Benefiting from the return of international oil prices to high levels, downstream oil and gas companies' capital expenditures continue to increase, and the global and domestic oilfield service industry has started a new round of growth cycle since 2020.
It is learned from the Securities app that Zheshang Securities released a research report stating that benefiting from the return of international oil prices to high levels, downstream oil and gas companies' capital expenditures continue to increase, and the global and domestic oilfield service industry started a new round of growth cycle since 2020. The global market size reached 306.3 billion USD in 2023, with a CAGR of about 17% from 2020 to 2023. It is expected that the global size will reach 328 billion USD in 2024, a year-on-year increase of 7%. At the current stage, the capital expenditures of the global and domestic oil and gas industry continue to increase, and oilfield service companies are expected to continue benefiting.
Zheshang Securities' main points of view are as follows:
Oilfield service industry: Industry demand continues, driven by both oil prices and energy security.
The global and domestic oilfield service industry has started a new round of growth cycle since 2020, with a market size CAGR of about 17% and 10% from 2020 to 2023. Benefiting from the return of international oil prices to high levels, downstream oil and gas companies' capital expenditures continue to increase, and the global and domestic oilfield service industry has started a new round of growth cycle since 2020. The global market size reached 306.3 billion USD in 2023, with a CAGR of about 17% from 2020 to 2023. It is expected that the global size will reach 328 billion USD in 2024, a year-on-year increase of 7%. In 2023, the market size in China reached 188.5 billion yuan, with a year-on-year increase of 4%. It is estimated that the market size will reach 249.4 billion yuan by 2030, with a CAGR of 2% from 2023 to 2030.
The capital expenditures of the global and domestic oil and gas industry continue to rise, and oilfield service companies are expected to continue benefiting. Benefiting from the return of international oil prices to high levels and China's policy of increasing production and reserves, the capital expenditures of the global and domestic oil and gas industry continue to rise, generally lagging behind oil prices by six months. It is expected that the global oil and gas industry's capital expenditures from 2024 to 2026 will be 60.3, 66.3, 68.3 billion USD respectively, with year-on-year increases of 4.5%, 10%, 3.2%. Oilfield service companies are expected to continue benefiting.
Onshore unconventional oil and gas has become the main source of incremental production, with rich offshore oil reserves and rapidly decreasing extraction costs. Looking at onshore areas, traditional oil and gas production has peaked, and unconventional oil and gas such as shale oil has become the main source of new production. It is estimated that by 2035, China's unconventional oil production will exceed 50 million tons, accounting for about 25% of the country's total oil production. From a marine perspective, as offshore oil extraction costs continue to decrease, the extraction cost for China Offshore Oil has dropped from $45 per barrel in 2013 to $29 per barrel in 2023, with expectations for high-speed growth in offshore oil capital expenditures.
Competition Situation: Both globally and in China, the market structure is an oligopoly, with a slight decrease in concentration overseas, while the competition situation in China remains stable.
Oilfield Service Industry Chain: Drilling and completion services have the highest value, while logging services have the strongest profitability. The oilfield service industry chain can be divided into geophysical services, drilling and completion services, logging services, oil and gas extraction services, and oilfield engineering construction based on process technology. In 2022, the proportion of value-added is 6%, 53%, 5%, 13%, and 23%, respectively. Geophysical services account for 6% of the value, represented by enterprises such as Orient Geophysical and China Oilfield Services; drilling and completion services account for 53% of the value, represented by China Oilfield Services and Yantai Jereh Oilfield Services Group; logging services account for 5% of the value, represented by China Oilfield Services and Sinopec Oilfield Service Corporation; oil and gas extraction services account for 13% of the value, represented by Offshore Oil Engineering and Bomesc Offshore Engineering; oilfield engineering construction accounts for 23% of the value, with the representation of China Petroleum Engineering Corporation and CNOOC Energy Technology & Services.
Global Situation: The market is monopolized by the three giants globally, with rich opportunities in the Middle East, Latin America, and other regions. The top five global manufacturers hold approximately 28% of the market share, with representatives such as the three giants Schlumberger, Baker Hughes, and Halliburton. Concentration is higher in North America and Europe, but the Middle East, Latin America, Africa, and other regions have a higher reliance on external oil technology services and equipment, with greater market inclusiveness and relatively lower entry barriers.
China's Situation: State-owned enterprises under the 'Big Three Oil Companies' monopolize the market, while private enterprises provide supplementary services. In 2022, state-owned enterprises accounted for 85% of the oilfield service industry, mainly dominated by comprehensive state-owned oilfield service companies focusing on the oilfield sector under the 'Big Three Oil Companies.' Private enterprises accounted for 10%, further divided into private oilfield service companies that provide integrated drilling technology services, such as Zhongman Petroleum, Yantai Jereh Oilfield Services Group, and Xinjiang Beiken Energy Engineering, as well as small and medium-sized oilfield service companies that provide specialized support services in various segments of the oilfield service industry, such as Tong Petrotech Corp., Sino Geophysical, and China Oil HBP Science & Technology, relatively decentralized, with most actively targeting overseas markets. Foreign-funded oilfield services accounted for 5%, with a continuous decline in market share.
Recommended Symbols: CNOOC's capital expenditure is expected to grow rapidly, and its subsidiary oilfield service companies are bullish; private enterprises rely on high technological barriers to drive domestic and overseas demand in segmented tracks, bullish on Yantai Jereh Oilfield Services Group.
China Oilfield Services (601808.SH): A leading domestic marine oilfield service company under CNOOC, driven by both domestic and foreign capital expenditure. Yantai Jereh Oilfield Services Group (002353.SZ): A leading domestic private oilfield service company, rapidly expanding in overseas markets. Offshore Oil Engineering (600583.SH): A leading domestic EPCI company under CNOOC, benefiting from CNOOC's high-speed capital expenditure growth.
Risk Warning: Lower-than-expected crude oil prices, lower-than-expected emphasis on energy security, rapid replacement by new energy sources.
