Matters:
Recently, China's first shale oil hydraulic fracturing test site was officially completed in the Qingcheng Oilfield in Changqing, providing a solid foundation for increasing single well production and the next step in shale oil efficiency development.
Guoxin Chemical's opinion:
1) Shale oil is widely distributed. The United States has achieved energy independence through the shale oil revolution: shale oil is mainly distributed in North America and Eurasia. By the end of 2017, the total amount of global shale oil geological resources was 936.8 billion tons, and the amount of technically recoverable resources was 61.8 billion tons. The top three recoverable resources were the United States, Russia, and China, respectively. US shale oil development was most successful. Since 2000, with the exploration and application of technologies such as horizontal wells and fracturing in shale oil exploration and development, US shale oil development costs have been continuously reduced, and commercial development of many shale oil projects has been realized. The rapid development of US shale oil has enabled America, once the world's largest importer of oil and gas, to achieve “energy independence,” profoundly changing the world's oil and gas supply pattern. According to EIA forecasts, under the benchmark scenario, US shale oil production will reach 1.544 million cubic meters in 2040, accounting for about 67.3% of total US oil production.
2) China's shale oil storage conditions are complicated. Currently, it is in the stage of efficient construction and production, and the future prospects are broad. China's shale oil resources are mainly found in terrestrial strata. Compared with North America, China's organic-rich shale has the characteristics of “one deep, two mixed, and three many”. These characteristics determine that there is a significant difference between the resource characteristics of shale oil and gas in China and the resource characteristics of marine shale oil and gas that are widely developed in the US. China's five major basins, including the Ordos Basin, Songliao Basin, Bohai Bay Basin, Junggar Basin, and Sichuan Basin, all have more than 2 billion tons of shale oil geological resources, accounting for more than 95% of China's shale oil geological resources. China's shale oil development started relatively late, and is still in the stage of master planning to technological breakthroughs. There is still a gap between achieving major engineering changes and comprehensive economies of scale development. However, judging from the resource base, engineering technology capabilities, and production expectations, China has the basic conditions for the shale oil revolution to succeed. In 2022, China's shale oil production exceeded 3.4 million tons for the first time, tripling from 2018.
3) CNPC continues to promote technological innovation and management innovation, and results in shale oil development continue to emerge. After years of technical research and practice, CNPC has initially developed a shale oil development evaluation method and technology suitable for the geological development characteristics of China's land-based shale oil. Adhering to the concept of “full life cycle management”, CNPC has explored and formed a “one full six” shale oil exploration and development model, promoted a “five production improvement, five cost reduction” system project, established a market mechanism where multiple market players participate and compete on an equal footing, promoted internal market contractors to work together to create efficiency, and built an Internet of Things system for oil and gas production, which promoted large-scale storage and efficiency development. The Qingcheng Oilfield is currently the largest proven shale oil field in China. It is expected to produce more than 3 million tons of shale oil in 2025; the Jiqing Oilfield is China's first national-level land-based shale oil demonstration zone, which is expected to produce 1.4 million tons of shale oil in 2025; Daqing Oilfield has been exploring shale oil for a long time and strives to produce 1 million tons of oil by 2025; the Dagang Oilfield is currently in the pilot stage of efficiency development, and the output is expected to reach 0.25 million tons in 2025.
1) 4) Investment advice: We maintain the forecast for the company's 2024-2026 net profit of 173.5/186.3/202.9 billion yuan, with diluted EPS of 0.95/1.02/1.11 yuan, 11.2/10.5/9.6x for the current A share PE, and 7.8/7.3/6.7x for H share PE, maintaining the “superior to market” rating.
Risk warning
Risk of large fluctuations in crude oil prices; risk of frequent natural disasters; risk of new projects falling short of expectations; geopolitical risk; policy risk, etc.