CNOOC will continue to seek growth opportunities abroad after completing mainland China's largest overseas acquisition, which its chairman said was full of challenges.
China's largest offshore oil and gas producer completed on February 26 the US$15.1 billion acquisition of Canada-based Nexen, which has assets in North America, Europe and Africa.
This was despite opposition by politicians in Canada on concerns ownership of Nexen by a Chinese state firm would jeopardise Canadian control over strategic resources, as well as opposition by US legislators on worries it would harm national security.
"The acquisition process was full of difficulties and convolutions," said CNOOC chairman Wang Yilin. "As to whether we will pursue more deals overseas … we will stick to a requirement [by Beijing] to keep internationalising our operations."
He made the comments after CNOOC yesterday posted net profit of 63.69 billion yuan (HK$79.5 billion) for last year, 9.3 per cent lower than in 2011.
Revenues rose 2.9 per cent to 194.77 billion yuan on the back of a 3.2 per cent rise in production to 342.4 million barrels of oil equivalent (boe) - of which oil output rose 5.2 per cent and gas output fell 5.1 per cent. Average oil selling price edged up 0.7 per cent to US$110.48 a barrel, and that of gas jumped 12 per cent to US$5.77 per 1,000 cubic feet.
Chief financial officer Zhong Hua attributed the fall in profit mostly to higher resources and income taxes and operating, depreciation and exploration costs.
They more than offset the benefits of higher sales volume and a decrease in a special government levy on crude oil sales.
Cash production costs rose 15.9 per cent to US$10.44 a barrel. Including fixed costs such as depreciation, oilfield dismantlement and sales and administration costs, total production costs jumped 16.8 per cent to US$35.73 a barrel.
CNOOC aims to produce 338-348 million boe of oil and gas this year, little changed from last year. Zhong said Nexen's books will likely be consolidated into those of CNOOC by mid-year, at which time CNOOC may revise its full-year output target. The acquisition would raise CNOOC's proven reserves by 24 per cent to 4.33 billion boe and output by 20 per cent to 411.7 million boe, if calculated at the end of last year.
Zhong said CNOOC's net debt-to-equity ratio will not be higher than 30 per cent after Nexen's consolidation, from just over 16 per cent at the end of last year.
"With our good credit rating, post-acquisition we will still have plenty of room to raise more financing to support future growth," he said.
A final dividend of 32 HK cents per share was recommended, up four HK cents from 2011, equalling a payout ratio of 26.7 per cent of last year's profit and a 3.1 per cent dividend yield for investors.