Sinopec Shares Rise on Kazakhstan Asset Acquisition

China Petroleum & Chemical Corp. (386), Asia’s biggest refiner, rose the most in over seven months after the company said it would form a joint venture with its parent to acquire overseas oil and gas assets in Kazakhstan, Colombia and Russia.

The shares rose as much as 4 percent to HK$9.10 in Hong Kong trading, headed for their biggest gain since Aug. 6. At 9:50 a.m. they were 3.2 percent higher at HK$9.03. The city’s benchmark Hang Seng Index was up 1 percent.

The company, known as Sinopec, will set up a 50-50 join venture with its state-owned parent China Petrochemical Corp. to acquire upstream assets in Kazakhstan, Colombia and Russia, the company said in a statement yesterday to Hong Kong’s stock exchange. Sinopec will pay about $1.5 billion for the assets.

“Although the deal size is relatively small compared to Sinopec’s market cap of $98 billion, we believe this upstream asset acquisition is one of many to come in the months ahead, and will certainly improve the overall profitability of the firm,” said Gordon Kwan, head of energy research at Mirae Asset Securities Ltd., in an e-mail today.

The deal will boost Sinopec’s proven reserves by 9.1 percent to 3.1 billion barrels and its annual crude oil production will rise 11 percent to 365 million barrels, Kwan said.

Sinopec’s fourth-quarter profit may stand at 21.1 billion yuan, Neil Beveridge, Ying Lou and Lu Wang, Hong Kong-based analysts at Sanford C. Bernstein & Co., wrote in a research note today. That would be 79 percent higher from a year earlier and above the 19.3 billion yuan mean of 6 analysts’ estimates compiled by Bloomberg. Sinopec didn’t provide fourth-quarter data in its earnings statement yesterday.

Sinopec’s full-year net income was 63.9 billion yuan, down from 73.2 billion yuan in 2011. That was higher than the 61.8 billion yuan mean of 26 analysts’ estimates compiled by Bloomberg.

bloomberg.com