Description of the event
The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved total revenue of 10.148 billion yuan, a year-on-year increase of 20.0%; net profit to mother of 636 million yuan, an increase of 57.3%; deducted non-net profit of 656 million yuan, an increase of 69.5% year-on-year.
Incident comments
Industry sentiment continued to improve, and Q1 2024 results showed significant growth. Q1 2024 was affected by multiple complex factors such as frequent geographical conflicts, trade games between major countries, energy transitions, and continued OPEC+ production cuts. Although oil prices fluctuated, the overall position remained high. International integrated oil companies have re-strengthened their upstream business; domestic exploration and development efforts have continued to increase, and the prosperity of the oil and gas industry continues to rise. The company's 2024 Q1 performance increased 57.3% year on year. The gross sales margin and net sales margin were 16.4% and 6.81% respectively, up 2.62 pct and 1.41 pct, respectively. The overall profit level increased significantly.
Give full play to the advantages of the entire industry chain, and expand all businesses smoothly. 1) The drilling sector was affected by platform leasing. The company's drilling platform operated for 4,388 days, a decrease of 1.7% year on year, but the high daily cost of semi-submersible drilling platform operation was 968 days, an increase of 1.6% year on year; 2) The oil technology service sector has formed a virtuous cycle of independent industrialization of core technology products and R&D and optimization of independent technology products. The operating volume of major business lines has continued to grow year on year, and the overall revenue scale has maintained an upward trend; 3) The marine sector has comprehensively strengthened its offshore ship service coordination capabilities, and the number of operating days increased by 3.9% year on year, with lean management to effectively guarantee the sector's profit level; 4) The volume of 3D acquisition operations in the geophysical exploration sector was 6,696 square kilometers, an increase of 5,585 square kilometers over the previous year, mainly due to the increase in overseas operations, and revenue growth by leaps and bounds.
Both the drilling sector and the oilfield technical service sector have received large orders, and overseas markets have continued to break through. On September 1, 2023, the two Norwegian international oil companies signed a number of drilling platform service contracts with a fixed term and a selection period of up to five years, with a total fixed term contract amount of about RMB 4.7 billion. The September 19 announcement and Dachuan Offshore signed a total of four jack-up drilling platform sales contracts; the October 11 announcement signed a land-based integrated technical service contract with a major oil company in Mexico, with a contract amount of about RMB 900 million. Looking forward to the future, the company will help increase the market share of the oilfield technical service sector through the promotion and application of new technology, and the drilling business is expected to continue to improve the workload and daily costs of benefiting from sufficient orders.
Offshore oil and gas resources have huge potential, and CNOOC is expected to fully benefit from increasing storage and production and increasing capital expenditure. In terms of the global oil and gas detection rate, ultra-deep water is far lower than that of land. The detection rates for terrestrial oil and natural gas are 36.72% and 47.01%, respectively. The detection rates for ultra-deep-water oil and natural gas are only 7.69% and 7.55%. The potential for marine oil and gas resources is huge, and ultra-deep water is the future trend.
Domestically, the overall quality of proven oil and gas reserves has deteriorated, and the overall quality of marine reserves is better. In the future, whether in terms of quality or reserves, offshore, deep-water, and unconventional oil and gas are important fields and directions for future oil and gas exploration and development. The total capital expenditure budget of CNOOC in 2024 is 125 to 135 billion yuan. Compared with the high base in 2023, there is still a certain increase, which will guarantee the prosperity of the offshore oil service industry for a certain period of time. In the future, as China continues to increase its offshore oil field exploration and development efforts, it will continue to benefit corresponding supporting oil and gas service and equipment suppliers, and CNOOC Oil Services will fully benefit.
Without considering future changes in share capital, the company's 2024-2026 EPS is expected to be 0.85 yuan, 1.03 yuan, and 1.24 yuan. The PE corresponding to the closing price on April 30, 2024 is 21.06X, 17.39X, and 14.45X, respectively, maintaining a “buy” rating.
Risk warning
1. The sharp drop in international oil prices;
2. Risks arising from international market operations.