Shares of Asia's top oil and gas company, PetroChina Co Ltd, jumped 13 percent on Monday as news of increased production and hopes of major new discoveries spurred optimism about its performance in the fourth quarter.

The share surge to an all-time high of HK$18.94 gave the state-backed energy producer a market value of as much as US$430 billion, outpacing General Electric as the world's most highly valued listed company after Exxon Mobil.

PetroChina's shares, which ended at HK$18.78, have soared some 60 percent since the start of September as Chinese media reports of big new oil and gas finds fuelled voracious demand for the stock.

Investors also have been hoping for good news timed to coincide with the Communist Party's five-yearly Congress this week and PetroChina's planned Shanghai share listing this quarter, which is expected to raise around $7-8 billion.

PetroChina Chairman Jiang Jiemin told reporters on Monday that the company would start investor presentations in late October and the shares would possibly start trading next month.

We believe after the company's A-share listing is launched next month PetroChina is likely to announce a number of substantial oil and gas discoveries, said Citigroup energy analyst Graham Cunningham in a research report. We thus expect strong short-term (2-3 months) share price performance.

PetroChina spokesmen were not immediately available to comment on the reports of new discoveries.

The firm added to the optimism on Monday with third-quarter production data showing it had pumped more oil and gas while managing to pass price rises on to its customers.

Larry Grace from Kim Eng Securities said that although the report was positive, it contained few surprises, but enthusiastic investors were likely to charge in to the stock regardless.

I look at the fundamentals but mainland (Chinese) investors do not. They just want to buy it, he said.

Another analyst, who declined to be identified, said that despite PetroChina's soaring valuation, oil stocks had lagged share prices in other sectors in China.

PetroChina's state-backed stablemates Sinopec Corp soared nearly 14 percent and CNOOC Ltd rose nearly 10 percent on Monday, easily outpacing a 3.5 percent gain in the index of Chinese firms listed in Hong Kong.

STEPPING ON THE GAS

PetroChina's third-quarter report showed oil and gas output grew 5.6 percent, up from a 3.7 percent year-on-year rise in the first half of 2007 and bringing PetroChina towards its full-year target of 5.3 percent, which it said it was on track to meet.

It banks more profit from high oil prices than Sinopec and has enjoyed a rebound in oil prices this year after a slump to a 19-month low towards $50 a barrel in January.

World oil prices hit fresh record highs on Monday with U.S. crude rising $1 to $84.69 a barrel and North Sea Brent crude also gaining $1 to a new record high of $81.55.

But Citigroup's Cunningham said PetroChina was now 10-15 percent overvalued relative to the oil majors, based on a price-to-earnings comparison, and he favoured moving to Sinopec, which he flipped from a sell to a buy.

With prices of crude oil rising and refined fuel prices capped by the state, Chinese refineries struggle to make ends meet. But PetroChina said its prices for fuels such as gasoline, kerosene and diesel were all higher in the first nine months of 2007 than in the corresponding period of 2006.

Its realised gasoline prices were up 4 percent while kerosene rose almost 10 percent and diesel rose more than 11 percent.

They have exported a tonne of diesel and gasoline to get the price up, Grace said.

The bulk of the production increase was from natural gas, which rose 16.8 percent compared with the same period of 2006, while crude oil output grew by a more modest 0.9 percent.

But Grace said even relatively flat oil output was impressive, given the need to replace old fields with new finds.

Before the production report, CLSA analyst Gordon Kwan said he was raising his target price for PetroChina to HK$20 per share based on a sum-of-the-parts valuation of existing opportunities. (Additional reporting by Chen Aizhu in Beijing)

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