Oct. 15 (Bloomberg) -- PetroChina Co. gained the most in five months in Hong Kong trading as oil rose to a record above $85 a barrel, vaulting the state-owned oil producer over General Electric Co. to become the world's second-largest company.
The stock climbed 13 percent, valuing Beijing-based PetroChina at HK$3.36 trillion ($434 billion), compared with General Electric's $420 billion. Asia's biggest company is closing in on Exxon Mobil Corp.'s $518 billion value.
The rally, part of a record year for Chinese stocks, underscores PetroChina's key role in supplying oil to the world's fastest-growing major economy. U.S. billionaire Warren Buffett sold more than half of his stake in PetroChina this year. The stock has soared 14-fold since its 2000 public share sale.
``Chinese oil companies deserve higher valuations compared with their international peers, given the strong domestic economy and an expected influx of capital from mainland investors,'' said Wang Jing, a senior oil analyst with Orient Securities Co. Ltd. in Shanghai.
PetroChina may make further discoveries in the northern Liaohe and Dagang areas, Chairman Jiang Jiemin said at the Communist Party congress in Beijing today. The offshore finds will add to reserves from the Jidong Nanpu field, the nation's largest oil find in almost half a century.
China's biggest oil producer climbed as much as 14 percent to a record HK$18.94 a share and closed at HK$18.78 at 4 p.m.
`Share Surge'
``Petrochina's share surge is mainly due to investors' expectations of the company's further growth, high oil prices and a good market outlook,'' Jiang told reporters in Beijing.
Shares of the company may debut on the mainland stock exchange next month, Jiang said. PetroChina has completed ``all procedures'' for the sale and the stock may start trading in Shanghai in November, he said.
China's stock market regulator on Sept. 24 approved PetroChina's plan to sell as many as 4 billion yuan-denominated so-called A shares in Shanghai. The stock sale may raise $5 billion to expand refineries and boost output at oil fields, according to plans set out in PetroChina's listing prospectus.
Benchmark oil prices in New York today rose as much as 1.8 percent to a record $85.19 a barrel and traded at $84.87 at 7:32 p.m. Hong Kong time.
PetroChina and its nearest domestic rivals, China Petroleum & Chemical Corp. and Cnooc Ltd., led gains in Hong Kong amid increased optimism among fund managers after the Chinese government said on Aug. 20 that some of its citizens will be allowed to invest in the territory's shares. Household savings in China total $2.3 trillion and JPMorgan Chase & Co. estimates $60 billion of that may flow into Hong Kong in the next year.
Exodus
The plan to allow investment in Hong Kong shares has been delayed, officials at China's bank regulator said on Sept. 5 because of concern about a potential exodus of funds from stock exchanges in Shanghai and Shenzhen.
Almost all of this year's 44 percent gain in the Hang Seng Index, dominated by Chinese companies, took place since the government announcement. The Hang Seng advanced 3.6 percent last week and climbed above 29,000 for the first time. The 2007 gain compares with 40 percent for the Morgan Stanley Capital International Emerging Markets Index, 10 percent for the Standard & Poor's 500 Index and 7 percent for the Dow Jones Stoxx 600 Index of European shares.
Berkshire
Buffett's Berkshire Hathaway Inc. pared its stake in the Beijing-based company's Hong Kong stock to 3.1 percent from 11 percent in May, according an Oct. 10 U.S. stock exchange filing. As of the end of last year, Berkshire was the largest non- government shareholder, with about 13 percent of the publicly held stock, according to Berkshire's annual report.
Berkshire first reported disposing of its PetroChina shares two months after calls by activists for investors to shed PetroChina shares because the company's state-run parents has developed fields in Sudan, whose government is accused by the U.S. of supporting genocide.
PetroChina's third-quarter production climbed 5.6 percent to the equivalent of 275.4 million barrels (about 3 million barrels a day), the company said today. The output growth outpaced second-quarter production at Royal Dutch Shell Plc and Chevron Corp.
`Strong Buy'
``The overall growth in oil and gas output accelerated in the third quarter,'' said Gordon Kwan, head of China energy research at CLSA Ltd. ``The stock is a strong buy on the back of these statistics.''
PetroChina expects to outspend Exxon and Shell this year as it drills deeper and further afield and expands refineries. Capital spending may jump to 185.7 billion yuan this year from 148.7 billion yuan in 2006, the company said in March.
Exxon, the world's biggest oil company, set a capital budget of $21 billion for this year, the Irving, Texas-based company said March 7. Shell, Europe's largest oil company, said Feb. 1 it will spend as much as $23 billion to stem an expected fifth year of declining production.
PetroChina on Aug. 23 reported first-half net income rose 1.4 percent to a record 81.83 billion yuan as refineries returned to profit and tax payments fell.
