Incident: On October 31, the company and Iraq Oilfield Development Co., Ltd. (Petro Iraq) formally signed a development and production contract with the Central Iraqi Petroleum Company (MDoc) for the Mansuriya project. The content of this contract is consistent with the content of the previous initial contract.

The Mansouria gas field is Iraq's second largest field, and the project is a landmark. MDoc is a state-owned enterprise belonging to the Ministry of Petroleum of Iraq. The Mansuriya gas field is the second largest field in Iraq. The gas field is 20 kilometers long, 3-4 kilometers wide, and the estimated reserves are as high as 4.5 trillion cubic feet. According to the initial signing of the contract, it is stipulated that MDoc holds 51% of the rights, and Jerry and the Iraq Oilfield Development Company (Petro Iraq) jointly hold 49% of the rights as the project contractor. At the same time, Jerry, as the operator of this project, assumes operational responsibility for the development and operation of this project on behalf of all parties. This cooperation is a landmark leap forward in the “Belt and Road” framework, where Chinese private enterprises take advantage of their technological advantages and actively participate in global energy development.

The project contract period is 25 years, which is expected to have a long-term positive impact on the company's operating performance. The Mansouriya gas field development project is an important practice of the Iraqi government to eliminate waste from natural gas combustion and maximize the use of resources, and help the country achieve energy self-sufficiency. After the commercial production of the project, as agreed in the contract, the Iraqi Ministry of Petroleum will buy back all natural gas, liquefied petroleum gas and condensate products to guarantee the company's expected cost recovery and equity distribution. At present, this contract has been officially signed, and the exact amount involved in the development of the project is uncertain. The contract period for this project is 25 years. If successfully implemented and put into operation, it is expected to continue to have a positive impact on the company's future business performance and consolidate the company's influence and competitiveness in the oil and gas field.

The Middle East market has repeatedly received major orders, and overseas markets have continued to break through. In September of this year, the company disclosed that it had signed a general contract project with Bahrain National Petroleum Company (BAPCO) for 7 gas pressurization station projects. The total amount of the contract including tax reached 0.316 billion US dollars, or about 2.2 billion yuan. In recent years, the company has successively won national oil company projects in the Middle East and North Africa region, such as Kuwait (KOC), the United Arab Emirates (ADNOC), Algeria (SONATRACH), Central Iraqi Oil Company (MDoc), and Bahrain National Petroleum Company (BAPCO), which fully reflects the high level of trust of high-end international oil companies in Jerry's ability to manufacture oil service equipment and general contracting of projects, confirming that the company's internationalization strategy continues to make major breakthroughs in the Middle East region.

Investment advice: The company is a leader in private oil service equipment. As overseas high-end markets continue to break through, related orders are gradually implemented, and it is expected to achieve steady growth in performance. The company is expected to achieve net profit of 2.63/3.09/3.54 billion yuan in 2024-2026, corresponding to the current PE of 13.1/11.1/9.7 times, maintaining an “increase in holdings” rating.

Risk warning: risk of oil and gas price fluctuations, risk of increased market competition, risk of international operation, etc.