China Petroleum and Chemical Corporation SNP, also known as Sinopec, reported net income of 1.7 billion yuan (US$0.3 billion) or 0.014 yuan per diluted share for the first quarter of 2015. The bottom line came in significantly below 13.5 billion yuan (US$2.2 billion) or 0.115 yuan per diluted share reported a year ago.
For the first three months ended Mar 31, 2015, revenues declined 25.4% to 478.24 billion yuan (US$77.7 billion) from 641.1 billion yuan (US$104.8 billion) in 2013. This was primarily owing to a fall in the price of crude oil and petrochemical products.
Operational Performance
During the period ended Mar 31, 2015, Sinopec’s crude oil production declined 2% year over year to 87.55 million barrels, while natural gas volumes increased 2.1% year over year to 181.06 billion cubic feet. Domestic crude oil production fell 4.4% to 74.01 million barrels, while overseas volumes rose 6% year over year to 13.54 million barrels.
Total oil and gas production decreased about 1% year over year to 117.82 million barrels of oil equivalent.
A decline in crude oil prices along with increasing expenses resulted in the Exploration and Production (E&P) segment’s operating loss of 1.23 billion yuan (US$0.2 billion).
The company’s Refining business recorded refinery throughput of 58.58 million tons, up 2.4% from the year-ago level.
The Marketing and Distribution segment sold 46.49 million tons of refined oil products, reflecting a 10.3% year-over-year increase.
The output of ethylene from the Chemicals segment was 2.768 million tons, up 7.3% from the prior-year level.
Capital Expenditure
For first quarter, capital expenditures totaled 7.116 billion yuan.
Capital expenditure for the E&P segment was RMB 2.995 billion, mainly due to the development oil and gas production capacities at various oil and gas fields, including Shengli oilfield, Tahe oilfield, Yuanba gas field and Fuling shale gas project. Construction of long-distance oil and gas pipeline projects, and the overseas projects added to the expenses.
Capital expenditure for the Refining Unit was RMB 1.061 billion, primarily because of upgrading refinery and revamping projects.
In the Chemicals segment, RMB 1.299 billion was used for feedstock mix optimization and environmental protection projects.
Capital expenditure for the Marketing and Distribution segment was RMB 1.580 billion. This was due to the development and revamp of service stations (including gas stations), construction of depots and oil product pipelines, ensuring safety and improving the environment.
A total of RMB 181 million was used for Corporate and Other purposes such as construction of R&D facilities and IT projects.
Stocks that Warrant a Look
Other stocks from the oil and gas sector that are worth considering are Valero Energy Partners L.P. VLP, CNOOC Ltd CEO and Hallador Energy Company HNRG.
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