CNOOC announced its 2024 semi-annual report. In the first half of this year, CNOOC achieved operating income of 226.77 billion yuan, an increase of 18.07% year on year; net profit to mother was 79.731 billion yuan, an increase of 25.05% year on year.

1H24 achieved the highest profit in the same period in history. In the first half of this year, the company achieved a net profit of 79.731 billion yuan, the best profit for the same period in the company's history. The rise in crude oil prices and the increase in oil and gas production are important reasons driving the company to achieve good profits.

Oil and gas production is growing steadily. In the first half of this year, the company achieved oil and gas production of 0.362 billion barrels of oil equivalent; of these, natural gas production was 460.9 billion cubic feet, up 10.9% year on year; petroleum liquid production was 0.284 billion barrels, up 8.8% year on year.

Crude oil achieved an increase in price. In the first half of this year, the company's crude oil achieved a price of 80.32 US dollars/barrel, a year-on-year increase of 6.75%. Furthermore, the company achieved a price of 7.79 US dollars/thousand cubic feet of natural gas, which was basically the same as the previous year.

Second-quarter earnings topped $40 billion. The company's net profit for the first and second quarter of this year was 39.7 billion yuan and 40 billion yuan respectively, and the profit for the single quarter exceeded 40 billion yuan. In the first two quarters of this year, Brent oil prices were 81.76 and 85.03 US dollars/barrel respectively, driving profit improvement. In terms of production, the company's oil and gas production in the first two quarters of this year was 0.18 billion barrels of oil equivalent and 0.183 billion barrels of oil equivalent, respectively, with a slight increase over the previous month.

Capital expenditure for the first half of the year was 63.125 billion yuan, up 11.7% year over year. Of the capital expenditure of 63.125 billion yuan in the first half of this year, development investment reached 40.221 billion yuan, an increase of 13.3% over the previous year. The increase in development investment has laid a solid foundation for increasing its oil and gas production.

Profit forecasting and investment ratings. We expect the company's EPS to be 2.97, 3.00, 3.08 HKD/3.27, 3.30, 3.39 in 2024-2026, and 15.68 HKD/17.25 for BPS in 2024. Referring to the valuation level of comparable companies, they were given 1.4 times PB in 2024, with a target price of 21.95 yuan/HK$24.19 (corresponding to a PE of 7.4 times in 2024). For the first time, the investment rating was “superior to the market”.

Risk warning: Large fluctuations in oil and gas prices have a great impact on the company's profits.