Incident: On March 18, 2024, the company successfully discovered the Qinhuangdao 27.3 billion ton oil field in the north-central waters of the Bohai Sea. Preliminary tests showed that a single well produced about 742 barrels of crude oil per day. Through continuous exploration, the Qinhuangdao 27-3 Oilfield has discovered 104 million tons of petroleum geological reserves.
Storage and production continued to increase, and the actual net oil and gas production in 2023 was higher than the target set in early 2023: the company raised the 2024-2025 production target and disclosed the 2026 production target. 1) In 2024, the company's net production target is 700-720 million barrels of oil equivalent (+3.7% to 6.7% year-on-year), of which China and overseas are expected to account for 69% and 31% respectively. In 2025 and 2026, the company's net production targets are 780-800 and 810-830 million barrels of oil equivalent, respectively. 2) At the beginning of 2023, the company expects production targets of 650-660, 690-700, and 730-740 million barrels of oil equivalent in 2023-2025, respectively. In 2023, the company's actual net production is estimated at 675 million barrels of oil equivalent, which is higher than the target set in early 2023.
Capital expenditure continues to increase, and the 2023 capital expenditure is in line with the company's goals: the company will increase capital expenditure in 2024 and increase capital expenditure in 2023. 1) In 2024, the company's total capital expenditure budget is RMB 1250-135 billion, of which capitalization expenses for exploration, development and production are expected to account for 16%, 63%, and 19% respectively; China and overseas are expected to account for 72% and 28% respectively. 2) In 2023, the company raised its capital expenditure from 100-110 billion yuan to 120-130 billion yuan. The actual capital expenditure is expected to reach about RMB 128 billion, which is in line with the company's target.
New domestic and foreign projects are progressing steadily: In 2024, the company expects to put into operation a number of important new projects, including China's Suizhong 36-1/Luda 5-2 Oilfield Secondary Adjustment and Development Project, Bozhong 19-2 Oilfield Development Project, Shenzhou 26-6 Oilfield Development Project, Shenfu Deep Coalbed Methane Exploration and Development Demonstration Project, and the Brazilian Mero3 Project overseas.
The company focuses on shareholder returns: According to the 2024 strategic guidance document, the company will maintain a dividend payment rate of no less than 40% for the year 2022 to 2024, and the absolute value of the annual dividend will not be less than HK$0.70 per share (tax included).
Profit forecast and investment rating: According to the company's increase in storage and production & the progress of new projects, we adjusted the company's net profit of 2023-2025 of 1278, 1397, and 148.6 billion yuan (previously 1278, 1397, and 149.8 billion yuan), respectively. The year-on-year growth rates were -10%, 9%, and 6%, respectively, and the H share PE corresponding to the closing price on March 18, 2024 was 5.9, 5.4, and 5 times, respectively. The company has remarkable profitability, excellent cost control, and maintains a “buy” rating.
Risk warning: macroeconomic fluctuations; oil price fluctuations; the company's increase in storage and production are falling short of expectations