March 24, 2019 - 7:10 PM EDT
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Sinopec's Net Profit Up Over 20% to RMB 61.6 Billion in 2018

Achieve Solid Development across All Four Core Business Segments; Total Cash Dividends Reaches RMB 50.8 Billion

BEIJING, March 25, 2019 /PRNewswire/ -- China Petroleum & Chemical Corporation ( "Sinopec Corp." or the "Company") (HKEX: 386; SSE: 600028; NYSE: SNP) today announced its annual results for the twelve months ended 31 December 2018.

Financial Highlights

  • In accordance with IFRS, the Company's turnover and other operating revenues reached RMB 2.89 trillion. Profit attributable to equity shareholders of the Company was RMB 61.6 billion, up 20.2% year-on-year. Basic earnings per share were RMB 0.509.
  • In accordance with ASBE, the Company's operating profit was RMB 101.5 billion, up 16.7% year-on-year. Profit attributable to shareholders of the Company was RMB 63.1 billion, up 23.4% year-on-year. Basic earnings per share were RMB 0.521.
  • In accordance with IFRS, the Company's liability-to-asset ratio as at the end of 2018 was 46.21%, which represented a slight decrease of 0.33 percentage points compared with the end of the previous year. The Company maintained a sound financial position. Cash and cash equivalents amounted to RMB 111.9 billion as at 31 December 2018, maintaining at a healthy level.
  • In upstream, we made great efforts to enhance oil and gas exploration and production and achieved domestic crude oil reserves replacement ratio of 132%. Meanwhile, we pushed ahead with the construction of natural gas production, supply, storage and marketing system, rapidly increasing natural gas production and sales volume. Operating profit of the refining segment totaled RMB 54.8 billion; Operating profit of the chemicals segment was RMB 27.0 billion; Operating profit of the marketing and distribution segment was RMB 23.5 billion.
  • Taking into account the Company's profitability, shareholder returns and the future development, the Board of Directors proposed a final dividend of RMB 0.26 per share. Combined with the interim dividend of RMB 0.16 per share, the total dividend for the year is RMB 0.42 per share. Dividend payout ratio and dividend yield reached 82.5% and 7.4%, respectively.

Business Highlights

In 2018, the global economic recovery was slow while China maintained an overall stable economic performance with its GDP up by 6.6%. International oil prices fluctuated in a wide range. Domestic demand for natural gas grew rapidly. Domestic oil products market saw fierce competition because of oversupply, and demand for chemicals increased steadily. Meanwhile, China's environmental regulations became more stringent. The Company actively coped with market changes by focusing on reform, management, innovation and development. We coordinated all aspects of our work by pressing ahead measures for optimised operation, market expansion, cost reduction, risk control, reform promotion, and management enforcement, which helped the company achieve solid operating results.

  • Exploration and Production segment: pressed ahead with high efficiency exploration and profit-oriented development, continuously reduced cost and expenditure on all fronts. Tangible results were achieved in maintaining oil production, increasing gas output and reducing cost. We reinforced preliminary exploration in new areas and strengthened integrated detailed evaluation in mature fields, which led to new discoveries in Tarim, Yin'e and Sichuan basins. In natural gas development, we constantly pushed forward capacity building in Hangjinqi of Neimongol, the eastern slope of west Sichuan Depression and Weirong shale gas fields. We optimised production and distribution and promoted a coordinated growth along the value chain.
  • Refining segment: continuously optimised product mix and the production volume of high-value-added products have been further increased. We proactively promoted structural adjustment and quality upgrading projects, the GB VI standard upgrading is completed successfully. Optimisation of production plans and resources allocation were carried out to reduce crude oil cost.
  • Marketing and Distribution segment: aimed to achieve a balance between sales volume and profits; brought our advantages of integrated business and distribution network into full play and confronted with fierce market competition, thus, achieved sustained growth in both total domestic sales volume and retail scale. Non-fuel business maintained rapid growth.
  • Chemicals segment: adhered to the development philosophy of "basic plus high-end" to enhance effective supply; intensified its efforts to enhance the efficiency of the integration among production, marketing, R&D, and application. The ratio of high-value-added synthetic products continued to increase. Total chemical sales volume achieved robust growth.

Mr. Dai Houliang, Chairman of Sinopec Corp. said, "In 2018, we adhered to the general principle of making progress while maintaining stability, following the new development philosophy and requirements for high-quality development, we fully exerted the advantages of the integrated value chain. We made great efforts in optimizing operation, expanding market, reducing costs, controlling risks, deepening reforms, reinforcing management, and launching the Talent Empowering Enterprise Scheme. We successfully dealt with various risks and challenges, made progress in many aspects and pushed forward the sustainable development in an all-round way. We constantly improved the Company's development quality by optimising production and operation, actively expanding markets, accelerating structural adjustment, and further promoting scientific and technological innovations, which strengthened our competitiveness. In 2019, the Company will adhere to the overall strategy of pursuing progress while maintaining stability, fulfill our due responsibilities and make more efforts in implementing our plans so as to lay solid foundation for sustainable development. Meticulous planning will be made to secure stable operation and to boost operational quality and profitability. Besides, we will strive to implement reform and to improve motivation and incentive mechanisms. Foundation will be consolidated, risk control will be strengthened, and operation and management standards will be further enhanced. In addition, we will strongly promote technological innovations to drive our future growth. We advance structural reform by building a solid resource foundation for sustainable development, strengthening the overall competitiveness of the value chain of refining and marketing businesses, and enhancing our capability in high-end production and value creation of chemical business. With an aim to build the Company into a green enterprise with high quality, we will make vigorous efforts in pollution prevention and environmental protection to raise the level of our green development. Moreover, we will explore and capture strategic emerging business opportunities through financial investments, thereby cultivating new growth drivers."

Business Review

Exploration and Production

In 2018, we pressed ahead with high efficiency exploration and profit-oriented development. Measures were taken to accelerate the formation of an integrated value chain of natural gas business including production, supply, storage and marketing and continuously reduce cost and expenditure on all fronts. Tangible results were achieved in maintaining oil production, increasing gas output and reducing cost. We reinforced preliminary exploration in new areas and strengthened integrated detailed evaluation in mature fields, which led to new discoveries in Tarim, Yin'e and Sichuan basins. The Company's newly added proved reserves in China reached 458.2 million barrels (64.54 million tonnes) of oil equivalent, with crude oil reserve replacement ratio at 131.7%. In crude oil development, we made a full-fledged push to build profitable production capacity, deepen the structural adjustment of mature fields, reduce natural decline rate and ensure steady production. In natural gas development, we constantly pushed forward capacity building in Hangjinqi of Neimongol, the eastern slope of west Sichuan Depression and Weirong shale gas fields. We optimised production and distribution and promoted a coordinated growth along the value chain. The Company's production of oil and gas reached 451.46 million barrels (63.50 million tonnes) of oil equivalent, with domestic crude production registering 248.93 million barrels (35.06 million tonnes) and natural gas production totaling 977.32 billion cubic feet (27.7 billion cubic meter), up by 7.1%.

In 2018, the operating revenues of this segment was RMB 200.2 billion, representing an increase of 27.1% over 2017. This was mainly attributed to the rise of realised price of crude oil and natural gas as well as the expansion of natural gas and LNG business. By capturing the recovery of crude oil price, the segment reinforced efficient exploration, enhanced profitable production of refined reservoir, promoted stable production of crude oil, and rapidly expanded production of natural gas. Operating loss of the exploration and production segment was RMB 10.1 billion, representing a significant reduced loss of RMB 35.8 billion as compared with 2017.

Exploration and Production: Summary of Operations


Twelve-month periods ended 31
December

Changes

2018

2017

%

Oil and gas production (mmboe)

451.46

448.79

0.6

Crude oil production (mmbbls)

288.51

293.66

(1.8)

China

248.93

248.88

0.02

Overseas

39.58

44.78

(11.6)

Natural gas production (bcf)

977.32

912.50

7.1

 

Refining

In 2018, with market-oriented approach, we optimised product mix to produce more gasoline, jet fuel and chemical feedstock, production of high value-added products further increased, and diesel-to-gasoline ratio declined to 1.06. We proactively promoted structural adjustment and quality upgrading projects, the GB VI standard upgrading is completed successfully. We moderately increased the export of oil products to keep a relatively high utilisation rate. Optimisation of resources allocation were carried out to reduce crude oil cost. In 2018, the Company processed 244 million tonnes of crude oil, up by 2.3% and produced 155 million tonnes of refined oil products, up by 2.7%, with gasoline up by 7.2% and kerosene up by 7.6% year on year.

In 2018, the operating revenues of this segment was RMB 1,263.4 billion, representing an increase of 24.9% over 2017. This was mainly attributed to the increase in products prices, as well as the Company's efforts in expanding the refinery throughput and increasing the sales volumes. Operating profit of the segment totaled RMB 54.8 billion.

Refining: Summary of Operations


For the twelve months
ended 31 December

Changes

2018

2017

(%)

Refinery throughput (million tonnes)

244.01

238.50

2.3

Gasoline, diesel and kerosene production (million tonnes)

154.79

150.67

2.7

Gasoline (million tonnes)

61.16

57.03

7.2

Diesel (million tonnes)

64.72

66.76

(3.1)

Kerosene (million tonnes)

28.91

26.88

7.6

Light chemical feedstock production (million tonnes)

38.52

38.60

(0.2)

Light yield (%)

76.00

75.85

0.15 percentage
points

Refining yield (%)

94.93

94.88

0.05 percentage
points

Note: Includes 100% of the production of domestic joint ventures.

Marketing and Distribution

In 2018, confronted with fierce market competition, the Company aimed to achieve a balance between sales volume and profits. We brought our advantages of integrated business and distribution network into full play, and increased marketing efforts, thus, achieved sustained growth in both total domestic sales volume and retail scale. We adopted a flexible and targeted marketing strategy and upgraded our distribution network to further strengthen our existing advantages. We proactively promoted vehicle natural gas business and accelerated the construction and operation of CNG stations. Total sales volume of refined oil products for the year was 198 million tonnes, of which domestic sales volume accounted for 180 million tonnes. Meanwhile, we strengthened development and marketing of self-owned brands to speed up the growth of non-fuel business.

In 2018, the operating revenues of this segment was RMB 1,446.6 billion, representing an increase of 18.2% over 2017. Operating profit of this segment was RMB 23.5 billion.

Marketing and Distribution: Summary of Operations


For twelve months
ended 31 December

Changes

2018

2017

%

Total sales volume of refined oil products
(million tonnes)

198.32

198.75

(0.2)

Total domestic sales volume of refined oil
products (million tonnes)

180.24

177.76

1.4

Retail (million tonnes)

121.64

121.56

0.1

Direct sales and Wholesale
(million tonnes)

58.61

56.20

4.3

Annualised average throughput per station
(tonne/station)

3,979

3,969

0.3

 


As of 31
December
2018

As of 31
December
2017

Changes
from the end
of previous
year (%)

Total number of Sinopec-branded service
stations

30,661

30,633

0.1

Company-operated

30,655

30,627

0.1

Chemicals

In 2018, the Company adhered to the development philosophy of "basic plus high-end" to enhance effective supply. We persistently fine-tuned chemical feedstock mix to lower cost. We optimised products slate and increased high-end products output. The ratio of new and specialty products in synthetic resin reached 64.3%, the ratio of high-value-added products in synthetic rubber amounted to 26.3%, and our differential ratio of synthetic fibre reached 90.4%. By optimising utilisation rate and production plan based on market demand, we improved the operation of chemical units. To reinforce the capacity structural adjustment, we actively promoted several key projects. Annual ethylene production was 11.51 million tonnes. The Company also intensified its efforts to enhance the efficiency of the integration among production, marketing, R&D, and application as well as promoted targeted marketing and servicing to further expand our business, with total chemical sales volume increased by 10.3% to 86.6 million tonnes, hitting a record high.

In 2018, the operating revenue of the chemicals segment was RMB 546.7 billion, representing an increase of 24.9% as compared with that of 2017, This was mainly due to increase in sales volume and price of chemical products as a result of the Company's effort in actively expanding sales volume and market share, optimising product mix. In 2018, the segment seized the opportunities of high chemical margin, continuously optimised the structures of feedstock, product and facilities, strengthened the coordination among research, development, production and marketing, intensified allocation of resources, improved targeted marketing strategy, and achieved remarkable profits with increased sales volume of petrochemicals. In 2018, the operating profit of this segment was RMB 27.0 billion.

Major Chemical Products: Summary of Operations          Unit of production: 1,000 tonne


For twelve months
ended 31 December

Changes

2018

2017

(%)

Ethylene

11,512

11,610

(0.8)

Synthetic resin

15,923

15,938

(0.1)

Synthetic fiber rubber

896

848

5.7

Synthetic fiber monomer and polymer

9,343

9,439

(1.0)

Synthetic fiber

1,218

1,220

(0.2)

Note: Includes 100% of the production of domestic joint ventures.

Research and Development

In 2018, with the emphasis on reinforcing innovation-driven strategy, the Company accomplished notable results in R&D, deepened reform of R&D mechanism and pushed ahead with efforts in key and frontier technologies. In upstream segment, further advancement in evaluation technology of buried hill bedrock and deep carbonate reservoir and fracturing technology of deep shale gas field brought the breakthroughs in the exploration of Guaizihu Depression in Yin'e Basin and new series of strata in Maokou Formation in Yuanba area as well as the discovery of Weirong deep shale gas field. The pilot test of 185℃ high temperature measurement while drilling was successfully conducted in the ultra-deep well in Shunbei. In refining, we realised the industrialization of technologies including new sulfuric acid alkylation and hydro-isomerisation dewaxing for producing high grade base oil. In chemicals, the industrial demonstration unit of HPPO achieved stable operation and new products like PE film turned into commercial production. In addition, SOR, the framework type code of a novel structured zeolite synthesized by us, has been approved by the Structure Commission of International Zeolite Association, making us the first Chinese company to achieve a breakthrough in this area. In 2018, the Company had 6,074 patent applications at home and abroad, among which 4,434 were granted. The Company also won one second prize of National Technology Invention and three second prizes of National Sci-tech Progress, four silver and four excellent prizes of National Patent Awards.

Health, Safety, Security and Environment

In 2018, the Company constantly promoted the HSSE management. We implemented the concept of "Comprehensive Health" by integrating the management of occupational, physical and mental health of our employees. The Company took stringent measures to control risks and supervise the safety and operations of contractors. We also strengthened safety measures at all levels, removing potential hazards and enhancing our emergency response capability, all achieved sound and reliable production and operation. Public security management capability was strengthened with improvement in risk evaluation, monitoring and early warning and emergency response mechanism. The green and low-carbon growth strategy was further carried out by promoting clean energy and green development, such as steadily pushing forward our Green Enterprise Campaign and Efficiency Doubling Plan. We accomplished all emission reduction targets by pursuing clean production and preventing pollutions.

Capital Expenditures

In 2018, focusing on quality and profitability of investment, the Company continuously optimised its capital projects, with total capital expenditures of RMB 118 billion. Capital expenditure for the exploration and production segment was RMB 42.2 billion, mainly for Fuling and Weirong shale gas development projects, Hangjinqi natural gas development project, Shengli and Northwest crude oil development projects, phase I of Xinjiang gas pipeline, phase I of Erdos-Anping-Cangzhou gas pipeline, Wen 23 and Jintan gas storages, as well as overseas projects. Capital expenditure for the refining segment was RMB 27.9 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Luoyang refineries, the gasoline and diesel GB VI quality upgrading projects and the construction of Rizhao-Puyang-Luoyang crude pipeline. Capital expenditure for the marketing and distribution segment was RMB 21.4 billion, mainly for construction of oil products depots, pipelines, service stations, non-fuel business and the renovation of underground oil tanks to remove potential safety hazards. Capital expenditure for the chemicals segment was RMB 19.6 billion, mainly for ethylene projects in Zhongke, Zhenhai and Gulei, Phase II of Hainan high-efficiency and environmentally-friendly aromatics project, Sinopec-SABIC Polycarbonate project and Zhongan coal chemical project. Capital expenditure for corporate and others was RMB 6.9 billion, mainly for setting up the joint-venture of Sinopec Capital Company with Sinopec Group, R&D facilities and information technology projects.

Business Prospects

Looking ahead to 2019, the international economy is expected to show a slower growth rate in the midst of a complex and uncertain global political and economic environment. Meanwhile, continued growth of China's economy will further drive up domestic demand for high-end refined oil products and petrochemicals. As the adjustment of China's energy mix deepens, demand for natural gas will continue to grow at a rapid pace. Considering uncertainties of supply capacity of major oil producing countries, global oil demand and geopolitical issues, etc., the international oil price is expected to fluctuate within a wide range.

Operations In 2019, adhering to the general principle of seeking progress while maintaining stability, the new development philosophy and the operating guidelines of "specialised development, market-based operation, international-isation and overall coordination". The following activities will be prioritized during the year.

Exploration and Production, by fully implementing the action plan of redoubling efforts in oil and gas exploration and production, we will advance high-efficiency exploration, continuously increase proved reserves and expand resource base. In crude oil development, more efforts will be made in promoting the capacity building of the Tahe Oilfield, making technological breakthrough for undeveloped oil-bearing reservoirs, improving refined reservoir characterization of mature fields in order to increase reserve development rate and recovery rate. In natural gas development, we will accelerate the capacity construction of key projects, optimise the system of natural gas production, supply, storage and marketing as well as the market layout so as to foster coordinated development of the whole business value chain. In 2019, we plan to produce 288 million barrels (40.48 million tonnes) of crude oil, among which overseas production will be 39 million barrels (5.41 million tonnes), and 1,019.1 billion cubic feet (28.9 billion cubic meter) of natural gas.

Refining, with integrated planning, we will optimise crude oil allocation, reinforce inventory management, and push forward the high-efficiency operation of the refining value chain. Maintenance will be arranged according to market changes so as to achieve maximum overall profit. We will further optimise product mix by lowering diesel-to-gasoline ratio and increasing the production of gasoline, jet fuel and light chemical feedstock.The quality upgrading plan for new spec marine fuel oil will be implemented to raise capacity utilisation ratio. Marketing mechanisms will be improved to push up the total trading volume of other refined oil products. In 2019, we plan to process 246 million tonnes of crude oil and produce 157 million tonnes of refined oil products.

Marketing and Distribution, insisting the marketing strategy of balancing profits and sales volume, we will continue to optimise resources allocation, expand market, and increase operation profit. We will carry out targeted and differential marketing with customers at its core so as to constantly improve service quality. The marketing and distribution network will be further improved to amplify the existing advantages. We will accelerate the construction and operation of natural gas stations and expand natural gas market for automobiles. Substantial progress will be made in hydrogen refueling stations and charging and battery swap stations. We will explore the new business mode of "Internet + service stations + convenience stores + comprehensive services" to advance the development and marketing of self-owned brands and to advance the growth of nonfuel business. In 2019, we plan to sell 182 million tonnes of refined oil products in the domestic market.

Chemicals, we will further adjust feedstock mix, product slate and facilities structure to constantly strengthen competitiveness. The continuous feedstock mix optimisation will diversify feedstock procurement channels and reduce costs. More efforts will be made in adjusting product slate and coordinating production, marketing, research and application to raise the proportion of high-end products. We will enhance the dynamic optimisation of facilities and product chain, and improve the utilisation and production scheduling based on market demand. We will strengthen market analysis to actively expand market, thus increasing market shares. Meanwhile, advantages cultivation and production capacity building will be accelerated to produce high-end products and create more value. In 2019, we plan to produce 12.12 million tonnes of ethylene.

Research and Development, we will continue to fully implement the innovation-driven development strategy, deepen the reform of scientific and technological systems, accelerate key technological breakthroughs, push ahead with frontier research on leading technologies, and step up the commercial application of technological achievement so as to strive for sustainable development in an all-round way. With the emphasis on constantly advancing oil and gas exploration and production technologies, we will focus on achieving breakthroughs in oil and gas exploration and production and resource evaluation technologies. In refining, more efforts will be made in making progress in refined oil product quality upgrading technologies, enhancing the technology development of self-owned refined oil product, and reinforcing the research on refinery total process optimisation technology. In chemicals, we will continue to improve the technological system for chemical products and strengthen development of high-value-added new materials. Technological breakthrough in safety and environmental protection will be stepped up. At the same time, prospective and basic research will be carried out on such leading and new areas including new energy, new materials, artificial intelligence and low-carbon so as to boost innovation.

Capital Expenditures, in 2019, we will further focus on investment quality and profitability through constantly optimizing capital projects. Capital expenditures for the year are budgeted at RMB 136.3 billion. Of which RMB 59.6 billion will be invested in exploration and production with focuses on the production capacity building of Shengli Oilfield, Northwest Oilfield, Leikou Slope in western Sichuan, Fuling Shale Gas Filed and Weirong Shale Gas Field, and the construction of natural gas pipelines and storage facilities as well as overseas oil and gas projects. The capital expenditure for refining will amount to RMB 27.9 billion which will be spent on the construction of Zhongke and Zhenhai Projects, and the refining structural adjustment projects of Tianjin, Maoming, Luoyang, Wuhan, Beihai and Yangzi. RMB 21.8 billion are budgeted for marketing and distribution with emphases on the construction of depots and storage facilities for refined oil products, pipelines and service stations, non-fuel business development, as well as renovation of underground oil storage tanks. The share for chemicals will be RMB 23.3 billion which will be used on Zhongke, Zhenhai, Gulei, Hainan and Wuhan, coal chemical projects of Bijie and Zhongan, and comprehensive resource utilisation and structural adjustment projects of Yangzi and SSTPC. The capital expenditure for corporate and others will reach RMB 3.7 billion, mainly for R&D facilities and information technology projects.

Appendix: Key financial data and indicators

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE

Principal accounting data

Items

For twelve months
ended 31 December

Changes

over the same
period of the
preceding year (%)

2018

(RMB million)

2017

(RMB million)

Operating income

2,891,179

2,360,193

22.5

Net profit attributable to equity
shareholders of the Company

63,089

51,119

23.4

Net profit attributable to equity
shareholders of the Company

after deducting extraordinary gain/loss
items

59,630

45,582

30.8

Net cash flows from operating activities

175,868

190,935

(7.9)


At 31 December 2018

(RMB million)

At 31 December 2017

(RMB million)

Change from the
end of last year (%)

Total equity attributable to equity
shareholders of the Company

718,355

727,244

(1.2)

Total assets

1,592,308

1,595,504

(0.2)

 

Principal financial indicators

Items

For twelve months
ended 31 December

Changes

over the same
period of the
preceding year (%)

2018

(RMB)

2017

(RMB)

Basic earnings per share

0.521

0.422

23.4

Diluted earnings per share

0.521

0.422

23.4

Basic earnings per share after deducting
extraordinary gain/loss items

0.493

0.376

31.1

Weighted average return on net assets (%)

8.67

7.14

1.53 percentage
points

Weighted average return on net assets
after deducting extraordinary gain/loss
items (%)

8.20

6.37

1.83 percentage
points

Net cash flow from operating activities per
share

1.453

1.577

(7.9)

 

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH IFRS

Principal accounting data

Items

For twelve months
ended 31 December

Changes

over the same
period of the
preceding year (%)

2018

(RMB million)

2017

(RMB million)

Operating Profit

82,264

71,470

15.1

Net profit attributable to owners of the
Company

61,618

51,244

20.2

Net cash generated from operating
activities

1.453

1.577

(7.9)


At 31 December 2018

(RMB million)

At 31 December 2017

(RMB million)

Change from the
end of last year (%)

Equity attributable to owners of the
Company

717,284

726,120

(1.2)

Total assets

1,592,308

1,595,504

(0.2)

Principal financial indicators

Items

For twelve months
ended 31 December

Changes

over the same
period of the
preceding year (%)

2018

(RMB)

2017

(RMB)

Basic earnings per share

0.509

0.423

20.3

Diluted earnings per share

0.509

0.423

20.3

Return on capital employed (%)

9.25

8.26

0.99 percentage
points


The following table sets forth the operating revenues, operating expenses and operating profit / (loss) by each segment before elimination of the inter-segment transactions for the periods indicated, and the percentage changes between 2018 and 2017.


For twelve months
ended 31 December

Changes

2018

2017

(RMB million)

(%)

Exploration and Production Segment




            Operating revenues

200,191

157,505

27.1

            Operating expenses

210,298

203,449

3.4

            Operating (loss)

(10,107)

(45,944)

-

Refining Segment




            Operating revenues

1,263,407

1,011,853

24.9

            Operating expenses

1,208,580

946,846

27.6

            Operating profit

54,827

65,007

(15.7)

Marketing and Distribution Segment




            Operating revenues

1,446,637

1,224,197

18.2

            Operating expenses

1,423,173

1,192,628

19.3

            Operating profit

23,464

31,569

(25.7)

Chemicals Segment




            Operating revenues

546,733

437,743

24.9

            Operating expenses

519,726

410,766

26.5

            Operating profit

27,007

26,977

0.1

Corporate and others




            Operating revenues

1,368,583

974,850

40.4

            Operating expenses

1,377,876

979,334

40.7

            Operating (loss)

(9,293)

(4,484)

-

Elimination of inter-segment (loss)

(3,634)

(1,655)

-

About Sinopec Corp.
Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the sale, storage and transportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity, precision, innovation and win-win' as its corporate core values, pursues strategies of value-orientation, innovation-driven development, integrated resource allocation, open cooperation, and green and low-carbon growth, and strives to achieve its corporate vision of building a world leading energy and chemical company.

Disclaimer
This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserve volume, other estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, results of oil exploration, estimates of oil and gas reserves, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond Sinopec Corp.'s control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

SOURCE China Petroleum & Chemical Corporation


Source: PR Newswire (March 24, 2019 - 7:10 PM EDT)

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Halliburton to pay down debt by issuing $1 billion of lower-interest notes- oil and gas 360

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February 13, 2020

Houston Chronicle


Houston exploration and production company Marathon Oil has cut its drilling budget by about 10 percent amid an ongoing shale slump that caused revenue and profits to decline in 2019.

Marathon Oil cuts drilling budget amid 56 percent drop in profit- oil and gas 360

Source: Houston Chronicle

In a Wednesday afternoon statement, Marathon said the company is cutting capital expenditures by 10 percent, to $2.4 billion from $2.6 billion in 2019.

The company plans to spend $2.2 billion of its capital expenditure budget on drilling, hydraulic fracturing and other activities in the field while the remain $200 million will go to secure new oil leases and exploratory work looking for new geological formations with oil and natural gas.

Marathon remains in the black, but like other companies in the exploration and production sector, more than a year of crude oil prices in the $50 range is taking its toll on profit and drilling activity.

Active in the Eagle Ford Shale, Permian Basin, Oklahoma and Bakken Shale, Marathon reported a $20 million loss during the fourth quarter of 2019 compared with a $165 million profit a year earlier and revenue fell to $1.2 billion from $1.3 billion.

For the year, the company reported a $480 million profit, a 56 percent drop from the $1.1 billion profit in 2018; revenue of $5.2 billion was 21 percent off the $6.6 billion in 2018.

“We’ll continue to be guided by our unwavering commitment to capital discipline and sustainability,” Marathon Oil CEO Lee Tillman said in a statement.

 

Precision Drilling Corporation Announces 2019 Fourth Quarter and Year End Unaudited Financial Results

February 7, 2020

Houston Chronicle


Houston oilfield service company National Oilwell Varco finished up a year of losses $6.1 billion in the red.

NOV finishes year of losses $6.1 billion in the red- oil and gas 360

Source: Houston Chronicle

In a statement released on Thursday evening, the company reported closing 2019 with a $6.1 billion loss, a dramatic drop from the $31 million end-of-year loss in 2018. The company’s annual revenue remained flat at $8.5 billion.

Most of the company’s end-of-year loss came from writing down the value of $5.4 billion of assets during the second quarter. Crude oil prices stuck in the $50 per barrel range for most of past year have dramatically cut demand for drilling and hydraulic fracturing services in the United States. The shale slump has created eye-popping losses for oilfield services companies, which have written down billions of dollars of assets in response.

“The fourth quarter saw continued improvements in international and offshore markets, partially offset by another sequential decline in spending by our customers in North America,” National Oilwell Varco CEO Clay Williams said in a statement.

Looking at the company’s fourth quarter performance, NOV posted a $385 million loss, which was a dramatic swing from the $15 million profit during the fourth quarter of 2018.

The company’s fourth quarter revenue also slipped by 5 percent year-over-year. NOV reported making $2.3 billion during the fourth quarter, compared to $2.4 billion during the fourth quarter one year earlier.

With historical roots going back to 1862, NOV is headquartered in Houston and has more than 35,000 employees in 65 nations.

The company has not made an annual profit since 2014.

 

February 6, 2020

Reuters


ABERDEEN, Scotland – Total (TOTF.PA) beat forecasts on Thursday by keeping net adjusted fourth-quarter profit steady at $3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.

Total beats quarterly forecasts despite low oil price, raises payout- oil and gas 360

Source: Reuters

The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to $2.7 billion.

“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to 0.68 euros per share.

“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.

Total bought back $1.75 billion in shares in 2019 and plans to buy back $2 billion more in 2020.

Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of $7.4 billion, up more than 20% from a year earlier.

“While some peers buckled last week to a synchronized slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.

The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.

LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices LCOc1 have tumbled to around $55 per barrel from last year’s peak in April of almost $75.

Rivals have seen fourth-quarter profits slide on lower prices. BP (BP.L) reported a 26% drop on Tuesday while Royal Dutch Shell (RDSa.L) last month said its profits had halved.

(Graphic: Majors cashflow Total, here)

Reuters Graphic

LNG OUTPUT

Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.

“One of the reasons our results resisted the low oil environment was because of the strong LNG output which grew 50%,” Pouyanne said.

He said exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2% to 4%, a more typical level in the industry.

The chief executive said Total was expanding in the low carbon energy business and was on track to meet its goal of producing 25 gigawatts (GW) of renewable electricity by 2025, helped by solar projects in Qatar and India.

Total, which kept its capital expenditure target steady for 2020 at $18 billion, said it was on track to achieve its target of $5 billion in divestments during 2019 and 2020.

Total said it had sold its 27.5% interest in Fosmax LNG, which operates France’s Fos Cavaou LNG terminal, to Engie (ENGIE.PA) unit Elengy for about $260 million.

Total is on track to achieve its divestment target with transactions worth $3 billion so far, Jefferies analysts said.

(Graphic: Total Results, here)

Reuters Graphic

Houston Chronicle


Black Stone Minerals said it will cut its quarterly payouts to investors by almost 20 percent because of falling oil and gas prices.

Black Stone Minerals cuts investor payouts by almost 20%- oil and gas 360

Source: Houston Chronicle

In another sign of the weakening energy sector, the Houston oil and gas royalties firm will reduce its distributions to 30 cents per unit from 37 cents. This is the first time Black Stone has reduced its payout since going public in 2015.

Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.

“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.

“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.

February 4, 2020

CNBC


Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.

BP full-year net profit falls 21% on weak oil and gas prices- oil and gas 360

Source: Reuters

The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.

Analysts had expected full-year net profit to come in at $9.7 billion in 2019, according to data from Refinitiv.

Shares of BP were up more than 4%.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.

“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.

Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.

In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.

Here are the key highlights:

  • Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
  • Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
  • A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.

The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.

Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.

France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.

All roads lead to OPEC decision

International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.

Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.

Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.

The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.

“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.

OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.

A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.

Houston Chronicle


ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.

ConocoPhillips' fourth-quarter profit plunges by 60%-oil and gas 360

Source: Houston Chronicle

Revenue during the quarter dropped by more than 20 percent to $8.1 billion.

For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.

The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.

“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”

Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.

The company’s production output is expected to dip a little in 2020 because of some recent asset sales.

Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.

The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.

Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.

The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.

 

January 31, 2020

Houston Chronicle


Houston refining and pipeline company Phillips 66 on Friday reported a $689 million fourth-quarter profit, 51 percent less than the same period in 2018.

Imperial Oil's quarterly profit beats estimates on higher crude prices- oil and gas 360

Source: Houston Chronicle

The fourth quarter performance resulted in Phillips 66 closing 2019 with a nearly $3.7 billion profit, a 35 percent drop from the previous year when favorable margins in the refining of domestic crude oil swelled profits. The

West Texas Intermediate crude oil prices fell by 40 percent during the fourth quarter of 2018 and entered the $40 per barrel range, creating losses for exploration and production companies and services companies but windfalls for refining companies that were able to process domestic crude.

Crude oil prices have since settled in the $50 per range, which are still beneficial to refining companies but not as profitable.

Phillips 66’s pipeline business took a $900 million hit during the third quarter for impairments related to writing down the value of DCP Midstream, a gathering and processing plant joint venture with Canadian pipeline operator Enbridge.

In a statement, Phillips 66 Greg Garland focused on future growth. The company placed its Gray Oak Pipeline into service in November. When in full service early this year it will move 900,000 barrels of crude oil per day from Texas’ Permian Basin and Eagle Ford Shale to the company’s refinery in Brazoria County and the Port of Corpus Christi.

“As we begin 2020, we are focused on operating excellence, executing our growth projects, enhancing returns on existing assets and exercising disciplined capital allocation,” Garland said.

 

CNBC


Chevron on Friday posted a $6.6 billion loss in the fourth quarter due to $10.4 billion worth of write-offs related to shale gas production in Appalachia and deep-water projects in the Gulf of Mexico. In December, the company warned that this charge would be $10 billion to $11 billion.

Chevron posts $6.6 billion loss in the fourth quarter-oil and gas 360

Source: CNBC

Shares slid 3.4% on Friday after the company reported $36.35 billion in revenue for the period, which missed analyst expectations and was down 14% year over year, hurt by weakness in the company’s upstream division.

Chevron said it earned $1.49 per share excluding items, down from $1.95 per share a year earlier.

Here’s how the energy giant’s results fared on an adjusted basis relative to Wall Street expectations:
  • Adjusted earnings: $1.49 cents per share vs. $1.45 expected by a Refinitiv survey of analysts
  • Revenue: $36.35 billion vs. $38.639 billion expected by Refinitiv

A year earlier, the company earned $3.7 billion. Total earnings for 2019 slid 80%, to $2.924 billion, compared with $14.824 billion in 2018.

Oil-equivalent production at 3.08 million barrels per day was unchanged year over year, although the company said its annual daily production exceeded 3 million barrels per day for the first time.

The company’s upstream operations in the U.S. lost $7.5 billion in the quarter, down from earnings of $964 million a year earlier. That was primarily due to $8.2 billion in write-offs related to Appalachia and Gulf of Mexico operations, as well as lower crude and natural gas prices.

Chevron said the average sale price per barrel of oil and natural gas liquids was $47, a 16% decrease from 2018.

“Cash flow from operations remained strong in 2019, allowing the company to deliver on all our financial priorities,“
Chairman and CEO Michael Wirth said in a statement. “We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion. Earlier this week, we announced a quarterly dividend increase of $0.10 per share, reinforcing our commitment to growing shareholder returns.”

In the same quarter a year earlier the company reported EPS of $1.95 and revenue of $42.35 billion. Last quarter, the company earned $1.36 per share, and brought in $36.12 billion in revenue.

U.S. West Texas Intermediate crude prices are down more than 15% this month, while international benchmark Brent crude has shed roughly 12%.


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