PeroChina Co plans to sell US$5.6 billion of stock in Shanghai in what may become the nation's largest share sale this year, to make overseas acquisitions, drill for oil and build refineries.
China's biggest oil company is seeking approval to sell as many as four billion shares, Beijing-based PetroChina said in a statement today. The sale would raise 43 billion yuan (US$5.64 billion), based on the record share price in Hong Kong on June 18.
The government wants to boost the supply of equities to cool a market where shares trade at 48 times earnings, the most expensive in the Asia Pacific region. China Construction Bank Corp and China Cosco Holdings Co, operator of Asia's largest container line, last week announced plans to sell as much as US$7.47 billion of shares in Shanghai.
"PetroChina needs to return to the A-share market as the government requested,'' said Liu Yang, who helps manage US$3 billion at Atlantis Investment Management Ltd in Hong Kong, including PetroChina shares. "PetroChina needs additional funding to acquire more assets.''
The company plans to spend 40 billion yuan developing the nation's biggest oil discovery for almost half a century, helping to lower dependence on imported crude in the world's fastest-growing major economy. The Jidong Nanpu field may hold more than 1 billion metric tons of oil, PetroChina said on May 3.
P etroChina's share sale would exceed the 38.9 billion yuan raised by Ping An Insurance (Group) Co, China's second-biggest insurer, which listed on the Shanghai exchange on March 1.
The share sale will "establish a new financing platform" and provide PetroChina with funds required for development, the company, Asia's largest by market value and most profitable, said in the statement. The sale requires shareholder and regulatory approval. An extraordinary general meeting will be held on August 10 for shareholders to vote on the sale, PetroChina said, without indicating how the stock would be priced.
PetroChina has yet to make formal announcement about a natural gas discovery in Longgang in Sichuan province. Production from the field could reach 4 billion cubic meters by 2010, the China Securities Journal reported May 28. The field has reserves of at least 500 billion cubic meters, the newspaper said.
