Incident: CNOOC released its 2023 annual report. In 2023, it achieved operating revenue of 416.09 billion yuan, down 1.33% from last year; realized net profit attributable to shareholders of listed companies was 123.843 billion yuan, down 12.60% year on year.
International oil prices declined in 2023, and the ability to control barrel oil costs was still impressive. The decline in performance was still lower than the decline in oil prices during the same period, and the performance was in line with expectations. The average price of Brent crude oil in 2023 was $82.56 per barrel, down 18.23% year on year; in 2023, the company's average realized oil price was $77.96 per barrel, down 19.29% year on year. In 2023, the company insisted on improving quality, reducing costs and increasing efficiency, and the cost of barrel oil was well controlled. The main cost of barrel oil was $28.83, down 1.56 US dollars compared with 2022, a decrease of 5.13%, which is a significant cost advantage. In 2023, the company achieved net profit of 123.843 billion yuan, down 12.60% from the same period last year. The decline was lower than international oil prices during the same period. In 2023, it achieved operating income of 416.09 billion yuan, down 1.33% from last year. The performance was in line with expectations. The company's performance was resilient and profitable.
Oil and gas production reached a 5-year record high, and the company's future performance is highly certain. In 2023, the company's oil and gas production reached a five-year record high, achieving net oil and gas production of about 678.0 million barrels equivalent, exceeding the production target of 650-660 million barrels equivalent set at the beginning of the year, and an increase of 8.65% over the previous year. According to the company's plan, the company's net oil and gas production target for 2024-2026 will further reach 700-720, 780-800, and 810-830 million barrels of oil equivalent. According to central calculations, the year-on-year growth rates are 4.72%, 11.27%, and 3.80%, respectively. Future production will increase steadily, and the company's performance will be guaranteed.
New projects are progressing in an orderly manner, and the increase in capital expenditure has boosted the increase in storage and production to a new level. The company's high growth is worth looking forward to. In 2023, the company obtained a total of 9 new discoveries and successfully evaluated 22 oil and gas structures, with a reserve replacement rate of 180%, an increase of 1 new discovery compared to the previous 3 quarters, and successfully evaluated 1 oil and gas structure. The reserve life span remained at least 10 years for 7 consecutive years, and the pace of storage growth progressed steadily. The company accelerated production capacity construction. The company's actual capital expenditure in 2023 was 127.913 billion yuan, up 27.46% year on year. Looking ahead to 2024, the global economy is expected to maintain weak growth, and the basic trend of China's long-term economic improvement will not change. The company will insist on increasing oil and gas storage and production, with an estimated capital expenditure of 125 to 135 billion yuan, boosting the increase in storage and production to a new level. In 2024, the company successfully put into operation a number of new projects, mainly including China's Bozhong 19-2 oil field development project, the Deep Sea 1 Phase II project, the Huizhou 26-6 oil field development project, and the overseas Brazilian Mero3 project. High growth is worth looking forward to.
The company continues to maintain high dividends and a high return on shareholders' investment. In 2023, the company's total cash dividend was $53,934 million (calculated at HK$1 to RMB 0.9071), and the company's dividend payment rate was 44%. Based on the company's closing price on December 29, 2023, the company's dividend rate for A shares is 5.44% and the dividend ratio for H shares is 9.62%. Since its listing on April 21, 2022, the company has paid cash dividends 3 times. The cumulative cash dividend amount has reached 80.745 billion yuan, the dividend rate has reached 32.78%, and the cumulative dividend share (including repurchased shares) has reached 80.44%.
Company profit forecast and investment rating: We are optimistic about the future, under a stable oil price center, the company has high storage space, strong cost control capabilities, and stable performance. We will continue to maintain our forecast. The company's revenue for 2024-2026 was 4349.88/4612.20/487.60 billion yuan, and net profit to mother was 1312.10/1478.85/155.454 billion yuan, corresponding EPS of 2.76/3.11/3.27 yuan, respectively. The current stock price corresponds to 2024-2026 PE values 10.85/9.62/9.16 times, respectively. Upgraded to “Highly Recommended” rating.
Risk warning: (1) the risk of changes in international political and economic factors; (2) the risk of fluctuations in crude oil and natural gas prices; (3) the risk of exchange rate fluctuations and exchange control; (4) the risk of deviations between forward-looking judgments and actual oil and gas prices.