Tue, Feb. 17, 3:31 PM
- China may merge its state-owned oil companies to create giants that will be more efficient and capable of taking on big overseas rivals, WSJ reports.
- One plan reportedly would combine the country’s largest oil companies, CNPC (PTR +2%) and Sinopec (SNP +4.2%), while other options include merging Cnooc (CEO +1.8%) with Sinochem.
- The firms have expanded into each others’ turf over the years, creating overlapping operations that span everything from exploration to refining to running gas pumps.
- No timetable is set for a decision on whether or when to proceed with the mergers, WSJ says.
Dec. 4, 2014, 6:32 AM
- The Shanghai Composite gained 4.3% overnight, bringing its advance over the past month to 19%, the most among 93 global markets. The index is now higher by 37% year-to-date.
- The rally comes not just alongside a PBOC rate cut, but as mainland stocks opened up to global investment in early November - exchange volume nearly doubled the previous 30-day average.
- Among the movers: PetroChina (NYSE:PTR) and Sinopec (NYSE:SNP) both soared by the 10% daily limit.
- FXI +3.9% premarket
- ETFs: FXI, EWH, PGJ, YINN, GXC, FXP, ASHR, YANG, MCHI, PEK, XPP, YAO, YXI, CHXF, FCA, CN, CHIE, EWHS, FCHI, ASHS, CNXT, CHNA, KBA, FHK
Nov. 17, 2014, 2:58 PM
- Sinopec (SNP -2.5%) pledges to spend $4.6B over three years to address safety concerns related to its oil pipelines, after authorities order it to temporarily shut down two of its pipelines following surprise inspections.
- SNP is told to shut the 179-km Linyi-Cangzhou pipeline and a 40-km pipeline from the Tanggu oil depot to Dagang in Tianjin by Nov. 20 after inspections found numerous problems including "stress corrosion and fatigue damage."
Sep. 17, 2014, 11:46 AM
- Sinopec (SNP -0.4%) and PetroChina (PTR +2%), China's largest oil and gas producers, plan to increase shale gas output by 40%/year to meet the country’s production target.
- SNP plans to invest 21.5B yuan ($3.5B) in shale gas drilling and expects to produce as much as 3.5B cu. meters by 2015, while PTR is targeting output of more than 2.5B cu. meters in 2015 after investing 11.2B yuan, according to the Ministry of Land and Resources.
- China’s 2015 target depends on SNP's ability to produce shale gas at the Fuling project in the country’s southwest, but the company has halved its target of producing 60B cu. meters by the end of the decade because of geological challenges.
Sep. 15, 2014, 10:28 AM
- Investors are underwhelmed by Sinopec's (SNP -5.5%) plan to sell a $17.5B stake in its sprawling network of gas stations to 25 local investors, after expectations for the sale were for $20B-$30B.
- The stake sale didn't turn out to be as valuable because it isn't real reform, writes Heard on the Street's Abheek Bhattacharya; the fragmented set of investors consists mostly of local Chinese funds and businesses who have little know-how in retail petroleum operations.
- No individual stake will exceed 2.8% of the retail business, making it unlikely that any of the investors will have much clout to press for meaningful changes.
- SNP's story will now return to its business fundamentals instead of reform, says Macquarie's James Hubbard; on the plus side, SNP is selling lower-sulfur fuels to combat pollution, which earn it higher margins.
Aug. 25, 2014, 2:49 PM
- Sinopec (SNP +2.6%) says 37 companies have expressed interest in investing in its spinoff of 30% of its gas station business, but a skeptical WSJ Heard on the Street column says early signs of hoped-for reforms are not encouraging.
- Instead of boosting efficiency, SNP so far looks like it is reorganizing its priorities and raising capital, Abheek Bhattacharya writes; if this is as good as it gets for SNP's reforms, China investors should brace for disappointment.
- Shares are up nicely, however, after Chairman Fu Chengyu, in discussing SNP's 8% Y/Y rise in H1 profit, said he expects shale drilling costs in China to drop to $50M/well from $80M in three to five years.
Aug. 13, 2014, 2:35 PM
- Petrobras (PBR -3.3%) says a fourth well drilled in the Jupiter area offshore Brazil indicates the existence of a subsalt oil discovery.
- The well is located ~185 miles off the coast of Rio de Janeiro, beneath 2,183 meters of water; drilling will continue until the well reaches a total depth of 5,700 m.
- PBR is operator of the block with an 80% interest, while a group owned by Portugal's Galp Energia (OTC:GLPEF) and China's Sinopec (NYSE:SNP) holds the remaining 20%.
- PBR shares have been sharply lower since news of the death of Brazilian presidential candidate Campos.
Apr. 25, 2014, 10:14 AM
- Canadian Oil Sands (COSWF -4.4%) announces an unplanned maintenance-related outage at Syncrude Coker 8-1, prompting it to lower its estimate for 2014 Syncrude production to 95M-105M barrels.
- National Bank downgrades shares to Underperform from Sector Perform, saying the outage could mean Q2 production will get hit especially hard since the timing could overlap with planned maintenance of another upgrader.
- Other owners of Syncrude include Imperial Oil (IMO), Suncor (SU), Murphy Oil (MUR), Sinopec (SNP) and Cnooc (CEO).
Mar. 17, 2014, 9:45 AM
- Sinopec (SNP +2.8%) pops higher at the open on a report that Alibaba Group will invest in the company's consumer gasoline sales subsidiary.
- The rumor follows SNP's Feb. 19 announcement that it will seek private investment in its sales business; Alibaba is currently recruiting and training SNP "petrol card" sales associates.
- Alibaba announced on its official microblog account yesterday that it had reached a business partnership with SNP, but it did not mention an investment.
Mar. 11, 2014, 11:39 AM
- Recon Technology (RCON +6.7%) says its BHD petroleum technology division received a new oilfield access certificate authorizing it to provide horizontal fracturing equipment and services for Sinopec (SNP).
- RCON and partner Baker Hughes (BHI) have so far provided fracturing equipment utilized at one of SNP's Northeast oilfield's wells.
Feb. 26, 2014, 11:14 AM
- Sinopec (SNP +3.7%) is said to be ready to reveal additional restructuring measures next month after announcing last week it would seek private investors for as much as 30% of its oil retail unit, which includes more than 30K fuel stations.
- SNP probably will introduce its next steps for reforms during China's annual National People's Congress meetings next month in Beijing, Chairman Fu Chengyu reportedly said.
Feb. 21, 2014, 11:20 AM
- Sinopec (SNP -2.6%) had been moving higher after news earlier this week that it would seek outside investors for up to 30% of its oil retail unit, but Jefferies is out with a report downgrading shares to Hold from Buy and says the reform interpretation was wrong.
- Optimism was misplaced because SNP probably will just use the proceeds to buy assets from its parent, Jefferies says; the market interpreted the action as reform of Chinese state-owned enterprises, but the firm says it looks "more like stealth capital raising.”
- But SNP has strong economic incentive to spin off and float its retail business, J.P. Morgan points out, believing the retail gas station business could fetch much higher trading multiples because they are really consumer names.
Feb. 20, 2014, 10:58 AM
- Sinopec (SNP +2.1%) continues to push higher after yesterday's 8.4% surge on its plan to open up its businesses to outside money, as additional funds would come at a crucial time for China's oil refining giant.
- Simon Powell, head Asian-Pacific energy analyst at CLSA, says SNP's retail gas stations are particularly attractive to outside investors; the business benefits from its vertical integration with the refining business, he says, adding that even the real estate under the stations is undervalued.
- Macquarie analysts, however, say SNP's move makes "little sense” because profit margins in the marketing and distribution business are artificially inflated and tightly regulated.
Feb. 14, 2014, 10:56 AM
- Sinopec (SNP +1.9%) has made a deep shale gas discovery with a maximum daily output of 105K cubic meters in southwestern China's Guizhou province, authorities say.
- The gas well is said to be the deepest so far in the country, and its exploration marks a technological breakthrough in China's deep shale gas drilling.
- The Dingye-2HF gas well is expected to have an average daily output of 43K cubic meters; another shale gas block in the region produced 150K cubic meters/day last year.
Jan. 21, 2014, 2:59 PM
- Cnooc's (CEO -6.2%) loss apparently is Sinopec's (SNP +5.9%) gain, as the two Chinese integrated oil and gas companies move in opposite directions after Cnooc estimated oil production growth below its annual target for the third straight year.
- J.P. Morgan is surprised Cnooc has guided almost no organic growth in 2014, and thinks the company has set itself up for a difficult 2015, where 14%-18% Y/Y organic production growth would be needed to reach the low end of the 2011-15 6%-10% target; the firm recommends SNP or PetroChina (PTR +0.2%) instead for China oil exposure.
- SNP's prospects are considered rosier than Cnooc's: Its dividend yield is healthy at 5.21% vs. the 4.67% industry average, and its 9.17 P/E ratio indicates general investor expectations of higher returns in the short and medium term, if not beyond.
- Also, SNP discloses that Sinopec Group (SHI) increased its shareholding via the acquisition of ~173.25M class A shares on the secondary market as of Jan. 17.
Oct. 29, 2013, 9:39 AM
- Sinopec (SNP +3.5%) reports its Q3 net earnings rose 20% Y/Y to 22B yuan ($3.6B), or 0.18 yuan/share, due to an improvement in refining margins after China reformed fuel pricing in March.
- SNP processed 174.2M metric tons of crude oil in the January-September period, up 6.4% from a year earlier; the average selling price of its oil fell 5.5% to $95.11/bbl in the period.
- Operating profit from the refining business was 6.7B yuan in the first nine months, compared with a loss a year earlier; crude and natural gas production rose 4% in the period to 331M barrels.
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