Offshore oil and gas giants are coming: CNOOC has raised more than 30 billion yuan, and "three barrels of oil" will gather in A shares

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On April 11, China National Offshore Oil Corporation (hereinafter referred to as CNOOC, 0883.HK) issued a series of announcements to introduce the company's initial public offering of RMB shares.

According to CNOOC, the company will open the subscription on April 12, with an issue price of 10.8 yuan per share and an issue of 2.6 billion to 2.99 billion RMB shares for the development of oil and gas projects at home and abroad.

Domestic offshore oil and gas giants landed on A shares

PetroChina (601857.SH/0857.HK) and Sinopec (600028.SH/0386.HK, which have been listed on the A-share market for many years, have finally waited for CNOOC, and the A-share market will also gather china's three major oil companies.

CNOOC is China's largest offshore crude oil and natural gas producer, one of the world's largest independent oil and gas exploration and production groups, conducting oil and gas exploration, development and production in China's Bohai, South and East China Sea regions, with overseas assets in Indonesia, Australia, Nigeria, North America, Brazil, the United Kingdom and other more than 20 countries and regions.

By the end of 2020, about 57.9% of CNOOC's net proven reserves and 67.4% of its net production came from China.

In August 2021, at the semi-annual report meeting, CNOOC said that the company is a red chip stock and will strive to realize its desire to return to A listing if allowed by policy. In September of the same year, the Csrc issued the Announcement on Expanding the Pilot Scope of Listing of Red-chip Enterprises in China to support high-quality red-chip enterprises to issue securities for listing in the domestic capital market.

After receiving policy support, CNOOC quickly launched the process of returning to A. On September 26, 2021, CNOOC announced that it intends to be listed on the main board of the Shanghai Stock Exchange and raise no more than 35 billion yuan for the development of oilfield projects at home and abroad.

On February 24, 2021, CNOOC's initial offering was approved, and on March 30, CNOOC disclosed its prospectus while announcing its 2021 operating results.

According to the latest disclosed documents, CNOOC expects to raise a total of 28.08 billion yuan, and if the over-allotment option is fully exercised, it is expected to raise 32.292 billion yuan; the funds raised by the company will be mainly used for oil and gas field development and supplementary working capital, and the oil and gas field projects to be invested include Guyana, Liuhua in the South China Sea, Lingshui, Luda and other oil and gas field development projects, as well as shore power application projects in Qinhuangdao and Caofeidian oilfield groups.

As of the afternoon close of trading on April 11, CNOOC's share price on the Hong Kong Stock Exchange fell 4.29% to HK$11.16 per share, with a market capitalization of about HK$498.27 billion.

Since the beginning of 2022, with the recovery of global oil prices, the tight energy supply situation has continued, and CNOOC's stock price has also begun to rise steadily, despite experiencing a short-term decline in mid-March, and has since shown an overall upward trend. At present, CNOOC's stock price is up about 40% compared with the beginning of the year.

Last year's net profit exceeded 70 billion

In 2021, benefiting from the recovery of overall oil and gas prices and the growth of production and sales, the performance of "three barrels of oil" has achieved significant growth. Compared with PetroChina and Sinopec, CNOOC is slightly inferior in terms of company size and revenue data, but its profit level is more prominent.

In 2021, PetroChina achieved revenue of 2.6 trillion yuan, a new high in the past years, and net profit attributable to the mother was 92.17 billion yuan, an increase of 385% year-on-year. Sinopec achieved revenue of 2.74 trillion yuan last year, an increase of 30.2% year-on-year; net profit attributable to the mother reached 71.975 billion yuan, an increase of 115.2% year-on-year.

The prospectus discloses that CNOOC achieved revenue of 246.112 billion yuan in 2021, an increase of 58.4% year-on-year; net profit attributable to the mother of 70.3 billion yuan, an increase of 181.77% year-on-year; and net annual operating cash flow of 147.89 billion yuan, an increase of 79.62% year-on-year.

As of December 31, 2021, CNOOC's total assets were RMB786.568 billion, an increase of 9.05% over the same period in 2020, and attributable equity was RMB480.912 billion, an increase of 10.88% over the same period in 2020.

The prospectus predicts that in the first quarter of 2022, CNOOC achieved revenue of about 69 billion yuan to 83 billion yuan, an increase of 32% to 58% year-on-year; and net profit attributable to the mother was 24 billion yuan to 28 billion yuan, an increase of 32% to 89% year-on-year.

Since the sharp decline in oil prices in the first half of 2020, international oil prices have been in a steady upward trend. Geopolitical conflicts in Eastern Europe since February have exacerbated structural imbalances in global oil and gas markets, and international oil prices have reached their highest levels since 2008.

As a giant enterprise focusing on the upstream of the oil and gas industry, CNOOC is more sensitive to changes in energy prices than other oil and gas companies integrating upstream and downstream.

CNOOC announced that oil and gas prices are uncertain, if oil and gas prices show a downward trend, and continue for a long time, it may adversely affect the company's business, revenue and profits; long-term downturn in oil prices will affect the company's investment decisions on the project.

CNOOC expects that the global economy will gradually recover, but there are still unstable and unbalanced problems in the recovery, and macroeconomic changes will affect oil and gas supply and downstream demand, which will adversely affect the company's performance.

Increase oil and gas reserves and production, and develop new energy

In recent years, the world's major economies have formulated carbon peak, carbon neutrality goals and routes, vigorously develop new energy, promote the green and low-carbon transformation of energy, traditional oil and gas companies are facing increasing environmental pressure, but also facing more competitive pressure from renewable energy.

At the same time, frequent geopolitical crises, the recovery of the global economy and the recovery of energy demand have led to a tightening supply situation in the energy market, the price of major energy has risen sharply, and ensuring energy security has become the focus of attention of major economies.

In recent years, the three major domestic oil companies have implemented the strategy of "increasing reserves and production" of oil and gas, and the upstream capital expenditure has been continuously improved, and the oil and gas production has also steadily rebounded.

In 2021, CNOOC's net oil and gas production reached 573 million barrels of oil equivalent, a new high; the confirmed reserves reached 5.728 billion barrels of oil equivalent, and the reserve replacement rate reached 162%, remaining above 130% for three consecutive years.

At the earnings report meeting held on March 30, CNOOC said that CNOOC's capital expenditure in 2022 will be 90-100 billion yuan, and 13 new projects will be put into operation during the year. Over the next three years, CNOOC's oil and gas production targets will continue to grow rapidly, with production growth expected at 600-610 million barrels in 2022, 640-650 million barrels in 2023 and 680-690 million barrels in 2024, with production growth mainly coming from the Stabroek blocks of China's Bohai Sea, the South China Sea and Guyana.

In addition to the traditional oil and gas industry, CNOOC is also constantly promoting low-carbon transformation, increasing the exploration and development of the natural gas industry, and promoting the development of renewable energy. In 2021, CNOOC's first offshore wind power project will be fully connected to the grid for power generation, and the first offshore carbon dioxide storage demonstration project will also be launched.

As an enterprise with resources and technical advantages at sea, CNOOC mainly promotes the large-scale development of wind power projects in the field of new energy, and will also increase investment in the onshore wind and photovoltaic industry. According to CNOOC's previous introduction, during the entire "14th Five-Year Plan" period, the company's development target for onshore photovoltaic and onshore wind power is not less than 5 million kilowatts, and the annual investment ratio is 5%-10%.

Source: 21st Century Business Herald