The hottest Sinopec gets the injection of overseas

Sinopec was injected with overseas assets, and the west east gas transmission is expected to become a new growth point

on the evening of March 28, Sinopec handed over its 2009 report card

although the operating revenue in FY2009 decreased by 10% year-on-year to 1.35 trillion yuan, the net profit of Sinopec increased by 117% year-on-year to 61.8 billion yuan. Stimulated by this news, Sinopec's A-share closing price rose 1.78% today

but the highlight of that night was not just these financial data representing the performance of the past year

after nearly half a year of rumors, Sinopec finally began the substantive action of acquiring the overseas assets of the parent company - acquiring 55% equity of SSI held by soogl, a subsidiary of the group, for us $2.457 billion, which holds 50% equity of Angola block 18 (divided into eastern and western districts)

at the analyst meeting at the end of October last year, Wang Xinhua, chief financial officer of Sinopec, said that the company had established a subsidiary to study the acquisition of overseas assets of the parent company Sinopec Group, and was stepping up the operation of this acquisition

although it was postponed, this story finally became the present continuous tense, and the acquisition target did not disappoint the outside world

overseas assets

on the evening of March 28, Su Shulin, chairman of Sinopec, announced that in order to further expand the scale of Sinopec's upstream business, the board of directors decided to set up in Hong Kong, Cisco BASF and many other large overseas chemical enterprises have their R & D bases here. The wholly-owned subsidiary acquired 55% of the equity of sonango Sinopec International Ltd ("SSI") held by soogl, a wholly-owned subsidiary of China National Petroleum and Chemical Corporation, while SSI owns 50% of the equity of Angola block 18

"among the overseas assets of Sinopec Group, this one is good." Qiu Xiaofeng said

Angola block 18 has an average water depth of 1500 meters, which is divided into eastern and western areas. The Eastern District has been officially put into production in October 2007, with a daily production capacity of 240000 barrels, and is currently in the upper production period. The west area is currently in the development preparation stage, and two rounds of seismic acquisition have been completed, with a high degree of reserves implementation. At present, the three exploration wells have been successful, and the oil test effect is ideal. The development concept design is under way

by the end of November 2009, SSI's working equity proved and probable (2P) reserves in the eastern area of block 18 had reached 238 million barrels, and its net equity proved and probable (2P) reserves had reached 170 million barrels. SSI's contingent resources in the west of block 18 in Angola are 38.31 million barrels in 1c and 49 mm in 2ci 54 million barrels

after the completion of this transaction, the remaining proved crude oil reserves of Sinopec will increase by 102 million barrels, an increase of 3.6%; Crude oil production will increase by 725200 barrels/day, an increase of 8.8%

it is understood that the total consideration of this acquisition is $2.457 billion (equivalent to about 16.776 billion yuan), of which the consideration for the acquisition of the underlying equity is $1.678 billion (equivalent to about 11.457 billion yuan), and the consideration for the acquisition of the underlying debt is $779 million. Shi will pay consideration to soogl with its own funds and bank loans

Yu Chunmei and Zheng Zhiguo, analysts of Shenyin Wanguo, believe that this is a reasonable acquisition consideration. "The equity consideration paid by the company is US $1.678 billion, corresponding to the equity reserves in Eastern Angola (102.49+67.24) × 0.55 = 93.35 million barrels, the purchase price of each barrel of reserves is about $18, which is equivalent to the current reserve transaction price in the world. At the same time, this reserve does not include the resources in the western region, and the block has relatively large development potential in the future, so we believe that the purchase price is reasonable. "

Sinopec said that according to the profit level in 2009, the enterprise value/operating profit before interest, tax and depreciation of this transaction was 5.8 times, and the P/E ratio was 9.7 times, both lower than the average transaction multiple of comparable companies. The operating cost of oil and gas cash in the east of block 18 is only $7/barrel. According to the consolidated caliber, this transaction will help reduce the operating cost of oil and gas cash of the joint-stock company

Sinopec pointed out in the draft issued, "this transaction is the first time Sinopec has acquired (parent company) overseas upstream assets, which is also the best overseas asset of the group company at present."

however, Qiu Xiaofeng said that 2008 was the highest year for international crude oil prices, and SSI's annual performance was only 4.8 billion yuan. The average price of crude oil this year to avoid affecting the measurement accuracy of equipment is expected to exceed 2008. Considering the 55% equity ratio, it is expected that the contribution to Sinopec's performance in 2010 will not exceed 3 cents

after the acquisition of assets in Angola, it is still worth looking forward to Sinopec's new asset injection into the group in the future

according to the data, the overseas oil and gas production of Sinopec Group is expected to reach 22.4 million tons in 2010. After deducting the 2million tons acquired this time, there is about 20million tons

new growth point

in addition to the acquisition of overseas assets of the parent company, Li Guohong, an analyst at Galaxy Securities, believes that the chemical industry sector represented by the three major synthetic materials will become a new profit growth point for Sinopec in 2010

he believes that with the improvement of the global economy, the demand for the three major synthetic materials is growing rapidly, and the petroleum and chemical products in the upper reaches of the industrial chain will enter a new round of price rise this year

in February this year, the average price of naphtha was $75/barrel, while ethylene and LDPE rose to $1335 and $1520/ton. The price and price difference were about $per ton higher than the level of oil prices in the same period. The price of terminal LDPE products rose more sharply. At present, the oil price of crude oil and naphtha is only 55% of the highest level in history, but the prices of the three major synthetic materials have risen to about 80% of the highest level in history. In January and February, the EBIT per ton of ethylene reached about 4000 yuan

on the other hand, with the completion and operation of the west to east gas transmission project and the rising call for the reform of the natural gas price mechanism, natural gas is expected to become another growth point for Sinopec

China's natural gas has entered a period of rapid development since 2000. With the improvement of urbanization rate, it is predicted that this process will continue until about 2050, with an average annual growth rate of about 10%. With the growth of demand, natural gas will change from the current basic balance of supply and demand to shortage. It is expected that the gap between supply and demand of natural gas will be about 30billion cubic meters in 2010, with imports accounting for about 20%. The gap will be 50billion cubic meters in 2015 and 90billion cubic meters in 2020

liguohong believes that at present, the ex factory price of industrial natural gas is only 33% of the price of crude oil, while the price ratio of natural gas to crude oil in mature market economy countries is usually between 0.65-0.80. The natural gas price reform is in line with the general direction of China's resource price reform. At the same time, the current domestic economic recovery and low inflationary pressure have provided a good macro environment for price reform. From a long-term perspective, the gas reform is inevitable, but Sinopec has benefited significantly from the gas reform

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