Sinopec Touts $5.2B in 1H10, Up 6.7%

China Petroleum & Chemical Corporation (Sinopec) announced its interim results for six month periods ended 30 June, 2010.

Financial Highlights:

  • In accordance with the PRC Accounting Standards for Business Enterprises ("ASBE"), in the first half of 2010, the Company's operating income was RMB 936.5 billion, up 75.4% from the same period in 2009. Net profit attributable to equity holders of the company was RMB 35.4 billion, representing an increase of 6.7% over the same period of last year. Basic earnings per share was RMB 0.409, up 6.7% over the same period of last year.
  • In accordance with the International Financial Reporting Standards (IFRS), in the first half of 2010, the Company's turnover, other operating revenues and other income amounted to RMB 936.5 billion, up 75.4% from the same period in 2009. Net profit attributable to equity holders of the Company was RMB 35.5 billion, up 6.7% over the same period of last year. Basic earnings per share was RMB 0.409, up 6.7% over the same period of last year.
  • In the first half of 2010, the Company's total capital expenditure was RMB 34.796 billion.

Business Highlights

  • In the first half of 2010, the Company produced 149 million barrels of crude oil, flat from a year earlier; and produced 200.6 billion cubic feet of natural gas, representing an increase of 40.7% over the same period of last year. The Exploration and Production Segment recorded an operating profit of RMB 22.0 billion, representing a year-on-year increase of 299.7%.
  • Refinery throughput of crude recorded a year-on-year increase of 16.7% to 101.0 million tonnes. However, the refining segment generated an operating profit of the RMB 5.7 billion, representing a decrease of 71.4% from the same period of last year.
  • The total domestic sales volume of oil products reached 68.15 million tonnes, representing a year-on-year increase of 18.1%. The marketing and distribution segment recorded an operating profit of RMB 14.5 billion, representing a year-on-year increase of 15.5%.
  • The output of ethylene reached 4.202 million tonnes, up 41.3% over the same period of last year. The total sales of chemical products reached 23.678 million tonnes. The Chemicals Segment recorded an operating profit of RMB 8.3 billion, a decrease of 14.5% from the same period of last year.

Sinopec said in a statement, "In the first half of 2010, the Chinese economy grew relatively fast, with GDP reaching 11.1% over the same period of last year. The Chinese government raised the ex-factory base price of domestic onshore natural gas and piloted the oil & gas resources tax reform in Xinjiang Autonomous Region. Domestic demand for oil products and chemical products has grown steadily. The Company achieved encouraging operational results thanks to its exposure to upstream, mid-stream and downstream integration, focusing on satisfying customer needs, enhancing the coordination between production, sales and research, and optimizing the product mix in line with market demands."

BUSINESS REVIEW AND PROSPECTS - Exploration and Production Segment

In exploration, the Company made new discoveries in oil and natural gas exploration in Tarim Basin, southeastern and western Sichuan. In development and production, the Company enhanced development rates, recovery rates and single-well productivity. The Sichuan-to-Eastern China Gas Pipeline Project has achieved stable operation and the Company's natural gas production grew significantly over the same period last year. In the first half of this year, the Company produced 149 million barrels of crude oil, flat from a year earlier, and produced 200.6 billion cubic feet of natural gas, a significant increase of 40.7% over the same period of last year.

In the first half of 2010, operating revenues of the segment were RMB 81.5 billion, up 76.5% over the first half of 2009. Under the market condition featured by significantly increased crude oil prices, the Company achieved an operating profit of RMB 22.0 billion, a strong increase of 299.7% over the first half of 2009. The average realized selling price of crude oil and natural gas were RMB 3,422 per tonne and RMB 1,059 per thousand cubic meters respectively, representing an increase of 89.3% and 10.2% respectively over the same period of 2009.

CAPITAL EXPENDITURE

In the first half of 2010, the Company's total capital expenditure was RMB 34.796 billion. The capital expenditure for exploration and production segment was RMB 15.348 billion, which was mainly used for exploration of crude oil & natural gas resources and key capacity-building projects, with newly-built production capacity of 2.46 million tonnes per annum of crude and 0.17 billion cubic meters per annum of natural gas. The capital expenditure for the refining segment was RMB 4.875 billion, which was mainly used for upgrading oil products quality, refinery revamping projects to process low grade crude, and the storage facilities and pipeline construction projects. The capital expenditure for the marketing and distribution segment was RMB 7.659 billion, which was mainly used for building and acquiring service stations in key areas, accelerating the construction of pipelines, improving the sales network of refined products, and developing 838 service stations. The capital expenditure for the chemicals segment was RMB 6.543 billion, with which the ethylene project in Zhenhai was completed and such key projects as the ethylene project in Wuhan progressed well. The capital expenditure for corporate and others was RMB 371 million.

Business Prospects

China will further implement policies to increase domestic demand, sustain economic growth, adjust structure and transform economic growth pattern. As a result of these measures the Chinese economy is expected to continue to grow relatively fast. The international crude oil price in the second half of 2010 is expected to continue to fluctuate within certain range, while domestic demand for both oil products and chemical products is expected to maintain its steady growth.

In respect of exploration and production, the Company will further optimize the exploration portfolio, attach particular emphasis on the planning of geophysical exploration, and give impetus to sound development of exploration. The Company will enhance the execution of various development and production activities, increase the construction of production capacity and focus on improving development rates, recovery rates, and single well productivity. Meanwhile, the Company will work to ensure smooth connection between production and sale, as well as safe transmission of natural gas. In the second half of this year, the Company plans to produce 21.54 million tonnes of crude oil and 6.32 billion cubic meters of natural gas.

In the second half of 2010, Sinopec Corp will actively adjust its business structure, expand its markets, enhance precise management, endeavor to achieve further progress on cost savings, tap potentials to increase profitability, and strive for delivering an excellent performance.

 

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