SHANGHAI :
Sinopec Drops After Losing Over USD1.5 Billion on Exploration, Bad Hedges
Zhang Yushuo
DATE:  Mar 25 2019
/ SOURCE:  yicai

Yicai Global) March 25 -- Shares of China Petroleum and Chemical, or Sinopec, fell after its annual earnings report showed the country's biggest refiner lost more than CNY10 billion (USD1.5 billion) due to improper trading and from crude oil and gas exploration.

Sinopec's stock price [SHA:600028] ended 2.7 percent lower today at CNY5.82 (87 US cents).

The energy giant's oil and gas exploration and development business lost CNY10 billion last year, the Beijing-based company said in its earnings report released yesterday. That compared with a loss of CNY45.9 billion in 2017.

It shed about CNY4.6 billion on oil hedging in the fourth quarter because of the improper dealing strategies of one of its units, it announced on Jan. 25. Sinopec's stock dropped when the media reported on Dec. 27 that two of Unipec's top officials had been suspended, erasing CNY70 billion from Sinopec's market value in a day. But the stock has been recovering, gaining more than 16 percent so far this year.

Annual net profit attributable to its parent company's shareholders jumped 20 percent to CNY62 billion from a year earlier on a 22.5 percent gain in revenue to CNY2.9 trillion, the earnings report said.

Sinopec's oil refining segment posted revenue of CNY1.3 trillion last year, up 25 percent from the year before, lifted by rising refined product prices and oil processing volumes. It also netted CNY1.45 trillion in sales and distribution, up 18 percent.

The firm produced about 250 million barrels of oil in China, up 0.02 percent. Overseas production was 40 million barrels, down 12 percent. Natural gas production was 977 billion cubic feet, up 7 percent.

Sinopec plans to invest CNY60 billion this year to increase risk exploration and pre-exploration in new areas. This will claim 44 percent of its total annual capital expenditure. Its oil-refining division is set to spend CNY28 billion, and its chemical division to cost CNY23 billion, and its marketing and distribution business CNY22 billion.

Although Sinopec's revenue and profit beat out rivals China National Petroleum, known as PetroChina and China National Offshore Oil Corporation or CNOOC, its 20 percent profit growth rate came in under their respective 131 percent and 113.5 percent.

PetroChina's operating revenue was CNY2.4 trillion in 2018, up 17 percent. Net profit attributable to shareholders was CNY53 billion, up 131 percent. CNOOC's oil and gas sales totaled CNY186 billion last year, up 22 percent from a year earlier. Net profit attributable to shareholders reached CNY53 billion, up more than twofold.

Editor: Ben Armour

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Keywords:   Sinopec Group,PetroChina,CNOOC,Earnings Report 2018