Here Is Where PetroChina Really Beats Exxon
http://www.forbes.com/sites/kenrapoza/2015/04/12/when-it-comes-to-oil-petrochina-still-not-as-big-as-exxon/
Whenever the market capitalization of PetroChina approaches or passes that of ExxonMobil, it becomes a headline. This has been going on for the past three years. It happened in 2012. It happened again on Thursday. And then by Friday’s closing on the NYSE, Exxon’s market cap was $358.9 billion to PetroChina’s $352 billion. The Exxon vs. PetroChina story is part of the overall narrative of China catching up to, and even replacing, the U.S. in world dominance.
But while PetroChina is a staple investment in all large cap China investment funds, including the iShares FTSE China (FXI) exchange traded fund, it is not bigger than Exxon when it comes to what matters: oil and the technology to pull it out of the ground.
As an investment, PetroChina trades fairly close to Exxon in terms of price. It’s just 13.9x trailing earnings compared to Exxon’s multiple of 11.2x. Investors who want to be part of China’s thirst for oil and don’t have a problem investing in state run enterprises, will buy PTR outright. There is no competition for investors, as one has a stake in the U.S. and the other has a stake in China.
That said, the story of Exxon being beat by PetroChina is mainly a market-cap story, one at the volatile whims of the market that has nothing to do with the realities of either companies. The market values China more on Monday, values it less on Tuesday, and so on. The fundamentals at the two oil giants are different, and in this regard, Exxon has more assets and is therefore worth more that PetroChina.