Investment Rating - The report maintains an "Accumulate" rating for the oil and gas industry [6] Core Viewpoints - The oil and gas industry has achieved significant exploration breakthroughs, with the oil service sector expected to benefit from the ongoing domestic reserve increase and production actions [10][11] - The "Three Barrel Oil" companies have significantly increased capital expenditures from 2020 to 2023, and are expected to maintain high levels in 2024 and 2025, which will benefit their affiliated oil service companies [11][12] - Global upstream capital expenditures are projected to decline slightly in 2025, but domestic investment is expected to remain high due to supportive policies [12] - The oil service sector's performance has improved, with major companies showing resilience in profitability despite falling oil prices [21][26] Summary by Sections Oil and Gas Breakthroughs - The Ministry of Natural Resources announced major breakthroughs in energy mineral exploration, including the discovery of 10 large oil fields and 19 large gas fields during the 14th Five-Year Plan period [10] - New geological reserves of over 300 billion cubic meters have been confirmed in the Ordos Basin alone, supporting stable oil production of 200 million tons and natural gas production exceeding 240 billion cubic meters [10][11] Capital Expenditure Trends - The "Three Barrel Oil" companies plan to invest approximately 210 billion, 72.9 billion, and 130 billion yuan in upstream capital expenditures for 2025, reflecting a 6% decrease from 2024 but still maintaining high levels [11][12] - Global upstream exploration and development spending is expected to be around 600 billion USD in 2025, a 4% year-on-year decline, with deepwater investments projected to decrease by 6% [12] Oil Service Sector Performance - In the first half of 2025, major oil service companies reported significant profit increases, with CNOOC Services' net profit rising by 23.3% and CNOOC Development's by 13.1% [21] - The gross profit margins of key oil service companies have improved, with CNOOC Services, CNOOC Engineering, and CNOOC Development showing increases compared to the previous year [21][26] International Competitiveness - The international competitiveness of domestic oil service companies is expected to improve, as their return on equity (ROE) has shown resilience compared to major international competitors [26] - The gross profit margins of domestic oil service companies have increased, while international competitors have experienced declines in their margins [26] Investment Recommendations - The report suggests a positive outlook for the "Three Barrel Oil" companies and the oil service sector, as well as for leading companies in the refining and chemical sectors [5]

Core Insights - The report highlights that in 2024, China's oil and gas production reached a historic high of 4.09 million tons, marking a continuous increase for eight years, and successfully completed the "Seven-Year Action Plan" two years ahead of schedule [1][8]. Group 1: Production and Exploration Achievements - In 2024, China's crude oil production reached 213 million tons, nearing historical peaks, while natural gas production exceeded 246.5 billion cubic meters, maintaining a growth of over 10 billion cubic meters for eight consecutive years [1][8]. - The marine and unconventional oil and gas sectors were the main contributors to production growth, with marine oil and gas production exceeding 85 million tons and shale oil production increasing by 35% year-on-year to over 6 million tons [1][2]. Group 2: Exploration Breakthroughs - The exploration sector focused on five key areas: deep and ultra-deep layers, marine, unconventional, new regions, and mature exploration areas, achieving significant breakthroughs [2]. - Notable achievements include the completion of China's first ultra-deep well "Deep Earth Taka 1" at a depth of 10,910 meters and the discovery of major oil fields in the Pearl River Mouth Basin and Qiongdongnan Basin [2]. Group 3: Technological Innovations - In 2024, China made significant advancements in oil and gas geological theory, exploration and development technologies, and equipment autonomy, enhancing the industry's technological capabilities [3]. - The introduction of high-density seismic exploration technology and advancements in shale gas drilling techniques led to an additional crude oil production of over 36 million tons in 2024 [3]. Group 4: Green Transition and Renewable Energy Integration - The oil and gas industry accelerated its integration with renewable energy, adding over 4 million kilowatts of solar and wind power capacity in 2024, and achieving record geothermal heating area [4]. - The application of CCUS (Carbon Capture, Utilization, and Storage) technology deepened, with 10 new CCUS-EOR projects added in 2024, cumulatively injecting 14.73 million tons of CO2 [4]. Group 5: Future Outlook - For 2025, the oil and gas industry aims to focus on high-quality development, with plans to maintain crude oil production at 200 million tons and continue increasing natural gas production by over 10 billion cubic meters for nine consecutive years [4].

Core Viewpoint - The company demonstrated strong resilience in its oil and gas operations despite a decline in revenue and net profit in the first half of 2025, maintaining a "buy" rating due to its solid fundamentals and cost advantages [1][3]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 207.61 billion yuan, a year-on-year decrease of 8.45%, and a net profit attributable to shareholders of 69.53 billion yuan, down 12.79% year-on-year [1]. - The second quarter saw operating revenue of 100.75 billion yuan, a decline of 12.62% year-on-year and 5.71% quarter-on-quarter, with a net profit of 32.97 billion yuan, down 17.60% year-on-year and 9.83% quarter-on-quarter [1]. - The average Brent crude oil price fell by 15.1% year-on-year, while the company's sales gross margin was 53.5%, a slight decrease of 0.2 percentage points [1]. Production and Reserves - The company's oil and gas net production reached 384.6 million barrels of oil equivalent in the first half of 2025, a year-on-year increase of 6.1%, marking a historical high for the same period [2]. - Domestic production was 266.5 million barrels of oil equivalent, up 7.6% year-on-year, while overseas production was 118.1 million barrels of oil equivalent, an increase of 2.8% [2]. - The company achieved a reserve replacement ratio of over 130%, maintaining a reserve life of around 10 years [2]. Technological Advancements - The company has made significant technological advancements, reducing the natural decline rate of offshore oil fields to 9.5%, the best level in history, and lowering the main cost per barrel of oil equivalent to 26.94 USD [2]. - Key projects such as "Deep Sea No. 1" and others have successfully commenced production, contributing to the overall increase in output [2]. Green Transition and Shareholder Returns - The company is advancing its green and low-carbon initiatives, with significant achievements in energy efficiency and emissions reduction, including the recovery of torch gas and the establishment of China's first offshore CCUS project [3]. - The board has decided to distribute an interim dividend of 0.73 HKD per share, reflecting a payout ratio of 45.5% and a total dividend amount of approximately 31.60 billion yuan, demonstrating a commitment to shareholder returns even during a downturn in oil prices [3]. Valuation Outlook - The company is expected to maintain strong performance despite short-term fluctuations in international oil prices, with projected net profits of 138.15 billion yuan, 138.75 billion yuan, and 142.25 billion yuan for 2025 to 2027, respectively [3]. - The earnings per share (EPS) are forecasted to be 2.91 CNY, 2.92 CNY, and 2.99 CNY for the same period, with corresponding price-to-earnings ratios of 8.9x, 8.9x, and 8.7x [3].

Core Insights - China National Offshore Oil Corporation (CNOOC) has successfully completed surface operations for six development wells in the Dongfang 1-1 gas field, setting a new domestic record for drilling speed with a maximum daily penetration of 2,618 meters on August 12 [1][3] - This project is notable as it is China's first high-temperature, high-pressure, low-permeability natural gas development project, with reservoir temperatures reaching 150 degrees Celsius and pressure coefficients exceeding 1.8 [1][3] Group 1 - The drilling operation not only represents a breakthrough in offshore drilling speed but also surpasses the drilling speed records of onshore gas wells [3] - The operation team utilized a self-developed "Drilling Optimization System" that employs big data analysis to optimize drilling parameters, allowing for efficient coordination among various technical personnel and equipment [3] - During the 14th Five-Year Plan period, CNOOC is aggressively advancing oil and gas reserve enhancement projects, with an average of nearly 1,000 offshore wells drilled annually, marking a 40% increase compared to the 13th Five-Year Plan [3] Group 2 - The number of wells in new fields such as deep, ultra-deep, deep water, and ultra-high temperature and pressure has doubled compared to the 13th Five-Year Plan [3] - Overall drilling and completion efficiency has improved by 15% [3]

Core Viewpoint - China National Offshore Oil Corporation (CNOOC) and Mingyang Smart Energy have established a new energy company with a registered capital of 1 billion yuan, focusing on offshore wind power technology and related systems [1] Group 1 - The newly formed company is named CNOOC (Oriental) Energy Co., Ltd. [1] - The registered capital of the new company is 1 billion yuan [1] - The business scope includes wind power generation technology services, research and development of wind farm-related systems, and research and development of offshore wind power-related systems [1] Group 2 - The ownership structure reveals that the company is jointly held by CNOOC (Hainan) New Energy Co., Ltd., a subsidiary of CNOOC, and Mingyang Smart Energy [1]

Group 1 - CNOOC (Oriental) Energy Co., Ltd. has been established with a registered capital of 1 billion yuan [1] - The company's business scope includes wind power generation technology services, research and development of wind farm-related systems, and research and development of offshore wind power-related systems [1] - The company is jointly owned by CNOOC (Hainan) New Energy Co., Ltd. and Mingyang Smart Energy (601615) [1]

Core Insights - The top three companies by Hong Kong Stock Connect holding ratios are China Telecom (00728) at 72.05%, Green Power Environmental (01330) at 69.19%, and China Shenhua (01088) at 67.94% [1] - Alibaba-W (09988), Horizon Robotics-W (09660), and BYD Company (01211) saw the largest increases in holding amounts over the last five trading days, with increases of +126.42 billion, +37.06 billion, and +23.82 billion respectively [1] - The largest decreases in holding amounts over the last five trading days were recorded by the Tracker Fund of Hong Kong (02800) at -19.72 billion, China Telecom (00728) at -13.62 billion, and Kuaishou-W (01024) at -10.29 billion [1] Hong Kong Stock Connect Latest Holding Ratios - China Telecom (00728): 100.01 billion shares, 72.05% holding ratio [1] - Green Power Environmental (01330): 2.80 billion shares, 69.19% holding ratio [1] - China Shenhua (01088): 22.95 billion shares, 67.94% holding ratio [1] - Other notable companies include Kaisa New Energy (01108) at 67.53% and COSCO Shipping Energy (01138) at 65.47% [1] Recent Increases in Holdings (Last 5 Trading Days) - Alibaba-W (09988): +126.42 billion, +88.22 million shares [1] - Horizon Robotics-W (09660): +37.06 billion, +361.88 million shares [1] - BYD Company (01211): +23.82 billion, +22.64 million shares [1] - Other companies with significant increases include Meituan-W (03690) and Ping An Insurance (02318) [1] Recent Decreases in Holdings (Last 5 Trading Days) - Tracker Fund of Hong Kong (02800): -19.72 billion, -73.80 million shares [3] - China Telecom (00728): -13.62 billion, -233.30 million shares [3] - Kuaishou-W (01024): -10.29 billion, -14.02 million shares [3] - Other companies with notable decreases include Pop Mart (09992) and Meitu (01357) [3]

Core Viewpoint - China National Offshore Oil Corporation (CNOOC) has achieved a significant milestone in offshore oil and gas development by setting a new record for daily drilling progress in a single well, indicating advancements in high-temperature and high-pressure oil and gas development technology in China [1] Group 1 - CNOOC's project in the Yinggehai sea area of Hainan has successfully drilled a well that reached a daily drilling depth of 2,618 meters [1] - This achievement marks a new record for single well daily drilling progress in China's oil and gas sector [1] - The development signifies that China's offshore high-temperature and high-pressure oil and gas development technology has reached an internationally advanced level [1]

Group 1 - The core achievement of the project is the record-breaking drilling speed of 2618 meters in a single day, marking a significant advancement in China's offshore high-temperature and high-pressure oil and gas development technology [1] - The well drilled is part of China's first high-temperature, high-pressure, and low-permeability natural gas development project, with a design depth exceeding 5800 meters and a bottom temperature reaching 150 degrees Celsius, indicating the complexity of the operation [1] - The project team utilized intelligent technology to enhance drilling speed, achieving a 50% increase in overall operational efficiency through dynamic optimization of operational parameters and automated tracking of downhole conditions [1] Group 2 - During the 14th Five-Year Plan period, China has significantly promoted offshore oil and gas development, with an average annual number of offshore wells reaching nearly 1000, a 40% increase compared to the previous five-year period [2] - The number of wells in new fields such as deep, ultra-deep, deep water, ultra-deep water, high temperature, and ultra-high temperature and pressure has doubled compared to the previous five-year period, with overall drilling and completion efficiency improving by 15% [2]

Core Viewpoint - China National Offshore Oil Corporation (CNOOC) has successfully implemented its "14th Five-Year Plan," achieving significant milestones in energy security, green transformation, and technological innovation, with confidence in meeting all targets by the end of the year [2][3]. Group 1: Energy Security and Production Growth - CNOOC has completed its oil and gas reserve increase and production "seven-year action plan" two years ahead of schedule, contributing over 70% of the national crude oil increase last year [4]. - The company has made breakthroughs in deep-water exploration and development, enhancing its understanding of marine resources and achieving significant discoveries in previously unexplored areas [4][5]. - CNOOC's integrated collaboration has led to record production levels, with the Bohai Oilfield aiming to exceed 40 million tons this year and the South China Sea East Oilfield surpassing 20 million cubic meters annually [5]. Group 2: Green Development Initiatives - CNOOC has achieved year-on-year reductions in energy consumption and carbon emissions since the start of the "14th Five-Year Plan" [6][7]. - The company has implemented a comprehensive green development strategy, focusing on carbon reduction, pollution control, and energy structure transformation [7][8]. - Major projects, such as the offshore oilfield shore power project, have been completed, and the company has exceeded national energy efficiency targets in refining and chemical sectors [9]. Group 3: Technological Innovation and New Energy Development - CNOOC has received national awards for its technological advancements in deep-water gas field development and oil and gas exploration [11]. - The company has developed key technologies and equipment, enhancing its capability to convert marine resources into tangible production [11][12]. - CNOOC is actively investing in strategic emerging industries, with a 21.8% increase in investment in these sectors, and is focusing on digital transformation and artificial intelligence applications [12].