Revenue performance of domestic offshore oil and gas giants has improved significantly
The company is one of the largest pure upstream oil and gas companies in the world and a leader in the exploration and development of crude oil and natural gas in China. The company is directly controlled by CNOOC and indirectly controlled by SASAC. It was listed on the New York Stock Exchange and Hong Kong Exchanges and Clearing in 2001 and returned to A shares in 2022. From the perspective of business structure, oil and gas sales contribute mainly to revenue and profits, while clean energy accounts for a gradual increase. After 2020, as the oil price hub rebounded, the company's revenue and performance improved significantly.
Offshore oil and gas has remarkable advantages and broad room for increasing production.
The high degree of external dependence of oil and gas highlights the grim situation of energy security in China, strengthening exploration and development efforts to promote the increase of reserves and production has become the inevitable choice to ensure national energy security, and the policy under the background of energy independence is expected to drive the growth of domestic oil and gas production. For CNOOC, strong support for capital expenditure has led to a steady increase in net proven oil and gas reserves and oil and gas production. According to the company's strategic outlook, nine new projects will still be put into production in 2023, which will strongly support production growth, and production will continue to grow at a high speed from 2023 to 2025.
The cost of barrel oil remains in the lead, highlighting the company's competitiveness.
The main cost of barrel oil can reflect the competitiveness of different oil and gas companies around the world. The cost control of the company has been very effective, and the main cost of barrel oil has increased only slightly in the context of the sharp rise in oil prices in 2022. Looking to the future, as the cost of DD&An accounts for about half of the main cost of barrel oil, controlling the change of DD&An is the focus of cost reduction. After 2015, the DD&An of domestic and overseas oilfields has declined. As the company continues to improve the success rate of exploration, shorten the development cycle and strengthen the fine management of old oilfields, there is still room for cost reduction in the future.
High-level operation in the oil price center to ensure the prosperity of the industry sluggish global economic growth crude oil demand is under pressure, but in the context of tight supply and Chinese demand is expected to recover, the oil price center will still operate at a medium-to-high level. Looking ahead, the oil price hub will fluctuate between $80 and $100 a barrel against a backdrop of expected recovery in Chinese demand and tight global supply. If the OPEC+ production reduction agreement is well implemented in the second half of the year, the possibility that the oil price will exceed 100 US dollars per barrel will not be ruled out. CNOOC is a company focused on upstream oil and gas exploitation, and oil and gas sales constitute the company's main source of profits. looking back at the company's net profit and oil price, we can find that the company's profit is highly positively related to oil price. if the oil price rises in the future, the performance of the company is very flexible.
Under the background of China Special valuation, the valuation of the company will continue to be repaired.
Since the beginning of this year, the construction of the valuation system with Chinese characteristics has achieved positive results. The energy sector of central state-owned enterprises, represented by three barrels of oil, has improved significantly in stock prices and corporate valuations under the background of ensuring energy security and the transformation of new energy. In order to explore whether it can continue to improve in the future, we compare petrochemical state-owned enterprises with non-state-owned enterprises in the same industry in China and overseas enterprises in the same industry. Judging from the results, the current valuation of central state-owned enterprises listed by petrochemical is still relatively low, and as the profitability gap of central state-owned enterprises represented by three barrels of oil gradually narrows, the valuation of leading central state-owned enterprises such as China National Offshore Oil still has a great prospect of improvement, and the valuation may continue to be repaired.
Investment advice: give a "buy" rating to the future, the oil price hub is expected to operate at a medium-to-high level. As China's largest offshore crude oil and natural gas producer, CNOOC will fully benefit from high oil prices and its own production growth. In the field of new energy, the company also conforms to the general trend of low-carbon development of the global energy industry, making use of rich offshore production operation and management experience, actively exploring the development of offshore wind power and other new energy business, and carrying out research in the field of cutting-edge technology. It is estimated that the company's 2023-2025 EPS will be 2.77,2.82,3.11 yuan respectively. The PE corresponding to the closing price on July 19, 2023 was 6.80X, 6.68X and 6.05X respectively, covering it for the first time and giving it a "buy" rating.
Risk tips: 1, the sharp decline in international oil prices; 2, geopolitical risks; 3, the risks brought by the operation of the international market; 4, the risks brought by natural disasters, bad weather and other natural factors; 5, the risk that the profit forecast hypothesis is not valid or not as expected.