International oil prices continue to run at a high level, allowing related companies to make a lot of money.
On the evening of April 24, Intercontinental Oil and Gas (600759), which is mainly engaged in oil and gas exploration and development, disclosed that the first quarter report of 2022 showed that the price of benefiting oil rose sharply, and the company's net profit for the period increased by about 96 times year-on-year.
The sharp rise in oil prices supported the performance
The first quarter report of 2022 disclosed by Intercontinental Oil & Gas shows that the company achieved operating income of 680 million yuan during the period, an increase of 27.17% year-on-year; net profit of 77.6996 million yuan, an increase of 9664% year-on-year; basic earnings per share of 0.03 yuan / share, an increase of 8482% year-on-year.
The company's 2021 annual report disclosed at the same time shows that the operating income during the period was 2.453 billion yuan, an increase of 51.22% year-on-year; the net profit loss was 943 million yuan, down 639.62% year-on-year.
Although the 2021 performance fell to a loss year-on-year, Intercontinental Oil & Gas also admitted in the performance forecast that in the case of a sharp increase in oil prices in 2021 compared with 2020 and continued to improve, the company's main holding company, Ma Teng Petroleum Co., Ltd., is expected to achieve sales revenue of about 2.383 billion yuan in 2021, an increase of about 50% compared with the same period last year, and is expected to achieve a net profit of about 547 million yuan after non-recurring gains and losses, an increase of about 900% compared with the same period last year.
The company is expected to achieve operating income of approximately RMB2.437 billion at the 2021 annual consolidated statement level, an increase of approximately 50% compared to the same period last year. After deducting the above-mentioned non-recurring profit and loss items and the company's financial expenses and management expenses, the company expects the net profit attributable to the shareholders of the listed company to be 80 million yuan to 95 million yuan, which is profitable compared with the loss after deducting non-recurring profit and loss in 2020.
Indeed, the performance of intercontinental oil and gas in recent years has mainly benefited from the rise in international oil prices.
In 2021, crude oil has been soaring, and the shock has risen. WTI crude oil rushed from $48 at the beginning of the year to above $80 in late October, and the two months of the year fell back. The core logic of the rise in oil prices in 2021 is basically highly correlated with the evolution trend of the epidemic, in addition, in the macro context of inflation expectations, the tightening of supply and economic recovery have also provided impetus for oil prices to rise. Entering 2022, affected by geopolitical conflicts, international oil prices have broken through the $100 mark and continued to fluctuate at a high level.
Tighter supply and recovery of demand in the first half of 2021 Are the main themes of rising oil prices. In the first quarter, oil prices continued to soar, mainly due to supply contraction. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) contributed to deepening production cuts, especially Saudi Arabia's unexpected and large production cuts. In addition, interspersed with the reasons for the unprecedented snowstorm in the United States in February, the decline in U.S. shale oil production and the continuous decline in crude oil inventories have brought upward momentum to oil prices. There was a strong correction in oil prices in mid-to-late March, stemming from concerns about the demand outlook due to the resurgence of the epidemic in Europe.
In the second quarter, oil prices returned to the upside track, the shock rose, the core logic is mainly the recovery prospects brought by vaccination, the European epidemic is under control, and OPEC+ cautiously increased production and other supply side of the bullish. At the same time, the United States, affected by high domestic inflation, began to pressure OPEC to increase production and restart the Iranian nuclear negotiations, and oil prices pulled back during the period, but the rising logic basically did not change.
In the second half of the year, the epidemic interference and the energy crisis coexisted with the oil price shock higher. In July and August, oil prices showed a strong correction, with WTI falling from $75 in early July to $62 in late August. The main reason is still the recurrence of the epidemic, the rapid rise in new cases of the Delta virus, and the Federal Reserve's reduction in the size of bond purchases, and the expectation of a slowdown in the economic recovery has heated up sharply. After September, oil prices ushered in a strong rise in the market, the energy crisis broke out, many places in the world now "energy shortage", especially the shortage of natural gas in Europe, electricity prices soared, China also once lacked coal, power rationing, as an alternative energy demand for oil rose, oil prices continued to rise. Oil prices have remained above $80 for a long time. After November, oil prices cooled down again, still related to the epidemic, the mutant strain Omicron was found and widely spread, economic recovery concerns restarted, oil prices have a strong decline, which is also interspersed with US inflation expectations, the US government and multinational countries to release strategic crude oil reserves, restart the Iranian nuclear negotiations and other supply disturbances.
Global oil production rebounded moderately in 2021, driven by a sharp recovery in oil and gas prices, up 1.3% from 2020 to 4.423 billion tonnes. OPEC produced 1.541 billion tonnes, up 2.3% from 2020 and increased to 34.9% of global production.
It is expected that the industry pattern will improve
Intercontinental Oil & Gas, formerly known as Zhenghe Shares, is mainly engaged in real estate development, leasing and trading. In 2014, the company acquired a 95% stake in Kazakhstan-based Maten Petroleum, and its business has shifted from real estate to the oil and gas industry.
At present, the operation block of intercontinental oil and gas is mainly concentrated in Kazakhstan, the main production projects Ma Teng Oilfield and Keshan Oilfield are located in the Kabin Caspian Basin of Kazakhstan, which is internationally recognized as one of the areas with rich oil and gas and low degree of exploration and development, through the formulation of scientific exploitation schemes and the use of advanced exploitation technology, the production and sales of Ma Teng Oilfield and Keshan Oilfield have increased year by year.
In 2021, the Keshan project completed the annual crude oil production of 626,300 tons, and the Ma Teng project completed the crude oil output of 306,000 tons under the guarantee of the smooth implementation of drilling, production operations, surface, monitoring and other projects throughout the year.
In 2021, Intercontinental Oil & Gas continued to manage the commercial properties it held, and the company Liuzhou Gubu Street International Mall and Beijing Fangzhuang Property achieved rental income of 51.9289 million yuan.
For the outlook for the oil and gas industry, intercontinental oil and gas is expected to be good. The company said that the overall trend of the epidemic in 2022 may improve, which will have a positive impact on oil prices, although the mutant strains Delta and Omicron will still play a role, but vaccination and herd immunity will continue to weaken the impact of the epidemic, and the global economy is still in the recovery channel.
The analysis believes that since 2021, inflation in the United States has continued to rise. While inflation has led to a lower dollar index, it will continue to drive up the valuation of oil prices. Although the Fed's monetary policy has turned to tightening, it has now reduced the scale of bond purchases and is expected to start raising interest rates in 2022. However, based on the consideration of employment-related economic data, the intensity and frequency of interest rate hikes may be limited, so it is expected that US inflation may remain high in the first half of 2022 and will continue to be positive for oil prices; as early as the second half of the year, inflation may fall, and lower inflation rates will calm oil prices.
Global crude oil supply will continue to grow in 2022, moving closer to the level it was before the epidemic. OPEC+ and U.S. shale oil led by Saudi Arabia and Russia may re-enter the game, and the relatively cautious production control policy of OPEC+ in 2021 may continue, and the pursuit of high oil prices by oil producers will still limit crude oil supply to some extent. However, the United States tends to suppress oil prices based on its own inflationary reasons, and the main growth point in the future lies in the United States shale oil. There is still a gap from the pre-pandemic supply of about 13 million bpd, and U.S. crude production is expected to approach this level after the second half of 2022.
In addition, Iranian crude oil is still an uncertain factor for future supply, and the current US-Iran nuclear negotiations continue to advance, but the possibility of reaching an agreement in the short term is low. Even if the negotiations are agreed, Iran's return to the international market may be as early as the second half of the year. Therefore, it is expected that the supply of crude oil in the first half of the year is still tight, oil prices may still be rising, and in the second half of the year, as the US shale oil production continues to grow and the possibility of Iranian oil returning to the oil market, it will put pressure on oil prices.
In the post-epidemic era, the global economy continues to recover, and oil demand will further grow, but with the emergence of the Omicron variant virus, the previously optimistic forecast will be lowered, and inflation is high, and the risk of stagnation will inhibit consumption, but the overall trend is still good, which will continue to bring benefits to oil prices, and natural gas will still maintain high prices and shortages.