PetroChina Surpasses Exxon as Shanghai Shares Surge (Update1) By Ying Lou [image: Enlarge Image/Details]<http://www.bloomberg.com/apps/news?pid=photos&sid=aixBdHxWY.po>
Nov. 5 (Bloomberg) -- PetroChina Co. became the world's first trillion-dollar company, surpassing Exxon Mobil Corp. as the shares started trading on the Shanghai stock exchange. PetroChina's Class-A shares almost tripled on their Shanghai debut, rising as high as 48.62 yuan from the sale price of 16.7 yuan. The listing gives mainland Chinese investors their first opportunity to own the stock. China's largest oil and gas producer has been listed since 2000 in Hong Kong where it advanced 78 percent this year as investors sought to profit from the world's fastest-growing major economy. The Beijing-based company's shares soared as the Hang Seng Index in Hong Kong rose 53 percent and the CSI 300 Index of shares listed on the Shanghai and Shenzhen exchanges increased 168 percent. ``Local investors might have a different risk tolerance level to global investors, so we may see PetroChina's A-shares trading at a premium'' to its Hong Kong stock, said Lei Wang, a co-manager of Thornburg International Value Fund in Santa Fe, New Mexico, which oversees $16 billion. PetroChina reached 43.96 yuan at 11:05 a.m. in Shanghai, valuing the company at more than $1 trillion. Exxon is worth $488 billion on the New York Stock Exchange. In Hong Kong, PetroChina fell 7 percent to HK$18.20 `Sense Of Responsibility' The Chinese oil producer trades at almost 60 times earnings in Shanghai, compared with Exxon's valuation of 13 times. PetroChina's market value is higher than Russia's gross domestic product. ``I feel very excited today and also feel a very strong sense of responsibility,'' Chairman Jiang Jiemin said at the Shanghai Stock Exchange. ``This is PetroChina returning to our investors and the society.'' The company had 20.5 billion barrels of oil and gas reserves in 2006, compared with 22.1 billion for Irving, Texas- based Exxon, data compiled by Bloomberg show. PetroChina has been adding new reserves at an average annual rate of 5 percent for the past three years, a faster pace than Exxon, Royal Dutch Shell Plc and BP Plc, the world's largest oil companies by sales. The share sale, the world's biggest this year, surpassed the 66.6 billion yuan generated by China Shenhua Energy Co. in September. Mainland Chinese investors were until now prevented from directly buying PetroChina stock, missing out on a 15-fold surge as economic growth turned the nation into the largest oil consumer after the U.S. and as crude prices reached a record $96.24 a barrel in New York. Demand For Shares Investors applied for more than 3.3 trillion yuan of stock, almost 50 times the amount PetroChina sold. Chinese companies now represent five of the world's 10 largest by market value, raising investor concerns that the market is too expensive. Billionaire investor Warren Buffett's Berkshire Hathaway Inc. sold its stake in PetroChina this year, reaping an eightfold gain that contributed to a 64 percent increase in third-quarter profit for the Omaha-based company. Berkshire had 2.34 billion shares as of the end of 2006, the largest holding after state-owned China National Petroleum Corp. Buffett said on Oct. 24 that Chinese share prices have risen too fast. ``It's easy to be carried away in the stock market when things are going very well,'' he said in the northern Chinese city of Dalian. ``We at Berkshire never buy stocks when we see prices soaring.'' `Limited Upside' Gains in PetroChina's Class-A stock in Shanghai may have more to do with Chinese investors seeking returns from their $2.3 trillion in savings than the outlook for the company's exploration and production operations, or its refining business, known as downstream, said Larry Grace, an oil analyst at Kim Eng Securities Co. in Hong Kong. ``Production is static with limited upside for the next three to four years,'' Grace said. ``As for the downstream, the price controls and overall regulatory trend limit the company's earnings.'' China controls fuel prices to shield consumers in the world's most-populous nation from accelerating inflation. The policy limits the ability of PetroChina and China Petroleum & Chemical Corp. to pass on the burden of higher crude oil costs. UBS AG's China venture, UBS Securities Co., Citic Securities Co. and China International Capital Corp. arranged PetroChina's Shanghai share sale.
