CNOOC's 2024Q1 performance significantly exceeded expectations
The net profit of 2024Q1 to mother was 39.7 billion yuan, +24% year over year, significantly exceeding market expectations. The sources of growth were simply split: about 3.2 billion came from incremental factors, about 2.8 billion from crude oil price improvements, and about 1.2 billion from exchange rate factors. The points that exceeded expectations may come from the above three aspects. Net operating cash flow is 60 billion dollars, investment payment cash is 28.5 billion dollars, and free cash flow is simply estimated at 31.5 billion dollars (+3.6 billion compared to the previous year).
Production growth exceeded expectations, mainly due to increased production in South American projects
Net production in Q1 2024 was 180MMBOE, +10% YoY, exceeding the previous forecast of 7%. Mainly due to the +37% year-on-year crude oil production in South America, the Payara project in Guyana (put into operation at the end of last year) and the Buzios5 project in Brazil (put into operation in the middle of last year), as well as the Suizhong Tourism Project, which was put into operation in the first quarter of this year.
The reduction in costs was mainly due to changes in exchange rates
In terms of cost, the main cost of 2024Q1 barrel oil is 27.59 US dollars/barrel, a slight decrease of 0.6 US dollars/barrel compared to the same period last year, mainly due to changes in exchange rates.
Achieving a narrower discount in oil prices compared to the same period in previous years
2024Q1 crude oil achieved a price of 79 US dollars/barrel, with a discount of about 3 US dollars/barrel compared to oil. Compared with the discount of 8 US dollars/barrel in the same period last year, it has basically returned to the normal historical discount level. Natural gas achieved a year-on-year price of -7.7%.
Profit forecast and investment rating: The original 2024-2026 net profit forecast was 1397/1577/162.3 billion yuan. As production speed and realized prices and performance in the first quarter all exceeded expectations, the net profit due to the increase in 2024-2026 to 1504/1664/171.5 billion yuan. A shares correspond to PE 9/8/8 times, and H shares correspond to PE 5.6/5.0/4.9 times. Dividend yield expectations for 2024 are 4.8% for A shares and 7.9% for H shares. Maintain a “buy” rating.
Risk warning: The economic recession has brought about a decline in crude oil demand, which will lead to a sharp drop in oil prices; there is a risk that future production of new projects will fall short of expectations.