production and reserves. PetroChina continues to strengthen its efforts in reserve growth and production, targeting a 0.6% increase in oil and gas equivalent output for 2026. It is accelerating the transformation of its midstream and downstream refining business, promoting low-cost "oil-to-chemicals" conversion and high-value "oil-to-specialties" initiatives in the refining sector. The marketing segment is actively transitioning towards becoming an integrated energy service provider offering "oil, gas, hydrogen, electricity, and services." The chemical business is steadily increasing the proportion of high-value-added products. The company will continue to adopt a long-term perspective, proactively respond to macroeconomic and market changes, fully leverage its advantages, and continuously enhance its value creation capabilities, positioning itself for long-term growth that transcends oil price cycles.
Recent ongoing US-Iran conflicts, with Iran maintaining a blockade of the Strait of Hormuz, have severely disrupted Middle East energy exports. Crude oil supply has been significantly impacted, and the transport of key raw materials like Middle Eastern crude, naphtha, and liquefied natural gas has been severely hampered, posing a serious threat to the supply of critical energy and petrochemical raw materials for China. As major central state-owned energy enterprises, the "Big Three" oil companies are expected to further intensify oil and gas exploration, development, and reserve-building efforts, solidifying the domestic production base. Simultaneously, they will deepen participation in global energy governance and improve the construction of energy transport corridors, highlighting the strategic value of ensuring energy supply.
Risk warnings include potential declines in crude oil and natural gas prices, and a downturn in refining and chemical industry profitability.
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