China Petroleum & Chemical Corp: A Global Powerhouse
Yesterday, 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.
Yesterday, 1:32 AM
- After announcing the sale of a $17.5B stake in its retail unit to investors, Sinopec (NYSE:SNP) now says it will use the cash toward optimizing its retail fuel business, boosting its non-fuel sales and paying down debts owed to its parent.
- The deal comes as the Chinese government pushes to restructure its state-owned enterprises by bringing in private capital.
- The stake will be sold to a group of 25 Chinese and foreign investors.
Fri, Aug. 29, 11:58 AM
- China energy heavyweights Sinopec (NYSE:SNP) PetroChina (NYSE:PTR) have raised their outlook on the country's shale gas industry but stopped short of predicting a near-term boom.
- Costs are coming down sharply, SNP Chairman Fu Chengyu said at the company's H1 results briefing earlier this week, citing the cost of shale gas drilling at the Fuling field - the country's largest shale gas project - which has been falling steadily to ~60M yuan ($9.8M) per well.
- PTR Vice Chairman and President Wang Dongjin said the company is keeping its drilling cost at 55M yuan per well and will strive to keep it under 50M.
- But Fu and Wang both ruled out the possibility of a shale gas boom in the near future, saying costs must come down much more and gas prices must rise further to justify a substantial step-up in investment.
Thu, Aug. 28, 5:08 AM
- In a grudging first step towards opening its state-dominated oil sector, China has granted a crude import license to non-state-owned Guanghui Energy.
- China's Ministry of Commerce stopped short of truly opening the market, since the new license does not actively pose a threat to China’s Sinopec (NYSE:SNP) and PetroChina (NYSE:PTR).
- Included in its WTO commitments, China allocates about 10% of its crude imports to non-state traders, but additional paperwork limits their competitiveness.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, CHIE, OLO, OLEM, TWTI
Wed, Aug. 27, 8:58 AM
- Sinopec's (NYSE:SNP) attempt to spin off 30% of its retail gas station business has drawn interest from China Life (NYSE:LFC), the country's biggest insurance company, and gas supplier ENN Energy; they are the first investors to publicly announce their intention to invest in the SNP unit.
- SNP is seeking to raise as much as 100B yuan ($16.3B) by selling part of its stake in the Sinopec Sales unit, which opoerates more than 30K fuel stations and 23K convenience stores in China.
Tue, Aug. 26, 11:38 AM
- Sinopec (SNP +0.4%) continues to move higher after yesterday's Q2 earnings beat and news of 37 bidders vying for a 30% stake in SNP's profitable retail business, but analysts are turning cautious on the stock.
- UBS removes SNP from its Key Call list (though it maintains a Buy rating), noting the stock has climbed to its highest level since Jan. 2008 even though there has been little change in the consensus earnings outlook.
- J.P. Morgan is concerned about the lack of comments on timing for the retail divestment, and it sees more risk of disappointment to existing and further corporate reforms with an increasingly fragile near-term refining outlook.
Mon, Aug. 25, 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.
Wed, Aug. 20, 10:24 AM
- Alimentation Couche-Tard (OTCPK:ANCUF) says it not pursuing a stake in China's Sinopec Sales (SNP, SHI), refuting an earlier report that it is among the companies rumored to be interested in buying a stake in the world's largest fuel retail network.
- Analysts had doubted Couche-Tard's interest, since a stake would give investors little control over Sinopec; Couche-Tard founder and CEO Alain Bouchard is a hands-on manager who makes acquisitions based on the belief that he can introduce his company's operational efficiency to the target and improve earnings. The chain has not historically made any passive investments of this kind, the paper said.
Tue, Aug. 19, 11:25 AM
- Canada's Alimentation Couche-Tard (OTCPK:ANCUF) and China's Tencent Holdings (OTCPK:TCEHY, OTCPK:TCTZF) reportedly are among suitors on the short list to buy a $16B minority stake in China's Sinopec Sales (SNP, SHI), the world's largest fuel retail network.
- Sinopec plans to sell up to 30% of Sinopec Sales by year-end 2014 as China restructures government-owned assets; while a deal would give investors little control over the company, a likely exit through an IPO planned within three years appears to have attracted a wide range of suitors.
- Sinopec Sales booked a net profit of 25.1B yuan ($4.1B) in 2013 from 30K-plus service stations and 23K-plus convenience stores.
Fri, Aug. 15, 4:54 PM
- Oil production at Iraqi Kurdistan's top producing Taq Taq field is set to rise to as much as 140K bbl/day by the end of the month despite the advance of Islamist militants, according to the general manager of the operating company.
- While several western oil companies have evacuated personnel from the area, production has remained consistent at Taq Taq, operated by a joint venture of Genel Energy (OTCPK:GEGYF) and Sinopec's (NYSE:SNP) Addax Petroleum.
- Meanwhile, Kurdistan has delivered its third major cargo of crude oil out of a Turkish port and a fourth is sailing to Croatia.
Wed, Aug. 13, 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.
Tue, Jul. 22, 7:57 AM
- Sinopec (NYSE:SNP) reports an 8% Y/Y gain in H1 oil and gas production to 237M barrels as overseas output doubled.
- Overseas crude oil production increased to 23.7M barrels, but the gain came after the refiner bought foreign assets from its state-owned parent last year.
- Domestic crude output was little changed at 154.2M barrels, while natural gas output rose 9.5% to 354.8B cu. ft.
Fri, Jul. 18, 8:16 AM
- The Chinese government verifies shale gas reserves in Sinopec's (NYSE:SNP) Fuling field in the southwest of the country, with production from 29 test wells averaging 3.2M cm/day, signaling the official launch of the commercial development of China's first large shale gas field.
- "Fuling proves to be a high quality marine shale gas reserve," according to the Ministry of Land and Resources, which verifies proven reserves of nearly 107B cm and adds that the gas contains as much as 98% methane, with low levels of carbon dioxide and no hydrogen sulphide.
- Estimates for China's reserves easily outweigh those of the U.S., but Chinese reserves are in many cases more difficult to access than shale gas in the U.S., and China lags in the expertise needed to develop them.
Sat, Jul. 12, 8:25 AM
- The problem facing Canada isn't the Keystone pipeline or Pres. Obama or environmentalists - it's the oil sands, and they've got to be cleaned up and the head-in-the-sand denials chased way or the country will be stuck with a "baby seal hunt" image, Diane Francis writes in the Financial Post.
- The columnist thinks she knows the right person to lead the clean-up: Jeff Immelt - "an American leader with stature in Washington, on Wall Street, in the oil patch and in Silicon Valley" - who said this week that GE will help companies clean up the oil sands.
- The only way to stop the environmental excuses, Immelt believes, is for the industry to collaborate and voluntarily establish lower emissions targets that would make the oil sands competitive with any other fuel source in the world - without such a promise to provide cleaner energy, "all bets are off."
- Some related companies: XOM, IMO, SU, RDS.A, RDS.B. ENB, TRP, CNQ, CVE, CVX, COP, BP, KMP, WPZ, TOT, STO, CEO, SNP, PTR, HUSKF, ATHOF, COSWF.
Fri, Jul. 11, 5:59 PM
- As much as ~$700B oil companies have in their capital spending pipeline may no longer be needed, as the big discoveries of shale oil in recent years have added ~66B barrels of crude oil resources, enough to meet demand growth in the coming years, according to Goldman Sachs' head of European energy research Michele della Vigna.
- New projects that require oil prices to be above $80-$85/bbl to break even ought to be delayed or canceled - which could include big investments considered in Canadian heavy oil or in deep waters off shore - della Vigna says.
- It's also potentially bad news for the oil service companies that make money helping oil companies with their big projects; the winners are likely to be companies with the best roster of low-cost investments: SNP, BRGXF, BRGYY, AFRNF, STOSF.
Thu, Jul. 10, 8:27 AM
- A Cnooc (CEO) subsidiary signs a ~$1.6B deal to build equipment for the Yamal liquefied natural gas project in the Russian Arctic.
- Russian gas producer Novatek is developing the $27B project with Total (TOT) and Sinopec (SNP); the first production unit, with annual capacity of 5.5M metric tons, is due to be launched in 2017.
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China Petroleum & Chemical Corp is engaged in the oil & gas and chemical operations & businesses, including exploration, development, production, refining, transportation, storage & marketing of crude oil & natural gas & production of chemicals.
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