Sinopec (SNP) Discovers New Oil & Gas at China's Shunbei
Sinopec's (SNP) oil production from the Shunbei field jumps almost 30% throughout 2020 to 1 million tons.
China Petroleum & Chemical Corporation or Sinopec SNP recently discovered an oil and gas field in the Xinjiang province of China, per Reuters. The field is located in the Shunbei area of the famous Tarim Basin.
Sinopec’s northwest China unit drilled an exploration well at the site, which encountered a daily flow of around 6,315 barrels of oil and 590,000 cubic metres of natural gas, as reported by Reuters. The company is expected to have discovered more than 100 million tons of hydrocarbons.
Shunbei is a strategic gem in Sinopec’s upstream portfolio. The field was discovered in 2016. Crude oil production from the field jumped almost 30% throughout 2020 to 1 million tons. Also, natural gas output increased 32% to 350 million cubic meters. This March, the company made a significant oil and gas find in the discovery well Shunbei-42X. Flow from the well was around 7,300 barrels of oil equivalent per day.
These recent discoveries in Shunbei are expected to further boost its output from the area. The Tarim Basin, wherein the Shunbei oil and gas field is located, is expected to play a crucial role in China’s drive toward reducing dependency on imported energy and decarbonization.
A significant portion of China's electricity is generated by coal-fired power plants, which emit greenhouse gases that lead to pollution. To solve this problem, China is rapidly increasing natural gas usage. Therefore, the Tarim Basin resources are important for Sinopec’s natural gas business as it has immense potential for growth over the coming years.
Sinopec has gained 2.9% in the year-to-date period compared with 22% rally of the industry it belongs to.
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Zacks Rank & Stocks to Consider
Currently, Sinopec has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Hess Midstream LP HESM, Range Resources Corporation RRC and Cheniere Energy, Inc. LNG, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hess Midstream’s bottom line for 2021 is expected to increase 19.1% year over year.
The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.57 per share, indicating a massive improvement from the year-ago loss of 9 cents.
The consensus estimate for Cheniere’s earnings for 2021 is pegged at $2.80 per share, signaling a major improvement from the year-ago loss of 34 cents.
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