Investment highlights: Intercontinental Oil & Gas announced its report for the third quarter of 2016. In the first three quarters of 2016, Intercontinental Oil & Gas achieved operating income of 857 million yuan, -11.21% year-on-year; realized net profit attributable to the parent company of 8.7764 million yuan, +77.58%; realized earnings per share of 0.0039 yuan, weighted average return on net assets of 0.17%; in the third quarter, the company achieved operating income of 297 million yuan, -4.50% year-on-year, and net profit of 79.506 billion yuan, year-on-year reduction in losses. Marten and Keshan have been operating steadily, and production and sales have increased. Ma Teng's three mature oil fields, Ma Ting, Dongke, and Kara, are doing well, and production is stable. The exploration work for the Daultali block owned by Keshan Company is nearing completion, and it is in the process of applying for a development license from the Kazakh government. We expect that Keshan will still have a lot of room to increase its production capacity in the future. At present, Ma Teng and Keshan are operating well. The company's crude oil production volume in the first three quarters was 444,400 tons, +12.49% year-on-year, and sales volume was 459,900 tons, +18.04% year on year, with production and sales increasing. The “Plan for Issuing Shares to Purchase Assets and Raise Supporting Funds and Related Transactions (Revised Draft)” was issued. Intercontinental Oil & Gas announced a plan for issuing shares to purchase assets (revised draft). It plans to issue 459 million shares at 733 yuan/share to purchase 96.70% of Shanghai Takizhou Xinke's shares. After the transaction is completed, Intercontinental Oil and Gas will hold 100% of Shanghai's shares in Takizhou Xinke. At the same time, it is planned to issue no more than 437 million shares at a price of 7.33 yuan/share to raise a total of no more than 3.2 billion yuan in supporting capital to be used for the construction of the underlying asset project under construction and to pay taxes and fees for this merger and acquisition transaction. The acquisition of shares of Banks and Geogee Investments has been completed. Shanghai Takishu Xinke (or its subsidiary) has completed the acquisition of 100% of Banks' shares and 100% of Jiao Investment's shares through cash on September 29 and October 14, respectively. It holds oil and gas assets in Albania and Kazakhstan, respectively. It is expected that there will be positive changes in the international crude oil supply side, and the prosperity of the petrochemical industry will pick up. Looking at crude oil supply and demand, the overall demand side is relatively stable, and there will be some positive changes on the supply side in the future, including changes in crude oil production in the US and Middle Eastern countries, capital expenditure by oil companies, etc. We believe that oil prices will fluctuate in the short term but not change the upward trend, so the prosperity of the petrochemical industry will pick up. The oil price rebounded and the performance was very flexible. Due to the acquisition of oilfield assets at a time of low oil prices, the company's unit reserve acquisition cost is low. We estimate that after this acquisition is completed, the full production cost of the company's oilfield assets is about 35 to 40 US dollars/barrel. Profit can still be achieved under low oil prices. Crude oil equity production is about 2 million tons (about 15 million barrels), and crude oil production will increase further in the future. As a pure oil and gas extraction company, its performance is very flexible when oil prices rebound. Profit forecasts and investment ratings. We expect EPS from 2016 to 2018 to be 0.01, 0.26, and 0.55 yuan respectively (based on an estimate of 3.159 billion shares after the completion of this non-public offering). According to 2017 EPS and 35 times PE, we gave the company a target price of 9.10 yuan to maintain an investment rating of “increased holdings”. Risk warning: large fluctuations in crude oil prices, progress in additional issuance and acquisition, and new business development risks.