China Petroleum & Chemical Corporation SNP, also known as Sinopec, reported total revenues of 1,612,126 million yuan for the first half of 2022, up 27.9% year over year.
The integrated energy giant reported an operating profit of 62,924 million yuan for the first half, up 7.6% from 58,486 million yuan in the year-ago period.
The strong results were led by a rise in oil and natural gas production, and commodity prices.
Exploration and Production: For the first half of 2022, Sinopec’s total crude oil production increased 1.1% year over year to 139.65 million barrels. Oil production in the domestic market increased 0.8% to 124.63 million barrels and overseas volume jumped 3.4% to 15.02 million barrels.
The natural gas volume of Sinopec increased 5.4% year over year to 613.92 billion cubic feet in the first half. Also, total oil and gas production rose 2.9% to 242.01 million barrels of oil equivalent.
Segmental operating profit for the first half was 26,302 million yuan, up from 6,233 million yuan in the year-ago period due to higher total oil and gas production, and rising crude prices.
Refining: Sinopec’s Refining business recorded a refinery throughput of 120.76 million tons (down 4.2% year over year). It also produced 68.99 million tons of petroleum products, reflecting a 4.4% decline.
Due to lower throughput volumes, the segment reported an operating profit of 29,768 million yuan, down from 39,398 million yuan in the year-ago period.
Marketing and Distribution: The Marketing and Distribution segment sold 98.42 million tons of refined oil products, leading to a 9.8% year-over-year decline. Of the total figure, domestic sales volume was 78.46 million tons, down 6.6%.
Annualized average throughput was 3,333 tons per station in the first half, down from 3,614 tons in the year-ago period.
From this segment, the company generated an operating profit of 16,855 million yuan, up 4.9% from the year-ago period’s 16,068 million yuan primarily due to lower sales of refined oil products in the domestic market.
Chemicals: In the first half of 2022, the production of ethylene increased 5.9% year over year to 6,846 thousand tons from 6,463 thousand tons. The production of Synthetic resin was 9,275 thousand tons compared with 9,292 thousand tons in the year-ago period.
The segment recorded an operating profit of 810 million yuan for the first half of 2022, falling 93.9% year over year on declining production of synthetic resin and fiber.
Total operating expenses for the first half were 1,549,202 million yuan, up from 1,202,287 million yuan in the year-ago period. Purchased crude oil, products, and operating supplies and costs were 1,262,183 million yuan, up from the year-ago level of 945,555 million yuan. SG&A costs increased to 26,797 million yuan from 25,810 million yuan in the comparable period of 2021. Exploration costs, including dry holes, rose to 5,738 million yuan from 4,846 million yuan in the first half of 2021.
Capital expenditure totaled 64.654 billion yuan in the first half of 2022. Of the total amount, 33.337 billion yuan was spent on exploration and production projects. Sinopec spent 8.929 billion yuan on the Refining segment, while the Chemical Business segment was allocated 18.214 billion yuan. The company has set aside 3.072 billion yuan for the Marketing and Distribution segment.
In the second half of 2022, Sinopec plans to produce 141 million oil barrels and 642.9 billion cubic feet of natural gas. In refining, the company aims to process 120 million tons of crude oil in the second half of the year.
The company expects to incur a capital expenditure of 133.35 billion yuan in the second half of the year, of which 48.16 billion yuan will be spent in the exploration and production segment. Sinopec expects to spend 11.47 billion yuan in the refining segment.
Zacks Rank & Stocks to Consider
Sinopec currently carries a Zacks Rank #4 (Sell).
Investors interested in the energy sector can consider the following stocks that reported solid second-quarter earnings numbers and presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Valero Energy Corporation VLO reported second-quarter 2022 adjusted earnings of $11.36 per share, comfortably beating the Zacks Consensus Estimate of $9.7 per share. The strong quarterly results were driven by increased refinery throughput volumes and a higher refining margin.
Valero has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value and Growth. Valero is expected to see earnings growth of 833.8% in 2022.
RPC, Inc. RES reported adjusted earnings of 22 cents per share in the second quarter, beating the Zacks Consensus Estimate of 10 cents. Strong quarterly earnings were backed by higher activity levels in all the service lines and improved pricing.
RPC has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth. RES is expected to see earnings growth of 1,733.3% in 2022.
Liberty Energy Inc. LBRT announced second-quarter 2022 earnings per share of 55 cents, which handily beat the Zacks Consensus Estimate of 18 cents. The company’s outperformance reflects the impacts of strong execution, higher activity and increased service pricing.
Liberty Energy has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth and B for Value. LBRT is expected to see earnings growth of 266.7% in 2022.
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