megamillionsjackpottoday| China-Manchu Petroleum won the bid for Iraq oil and gas fields: net profit is expected to increase by 12.8% annually from 2024 to 2026
News summary
China-Manchu Petroleum wins the bid for EBN and MF blocks in the tender for oil and gas blocks in Iraqmegamillionsjackpottoday, net profit is expected to increase by 34% annually from 2024 to 2026megamillionsjackpottoday.4% to 12.8%, maintaining a "buy" rating, with risks including downward oil prices and geopolitics.
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[China-Manchu Petroleum (603619) successfully won the bid for two major oil and gas blocks in Iraq, opening a new chapter in profit]
On May 11, 2024, China-Manchu Petroleum participated in the oil and gas block bidding of the Ministry of Petroleum of Iraq and obtained exploration and development rights in the East Baghdad Field Northern Extension block (EBN block) and the Middle Euphrates block (MF block).
After the bidding is successful, the company will quickly start contract negotiations with the Ministry of Oil of Iraq based on policies related to the development of oil and gas fields in Iraq and the company's actual situation.
The tender by the Iraq Ministry of Oil has been six years since the previous round. The tender adopts a profit-sharing agreement to optimize resource allocation and attract more investment.
According to the tender conditions, the EDPC contract includes an exploration period of 5 to 9 years and a development period of 25 years. The DPC contract is 20 years and can be renewed for 5 years. Contractors invest in oil and have the right to recover costs, as well as accelerated recovery and interest on certain costs.
The contractor is required to pay the signature fee and certain post-commercialization fees. These fees are not included in the scope of cost recovery and are not tax deductible. In terms of taxes and fees, the contractor is required to pay 15% of the recognized revenue as royalties and pay income tax in Iraq.
Remuneration is paid based on the remaining net recognized income, mainly by exporting oil. Contractors are also required to provide training, technology transfer, hire local personnel, purchase local goods and services, and contribute to infrastructure funds.
The EBN block and MF block won by China-Manchu Petroleum are both DPC contracts with a development period of 20+5 years. The company's integration of exploration and development and drilling equipment services is expected to increase project profitability.
Earnings forecast shows that the company's net profit attributable to the parent company from 2024 to 2026 is expected to be 10.89, 13.51 and 1.523 billion yuan respectively, with year-on-year growth rates of 34.4%, 24.0%, and 12.8%, and EPS of 2.72, 3.38 and 3.81 yuan/share respectively. Based on expectations of high crude oil prices and rapid production growth, the company maintains a "buy" rating.
Risk factors that need to be aware of include economic fluctuations, downward oil prices, slower production than expected, economic sanctions and geopolitical risks.