Oil and gas giant PetroChina Company [[PTR]] is among today’s biggest losers by market capitalization, though it has company with American-based competitors Exxon Mobil Corporation [[XOM]] and Chevron Corporation [[CVX]] also on the list.
Though recent years have been exceptionally good to energy companies – the top six most profitable companies in the world in 2008 according to Fortune Magazine were all energy companies with Exxon Mobil holding the top spot despite the drop in oil prices.
Chevron and Exxon Mobil’s respective drops today stem from Chevron’s warning, issued in an 8-K filing, of weak second-quarter results due to lower refining margins combined with foreign currency losses due to the weakening of the U.S. dollar against most other major currencies. Exxon Mobil would be susceptible to similar problems.
Without American refining operations or major exposure to weakness in the U.S. dollar, Chevron’s announcement doesn’t explain PetroChina’s drop. Instead, investors may be responding unfavorably to macroeconomic conditions that are dragging major oil and gas companies down across the board today.
Also of possible concern, PetroChina received approval from the Chinese government to invest in Nippon Oil Corporation’s Osaka refinery. Though the deal itself is not particularly problematic, China’s commodity investment spree – described by some as the largest investment in the history of the world when tallied together – has some watchers worried that China is sometimes overpaying for access. The Nippon Oil deal comes on the heels of purchasing a major stake in Singapore Petroleum Co. for $1 billion and the announcement of talks to invest in a giant oil refinery in Scotland, PetroChina’s first attempted move into Europe.
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