CNOOC to pursue projects despite oil price fall

PUBLISHED : Wednesday, 29 October, 2008, 12:00am
UPDATED : Wednesday, 29 October, 2008, 12:00am

CNOOC, the mainland's dominant offshore producer of oil and gas, said third-quarter revenue jumped 69.1 per cent year on year and indicated it would maintain its plans for production and exploration in the fourth quarter despite sharply lower oil prices.

Revenue was 30.87 billion yuan (HK$35 billion), compared with 18.26 billion yuan for the same period last year, the company said. CNOOC did not disclose quarterly profit and cost figures.

Crude oil output jumped 15.4 per cent year on year to 430,729 barrels per day, while natural gas production surged 14.1 per cent to 679 million cubic feet per day. Together, oil and gas output grew 15.2 per cent to 549,589 barrels per day.

The average selling price for crude oil climbed 58.7 per cent to US$106.94 a barrel in the quarter, while the realised price for gas increased 11.7 per cent to US$3.83 per thousand cubic feet. The price gain is in line with New York crude futures' 57.3 per cent rise to US$118.22 a barrel in the same quarter.

For the first nine months, revenue jumped 66.2 per cent, primarily on the back of a 68.9 per cent rise in the price of oil and a 13.1 per cent rise in gas prices.

Despite a 56 per cent slump in international oil prices from their peak in July, chief financial officer Yang Hua said the company would not slow down or cut capital expenditure aimed at boosting future output.

'We have been adopting a relatively conservative financial policy, and given our strong balance sheet, we will still increase expenses on resource exploration and development,' he said. 'We are still sticking to our spending budget for this year.'

The sharp fall in oil prices had made projects that were expensive to develop much less profitable, he said. But the company had not delayed or abandoned exploration in China's deep-sea regions, which are virgin territory but costly to exploit.

While lower oil prices could mean lower costs for acquisitions, Mr Yang said 'the room to create value [from such deals] would also be lower'.

'The price of oil is only one factor. There are other factors, such as geology, to consider,' he said.