China Petroleum & Chemical Corporation SNP, also known as Sinopec, declined marginally after reporting lower year-over-year earnings for the third quarter of 2021 on Oct 28.

The company reported third-quarter 2021 earnings per American Depositary Receipt (ADR) of $2.64, declining from the year-ago quarter earnings of $5.54. The lower profit was owing to decreased crude production in the overseas market. This was offset partially by higher commodity prices and throughput volumes.

Revenues, however, improved 52.4% year over year to $114,618 million.

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Like Sinopec, PetroChina Company Limited PTR, another major energy player in China, reported lower year-over-year earnings per share in the third quarter.

Operational Performance

Exploration and Production: During the nine-month period ending Sep 30, 2021, Sinopec’s crude oil production decreased almost 1% year over year to 208.65 million barrels. Although oil production in the domestic market almost remained flat, overseas volumes slipped 7.9% year over year to 22.06 million barrels.

Natural gas volumes increased 13.7% year over year to 877.85 billion cubic feet in the same period. Total oil and gas production rose 4.6% year over year to 355.01 million barrels of oil equivalent.

For the nine-month period ending Sep 30, the company’s average realized oil price surged to $60.94 per barrel from $38.24 a year ago. Realized natural gas price recovered 26.7% from $5.32 per thousand cubic feet to $6.74.

Segmental earnings before interest and taxes (EBIT) for the first nine months of 2021 were recorded at 10.904 billion yuan, declining from 13.16 billion yuan in the year-ago period. Lower crude production in the overseas market hurt the segment.

Refining: The company’s Refining business recorded refinery throughput of 190.73 million tons (up 9.3% year over year). It also produced approximately 108.60 million tons of petroleum products, representing a 3.2% improvement from the first nine months of 2020.

Due to higher throughput volumes, the segment reported EBIT for the first nine months of 2021 at 54.268 billion yuan, reflecting an improvement from the year-ago quarter’s 31.55 billion yuan.

Marketing and Distribution: The Marketing and Distribution segment sold 166.59 million tons of refined oil products, reflecting a 2.7% year-over-year improvement.

From this segment, the company generated EBIT of 24.316 billion yuan, up from the year-ago period’s 18.24 billion yuan owing to higher sales volume of refined oil products.