The crude oil exploration and development business continued to expand, and revenue increased 3.43% year-on-year in the first half of 2024. On August 29, 2024, the company released an interim report. In the first half of 2024, the company achieved operating income of 1.918 billion yuan, an increase of 3.43% over the previous year; net profit to mother was 0.428 billion yuan, an increase of 1.02% over the previous year. In the second quarter of 2024, the company achieved operating income of 1.111 billion yuan, up 12.90% year on year and 37.67% month on month; realized net profit of 0.256 billion yuan, up 12.78% year on year and 48.84% month on month. Net profit to mother for the second quarter of 2024 was the highest value in a single quarter since the company went public.

By sector, the company's exploration and development business segment achieved revenue of 1.119 billion yuan, a year-on-year increase of 17.91%; the drilling engineering business segment achieved operating income of 0.665 billion yuan, a year-on-year decrease of 4.18%; the equipment manufacturing sector achieved revenue of 0.126 billion yuan, a year-on-year decrease of 3.82%; and the trade sector achieved revenue of 0.008 billion yuan, a year-on-year decrease of 89.50%.

Domestic Onsu Oilfield has steadily increased storage and production, and the overseas exploration and development layout is beginning to take shape. In terms of domestic oil fields, in 2018, the company obtained prospecting rights in the Wensu block for 0.867 billion yuan, and in 2021, the company obtained mining rights.

With the collaborative development of the company's three major businesses: drilling equipment manufacturing, drilling engineering services, and petroleum exploration and development, the company's internal block development well has been drilled and put into operation on a large scale. Since 2021, crude oil prices have remained fluctuating in the medium to high range after continuing to rise. Along with the continuous increase in the company's crude oil production and sales volume, the company's cash flow from operating activities has increased rapidly, providing financial guarantees for the rapid production of oil fields, and forming a virtuous cycle of exploration, development, and revenue. In the first half of 2024, the company's Wensu project achieved crude oil production of 0.3163 million tons, an increase of 0.0412 million tons over the previous year, and a year-on-year increase of 14.98%.

In terms of overseas crude oil exploration and development layout, the company has now laid out tenge and coastal blocks, and obtained development rights for Iraq's EBN block and MF block. Among them, the Tenge project has accelerated production, broken records, and entered a period of rapid increase in production capacity. In the first half of 2024, crude oil production was 0.0887 million tons, an increase of 0.053 million tons over the previous year, an increase of 148.46% over the previous year; the shore project completed the extension of old mining rights, completed research plans for oil field construction methods, ground transportation, and base construction, laying the foundation for the next step to move into the development stage as soon as possible.

Drilling engineering continues to speed up efficiency, and equipment manufacturing is moving towards a new stage of digital intelligence. In the first half of 2024, the company's revenue in the drilling engineering sector and equipment manufacturing sector decreased by 4.18%/3.82% year-on-year respectively.

In the drilling engineering sector, in the first half of 2024, the company operated a total of 49 drilling rigs, and the utilization rate of drilling vehicles reached more than 85%. They were distributed across 16 projects at home and abroad. The main distribution countries were Iraq, Egypt, Saudi Arabia, and Kazakhstan, which completed a total of 0.4013 million meters. Since 2024, the company has focused on speeding up technology. Currently, the drilling cycle for the BP big package project has been shortened by 5-9 days. Among them, the Ru-608 well construction cycle is 35.33 days, saving 12.67 days compared to the contract, and the effect of speeding up and increasing efficiency is remarkable.

In the equipment manufacturing sector, the company has carried out many scientific research and innovation projects. Through the “Development of an Intelligent Drilling Tool Handling System Based on Robotics Technology” project application, the company applied heavy-duty industrial robot technology, etc. to oil rigs with the goal of autonomous and controllable core technology, less manned operation, and unmanned operation to achieve remote control, one-click operation, automatic connection and collaborative operation of drilling operations to achieve unmanned drilling surface operations and offline root establishment operations. The company's equipment division creates a deep integration of artificial intelligence and digital technology, and uses research results to enable operation in the company's engineering sector and oil fields.

Risk warning: crude oil prices fluctuate greatly; increase in crude oil production falls short of expectations; geopolitical risks.

Investment advice: Maintain profit forecasts and maintain a “better than the market” rating.