ZPEC(603619) 长江证券·2024-03-17 16:00Investment Rating - The report gives a "Buy" rating for the company, with a target PE of 10.6X, 7.3X, and 5.7X for 2023-2025 respectively [18][20] Core Views - The company has successfully transformed into a leading oil and gas exploration and development enterprise, with a complete upstream and downstream industrial chain [15][30] - The company's crude oil production has been growing rapidly, with significant potential for future growth due to its rich reserves [6][15] - The company has three major oilfield blocks: Wensu Oilfield, Kazakhstan's Zhengguo Oilfield, and Kazakhstan's Anbian Oilfield, all of which have been under control by the end of 2023 [6][15] Domestic Operations: Wensu Oilfield - Wensu Oilfield, located in the Tarim Basin in Xinjiang, has four major oil and gas blocks: Wenbei, Hongqipo, Kekeya, and Saike [7][16] - The company acquired the exploration rights for Wensu Oilfield for 867 million yuan in 2018 and achieved efficient development with a record of "one year for discovery, two years for exploration, and three years for production" [7][16] - The annual crude oil production of Wenbei Oilfield reached 581,000 tons in 2023, with proven geological reserves of 30.11 million tons in the Wen 7 block [16] - The Kekeya Oilfield has preliminary proven oil reserves of 10.924 million tons, and the Hongqipo and Saike Oilfields are in the early exploration stage, with 269 square kilometers remaining to be explored [16] International Operations: Kazakhstan Oilfields - The company has two major oilfields in Kazakhstan: Zhengguo Oilfield and Anbian Oilfield [16][17] - Zhengguo Oilfield has proven crude oil reserves of 65.44 million tons and natural gas reserves of 24.3 billion cubic meters, with a cumulative crude oil production of 100,600 tons in 2023, a year-on-year increase of 55% [16] - Anbian Oilfield has a high-quality oil reserve of 25.232 million tons, with a shallow burial depth of 400-600 meters, resulting in low extraction costs [17] Cost Advantages - The company's direct cost per barrel of oil is $12.97, lower than major oil-producing countries like Iran and Russia, and its total cost per barrel is $23.75, significantly lower than the "Big Three" Chinese oil companies [17] - The company's oilfields are mostly shallow, with Wensu Oilfield at 500-1800 meters, Zhengguo Oilfield at 1700-2400 meters, and Anbian Oilfield at 400-600 meters, which contributes to lower extraction costs [17][134] Future Growth Potential - The company's oil production is expected to maintain a high growth rate, with Wensu Oilfield's production potentially exceeding 600,000 tons in 2024 and reaching 800,000 tons by 2025 [104][105] - The company is also exploring natural gas reserves in Wensu Oilfield, which could contribute to future performance growth [105] - The Kazakhstan oilfields, particularly Zhengguo and Anbian, are expected to become important growth drivers in the medium term, with significant potential for increased production [106][110][116]