Financial Performance - Revenue for the year 2024 reached HKD 17,522,924 thousand, representing a 28.9% increase compared to HKD 13,591,075 thousand in 2023[6] - The company reported a net profit of HKD 1,558,118 thousand for 2024, a significant recovery from a loss of HKD 1,707,401 thousand in 2023[6] - The group recorded a profit attributable to equity holders of approximately HKD 1,558,132,000, a significant turnaround from a loss of approximately HKD 1,707,385,000 in the previous year[43] - The gross profit for the reporting period was approximately HKD 3,301,651,000, with a gross profit margin of 18.8%, down 25.6% from last year's gross profit of HKD 4,439,240,000[59] - The adjusted EBITDA for the reporting period is approximately HKD 7,991,874,000, a decrease of 10.1% from HKD 8,885,063,000 in the previous year, mainly due to a decline in average net realized sales prices[72] - Oil and gas sales amounted to approximately USD 2,477,102,000, a 10.7% increase from USD 2,238,415,000 in the previous year[47] - The average realized price for oil and gas was approximately USD 62.58 per barrel of oil equivalent, a slight increase of 2.1% from USD 61.31 per barrel of oil equivalent last year[47] Production and Exploration - Average daily production for the year was 180,554 barrels of oil equivalent, with an average equity daily production of 108,079 barrels of oil equivalent[12] - The company achieved 11 commercial discoveries, contributing to a 2P reserve of approximately 665.6 million barrels of oil equivalent[12] - Daily total production target is set between 178,900 to 204,200 barrels of oil equivalent, with equity production between 104,200 to 120,600 barrels of oil equivalent[19] - The average daily production for the group reached approximately 180,554 barrels of oil equivalent, a 7.6% increase from last year's average of 167,826 barrels[28] - The average daily production in Pakistan was 36,627 barrels of oil equivalent, while in the Middle East and North Africa, it was 71,452 barrels of oil equivalent[99] - The group achieved 11 commercial discoveries in 2024, further solidifying its resource base and supporting long-term production growth[33] Capital Expenditure and Financial Position - Capital expenditure is projected at USD 750 million for exploration, development, and operational optimization[19] - Total assets increased by 1.1% to HKD 26,120,400 thousand, while net assets rose by 3.6% to HKD 13,295,380 thousand[6] - The group maintained a strong financial position with low leverage, providing a solid foundation for future growth and capital expansion[35] - The financing costs for the reporting period were approximately HKD 351,143,000, an increase of 19.6% from HKD 293,634,000 in the previous year[62] - The net cash outflow for financing activities in 2024 is approximately HKD 1,591,065,000, primarily due to special dividend distribution of HKD 1,033,984,000 and bank loan repayment of HKD 2,578,772,000[66] Strategic Initiatives and Future Outlook - The company plans to complete a strategic acquisition in Egypt, which is expected to double its asset portfolio[12] - The outlook for 2025 anticipates continued growth opportunities amid geopolitical and economic uncertainties, with rising oil demand expected[15] - The company is actively investing in renewable energy as part of its strategy to transition into a diversified energy leader[13] - The company aims to establish a global digital center and procurement center to achieve full digital integration by 2026[18] - The group anticipates global oil demand to increase by 1.45 million barrels per day in 2025, reaching an average of 105.2 million barrels per day[76] Health, Safety, and Environmental Standards - The company maintained a zero fatality and zero major incident record, demonstrating its commitment to health, safety, security, and environment (HSSE) standards[12] - The group emphasizes health, safety, security, and environmental (HSSE) execution as a key focus area, achieving all HSSE key performance indicators during the reporting period[139] Corporate Governance - The company has maintained compliance with corporate governance standards, although the CEO position is currently vacant[102] - The board confirmed that the consolidated financial statements comply with legal requirements and applicable accounting standards[114] - The company has confirmed compliance with the corporate governance code as per the listing rules, except for a specific provision[181] - The company has established several board committees, including audit, remuneration, and nomination committees, to oversee specific areas and assist in board responsibilities[115] Shareholder Information - The proposed final dividend for the year ending December 31, 2024, is HKD 0.05 per share, amounting to approximately HKD 1,292,480,000[67] - The company reported a total reserve available for distribution to shareholders of approximately HKD 6,402,448,000 as of December 31, 2024, down from HKD 7,436,432,000 as of December 31, 2023[183] - The last annual general meeting held on June 6, 2024, reappointed the auditor, which will be presented for resolution at the upcoming annual general meeting[193]

Group 1 - The core viewpoint of the news highlights the recent performance of the Hong Kong stock market, specifically the decline of the Hang Seng Index and the notable increase in the share price of United Energy Group [1] - United Energy Group's stock price increased by 9.21% to HKD 0.415 per share, with a trading volume of 244 million shares and a turnover of HKD 97.95 million, indicating significant market activity [1] - Over the past month, United Energy Group has seen a cumulative increase of 4.11%, and a year-to-date increase of 7.04%, which is underperforming compared to the Hang Seng Index's increase of 17.54% [2] Group 2 - Financial data shows that as of December 31, 2024, United Energy Group achieved total revenue of CNY 16.227 billion, representing a year-on-year growth of 28.93%, and a net profit attributable to shareholders of CNY 1.443 billion, reflecting a substantial year-on-year increase of 191.26% [2] - The company's gross profit margin stands at 18.84%, with a debt-to-asset ratio of 49.1%, indicating a moderate level of financial leverage [2] - Currently, there are no institutional investment ratings for United Energy Group, and its price-to-earnings ratio is reported at -4.16 times, ranking 35th in the industry, which has an average price-to-earnings ratio of 34.9 times [3]

Financial Performance - Revenue for the year ended December 31, 2024, was HKD 17,522,924 thousand, an increase of 28.9% compared to HKD 13,591,075 thousand in 2023[2] - Gross profit decreased by 25.6% to HKD 3,301,651 thousand from HKD 4,439,240 thousand in the previous year[2] - The company reported a profit of HKD 1,558,118 thousand for the year, recovering from a loss of HKD 1,707,401 thousand in 2023[2] - Basic earnings per share for the year were HKD 6.04, compared to a loss of HKD 6.53 per share in the previous year[4] - Adjusted EBITDA decreased by 10.1% to HKD 7,991,874 thousand from HKD 8,885,063 thousand in 2023[2] - Total revenue for the group in 2024 reached HKD 17,522,924,000, an increase of 29.1% from HKD 13,591,075,000 in 2023[22] - The group reported a total investment and other income of HKD 222,411,000 in 2024, compared to HKD 213,279,000 in 2023, reflecting a slight increase of 4.3%[25] - The group recognized a loss of HKD 438,337,000 in 2024 from other gains and losses, a significant improvement from a loss of HKD 5,127,278,000 in 2023[26] - The total classified profit for 2024 was HKD 1,717,421, down from HKD 3,202,264 in 2023, indicating a decrease of about 46.3%[29][31] - Interest income increased to HKD 69,919 in 2024 from HKD 48,997 in 2023, reflecting a growth of approximately 42.6%[29][30] - The company reported a significant impairment loss on intangible assets of HKD 2,263,951 in 2023, which was not present in 2024[30][31] - The effective tax rate for the reporting period was approximately -6.8%, down from 15.5% last year, primarily due to favorable tax authority rulings[88] Production and Reserves - Average daily production in Pakistan decreased by 14.9% to 36,627 barrels of oil equivalent per day from 43,017 in 2023[2] - Average daily production in the Middle East and North Africa increased by 24.5% to 71,452 barrels of oil equivalent per day from 57,390 in 2023[2] - Year-end net proven reserves in Pakistan increased by 1.7% to 49.2 million barrels of oil equivalent from 48.4 million in 2023[2] - Year-end net proven reserves in the Middle East and North Africa decreased by 7.7% to 110.6 million barrels of oil equivalent from 119.8 million in 2023[2] - The average daily production reached approximately 180,554 barrels of oil equivalent, an increase of 7.6% from last year's average of 167,826 barrels of oil equivalent[63] - The cumulative production for the year was approximately 66.08 million barrels of oil equivalent, up 7.9% from approximately 61.26 million barrels of oil equivalent in the previous year[63] - In Pakistan, the average daily production was approximately 51,896 barrels of oil equivalent, a decrease of 17.3% compared to the previous year[64] - In Iraq, the average daily production in the B9 block was approximately 86,832 barrels of oil equivalent, an increase of 37.1% compared to the previous year[65] - The average daily production in Egypt for 2024 is approximately 15,872 barrels of oil equivalent, a decrease of 6.4% compared to the previous year[67] - The cumulative production in Egypt for the year is about 5.8 million barrels of oil equivalent, with a gas-to-oil ratio of approximately 99%[67] Assets and Liabilities - Total assets increased by 1.1% to HKD 26,120,400 thousand from HKD 25,829,150 thousand in the previous year[2] - Total equity attributable to owners increased to HKD 13,289,971 thousand in 2024 from HKD 12,830,726 thousand in 2023, representing a growth of approximately 3.57%[7] - Total classified assets rose to HKD 22,033,729 in 2024 from HKD 21,763,246 in 2023, marking an increase of about 1.2%[31] - Total classified liabilities increased significantly to HKD 10,562,107 in 2024 from HKD 7,946,273 in 2023, representing a rise of approximately 33.5%[31] - Non-current assets totaled HKD 14,251,436 in 2024, an increase from HKD 13,698,361 in 2023, reflecting a growth of about 4%[33] - The company reported a potential tax liability of approximately HKD 898,741,000 as of December 31, 2024, compared to HKD 807,579,000 in 2023[54] - The company has provided guarantees for United Energy Pakistan Limited to fulfill its obligations under the concession agreement[54] Dividends and Shareholder Returns - The company has declared a special dividend of HKD 0.04 per ordinary share for 2024, totaling HKD 1,033,984,000, compared to HKD 1,051,597,000 for 2023[43] - A final dividend of HKD 0.05 per share was proposed, amounting to approximately HKD 1,292,498,000, compared to no dividend last year[92] - The company's available reserves for distribution to shareholders amounted to approximately HKD 6,402,448,000 as of December 31, 2024, down from HKD 7,436,432,000 a year earlier[118] Strategic Initiatives and Acquisitions - The company has entered into an agreement to acquire Apex International Energy Holdings I for a total consideration of approximately HKD 1,170,000,000 (around USD 150,000,000) and deferred consideration of HKD 54,600,000 (around USD 7,000,000)[53] - The acquisition of 52% of the issued shares of Oriental Group Beijing Investment Holding Limited is set at a purchase price of approximately HKD 148,200,000 (around USD 19,000,000)[53] - The company completed the acquisition of 100% equity in Green Profit EOOD for a base price of €37,500,000, aimed at constructing a total of 250 MW solar power facilities in Bulgaria[105] Governance and Compliance - The company has adopted new and revised Hong Kong Financial Reporting Standards effective from January 1, 2024, which may impact the classification of liabilities[11] - The company has not early adopted several new standards and interpretations that are expected to be effective in future periods, indicating a cautious approach to regulatory changes[14] - The company is subject to the corporate governance code as per the listing rules[129] - The independent non-executive directors are required to rotate every three years according to the company's articles of association[125] Operational Efficiency and Future Outlook - The group aims to enhance operational efficiency and focus on high-potential asset investments to drive sustainable growth and value creation[101] - The average daily production target for 2025 is set between 178,900 and 204,200 barrels of oil equivalent, with capital expenditures expected to reach USD 750 million to support exploration and development plans[97] - The group plans to explore opportunities to optimize its capital structure, including potential issuance of corporate bonds in the international debt capital market within the next 12 months[104]

中国能源 威廉·冯，CFA (852) 3900 0826 wayne fung@cmbi.com.hk 2025年3月3日 中国民生银行国际 | 全球市场 | 股权研究 | 覆盖终止 联合能源（467 HK） 终止覆盖 鉴于资源分配更加合理，我们终止了对联合能源的覆盖。所有之前的推荐自覆 盖终止之日起不再有效。 请阅读最后一页的分析师认证和重要披露，更多来自彭博社的报告：响应CMBR或http://www.cm bi.com.hk 1 2025年3月3日 披露与免责声明 分析师认证 该研究报告内容（全部或部分）的主要研究员声明，关于本报告中所涵盖的证券或发行人：（1）所表达的所有观点准确反映了其个人对该证券或发行人的看法 ；并且（2）其薪酬的任何部分均未、现在或将来直接或间接与其在本报告中表达的特定观点相关。 此外，分析师确认，分析师及其关联人（根据香港证券及期货事务监察委员会发布的《行为守则》定义）在以下方面没有参与或交易本研究报告涵盖的股票： （1）在报告发布前30个日历日内未曾买卖本报告涵盖的股票；（2）在报告发布后3个营业日内不会买卖本报告涵盖的股票；（3）未担任本报告涵盖的任何香 港上市公司的董事 ...

Wayne FUNG, CFA (852) 3900 0826 waynefung@cmbi.com.hk PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk 1 3 Mar 2025 3 Mar 2025 CMB International Global Markets | Equity Research | Coverage Termination United Energy (467 HK) Termination of Coverage In view of better allocation of resources, we terminate coverage of United Energy. All previous recommendations are no longer valid, as of the date of termination of cove ...

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 8,439,807, an increase of 35.5% compared to HKD 6,226,137 for the same period in 2023[4] - Gross profit decreased to HKD 1,888,578, down 26% from HKD 2,549,269 year-over-year[4] - Operating profit was HKD 1,501,328, a decline of 38.5% from HKD 2,440,998 in the previous year[4] - Profit before tax was HKD 1,375,268, down 38.6% from HKD 2,239,495 in the same period last year[4] - Net profit for the period was HKD 1,010,270, a decrease of 39.2% compared to HKD 1,663,117 in 2023[4] - Basic earnings per share were HKD 3.90, down from HKD 6.36 in the previous year[4] - Total comprehensive income for the period was HKD 1,011,446, compared to HKD 1,666,891 in the same period last year[5] - The total segment profit for the six months ended June 30, 2024, was HKD 921,006, down from HKD 1,484,834 in the same period of 2023, indicating a decrease of about 38%[20] - The group reported a total comprehensive profit of HKD 1,010,270 for the six months ended June 30, 2024, compared to HKD 1,663,117 for the same period in 2023, indicating a decrease of about 39.3%[20] - The group confirmed an expense of approximately HKD 7,775,000 for the PSU plan for the six months ending June 30, 2024, compared to HKD 6,357,000 in 2023[52] Cash Flow and Liquidity - The net cash generated from operating activities for the six months ended June 30, 2024, was HKD 4,343,781, compared to HKD 2,851,219 for the same period in 2023, representing a significant increase[10] - The total cash and cash equivalents at the end of the period increased to HKD 4,395,540 from HKD 2,702,159 in the previous year, showing a strong liquidity position[10] - The company paid dividends of HKD 242 during the current period, up from HKD 109 in the previous year, indicating a commitment to returning value to shareholders[10] - The company’s cash flow from financing activities showed a net outflow of HKD (353,267), compared to HKD (169,719) in the previous year, indicating increased financial obligations[10] - The group’s total liabilities were approximately HKD 3,647,748,000, with a debt ratio of 13.4% compared to 16.5% on December 31, 2023[98] Assets and Liabilities - Non-current assets increased to HKD 14,749,908 from HKD 14,170,196 at the end of 2023[6] - Current liabilities rose to HKD 10,563,911, up from HKD 8,987,411 at the end of 2023[7] - Total equity increased to HKD 13,812,317 from HKD 12,836,149 at the end of 2023[7] - The group's total assets as of June 30, 2024, amounted to HKD 21,986,313, compared to HKD 21,763,246 as of December 31, 2023, reflecting a slight increase of approximately 1%[19] - The total liabilities for the group as of June 30, 2024, were HKD 10,930,641, up from HKD 7,946,273 as of June 30, 2023, showing an increase of about 37.5%[19] Capital Expenditures and Investments - The company incurred a deposit of HKD (31,581) for the acquisition of a subsidiary, reflecting ongoing expansion efforts[10] - The group purchased property, plant, and equipment totaling approximately HKD 2,934,258,000 for the six months ended June 30, 2024, compared to HKD 3,422,255,000 in 2023, reflecting a decrease of about 14.3%[32] - Capital expenditures for the first half of 2024 were approximately HKD 2,845,238,000, a decrease of 13.0% compared to the previous year[90] Production and Exploration - The average daily production of the company was approximately 171,195 barrels of oil equivalent, an increase of 0.5% from 170,271 barrels of oil equivalent in the same period last year[66] - The company achieved 6 commercial discoveries during the reporting period, with 4 in Pakistan, 1 in Egypt, and 1 in Iraq[66] - The average daily production in Iraq's B9 block was approximately 74,824 barrels of oil equivalent, an increase of 19.1% compared to the same period last year[68] - The company incurred exploration costs of approximately HKD 244,292,000 and development costs of approximately HKD 2,567,422,000 during the reporting period[64] Shareholder Information - The company repurchased a total of 91,054,000 shares as treasury stock for approximately HKD 31,233,000 in June 2024[49] - The group has a significant short position of 2,696,809,090 shares, representing 10.39%[109] - The total shares held by major shareholders include 6,572,483,000 shares (25.33%) by Dongfang Group[113] - The ownership structure indicates that Zhang Hongwei is deemed to have control over 66.23% of the shares through various entities[110] Governance and Compliance - The company has complied with the corporate governance code as per the listing rules, except for the CEO position which remains vacant[117] - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited consolidated financial statements for the six months ending June 30, 2024, and found them satisfactory[119] - The company has established a nomination committee responsible for the nomination of directors and reviewing the board's composition[117] - The company has adopted the standard code for securities transactions by directors and confirmed compliance for the six months ending June 30, 2024[118]

Revenue and Profitability - Revenue for the six months ended June 30, 2024, was HKD 8,439,807, representing a 35.6% increase compared to HKD 6,226,137 in the same period of 2023[2] - Profit for the period was HKD 1,010,270, down 39.3% from HKD 1,663,117 in the previous year[2] - Basic earnings per share fell by 38.7% to HKD 3.90 from HKD 6.36[2] - The company reported a total comprehensive profit of HKD 1,010,270 for the six months ended June 30, 2024, down from HKD 1,663,117 for the same period in 2023, a decline of approximately 39.2%[23] - The company recorded a profit attributable to shareholders of approximately HKD 1,010,276,000, a decrease of 39.3% compared to HKD 1,663,123,000 in the same period last year[70] Production and Exploration - Average daily production in Pakistan decreased by 13.9% to 38,349 barrels of oil equivalent, while production in the Middle East and North Africa increased by 12.1% to 63,949 barrels[2] - The average daily production during the reporting period was approximately 171,195 barrels of oil equivalent, a 0.5% increase from 170,271 barrels of oil equivalent in the previous year[72] - The company achieved six commercial discoveries during the reporting period, with four in Pakistan, one in Egypt, and one in Iraq[72] - The company drilled a total of 23 wells during the reporting period, with 10 in Pakistan and 13 in the Middle East and North Africa[71] - The cumulative production in Pakistan was approximately 9.91 million barrels of oil equivalent, with a cumulative equity production of approximately 6.98 million barrels of oil equivalent[75] Financial Position - Total assets increased by 5.8% to HKD 27,315,492 from HKD 25,829,150[2] - Net assets rose by 7.6% to HKD 13,812,317 compared to HKD 12,836,149 at the end of 2023[2] - The company’s cash and cash equivalents increased to HKD 4,395,540 from HKD 3,327,279[9] - Total trade and other receivables as of June 30, 2024, amounted to HKD 7,811,790,000, a decrease from HKD 8,048,362,000 as of December 31, 2023[38] - The total debt as of June 30, 2024, was approximately HKD 313,611,000, significantly reduced from HKD 2,794,035,000 as of December 31, 2023[116] Expenses and Costs - Gross profit decreased by 25.9% to HKD 1,888,578 from HKD 2,549,269 year-on-year[2] - The financing cost for the six months ended June 30, 2024, totaled HKD 166,094,000, compared to HKD 150,006,000 in 2023, with a weighted average capitalized interest rate of 8.1% in 2024, down from 11.4%-12.0% in 2023[27] - The income tax expense for the six months ended June 30, 2024, was HKD 364,998,000, a decrease from HKD 576,378,000 in 2023[28] - Exploration expenses rose significantly to approximately HKD 92,684,000, compared to HKD 13,157,000 in the same period last year[97] Shareholder Returns and Dividends - The company has approved a special dividend of HKD 0.04 per share for 2024, to be paid on October 21, 2024, with no interim dividend declared for the six months ended June 30, 2024[33] - The company repurchased 91,054,000 shares as treasury stock in June 2024, at a total cost of approximately HKD 31,233,000[53] Governance and Compliance - The company has complied with the corporate governance code, except for the CEO position, which remains vacant[137] - The audit committee reviewed the unaudited consolidated financial statements for the six months ending June 30, 2024, and found them satisfactory[140] - The company has established a nomination committee responsible for board member nominations and diversity policies[138] Future Outlook and Strategy - The average daily production target for 2024 is set between 176,300 and 197,600 barrels of oil equivalent[108] - The company is actively pursuing partnerships with local firms in the Middle East to enhance operational capabilities and reduce costs by 15%[146] - The company plans to publish a detailed interim report in accordance with listing rules, which will be sent to shareholders[143]

Investment Rating - The report downgrades the investment rating of United Energy (467 HK) to HOLD from Buy, with a revised target price of HK$0.30, implying a 2.5x P/E for 2024E [2][3]. Core Views - The share price of United Energy is under pressure due to the uncertain financial condition of its controlling shareholder, Orient Group, which is facing financial difficulties [2][3]. - The earnings forecast for United Energy remains unchanged, but the report indicates a substantial overhang on the stock price for the next 3-6 months due to the financial situation of Orient Finance [2][3]. - The report suggests that a more constructive outlook on United Energy will depend on positive developments at the shareholder level [2][3]. Financial Summary - Revenue is projected to grow from HK$13,591 million in FY23A to HK$15,707 million in FY24E, representing a year-on-year growth of 15.6% [9]. - Adjusted net profit is expected to recover from a loss of HK$1,707.4 million in FY23A to HK$3,151 million in FY24E [9]. - The report highlights a significant increase in daily output from Iraq - Block 9, projected to reach 51.3 thousand barrels of oil equivalent per day in 2024E, up from 38.0 in 2023 [3][9]. Earnings Summary - The earnings summary indicates a net profit of HK$3,151 million for FY24E, with an EPS of 12.05 HK cents, reflecting a year-on-year growth of 9.9% [9]. - The report notes a P/E ratio of 2.3x for FY24E, suggesting that the stock is undervalued compared to its earnings potential [9]. - The gross profit margin is expected to stabilize around 33.0% in FY24E, down from 32.7% in FY23A [9]. Operational Insights - The report provides insights into the operational performance, indicating that the total daily output is expected to increase to 110.1 thousand barrels of oil equivalent per day in 2024E, with a notable decline in output from Pakistan [3]. - Realized crude prices are projected to average US$86 per barrel in 2024E, which is a slight increase from US$79 in 2023 [3][5]. - The lifting cost is expected to remain stable at around US$4.7 per barrel of oil equivalent in 2024E [3]. Share Performance - The report notes a significant decline in share performance, with an absolute drop of 48.3% over the past month and a relative decline of 45.0% [2]. - The share price has fluctuated between HK$0.30 and HK$1.25 over the past 52 weeks, indicating high volatility [2]. Conclusion - The report emphasizes the need for monitoring the financial condition of Orient Finance and its implications for United Energy's stock performance, while also highlighting potential upside risks related to strategic share disposals and buybacks [2][3].

M N 6 May 2024 CMB International Global Markets | Equity Research | Company Update United Energy (467 HK) Expect volume growth to accelerate in 2024E Target Price HK$0.96 We believe the low volume growth in 2023 and the impairment of Iraq assets (Previous TP HK$1.45) have been gradually digested by the market. We slash our 2024E/25E earnings Up/Downside 50.0% forecast by 26%/28% due to lower oil & gas output and higher production cost Current Price HK$0.64 assumptions. On the positive side, we expect the co ...

Revenue and Profit Performance - Revenue for 2023 increased by 26.4% to HKD 13,591,075 thousand compared to HKD 10,753,743 thousand in 2022[6] - Gross profit decreased by 19.5% to HKD 4,439,240 thousand in 2023 from HKD 5,512,983 thousand in 2022[6] - The company's revenue for the year was approximately HKD 13,591,075,000, an increase of 26.4% compared to the previous year's HKD 10,753,743,000, driven by new trading business but offset by lower realized sales prices in exploration and production[30] - The company's gross profit for the year was HKD 4,439,240,000 (gross margin of 32.7%), a decrease of 19.5% compared to the previous year's HKD 5,512,983,000 (gross margin of 51.3%), primarily due to lower average international oil prices and increased depreciation and amortization[37] - Revenue for 2023 increased to 13,591,075 thousand HKD, up from 10,753,743 thousand HKD in 2022, representing a growth of approximately 26.4%[151] - Gross profit for 2023 was 4,439,240 thousand HKD, a decrease from 5,512,983 thousand HKD in 2022, reflecting a decline of approximately 19.5%[151] Production and Reserves - Average daily production in 2023 was 100,407 barrels of oil equivalent per day (boe/d), with a total of 11 commercial discoveries made during the year[11] - Proved and probable (2P) reserves reached approximately 611.6 million barrels of oil equivalent (MMboe) with a reserve-to-production ratio of 16.7[11] - The company's net equity proved reserves at the end of 2023 were 48.4 million barrels of oil equivalent (MMboe), a decrease of 16.0% compared to 57.6 MMboe in 2022[7] - The company's net equity proved and probable reserves at the end of 2023 were 94.0 MMboe, a decrease of 5.5% compared to 99.5 MMboe in 2022[7] - The company achieved 11 commercial discoveries in 2023, with 7 in Pakistan, 3 in Egypt, and 1 in Iraq[18] - The company's average daily production reached 167,826 barrels of oil equivalent (BOE) in 2023, a 1.17% increase from the previous year[20] - In Pakistan, the average daily production was 62,762 BOE, a 9.6% decrease compared to the previous year[21] - In Iraq, the B9 block's average daily production reached 63,320 BOE, a 9.5% increase from the previous year[22] - In Egypt, the average daily production was 16,951 BOE, a 7.8% decrease compared to the previous year[23] - The company's cumulative equity crude oil and condensate sales volume was 23.2 million barrels in 2023, an 8.4% increase year-over-year[25] - The average realized crude oil price was $78.60 per barrel in 2023, an 18.3% decrease from the previous year[25] - The company's cumulative equity natural gas sales volume was 13.0 million BOE in 2023, a 12.8% decrease year-over-year[26] - The average realized natural gas price was $30.88 per BOE in 2023, a 3.5% increase from the previous year[26] - The company's petrochemical product sales volume was 741,605 tons in 2023, with an average realized price of $548.55 per ton[27] - The average daily equity production for the year was approximately 100,407 barrels of oil equivalent (BOE), a slight increase of 0.16% compared to the previous year's 100,245 BOE[28] - The average realized price for oil and gas was USD 61.31 per BOE, a decrease of 11.1% compared to the previous year's USD 68.93 per BOE[28] - The company's net proved reserves as of December 31, 2023, included 15.2 million barrels of crude oil, condensate, and LPG, and 192.5 billion cubic feet of sales gas[60] - The group's average daily production in Pakistan and the Middle East & North Africa was 43,017 and 57,390 barrels of oil equivalent, respectively[61] Financial Performance and Losses - The company recorded a net loss attributable to owners of approximately HK$1,707,385,000 in 2023, compared to a profit of HK$2,601,162,000 in 2022, primarily due to a one-time impairment of reserves of approximately HK$4,185,457,000 (post-tax) and a one-time exploration dry hole write-off of approximately HK$201,156,000 (post-tax)[13] - The company reported a net loss of 1,707,401 thousand HKD in 2023, compared to a net profit of 2,601,146 thousand HKD in 2022[151] - Total comprehensive loss for 2023 was 1,704,458 thousand HKD, compared to a total comprehensive income of 2,611,238 thousand HKD in 2022[154] - The company reported a pre-tax loss of 2,019,941 thousand HKD in 2023, compared to a pre-tax profit of 3,021,096 thousand HKD in 2022[159] - Impairment losses on intangible assets surged to 2,263,951 thousand HKD in 2023 from 609,132 thousand HKD in 2022[159] - Impairment losses on property, plant, and equipment rose to 2,833,566 thousand HKD in 2023 from 219,421 thousand HKD in 2022[159] - The company recognized impairment provisions and write-offs for property, plant, and equipment, as well as intangible assets, totaling approximately HKD 3,420,805,000 and HKD 2,263,951,000 respectively[140] Capital Expenditures and Investments - The company invested approximately HK$6,868,844,000 in capital expenditures for oil exploration, development, and production activities in 2023, completing the drilling of 48 wells, including 20 in Pakistan and 28 in the Middle East and North Africa[13] - The company's target for 2024 is an average daily production range of 176,300 to 197,600 barrels, with an average equity daily production range of 101,600 to 113,500 barrels. The expected capital expenditure is between $880 million and $930 million[12] - Exploration costs for the year ended December 31, 2023, were HKD 368,337,000, with development costs totaling HKD 6,190,149,000[62] - Cash outflow for investment activities increased by 14.7% to approximately HKD 6,543,314,000 in 2023, with capital expenditures rising by 23.7% to HKD 6,669,825,000[44] - Net cash used in investing activities amounted to HK$6,543,314 thousand in 2023, compared to HK$5,706,750 thousand in 2022[160] Clean Energy and Sustainability - The company aims to expand its clean energy portfolio and invest in gigawatt-scale clean energy projects in Europe, the Middle East, North Africa, and Central Asia as part of its long-term decarbonization and sustainability strategy[12] - The company plans to continue exploring new opportunities for clean energy projects in the Middle East, North Africa, and other regions, while also developing its carbon trading business and advancing its roadmap for achieving carbon neutrality[12] Operational Highlights by Region - In Iraq, the B9 block's daily production exceeded 70,000 barrels, and the construction of central processing facilities is progressing rapidly[11] - In Pakistan, the company maintained stable production and operations, ensuring local energy supply[11] - In Egypt, the company expanded exploration areas and improved operational efficiency, maintaining stable overall production[11] - In Pakistan, the company's exploration area increased by 10.7% from 22,433 square kilometers in 2022 to 24,830 square kilometers in 2023, with plans to achieve an average working interest production of 35,500 to 40,900 barrels of oil equivalent per day in 2024[47] - The Middle East and North Africa assets have proven and probable reserves of 517.6 million barrels of oil equivalent, with 96.4% located in Iraq, and the company plans to achieve average working interest production of 55,100 to 59,400 barrels of oil equivalent per day in Iraq and 11,000 to 13,200 barrels of oil equivalent per day in Egypt in 2024[48] Financial Position and Assets - The company's total assets decreased by 5.8% to HKD 25,829,150 thousand in 2023 from HKD 27,419,844 thousand in 2022[6] - Total assets decreased to 14,170,196 thousand HKD in 2023 from 17,414,747 thousand HKD in 2022, a reduction of approximately 18.6%[155] - Current assets increased to 11,658,954 thousand HKD in 2023 from 10,005,097 thousand HKD in 2022, showing a growth of approximately 16.5%[155] - Current liabilities rose to 8,987,411 thousand HKD in 2023 from 7,974,309 thousand HKD in 2022, an increase of approximately 12.7%[155] - The company's net current assets improved to 2,671,543 thousand HKD in 2023 from 2,030,788 thousand HKD in 2022, reflecting a growth of approximately 31.6%[155] - The company's property, plant, and equipment decreased to 11,224,269 thousand HKD in 2023 from 11,739,252 thousand HKD in 2022, a reduction of approximately 4.4%[155] - Intangible assets significantly decreased to 1,619,227 thousand HKD in 2023 from 4,323,573 thousand HKD in 2022, a decline of approximately 62.5%[155] - Non-current liabilities increased to 4,005,590 thousand HKD in 2023 from 3,637,715 thousand HKD in 2022, driven by a significant rise in borrowings to 2,488,001 thousand HKD from 1,586,344 thousand HKD[156] - The company's net asset value decreased to 12,836,149 thousand HKD in 2023 from 15,807,820 thousand HKD in 2022, reflecting a decline in equity[156] - Total equity attributable to the company's owners dropped to 12,830,726 thousand HKD in 2023 from 15,802,040 thousand HKD in 2022, primarily due to a decrease in retained earnings[157] - The company's bank and cash balances as of December 31, 2023, were approximately HKD 3,327,279,000, compared to HKD 3,255,124,000 at the end of 2022[50] - The company's debt ratio was 16.5% as of December 31, 2023, compared to 15.3% at the end of 2022, with a current ratio of 1.30 times, up from 1.25 times at the end of 2022[51] - Total borrowings of the group amounted to approximately HKD 2,794,035,000 as of December 31, 2023, with a weighted average interest rate of 8.33%[52] - The group's property, plant, and equipment, along with other assets, were valued at approximately HKD 4,039,764,000 as of December 31, 2023, serving as collateral for bank financing[52] - The company's distributable reserves as of December 31, 2023, amounted to approximately HKD 7,436,432,000 (December 31, 2022: HKD 8,488,029,000)[127] Cash Flow and Financing - Operating cash inflow for the reporting period was approximately HKD 7,326,562,000, a decrease of 6.4% compared to the previous year's HKD 7,824,906,000, primarily due to lower average international oil prices in 2023[43] - Cash outflow for financing activities was approximately HKD 638,132,000 in 2023, including special dividends of HKD 1,051,597,000, bank loan repayments of HKD 3,074,136,000, and share buybacks of HKD 216,491,000[45] - Net cash used in financing activities was HK$638,132 thousand in 2023, a significant decrease from HK$2,069,864 thousand in 2022[160] - Cash and cash equivalents increased by HK$145,116 thousand in 2023, up from HK$48,292 thousand in 2022[160] - The company raised HK$2,409,251 thousand in borrowings, net of direct transaction costs, in 2023, compared to HK$768,300 thousand in 2022[160] - Repayment of borrowings totaled HK$3,074,136 thousand in 2023, up from HK$1,980,101 thousand in 2022[160] - A customer deposit of HK$1,560,000 thousand was received in 2023, compared to HK$390,000 thousand in 2022[160] - The company repurchased shares worth HK$216,491 thousand in 2023, with no repurchases in 2022[160] - Dividends paid to the company's owners amounted to HK$1,051,597 thousand in both 2023 and 2022[160] - Cash and cash equivalents at the end of 2023 stood at HK$3,327,279 thousand, up from HK$3,169,455 thousand at the end of 2022[160] Corporate Governance and Board Activities - The company's Board of Directors consists of 5 members, including 2 executive directors and 3 independent non-executive directors, with Mr. Zhang Hongwei serving as the Chairman[67] - The Board of Directors held 8 meetings in 2023, with all directors having a 100% attendance rate[71] - All directors attended the 2023 Annual General Meeting, with a 100% attendance rate[72] - The company provides ongoing professional development for directors, including briefings on corporate governance, director responsibilities, and regulatory updates[73] - Directors are required to participate in suitable continuous professional development to enhance their knowledge and skills[73] - The company has adopted the standard code of conduct for directors' securities transactions as per the Listing Rules Appendix C3[65] - The company maintains appropriate insurance coverage for directors and senior officers to protect against legal liabilities arising from the group's business[66] - The Board of Directors is responsible for approving the group's development and business strategies, major investments, financial controls, and significant transactions[70] - The company ensures that at least one-third of the Board consists of independent non-executive directors, with at least one possessing relevant professional qualifications and financial expertise[69] - The company has established a clear division of responsibilities between the Chairman and the CEO, although the CEO position is currently vacant[64] - The audit committee held two meetings in 2023, with 100% attendance from all members (Zhou Shaowei, Shen Feng, and Wang Ying)[79] - The company paid HKD 7,133,000 for audit services and HKD 1,107,000 for non-audit services to its external auditor, RSM[84] - The risk management and internal control department conducted an annual review, implementing stricter procedures, and the board confirmed the system's effectiveness[85] - The remuneration committee held three meetings in 2023 to review and approve the compensation packages for directors and senior management[80] - The nomination committee held two meetings in 2023, focusing on board diversity and re-election of directors[82] - The company secretary, Mr. Kong Likai, completed over 15 hours of professional training in 2023 to update his skills and knowledge[86] - The board ensures compliance with Hong Kong Financial Reporting Standards (HKFRS), which align with International Financial Reporting Standards (IFRS)[75] - The audit committee reviewed external auditor plans, risk management, internal controls, and financial statements, providing recommendations to the board[79] - The remuneration committee considered factors such as comparable company salary levels and the time and responsibilities of directors and senior management when determining compensation[80] - The nomination committee assessed the board's diversity in skills, experience, and perspectives, concluding it aligns with the company's diversity policy[82] Risks and Challenges - The company's financial performance is significantly impacted by fluctuations in international oil and gas prices, which are influenced by supply and demand changes, global economic conditions, and political instability[91] - The company faces risks related to tax and fiscal systems in Pakistan, Egypt, and Iraq, where any changes could increase tax burdens and adversely affect financial performance[92] - Exploration and development activities carry inherent risks of not discovering commercial oil and gas reserves, which could lead to write-offs or impairment charges[93] - Operational risks in exploration, development, and production include health, safety, security, and environmental concerns, which could result in economic losses, operational disruptions, and litigation[94] - Mergers and acquisitions may not succeed due to factors such as external financing availability and discrepancies between key assumptions and actual parameters[95] - The company's operations could be adversely affected by natural disasters, pandemics, or other public health crises, potentially disrupting supply chains and reducing demand for products[97] Shareholder and Equity Information - The company granted 20,600,000 shares to 55 eligible employees under the PSU plan in 2023, with 1,341,036 shares vested due to retirement and 105,608 shares forfeited due to employee departure[109] - The total number of shares granted under the PSU plan since its adoption is 60,147,163, with 82,594,841 shares available for future grants, representing approximately 3.2% of the plan's authorized limit[109] - Zhang Hongwei holds 17,661,944,230 shares (67.82%) of the company's equity through controlled