In the first three quarters of 2024, the company achieved operating income of 326.024 billion yuan, an increase of 6.3% year on year; net profit to mother was 116.659 billion yuan, an increase of 19.5% year on year. Among them, the third quarter achieved revenue of 99.254 billion yuan, a year-on-year decrease of 13.5%, a year-on-month decrease of 13.92%, and net profit to mother of 36.928 billion yuan, an increase of 9.0% year-on-year and a decrease of 7.71% month-on-month. The company's oil and gas production increased steadily, and its profitability continued to grow, maintaining a “buy” rating.

Key points to support ratings

Net oil and gas production has increased steadily, and the cost advantage continues to be consolidated. In the first three quarters of 2024, the company's net production reached 542.1 million barrels of oil equivalent, up 8.5% year on year. The main cost of barrel oil was 28.14 US dollars/barrel oil equivalent, which was basically the same as the previous year.

In the third quarter, the company achieved net production of 179.6 million barrels of oil equivalent, an increase of 7.0% over the previous year. In the first three quarters, China and overseas oil and gas production accounted for 68% and 32%, respectively. Among them, China's net production increased 6.8% year on year, mainly due to production contributions from oil and gas fields such as Bozhong 19-6 and Enping 20-4. Overseas net production increased 12.2% year on year, mainly due to the increase in output brought about by the commissioning of the Payara project in Guyana. In the first three quarters of 2024, a total of 7 new projects were successfully put into operation. In the future, as construction of new projects progresses smoothly, the company is expected to successfully achieve its annual production target.

Petroleum sales prices rose year on year, and oil and gas sales revenue increased year on year. In terms of product structure, in the first three quarters of 2024, the company's petroleum liquid and natural gas accounted for 78% and 22% of the oil and gas equivalent, respectively; the average realized sales price of petroleum liquid was 79.03 US dollars/barrel, up 2.9% year on year; the average realized sales price of natural gas was 7.78 US dollars/1000 cubic feet, down 1.8% year on year, and oil and gas sales revenue reached 271.432 billion yuan, up 13.9% year on year, of which petroleum liquid/natural gas sales revenue was 235.382 billions/36.05 respectively billion yuan, up 14.6%/9.4% year over year, respectively.

Cash flow has been steady and improving, and capital expenditure has increased reasonably. In the first three quarters of 2024, the company's net cash inflow from operating activities was 182.768 billion yuan, +14.9% year on year; cash payments from debt repayment amounted to 33.639 billion yuan, an increase of 66.93% over the previous year, and the financial situation was stable, moderate and positive. In the first three quarters of 2024, the company completed capital expenditure of RMB 95.34 billion, up 6.6% from the same period last year, of which exploration expenditure was 13.847 billion yuan, down 1.3% year on year, and development and production capitalization expenses were 61.785 billion yuan and 17.974 billion yuan, respectively, up 7.9% and 4.7% year on year. In terms of results, in the first three quarters of 2024, the company obtained a total of 9 new discoveries and successfully evaluated 23 oil and gas structures. Among them, the new discovery of Wenchang 10-3 east was obtained in Chinese waters, showing good prospects for medium- and deep-layer natural gas exploration in the western Pearl River estuary basin; Caofeidian 23-6 was successfully evaluated. The scale of reserves continues to expand, and it is expected to become a large and medium-sized oil field. As the company's work to increase storage and production progresses steadily, oil and gas resource endowments are expected to be further optimized.

valuations

The company's oil and gas production is increasing steadily, and profitability continues to grow. The company's net profit for 2024-2026 is estimated to be 148.8 billion yuan, 160.047 billion yuan, and 168.564 billion yuan respectively, corresponding to EPS (diluted) of 3.13 yuan/share, 3.37 yuan/share, and 3.55 yuan/share. The current stock price corresponds to a net market ratio (PB) of 1.7 times, 1.5 times, and 1.4 times, maintaining the purchase rating.

The main risks faced by ratings

Factors such as the risk of drastic fluctuations in international oil prices, environmental policy changes, or natural disasters cause abnormal production facilities, production safety risks caused by personnel operation errors, and a downturn in the global economy.