Mid Year Report Card Of "Three Barrels Of Oil": Petrochina And Sinopec Both Suffered Huge Losses And CNOOC Made A Profit Of 10.3 Billion Yuan

On the afternoon of August 30, Sinopec (600028. SH) released its financial report for the first half of 2020. So far, all three major oil companies in China have announced their first half results.

On the whole, China is also the world's two largest oil companies, PetroChina (601857. SH) and Sinopec did not get rid of the negative impact of the epidemic. Like their international counterparts, they recorded a substantial half year loss. On the contrary, CNOOC (00883. HK) made a surprising performance, recording a profit of more than 10.3 billion yuan, leaving their international and domestic counterparts behind After.

Since February, the epidemic has swept across the world, which has become the most serious public health crisis in human history for a century. Under the influence of the epidemic situation, the global economy suffered a recession not encountered since the great depression. According to the World Bank forecast, the global economy will shrink by 5.2% in 2020.

Oil consumption is highly related to people's living habits and economic development. The double blow of epidemic and economic recession has caused the most serious energy crisis in the world since World War II. The International Energy Agency predicts that global energy demand will fall by 6% in 2020, the biggest decline since World War II; since 2020, Brent and WTI oil prices have both fallen by more than 70% compared with the peak of the year.

Under the crisis, China's three major oil companies have actively responded to the crisis. Compared with the last oil price collapse cycle, their performance this year is more mature, and their preparation is more perfect. Although there are losses and gains in the final performance, all of them have positive highlights.

Performance of oil companies in crisis

Under the crisis, three barrels of oil delivered different performance answers.

In the first half of 2020, PetroChina realized operating revenue of 929.045 billion yuan, a year-on-year decrease of 22.3%; the net loss attributable to the shareholders of the parent company was 29.983 billion yuan, of which the loss in the second quarter was narrower than that in the first quarter, and the business trend was steadily improving.

In the first half of 2020, Sinopec's revenue was 1034.246 billion yuan, a year-on-year decrease of 31%; the net profit was a loss of 22.882 billion yuan. Among them, the production, operation and profitability improved month by month from the second quarter, and the output of natural gas, gasoline and diesel oil, the sales volume of refined oil and the total business volume of chemical products increased significantly on a month on month basis. In the current quarter, the operating income was 4.8 billion yuan, turning losses into profits.

Among the three oil companies, CNOOC was the only one to record profits. In the first half of the year, CNOOC's oil and gas sales revenue reached 66.34 billion yuan, down nearly 30% year-on-year; and its net profit was 10.38 billion yuan, a year-on-year decrease of 65.7%. The main reason for the profit is the sharp decrease of cost. The main cost of barrel oil of the company decreased by 11.3% to 25.72 US dollars / barrel oil equivalent, a new low in ten years.

It is worth mentioning that the listed companies of PetroChina and SINOPEC are the whole industry chain enterprises including oil exploration and development, refining and marketing, while CNOOC only includes exploration and development business. In terms of horizontal comparison, only Sinopec recorded a loss of 6.002 billion yuan, while PetroChina recorded a profit of 10.3 billion yuan.

From this point of view, the upstream business of PetroChina is basically equivalent to CNOOC's profit, which is far better than the huge loss during the last round of oil price slump; although Sinopec's upstream business has losses, compared with the previous round's loss range, it is much narrower.

"In the oil price slump cycle, the test is the cost control ability of enterprises, because the exploration and development costs will not follow the sharp drop of oil prices." A person in the oil industry told the 21st century economic report, "especially in China, the geological conditions are complex, the exploration and development are difficult, and the cost has been declining year after year. In this situation, a lot of costs are still reduced, which is really not easy."

Further reduce expenditure

In addition to reducing costs and increasing efficiency, the three major oil companies, like their international counterparts, have cut their capital expenditure in 2020.

In terms of PetroChina, the capital expenditure in the first half of 2020 was 74.761 billion yuan, a year-on-year decrease of 11.0%. The annual capital expenditure in 2020 is expected to be 228.500 billion yuan, 23.0% lower than that of 296.776 billion yuan in 2019, which is also the company with the largest reduction in capital expenditure among the three barrels of oil.

In terms of Sinopec, the capital expenditure in the first half of the year was 44.990 billion yuan, of which the capital expenditure of exploration and development plate was 20.470 billion yuan, which was the largest business sector in capital expenditure. It is reported that Sinopec will dynamically optimize and adjust investment projects according to market changes in the second half of the year. It is estimated that the annual capital expenditure will be reduced by about 10% compared with the plan at the beginning of the year.

CNOOC's capital expenditure in the first half of the year was 35.6 billion yuan, up 6.5% year-on-year. The annual capital expenditure was adjusted from 85-95 billion yuan planned last year to 75-85 billion yuan. "This adjustment is mainly due to inefficient and ineffective production under the condition of low oil prices." "What we need is productive production," said Xu Keqiang, CEO of CNOOC

Compared with international counterparts, Chinese companies have achieved excellent results in cost control, but there are still many deficiencies.

Royal Dutch Shell, BP, ExxonMobil, total, Chevron and ConocoPhillips have all reported second quarter results. According to the reporter's statistics, the total loss of the six multinational oil companies in the second quarter reached 53.693 billion US dollars (about 374.8 billion yuan), and the total loss in the first half of the year was 54.572 billion US dollars (about 380.972 billion yuan).

Surprisingly, the oil and gas trading business of large IOC experienced an exceptionally strong growth just as the oil companies suffered huge losses in the second quarter.

Taking shell as an example, excluding the large-scale write down in the second quarter, the revised net profit can reach 680 million US dollars. In its various business sectors, trade revenue was as high as $1.5 billion, far more than in the same period last year.

However, by contrast, the trading business of PetroChina is not so good. Although there is no separate financial statement, it can be seen from the statement of senior executives that the business sector related to trade in the first half of the year has encountered difficulties. PetroChina's natural gas import business, refining and chemical business, as well as Sinopec's refining and chemical business, all recorded large losses, a large part of which was caused by the decline in the price of crude oil in stock.

Duan Liangwei, President of PetroChina, said that in the first half of the year, by flexibly controlling the structure and timing of crude oil procurement and coordinating the pace and decline of inventory sales, by the end of the second quarter, the loss of inventory falling price was digested, and good results were achieved.

In the follow-up, China's oil companies have not been able to get rid of the crisis and still need more efforts to achieve performance improvement under the condition that oil prices in the second half of the year remain at the current level.

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