Singapore Petroleum Q3 net down on weak margins

Singapore Petroleum Q3 net down on weak margins

Oil and gas refining and marketing firm Singapore Petroleum Co. Ltd. (SPC) posted a 78.3 percent fall in third-quarter net profit on Wednesday due to a sharp drop in refining margins at its sole refinery.

SPC said in a statement that it had achieved an average refining margin of approximately US$4 per barrel for the third quarter, compared to more than US$8 per barrel in the previous quarter.

Asian complex refining profit margins during the July-September quarter averaged at US$4.75 a barrel, compared with an average of US$8.9 in the previous quarter, according to Reuters calculations.

SPC, which is 49-percent owned by Singapore conglomerate Keppel Corporation Ltd. , said that it earned a net profit of S$23.2 million ($14.76 million), down from S$106.9 million in the year-ago quarter and against S$135.7 million in the second quarter this year.

SPC’s major asset is its 285,000 barrel-per-day refinery, Singapore Refining Company (SRC) — a 50-50 joint venture between the company and Chevron — which mainly exports products to China and Southeast Asia.

SPC said that a scheduled maintenance turnaround of the Residue Catalytic Cracker at SRC also adversely affected the overall refining margin.

The company in July had said that the residue cracker complex would be shut down for maintenance for more than 30 days from September to October.

“As a result of the turnaround, crude volume processed also fell by about 6 percent with a consequential accumulation in inventories. This turnaround that commenced on 9 September was completed by 16 October,” it said.


The company said it expected refining margins to improve as the recent fall in crude oil prices was likely to boost demand for refined products.

“After the scheduled maintenance in September and October, SRC has resumed full production,” it said.

“This would enable the group to benefit from the anticipated pick-up in demand.”

Shares in SPC ended 1.3 percent higher on Wednesday. However, the stock price is unchanged from the start of the year, after a 26 percent gain in 2005. The firm’s market capitalisation stands at about US$1.5 billion.

According to a median of Reuters Estimates’ poll of three analysts, SPC is expected to make a net profit of S$373 million in the full year. The analysts’ forecasts ranged from S$342 million to S$414.6 million. SPC earned S$403.6 million in 2005.

SPC shares trade at 6 times their 2007 forecast earnings. Among its Asian peers, Thai Oil PCL trades at about 7 times and Shell Refining , the Malaysian refining unit of Royal Dutch Shell , trades at 8 times.

Copyright © 2005 Reuters Limited. All rights reserved.

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