Sinopec's (SNP) 1H16 Profit Falls Y/Y As Production Declines

China Petroleum and Chemical Corporation (NYSE:SNP) , which is also known as Sinopec, reported net profit of 19.9 billion yuan ($3.0 billion) or 0.151 yuan per diluted share for the first half of 2016. The bottom line came in below the year-ago profit level of 25.4 billion yuan ($4.14 billion) or 0.194 yuan per diluted share.

Operational Performance

During the first half of 2016, Sinopec’s crude oil production decreased 11.4% year over year to 154.17 million barrels. Nonetheless, natural gas volumes increased 10% year over year to 388.69 billion cubic feet in the same period. Domestic crude oil production declined 13% year over year to 128.38 million barrels, while overseas volumes slipped 3.1% year over year to 25.79 million barrels. Total oil and gas production fell 6% year over year to 219 million barrels of oil equivalent.

The company’s Refining business recorded a 2.5% year-over-year decline in refinery throughput to 115.9 million tons. It also produced approximately 73.26 million tons of petroleum products, down 2% from the prior-year period.

The Marketing and Distribution segment sold 97.17 million tons of refined oil products, up 4.52% year over year.

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Capital Expenditure

Capital expenditures for the first half of 2016 totaled 13.474 billion yuan. Out of this, 5.168 billion yuan was spent on exploration and production projects. Sinopec spent 2.774 billion yuan on the Refining segment, while the Chemical Business segment was allocated 2.44 billion yuan. The company had set aside 2.61 billion yuan for the Marketing and Distribution segment.

A total of 482 million yuan was used for Corporate and Other purposes, such as construction of R&D facilities and IT projects.

Zacks Rank

Sinopec currently holds a Zacks Rank #2 (Buy). Other well-ranked players from the energy sector that warrant a look include Devon Energy Corporation (NYSE:DVN) , NGL Energy Partners LP (NYSE:NGL) and Enbridge Energy Partners L.P. (NYSE:EEP) . All these stocks sport a Zacks Rank #1 (Strong Buy).