Since the beginning of this year, geopolitical conflicts and other factors have greatly pushed up crude oil and natural gas prices, and the world's major oil and gas giants have reported strong financial reports.
From the worst performance collapse in history to a record-breaking net profit, in just two years, the oil industry has rushed from the bottom to the top.
The total net profit of "Three Barrels of Oil" exceeded 197 billion yuan, both of which were the highest in history, but the differentiation was obvious
According to the financial report disclosed by Sinopec (600028.SH; 00386.HK) on August 28, the operating income in the first half of the year was 1.61 trillion yuan, a year-on-year increase of 27.9%; the net profit attributable to shareholders of the parent company was 43.53 billion yuan, a year-on-year increase of 10.4% ; Basic earnings per share of 36 million yuan.
So far, the semi-annual performance of the flagship listed company of the "three barrels of oil" in China has been released.
In the first half of the year, PetroChina (601857.SH; 00857.HK) achieved operating income of 1.61 trillion yuan, a year-on-year increase of 34.9%; net profit attributable to shareholders of the parent company was 82.391 billion yuan, a substantial increase of 55.3% year-on-year; free cash flow increased year-on-year 89.21 billion yuan, realizing basic earnings per share of 0.45 yuan.
During the same period, CNOOC (600938.SH; 00883.HK) operating income reached 202.355 billion yuan, up 84% year-on-year; net profit attributable to the parent was 71.89 billion yuan, up 115.7%; oil and gas sales revenue was 176.68 billion yuan, up 75.6% year-on-year ; Earnings per share of 1.57 yuan.
According to The Paper, the net profits of PetroChina, Sinopec and CNOOC in the first half of the year were 89.4%, 61.1% and 102.3% of last year's net profits, respectively.
The three major oil companies all said that their profits in the first half of the year hit the best level in history for the same period, and they have announced large dividends.
The board of directors of PetroChina proposed to distribute an interim dividend of 0.20258 yuan per share in 2022, with a dividend amount of 37.08 billion yuan; the board of directors of Sinopec decided to distribute an interim dividend of 0.16 yuan per share, with a total of 19.371 billion yuan in cash dividends (tax included). Opportunity to repurchase A shares and H shares; the board of directors of CNOOC decided to distribute an interim dividend of HK$0.70 per share (tax included) in 2022, a record high for the same period in history.
When describing the market environment, PetroChina said that due to factors such as supply and demand, geopolitics and other factors, international oil prices rose sharply in the first half of the year. The average spot price of Brent crude oil was US$107.94 per barrel, a year-on-year increase of 66.1%; the average spot price of WTI crude oil in the United States was 101.85 US dollars / barrel, a year-on-year increase of 63.7%.
However, in the refined oil market, domestic demand decreased in the first half of the year, and at the same time, due to quota restrictions, refined oil exports declined year-on-year.
During the same period, the growth rate of domestic chemical market demand declined, and natural gas consumption grew at a low rate.
Peng Mei News noticed that, looking at the interim reports of PetroChina and Sinopec, the exploration and development business sector contributed the most to the overall performance growth, while the refined oil sales and chemical sectors were "lag behind".
This is also the reason why CNOOC's net profit has grown more rapidly than the other two companies: it is different from the other "two barrels of oil" integrated business structure that runs through upstream exploration and development, midstream refining and downstream sales. CNOOC, which returned to A, is a pure upstream oil and gas exploration developer, and the sharp rise in oil prices has a more significant effect on its profitability.
In the first half of the year, CNOOC's net production reached a record high of 304.8 million barrels of oil equivalent, a year-on-year increase of 9.6%. The realized oil price and gas price increased by 66.5% and 22.3% respectively compared with the same period of the previous year.
In the first half of this year, international oil prices were slightly lower than the same period in 2013, but CNOOC's net profit doubled compared to that time.
Judging from the performance of PetroChina's different segments, the exploration and production segment achieved an operating profit of 82.455 billion yuan, a year-on-year increase of 167.1%; the refining and chemical segment's operating profit increased by 8.5%, but most of it came from the refining business.
Due to the increase in the cost of raw materials, the operating profit of the chemical business decreased significantly by RMB 8.641 billion compared with last year.
In the sales business, the sales volume of domestic refined oil products decreased by 6.1% as a whole. Except for diesel which increased by 10.2%, the sales volume of gasoline and kerosene decreased by 12.1% and 45.4% respectively.
The "blood loss" in the chemical and refined oil sales links is more evident in Sinopec's semi-annual report.
In sharp contrast to the 322% surge in operating income from the Exploration and Development Division, Sinopec's Refining Division operating income in the first half of the year decreased by 9.6 billion yuan year-on-year, or 24.4%.
Although the average realized prices of gasoline, kerosene and fuel oil of the Marketing and Distribution Division rose sharply, the sales volume declined to varying degrees.
In addition, due to the sharp rise in the price of raw materials such as naphtha, as well as the low operating rate of downstream and sluggish demand, the increase in product prices was less than the increase in the cost of raw materials, and the overall gross profit of the chemical business decreased. 12.6 billion yuan.
In response to the shrinking demand for refined oil, Ling Yiqun, senior vice president of Sinopec, said at the performance meeting that domestic demand for refined oil increased year-on-year in the first quarter, but due to the impact of the epidemic in the second quarter, the company's main markets in East China and South China demand for refined oil dropped significantly.
With the effective prevention and control of the epidemic, the implementation of measures to stabilize growth and the rectification of market order, the demand for refined oil in the second half of the year is optimistic and is expected to gradually recover and achieve positive growth.
Yu Baocai, president of Sinopec, said that in the second half of the year, due to the continuous release of new chemical production capacity and the impact of high oil prices, it is expected that the gross profit of chemical products will still be under pressure.
"However, with the recovery of the macro economy and the gradual recovery of domestic demand, coupled with the steady growth policy, the demand for chemical products will gradually improve, the export of downstream products is also expected to increase, and the consumption of major domestic petrochemical products will gradually recover."
After the performance blowout, oil prices go up or down
The seesaw between economic recession fears and tight supply controls the trend of international oil prices, making them fluctuated at high levels.
In the second half of the year, will oil prices continue to firm or will they pull back sharply?
"In the first half of the year, due to the weakening of the epidemic, the recovery of demand and geopolitics, international oil prices rose sharply and fluctuated violently. The average spot price of Platts Brent crude oil in the first half of the year was $108 per barrel, a year-on-year increase of 66%. July Since then, the international oil price has fluctuated downward, and there are many factors affecting the trend of oil prices, such as macroeconomic trends, fundamentals of supply and demand, inventory levels, geopolitics, and the strength of the US dollar. Forecast." Ma Yongsheng, chairman of Sinopec, said at the performance meeting that according to the forecast data of some international investment banks, the average forecast for Brent oil prices in the second half of 2022 is about US$103, which is lower than the average spot price in the first half of the year. At $5, the average forecast for Brent in 2023 is around $95.
"In fact, major institutions and investment banks are adjusting their forecasts every month. The company's team is also closely monitoring and studying the future trend of oil prices, and then making corresponding adjustments."
Wang Dongjin, chairman of CNOOC, said at the performance meeting that based on the latest forecasts of many institutions, the average price of Brent oil price this year will be $105 per barrel. Conflict, the global oil and gas supply is still relatively tight. The oil price in the second half of the year will basically remain at a relatively high level.”
He believes that oil prices are like tides in the ocean, rising and falling.
"The cycle of ups and downs has different lengths in different periods. Personally, I believe that the international oil price between US$60 and US$80 per barrel is a more reasonable range, which is more suitable for oil and gas production suppliers and market consumers."
According to the semi-annual report, the main cost of CNOOC's barrel of oil is 30.32 US dollars / barrel of oil equivalent.
Wang Dongjin emphasized that compared with international oil companies and domestic oil and gas peers, the company's main oil and gas costs are competitive, and he is confident and capable of resisting the possible drop in oil prices.
Regarding the future international oil and gas supply and demand pattern and price trend, Ren Lixin, senior vice president of PetroChina, said that due to factors such as changes in the epidemic and the slowdown in global economic growth, crude oil demand growth is less than expected, and there is also certain uncertainty on the supply side.
International oil prices have been fluctuating at high levels recently. In the long run, with the rebalancing of the global economy, it is expected that oil prices will return to a reasonable level in the long run.
Ren Lixin said that geopolitical events have caused profound changes in the global natural gas supply and demand pattern, and the spot price of liquefied natural gas (LNG) in the international market continues to rise. The rise in the price will also dampen demand growth in major consuming countries.
In the long run, as the impact of the Russian-Ukrainian conflict weakens and some LNG projects are successively completed and put into production, the spot price will return to a reasonable level.
In the first half of this year, especially in the second quarter, the international oil and gas giants swept away the haze of the past, and their performance ushered in a "blowout moment".
Against the backdrop of strong profits, oil companies have launched huge buybacks and dividends to provide handsome returns to shareholders.
The world's largest oil producer, Saudi Aramco, the state-owned oil company of Saudi Arabia, continues to sit firmly in the "profit king" seat.
Driven by rising crude oil prices and sales and improved refining margins, Saudi Aramco’s net profit in the second quarter of this year was as high as $48.4 billion and net profit in the first half of this year was $87.9 billion, both up about 90% from the same period last year.
The company's free cash flow rose 53% to $34.6 billion in the second quarter and $65.2 billion in free cash flow in the first half.
Aramco announced a second-quarter dividend of $18.8 billion, to be paid in the third quarter.
"Indeed, despite the expected short-term downward pressure on the global economy, we still believe that oil demand will continue to grow over the next decade," Saudi Aramco President and CEO Amin Nasser said, commenting on the financial performance.
Both major U.S. oil companies posted record net profits.
Exxon Mobil's second-quarter net profit of $17.85 billion, nearly tripled from $4.69 billion in the same period last year, breaking its previous record of $15.9 billion in quarterly profit set in 2012.
Chevron posted a record net profit of $11.622 billion in the second quarter, nearly four times the same period a year earlier.
Shell's second-quarter adjusted net profit reached US$11.472 billion, a year-on-year increase of 107%, breaking the quarterly profit record in a row.
According to bp's quarterly report, second-quarter net profit was US$9.257 billion, nearly three times the profit in the same period last year.
In the second quarter, Total Energy's adjusted net profit was US$9.8 billion, compared with a net profit of US$5.7 billion under International Financial Reporting Standards (IFRS).
Taking into account the potential impact of international sanctions on the value of Russia's Novatek stake, Total Energy took a $3.5 billion write-down in its financial statements for the year ended June 30.
After excluding the Russian business, the company's adjusted net profit was $9.1 billion.
However, it remains to be seen how long the boom cycle in the oil industry will last as high energy prices fuel inflation across countries and recession risks are piling up.
For oil companies, once demand weakens or falls sharply, the industry boom cycle will end.