Group 1 - The geopolitical conflicts have increased concerns about oil and gas supply reductions, leading to a rebound in Brent oil prices, which is expected to enhance the oil service industry's outlook [1] - Global oil and gas capital expenditures are currently at a low level, with active drilling rigs around 1700-1800, still below pre-2019 levels. Domestic capital expenditures are projected to decline by 1.8% and 5.1% in 2024 and 2025, respectively, but are expected to recover gradually [2] - The recovery in oil service industry sentiment is anticipated to take at least six months due to the long construction cycles of oil service projects, with a focus on high-competitiveness companies benefiting from the recovery [3] Group 2 - The ongoing geopolitical tensions and adverse weather conditions in the U.S. have impacted oil production, contributing to the rise in oil prices, which may lead to marginal increases in industry capital expenditures [1] - The domestic oil and gas sector's reliance on foreign sources remains high, and the U.S. government is promoting oil and gas development, which is expected to boost overseas oil service expenditure demand by 2026 [2] - Investment recommendations include companies such as Jereh, Deewell, Bomei, CNOOC Engineering, and Zhongmi Holdings, which are considered to have high competitiveness in the market [3]

Investment Rating - The industry investment rating is maintained as "Positive" [6] Core Insights - Concerns over geopolitical conflicts have increased, leading to a rise in Brent crude oil prices, which is expected to improve the oil service industry's outlook. Recent military actions by the U.S. against Venezuela and increased military presence near Iran have contributed to these concerns. Additionally, severe weather in the U.S. has impacted refining output. As a result, Brent crude oil prices have shown a sustained increase, and if this trend continues, capital expenditures in the industry are expected to marginally improve, enhancing the oil service sector's outlook [9] - Global oil and gas capital expenditures remain at low levels, indicating potential for upward recovery. Currently, the global active rig count is approximately 1,700-1,800, still below pre-2019 levels. In China, capital expenditures in the oil and gas sector have contracted due to oil prices and the end of the 14th Five-Year Plan, with expected year-on-year declines of 1.8% and 5.1% in 2024 and 2025, respectively. After several years of capital contraction, a recovery in industry expenditures is anticipated. Domestically, China's reliance on foreign oil and gas remains high, and a gradual recovery in capital expenditures is expected. Internationally, U.S. government policies are promoting oil and gas development, and the EIA predicts an increase in natural gas generation capacity in the coming years, suggesting a potential rebound in overseas oil service expenditure in 2026 [9] - The recovery in oil service sector sentiment takes time, emphasizing the importance of competitive companies. Due to the long construction cycles of oil service projects, owner companies often need to observe the sustainability of oil prices. Current geopolitical concerns have elevated oil prices and market expectations, but a recovery in oil service sentiment will require time. It is estimated that it will take at least six months for the positive effects of rising oil prices to be felt in the oil service sector. As downstream companies place greater emphasis on long-term partnerships with suppliers, companies with high competitiveness are expected to benefit more from the recovery [9]