• Article
• 2024-05-30

Net Profits Surpass 200 Billion Yuan!

Beijing, August 30th - As of August 29th, the financial results for the first half of 2024 have been announced for China's three major state-controlled listed oil companies: PetroChina Company Limited, Sinopec Limited, and CNOOC Limited.

Collectively known as the "Three Barrels of Oil," their profits have all increased compared to the same period last year.

They have made new progress in upstream operations, cost reduction, and efficiency enhancement, and have shown a clear trend of integrated development with new energy sources.

Their cash flow has strong risk resistance capabilities.

On this basis, high dividend payouts have also become an important way for them to reward investors.

The mid-year reports show that in the first half of this year, PetroChina, Sinopec, and CNOOC achieved operating revenues of approximately 1.55 trillion yuan, 1.58 trillion yuan, and 226.77 billion yuan, respectively.

Among them, Sinopec's revenue declined by 1.10% year-on-year during the reporting period, while CNOOC's revenue growth reached 18.07%.

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In terms of net profit attributable to the parent company, PetroChina, Sinopec, and CNOOC all saw an increase compared to the same period last year, with 88.61 billion yuan, 35.7 billion yuan, and 79.73 billion yuan respectively, with CNOOC having the fastest growth rate, with a net profit increase of 25.05% year-on-year.

The total net profit of the "Three Barrels of Oil" reached 204.04 billion yuan.

Oil and gas reserves and production have been impressive, with global economic growth driving a recovery in crude oil demand.

Geopolitical factors and OPEC production cuts have led to tight supply, causing international oil prices to fluctuate upwards.

In the first half of this year, the average price of Brent international crude oil futures was $83.42 per barrel, up 4.56% year-on-year.

Against this backdrop, the "Three Barrels of Oil" have maintained a good momentum in oil and gas reserves and production in the first half of the year, setting a new historical high for oil and gas equivalent production during the same period, with the proportion of natural gas production in the oil and gas equivalent production further increasing, demonstrating the strength and responsibility of the main energy forces.

In the first half of 2024, PetroChina achieved an oil and gas equivalent production of 905.5 million barrels, a year-on-year increase of 1.3%; marketable natural gas production was 258.42 billion cubic feet, a year-on-year increase of 2.7%.

Sinopec achieved an oil and gas equivalent production of 257.66 million barrels, a year-on-year increase of 3.1%, with natural gas production reaching 700.57 billion cubic feet, a year-on-year increase of 6%.

Thanks to the increase in production and oil prices in the first half of the year, CNOOC, which focuses on upstream operations, saw a significant increase in performance in the first half of the year.

CNOOC stated that in the first half of 2024, the company continued to promote reserves and production, and the resource base was continuously strengthened, with solid efforts to stabilize and increase production in producing oil fields, implement refined management, and maintain the best production efficiency, achieving a net production of 362.6 million barrels of oil equivalent, a year-on-year increase of 9.3%, with both domestic and foreign oil and gas production breaking the company's historical best performance.

In recent years, China has implemented a "seven-year action plan to vigorously enhance the intensity of oil and gas exploration and development," discovering a number of large oil and gas fields with hundreds of millions of tons and tens of billions of cubic meters, and the core demand for self-sufficiency in oil and gas has been continuously strengthened.

CNOOC stated that in the first half of the year, the company made seven new discoveries and successfully evaluated 18 oil and gas structures.

The first ultra-deepwater ultra-shallow layer billion cubic meter gas field in the South China Sea, Lingshui 36-1, was successfully explored, marking the first realization of the trillion cubic meter gas area in the South China Sea; two hundred-million-ton oil fields, Qinhuangdao 27-3 and Kaiping South, were discovered in the Bohai Sea and the eastern South China Sea respectively; the BZ 8-3 South was successfully evaluated, with the test daily production setting the highest record for deep exploration wells in the Chinese sea area.

Overseas, a new discovery, Bluefin, was made in the Stabroek block of Guyana, further expanding the reserve scale in the southeast of the block; five blocks of oil exploration and production concession contracts were successfully signed in Mozambique, further expanding the exploration potential overseas.

Data from the National Energy Administration shows that in 2023, China's crude oil production reached 208 million tons, with an increase of more than 3 million tons year-on-year, a significant increase of nearly 19 million tons compared to 2018, and the basic plate of domestic crude oil production of 200 million tons for a long period has been further consolidated.

Natural gas production reached 230 billion cubic meters, maintaining a momentum of increasing production by 10 billion cubic meters for seven consecutive years.

The "oil and gas + new energy" is impressive.

The mid-year report shows that oil giants are vigorously promoting the layout of new energy business, and various types of new energy projects such as charging stations, hydrogen stations, "photovoltaic oil fields," and "photovoltaic gas stations" are accelerating the landing of plans, promoting the construction of a clean, low-carbon, safe, and efficient energy system.

PetroChina focuses on the development of photovoltaic and wind energy, actively promoting the layout of new energy bases and the competition for new energy targets.

The mid-year report shows that in the first half of this year, the company's wind and photovoltaic power generation was 2.17 billion kilowatt-hours, and the power supply to the outside was 950 million kilowatt-hours, which are 2.5 times and 4.5 times that of the same period last year, respectively; the CCUS (carbon dioxide capture, utilization, and storage) business was deeply promoted, with 837,000 tons of carbon dioxide injected; the oil and gas new energy business achieved an operating profit of 91.66 billion yuan, a year-on-year increase of 7.2%.

Sinopec stated that it is actively cultivating new energy businesses such as hydrogen energy, wind energy, and solar energy, and accelerating the construction of a "oil and gas + new energy" multi-energy complementary pattern.

The company also fully utilizes the advantages of the existing terminal network to vigorously promote the development of charging and gas networks, with a significant increase in charging volume and vehicle LNG (liquefied natural gas) business volume year-on-year.

Promote the steady development of hydrogen energy transportation and actively transform into a comprehensive energy service provider of "oil, gas, hydrogen, electricity, and service."

CNOOC is actively promoting the integrated development of oil and gas exploration and development with new energy.

The person in charge introduced that the first green-designed oil field in China's offshore - the Wushi 23-5 oil field group development project was put into operation, running the concept of green and low-carbon throughout the design, construction, and production process; the Suizhong-Jinzhou shore power was put into operation, marking the completion of the world's largest shore power application base in offshore oil fields, and the world's first 5MW-level offshore high-temperature flue gas waste heat power generation device was tested, with further green development effects.

"China is based on the basic national conditions and development stage, grasping the coordination and balance between new energy and traditional energy, promoting energy transformation while ensuring reliable energy supply.

Vigorously enhance the reliable substitution capability of non-fossil energy, play the supporting and regulatory role of fossil energy, and accelerate the construction of a new system of diverse, clean, safe, and resilient energy supply."

The white paper "China's Energy Transformation" released by the State Council Information Office on August 29 pointed out.

Huang Hai, Dean of the School of Petroleum Engineering at Xi'an Petroleum University, believes that the integrated development of oil and gas and new energy needs to be based on maintaining the increase in oil and gas reserves and production, coordinate the development planning of oil and gas and new energy, and optimize the layout of the oil and gas and new energy industry chain.

First, in the construction of oil and gas development, design new energy utilization plans according to regional resource distribution, formulate reasonable low-carbon targets, and achieve "construction integration"; second, carry out distributed new energy power supply on the production site, making both ground life and underground mining as much as possible adopt green electricity, forming "production integration"; finally, explore the synergistic development technology of oil and gas and new energy, maximize the advantage of resources, achieve integrated development of "oil and gas + new energy", and promote the realization of "technical integration".

The high proportion of dividends is impressive.

Reporters have noticed that in the first half of the year, the "Three Barrels of Oil" have abundant cash flow.

Sinopec's net cash flow from operating activities in the first half of the year increased significantly, with a net cash inflow from operating activities of 42.3 billion yuan, an increase of 14.7 billion yuan year-on-year; CNOOC's net cash flow from operating activities in the first half of the year was 11.8554 billion yuan, an increase of 19.0% year-on-year; PetroChina's net cash flow from operating activities was 217.329 billion yuan.

The considerable operating cash flow is the direct result of high-quality development and also provides a solid financial foundation for high-proportion dividends.

The mid-year report shows that PetroChina plans to pay a mid-term dividend of 0.22 yuan per share, with a total dividend of 40.26 billion yuan, setting a new high for the same period in history for three consecutive years; Sinopec plans to pay a cash dividend of 0.146 yuan per share (including tax), with a dividend ratio of 49.8%; CNOOC's board of directors has decided to pay a mid-term dividend of 0.74 Hong Kong dollars per share (including tax) for 2024, setting a new high for the same period in history.

High-proportion dividends are a consistent action of the "Three Barrels of Oil," and another common point is the impressive performance of stock prices.

Data shows that in the first half of 2024, the A-share stock price increases of PetroChina, Sinopec, and CNOOC were 49.60%, 13.26%, and 57.37%, respectively.

"Under the current risk preference, the 'Three Barrels of Oil' outperform the market through dividends and stock buybacks."

Yan Jiantao, executive director of Jiecheng Energy, said.

Stock buybacks are also an important way to reward investors.

On the day of the release of the mid-year report, Sinopec disclosed that the company will pay a cash dividend ratio of not less than 65% for each of the next three years, and at the same time, implement a large-scale buyback plan of not less than 800 million yuan and not more than 1.5 billion yuan, with the upper limit of the buyback share price not exceeding 9.81 yuan/share (including 9.81 yuan/share).

CNOOC announced that the company spent 99.1997 million Hong Kong dollars to repurchase 4.83 million shares on July 19, with the share price ranging from 20.35 to 20.7 Hong Kong dollars.

Looking forward to the future, Guangda Securities research report believes that the tense geopolitical situation in the Middle East, under the leadership of OPEC+, the supply and demand of crude oil may become tighter, and the oil price is expected to remain high; the "Three Barrels of Oil" have shown strong performance resilience during the period of oil price fluctuations, and the profit center is expected to move further upwards; the global upstream capital expenditure is expected to continue to rise, and the oil service market is expected to maintain prosperity, and the oil service under the "Three Barrels of Oil" is expected to fully benefit.