China National Offshore Oil Corporation (CNOOC Limited) announced its interim results for the six months ended June 30, 2015.
In the first half of the year, the Company ensured spending in exploration in its core area offshore China, and prioritized mature areas and rolling areas to improve utilization of exploration resources. The Company made six new discoveries and drilled 21 successful appraisal wells. In offshore China, the Company made a mid-sized light crude oil discovery in Eastern South China Sea, namely Liuhua 20-2, which is expected to facilitate the joint development with the adjacent Liuhua 16-2 and Liuhua 23-1 oil and gas structures. The Company also made a mid-sized discovery in Bohai, namely Penglai 20-2.
Benefiting from the lowering costs and enhancing efficiency program, of the seven projects scheduled to come on stream in 2015, the Jinzhou 9-3 oilfield comprehensive adjustment, Bozhong 28/34 oilfields comprehensive adjustment, Kenli 10-1 oilfield, Dongfang 1-1 gas field phase one adjustment and Luda 10-1 oilfield comprehensive adjustment have successfully commenced production, and several came on stream ahead of schedule and under budget. The other two new projects are progressing smoothly.
During the period, the Company changed the performance evaluation system to motivate subsidiaries to implement more stringent cost control mechanisms, optimized management mechanisms and conducted special programs to reduce operation costs, and fully utilized the market mechanism to lower the costs of services and supplies. These initiatives allowed the Company to effectively control its costs. The Company’s all-in cost was US$41.24 per barrel of oil equivalent (BOE), down 4.5% year-on-year (yoy), while operating cost was US$9.60 per BOE, down 18.5% yoy.
For the first half of the year, the Company’s total net oil and gas production reached 240.1 million BOE, up 13.5% yoy, primarily due to the production contribution from newly commenced projects in Bohai and the Eastern South China Sea. Production from offshore China rose by 19.1% yoy to 156.3 million BOE and production from overseas was 83.9 million BOE, up 4.4% yoy. The Company’s 2015 full year production target of 475-495 million BOE remains unchanged.
The Company’s average realized oil price was US$57.53 per barrel in the first half of 2015, representing a decline of 45.9% yoy, while the average realized natural gas price rose by 1.7% yoy to US$6.55 per thousand cubic feet. Due to the substantial decline in realized oil prices, the Company’s oil and gas sales revenue were RMB77.03 billion, representing a decline of 34.2% yoy, and net profit fell 56.1% yoy to RMB14.73 billion.
Mr. Yang Hua, Chairman of the Company, said, “In view of the challenges from the external environment, staff at all levels of the Company worked hand in hand, made further progress in our focus on the ‘Year of Quality and Efficiency’ program and achieved favourable results. We will fortify our confidence about the future, remain steadfast in implementing our established strategy, and pursue high-quality, effective and sustainable development.”
Mr. Li Fanrong, CEO of the Company, said, “In the first half of 2015, the Company made tremendous efforts to reduce costs and enhance efficiency. As a result of these initiatives, our exploration, development and production activities have maintained stable growth, and major financial indicators remained healthy. In the second half of the year, we will effectively execute the year’s operational strategy under the guidance of the Company’s growth strategy, proactively deal with the adverse environment of low oil prices and ensure that all annual production and operation targets for the year are achieved.”
In the first half of the year, the Company’s basic earnings per share reached RMB0.33. The Board has declared an interim dividend of HK$0.25 per share (tax inclusive).