Everbright Securities released a research report saying that under the background of "Belt and Road Initiative", the cooperation between China and oil-producing countries in the Middle East, Africa, Southeast Asia and other regions in the fields of oil service and petroleum engineering is expected to be further deepened, Zhitong Financial APP learned. For many years, the oil service enterprises under "three barrels of oil" have adhered to the "going out" strategy and actively distributed their overseas business. with the further promotion of "Belt and Road Initiative" and international energy cooperation, "three barrels of oil" has actively promoted the work of going out to sea. Regional influence is expected to be further enhanced, subordinate oil service enterprises speed up the layout of oil field services, petroleum engineering and other areas, consolidate the existing superior business, and actively explore new business sectors such as technical services. It is expected to continue to benefit.
Everbright Securities counted the voluntary disclosure of newly signed contracts by oil service companies since 2023. Since 2023, oil service companies such as China Oil Service (601808.SH), Petrochemical Oil Service (600871.SH), China National Petroleum Engineering (600339.SH), 603727.SH and other oil service companies have voluntarily issued announcements to disclose 9 contracts, 6 of which are overseas contracts. The layout of overseas business of oil service companies has been accelerating since 2023, and large new orders signed overseas continue to land.
The performance of oil service enterprises is highly related to the oil price hub and upstream capital expenditure.
From a long-term point of view, the oil price hub, upstream capital and the performance of oil service enterprises are highly related, and the high oil price center and upstream capital expenditure contribute to the high prosperity of the oil service industry. Looking back, in the past 14-16 years, as the rapid expansion of US shale oil production led to a sharp drop in global oil prices and the willingness of the parent company to spend capital, the revenue and performance of oil service companies such as COSL and CNOOC Engineering also fell under the pressure of international oil prices. In 17-22, as the international oil price continued to rise under multiple factors such as OPEC production reduction and the conflict between Russia and Ukraine, the cost of superimposed offshore crude oil exploration and development continued to decline, the economy of offshore crude oil was highlighted, the parent company CNOOC's upstream capital expenditure willingness increased, and the revenue and profits of oil service companies such as COSL, 600583.SH and 600968.SH also rose to a historically high range.
Geopolitical risks still exist in 23Q4, OPEC is optimistic about the supply and demand prospect of crude oil, and oil prices are expected to run high.
With the recurrence of the Palestinian-Israeli conflict, the Middle East may be affected on a large scale, and a new round of Palestinian-Israeli conflict may affect the stability of the Middle East, thus affecting the supply end of crude oil. In addition, the recent rise in oil prices has caused the price of Russian crude oil to exceed the price ceiling of 60 US dollars per barrel set by the West, which may become a potential disturbing factor to oil prices. OPEC will raise its medium-and long-term oil demand forecast to demonstrate its confidence in oil demand. As of August 2023, the idle capacity of OPEC10 countries totaled 5.19 million barrels per day. But Secretary General OPEC said at an energy industry event in Abu Dhabi on Monday that OPEC was optimistic about demand and that underinvestment was a risk to energy security and that OPEC's spare capacity was low. Everbright Securities believes that under the background of tight balance between supply and demand of crude oil and superimposed geopolitical risk premium, Q4 oil price is expected to remain high for 23 years.
Industry capacity utilization and daily fees and other data continue to improve, increase storage and production steadily, the domestic oil service high boom is expected to continue, performance can be expected
In terms of industry fundamental data, the number of drilling service days and daily fees rebounded compared with the same period last year. 22Q2-23Q2 and COSL had a year-on-year growth rate of 4095, 4309, 4401, 4465 and 4324 days, respectively, with a year-on-year growth rate of more than 10%. Under the influence of high oil prices, COSL rates still improved compared with the same period last year, with 2023H1 drilling service daily fees reaching 82000 US dollars per day, up 4 per cent from the same period last year. In terms of upstream capital expenditure, the "three barrels of oil" steadily increased reserves and production in the past 22 years. CNOOC achieved upstream capital expenditure of + 14.6% year on year and total oil and gas production of + 9.0%. In the context of "increasing reserves and production" as a long-term strategy, superimposed oil prices remain high and industry-related data continue to improve, and the domestic oil service boom is expected to continue.
Risk analysis:Upstream capital spending grew less than expected and crude oil and natural gas prices fluctuated sharply.