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Sinopec (SNP) Beats Q3 Earnings Estimates, Revenues Rise

China Petroleum and Chemical Corporation SNP, also known as Sinopec, reported third-quarter 2017 earnings per American Depositary Receipt (ADR) of $1.31, beating the Zacks Consensus Estimate of 97 cents and the year-ago quarter figure of $1.26. Also, revenues increased 19.5% year over year to 579,118 million yuan.

Higher oil equivalent production and increased refinery throughput volumes primarily supported Sinopec’s Q3 numbers.  

It is to be noted that another Chinese energy giant — PetroChina Company Limited PTR — recently reported a year-over-year improvement in third-quarter 2017 earnings.

Operational Performance

Exploration and Production: During the nine-month period ending Sep 30, 2017, Sinopec’s crude oil production decreased 4% year over year to 220.21 million barrels. Domestic crude oil production declined 2.7% year over year to 186.09 million barrels, while overseas volumes slipped 10.5% year over year to 34.12 million barrels.

Natural gas volumes, however, increased 21% year over year to 674.15 billion cubic feet in the same period. Also, total oil and gas production jumped 3.2% year over year to 332.63 million barrels of oil equivalent.    

Refining: The company’s Refining business recorded refinery throughput of 177.46 million tons (up 1.3% year over year). It also produced approximately 112.20 million tons of petroleum products, which represents a 1.1% rise from the first nine months of 2016.  

Marketing and Distribution: The Marketing and Distribution segment sold 150.23 million tons of refined oil products, which reflects a 3.1% year-over-year increase.

Chemical: During the nine-month period ending Sep 30, 2017, the production of ethylene came at 8,534 thousand tons, up 5.2% from 8,115 thousand tons in the prior-year period.

Also, production of Synthetic resin was 11,791 thousand tons as compared with 11,138 thousand tons in the year-ago period.

Q3 Price Performance

During third-quarter 2017, Sinopec fell 3.6% as compared with the industry’s 13% rally.  


Capital Expenditure

Capital expenditures in the first nine months of 2017 totaled 29.1 billion yuan. Out of this, 10.9 billion yuan was spent on exploration and production projects. Sinopec spent 8. 5 billion yuan on the Refining segment, while the Chemical Business segment was allocated 3.7 billion yuan. The company had set aside 5.3 billion yuan for the Marketing and Distribution segment.

Zacks Rank & Other Key Picks

Sinopec currently has a Zacks Rank #1 (Strong Buy). Other top-ranked energy players include Par Pacific Holdings Inc. PARR and Northern Oil and Gas, Inc. NOG. Par Pacific sports a Zacks Rank #1, while Northern Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, Par Pacific managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average earnings surprise being 195.26%.

Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow 44.1%.

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