China Petroleum and Chemical Corporation
), also known as Sinopec, reported full year 2012 net income of
63.50 billion yuan (US$10.05 billion) and earnings per share of
0.704 yuan ($11.14 per ADS) as per the Chinese reporting
standards. The reported figure beat the Zacks Consensus Estimate
of 10.59 per ADS thanks to the growth in both oil and gas reserve
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However, earnings dropped 11.4% year over year mainly on account
of slower domestic economic growth in the first half of the year.
Full-year revenues improved 11.2% to 2,786.0 billion yuan from
2,505.7 billion in the prior year.
During the 12-month period ending Dec 31, 2012, Sinopec's crude
oil production expanded 2.0% year over year to 328.3 million
barrels, while natural gas volumes spiked 15.7% to 598.0 billion
cubic feet. Domestic crude oil production increased 1.1% year
over year to 306.6 million barrels though overseas volumes
increased a considerable 18.1% year over year.
Total oil and gas production surged 4.9% to 428 million barrels
of oil equivalent. For 2013, Sinopec − Asia's largest refiner and
China's second largest oil and gas company − plans to produce
46.4 million tons of crude oil and 18.1 billion cubic meters of
The company's Refining business recorded refinery throughput of
221.31 million tons (up 1.8% year over year). It also produced
approximately 133 million tons of oil products, which represents
a 3.9% improvement from the previous year. For 2013, Sinopec
plans to refine 238 million tons of crude oil.
The Marketing and Distribution segment sold 173.15 million tons
of refined oil products, reflecting a 6.7% year-over-year
The output of ethylene from the Chemicals segment was 9.452
million tons, down 4.5% from the year-ago level.
Capital expenditures for 2012 totaled 168.968 billion yuan, of
which 79.071 billion yuan was spent on exploration projects in
key oilfields, including Shengli shallow water oilfield,
northwest Tahe Oilfield, Ordos oil and gas fields, natural gas
exploration and development in Sichuan and the Shandong liquefied
natural gas (LNG) project.
In the Refining segment, Sinopec spent 32.161 billion mainly on
The Marketing and Distribution segment expended 31.723 billion
yuan for the construction and acquisition of gas stations on
highways, in important cities and newly planned regions. Capital
expenditures in the Chemicals segment totaled 23.616 billion
yuan, mainly due to the construction of the Wuhan ethylene plant,
the Yanshan butyl rubber project, the Yizheng butylene glycol
project as well as for the Anqing acrylonitrile and Luoyang
polypropylene projects and the Hainan aromatics.
As of Dec 31, 2012, the company's proven reserve of crude oil and
natural gas was 3.964 billion barrels of oil equivalent, down
marginally by 0.05% from the year-earlier period.
Sinopec remains highly exposed to government directed price
controls owing to its large downstream refining and
petrochemicals operations compared to its arch rival
) − China's largest listed oil company by capacity. Chinese
biggies are making deeper inroads these days into the
international energy markets with the specific aim of meeting
domestic demand as well as balancing the adverse effect of the
price control. As the world's second-largest economy, China has a
huge energy requirement.
Sinopec and its parent company − China Petrochemical Corp. or
Sinopec Group − expect to form a joint venture to get hold of
overseas oil and gas assets owned by the parent for about $3
billion. The approximately $1.5 billion project is mainly
intended to strengthen its reserves and production.
In this connection, it is worth mentioning that on Feb 25,
Sinopec inked a $1.02 billion deal with
Chesapeake Energy Corp.
). This gives the second-largest Chinese energy producer a 50%
share in 850,000 acres in the Mississippi Lime play in northern
Again, China's largest offshore oil producer,
) closed its $15.1 billion acquisition agreement with Canada's
Nexen Inc. in February. This deal marks a significant milestone
for CNOOC as it gets hold of Nexen's biggest reserves in the
Canadian oil sands.
Sinopec currently retains a Zacks Rank #4 (Sell).