Oil price rise helps to boost Sinopec profit

PUBLISHED : Friday, 29 October, 2010, 12:00am
UPDATED : Friday, 29 October, 2010, 12:00am

China Petroleum & Chemical (Sinopec), the nation's second largest oil and gas producer, posted a 14.8 per cent year-on-year rise in third quarter net profit on higher oil prices.

Net profit was 19.62 billion yuan (HK$22.75 billion), up from 17.09 billion yuan in the year-earlier quarter, it said last night. Oil and gas production operating profit surged 61 per cent year-on-year to 18.9 billion, but chemical production profit plunged 62 per cent to 1.67 billion yuan. Refining and fuel marketing profit was flat at 11.3 billion yuan.

Profit for the first nine months grew 11.6 per cent to 56.4 billion yuan.

Rival PetroChina's share price yesterday fell 0.5 per cent to HK$9.54 despite it posting a 12.5 per cent year-on-year rise in net profit to 34.7 billion yuan, 3 per cent ahead of analysts' expectation.

The third-quarter profit is 6 per cent higher than that of the second, thanks to a 25 per cent jump in gas price since June 1, despite a 2.9 per cent decline in oil and gas output and a 5.7 per cent fall in average oil selling price to US$70.5 a barrel. Refined fuel and chemicals output also fell, as demand weakened due to Beijing's economic tightening.

Profit for the first nine months grew 12.3 per cent year-on-year to 100 billion yuan, on the back of a 46.3 per cent jump in oil selling price to US$71.8 and a 4 per cent increase in oil and gas output. The benefits were offset by weak refining operations due to fuel price controls and lower chemical profits.

Meanwhile, offshore oil and gas producer CNOOC yesterday reported a 64 per cent rise in revenues for the third quarter to 38.9 billion yuan, thanks to a 48.8 per cent jump in output to 88.7 million barrels of oil equivalent (boe) and a 9.3 per cent rise in average oil selling price to U$74.15.

It raised its annual output target to 319 million to 329 million boe, 14.7 per cent higher than the previous target of 275 million to 290 million boe if mid-points are compared.

Sanford Bernstein analyst Neil Beveridge said in a research note he may raise his earnings forecast on CNOOC for this year by 6 to 7 per cent as the new target is ahead of his estimate of 305 million boe.

Sister firm China Oilfield Services' share price gained 2.7 per cent yesterday to HK$12.3, after reporting a 29.4 per cent year-on-year decline in net profit to 1.25 billion yuan. Nine-month profit was up 22 per cent to 3.4 billion yuan. A Goldman Sachs research note said the third-quarter profit would have risen had it not booked a one-off, non-cash accounting item resulting in higher revenues last year. The nine-month profit amounted to 91 per cent of analysts' estimate as polled by Bloomberg. Fourth-quarter net was 11 per cent of the annual total in 2008 and last year.

On the up

China Petroleum & Chemical's net profit was 19.62 billion yuan

It posted a year-on-year rise in third quarter net profit of: 14.8%