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Sinopec 1Q Earnings Outshine

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China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, reported first quarter 2013 net income of 15.834 billion yuan (US$2.52 billion), up 23.4% from the prior-year quarter. Earnings per share of 0.178 yuan ($2.83 per ADS) jumped 21.1% year over year, as per the Chinese reporting standards. The growth was mainly backed by higher oil and gas production as well as improved refinery throughput.

Revenues in the first quarter improved 3.6% to 695.6 billion yuan from 671.4 billion in the prior year.

Operational Performance

During the quarter ended Mar 31, 2013, Sinopec’s crude oil production grew 0.8% year over year to 82.2 million barrels, while natural gas volumes surged 14.0% to 163.2 billion cubic feet. Domestic crude oil production increased 0.6% year over year to 76.2 million barrels, while overseas volumes increased 3.5% year over year to 6.0 million barrels.

Total oil and gas production expanded 3.8% to 109.4 million barrels of oil equivalent.

The average realized crude oil prices were $98.83 per barrel, down from $106.1 per barrel in the prior-year quarter. Average realized natural gas price was $5.86 per thousand cubic feet compared with $5.64 per thousand cubic feet in the first quarter of 2012.

The company’s Refining business recorded refinery throughput of 58.7 million tons (up nearly 6% year over year). It also produced approximately 35.3 million tons of oil products, representing a 7.4% improvement from the year-ago quarter.

The Marketing and Distribution segment sold 42.2 million tons of refined oil products, reflecting a 1.9% year-over-year increase.

The output of ethylene from the Chemicals segment was 2.442 million tons, down 0.5% from the year-ago level.

Capital Expenditure

Capital expenditures for the quarter totaled 21.535 billion yuan, of which 9.416 billion yuan was spent on exploration and production projects. In the Refining segment, Sinopec spent 2.837 billion yuan, while the chemical business and marketing and distribution segment were allocated 277 billion yuan and 6.396 billion yuan, respectively. The company also spent 609 million yuan for the company’s scientific research facilities and IT projects.

Zacks Rank

Sinopec currently retains a Zacks Rank #3 (Hold). However, there are certain Zacks Ranked #1 stocks – Harvest Natural Resources, Inc. , Lehigh Gas Partners LP and EPL Oil & Gas, Inc. – that appear more rewarding in the short term.

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