CNOOC reports worst result since at least 2011
China’s offshore oil and gas producer expects to raise output this year as crude prices rebound
China’s offshore oil and gas producer CNOOC reported its worst annual result since at least 2011, with revenue from its core oil and gas business falling 17 per cent last year, but it expects to raise output this year as oil prices rebound.
CNOOC reported a net profit of 637 million yuan (US$92.5 million) in 2016, down nearly 97 per cent from a year earlier. Revenue from oil and gas dropped to 121 billion yuan from 147 billion yuan.
“CNOOC managed to eke out a tiny profit, thanks to cost efficiencies and the oil price rebound during the fourth quarter,” Nomura Research analyst Gordon Kwan said.
The poor showing for last year came as CNOOC slashed upstream investment, reduced production and saw a drop in both crude oil and natural gas prices.
The state-owned firm reported a realised oil price of US$41.40 a barrel last year, 19 per cent lower than 2015. Natural gas prices fell 14.6 per cent.
Total production of oil and gas fell 3.8 per cent year on year to 476.9 million barrels of oil equivalent, the first drop since 2012.
“CNOOC must confront difficult challenges to kick-start production growth and replenish reserves, probably at the expense of higher [capital expenditure] and perhaps lower dividend payout ahead,” Kwan said.
CNOOC said it would start operations on five new projects this year and planned to increase reserves and production through drilling and acquisitions.
“In 2017, our strategies in exploration will focus on the continued search for large and medium-sized oil and gas fields,” the company said in a statement.
CNOOC recommended a final dividend of 23 HK cents (3 US cents) per share, compared with 25 HK cents in 2015.