PetroChina: Is It Time To Buy?

Year to date, the stock price for PetroChina (PTR), the largest integrated oil company in China, has fallen 13.5%. Given the recent volatility in the price of oil, this is not surprising. However, one has to wonder, is the current drop in price a great opportunity for long term investors to either add shares to existing positions or add PTR to their portfolio? Common sense would dictate that it is. China is one of the fastest and largest economies in the world with a rapidly growing middle class. Furthermore, PetroChina is partially state controlled meaning that the company is in a position to receive favorable treatment from the Chinese government, that would not be afforded to say Exxon-Mobil or BP, in regards to everything from access to drilling on government property to access to debt financing from government lending associations. Warren Buffet even has a stake in the company, which in my opinion is a testament to management's character and ability. The company is also heads and tails above most emerging market companies in terms of their accounting standards and PetroChina meets the requirements for listing on the NYSE as an ADR (American Depository Receipt). As for the fundamentals, the company is trading within its historical norms from Price to Earnings and other popular valuation measurements. While future growth depends on the company's ability to continue to replace reserves and the price of oil and natural gas remaining high, the likelihood of gas or oil prices falling significantly for any length of time is in my opinion almost negligible. Those analysts currently making statements to the affect that we will soon see $40 a barrel or lower oil are just plain wrong. As far as PTR being able to replace its reserves, the company has a very good record at not only replacing 100% of its existing reserves, but increasing them. Another plus for shareholders of PTR is the enormous dividend the company pays out. The current yield on the stock is about 4%.

The only dangers I see for investors is a breakdown in the Chinese economy such as a recession. To answer my own question, I do think its time to load up on PTR (Currently, I do not own this stock).