Incident: The Dingzeng equity purchase section completed the transfer at the end of the year 18. The company became a shareholder of CNOOC Wobang Holdings. The 18th annual report combined CNOOC's plans to quickly enter the natural gas sector through mergers and acquisitions. The M&A plan was divided into two steps: ① Through Wo Jin Energy, a subsidiary holding 51% of the shares, paid in cash to buy 27.20% of CNOOC Wobang's shares. This section completed the transfer in February 2018; ② The transfer was completed in February 2018; The acquisition of 23.20% of CNOOC Wobang's shares was completed in February 2018. On the evening of January 2, 2019, the company announced that part ② of the 23.2% shares of CNOOC Wobang purchased through fixed increases had completed the transfer on December 26 and 28, 2018, respectively. The company has controlled 50.5% of CNOOC Wobang's shares and became its controlling shareholder, with an actual shareholding ratio of 37.17%; the company's 18th annual report will be combined with CNOOC Wobang, thereby increasing the company's net profit by 1.18 million yuan. Currently, the fixed increase has not been completed, and subsequent companies will issue shares in accordance with relevant regulations. The transaction price of 100% of CNOOC Wobang's shares is 4.5 billion yuan, and the transaction consideration for 23.2% shares is 1,044 billion yuan; the current stock issue price is 25.8 yuan/share, the number of shares issued is about 40 million shares, and the total share capital of the company after issuance is about 102 million shares. In order to further strengthen CNOOC's management and control capabilities, in November '18, the company signed a “Letter of Intent to Acquire” with the original shareholders of CNOOC Wobang. After CNOOC Wobang's 18-year performance betting is completed, the company will continue to acquire 16.50% of its shares, thus controlling 67% of CNOOC's shares and becoming its absolute controlling shareholder. Yonghe's 18-45 well plans to have an annual production capacity of 1.2 billion square meters, and the gas production growth rate in block 18-20 is expected to exceed 16%. CNOOC Wobang, the subject of this acquisition, was founded in 2007 and is a professional unconventional natural gas extraction enterprise. In 2009, CNOOC Wobang signed a 30-year product sharing contract with CNPC Coalbed Methane Company to jointly develop dense gas in Shilou West Block. The Shilou West block has an area of 1,524 square kilometers, of which 928 square kilometers have proven reserves; currently, the block has proven geological reserves of 127.6 billion square meters, technical recoverable reserves of 61 billion square meters, and economic recoverable reserves of 44.3 billion square meters; the discovered well areas include: Yonghe 18 well area, Yonghe 30 well area, and Yonghe 45 well area, of which, ① Yonghe 18 well entered the commercial production stage in May 17, with a production capacity of 500 million square meters per year; ② Yonghe 45 well is close to Yonghe 18, and has now applied for joint development with Yonghe 18, The planned production capacity is 1.2 billion square meters/ year. Benefiting from the commercial mining of Yonghe No. 18 well, CNOOC Wobang sold 630 million square meters of gas in '17, up 125% year on year; revenue was 770 million yuan, up 112% year on year; net profit was 3.1 billion yuan, up 175% year on year; and H1 sales volume was 363 million square meters in '18. After the approval of Yonghe's joint development plan for the 18-45 well area with an annual production capacity of 1.2 billion square meters, it is expected that CNOOC Wobang's gas production will continue to increase markedly. According to the acquisition report, it is predicted that the growth rate of gas production in the block 18-20 will remain above 16%, with a net profit of about 3.63/4.56/554 million yuan. Profit forecast: In the absence of a consolidated list, we expect the company to return a net profit of 803/1896/28.68 million yuan in 18-20, with an EPS of 0.13/0.31/0.47 yuan. We gave and presented a profit forecast for the exam: ① After CNOOC Wobang's 50.5% equity merger, the company's net profit in 19-20 was 1.25/157 million yuan; after the fixed increase was completed, the company's total share capital was about 102 million shares and EPS was 1.22/1.54 yuan; ② After completing CNOOC's 67% equity acquisition, the company's net profit for 19-20 was 163/204 million yuan, and EPS was 1.60/2 yuan. Risk warning: valuation risk of assets to be purchased, risk of transactions being suspended/cancelled, and production of underlying assets falling short of expectations