Oil and gas major CNOOC ebbs on net profit decline
Chinese oil and gas major reveals worse results than expected and cuts dividends to help finance planned acquisition of Canada's Nexen
Shares of CNOOC, the country's dominant offshore oil and gas producer, fell up to 5.5 per cent after it announced a worse-than-expected drop in interim net profit and slashed dividends to help fund its US$15.1 billion acquisition of Canadian oil firm Nexen.
CNOOC recorded a net profit of 31.87 billion yuan (HK$38.95 billion) in the year's first six months, down 19 per cent from the same period last year. That was 6.8 per cent short of the 34.2 billion yuan average estimate of seven analysts polled by Reuters.
Its shares fell to HK$14.7 before closing down 3 per cent at HK$15.10 yesterday.
Chief financial officer Zhong Hua said the company could have fared worse than expected because of Beijing's implementation of a resource tax from November, and the booking of taxes payable under a dispute with the Nigerian government. Some analysts might not have taken these items into account.
"Since we have had disagreements in the past two years with the Nigerian government over some preferential tax incentives offered to us, we have fully booked the amount demanded by the government for the sake of prudence," he said. "We will make adjustments if necessary when the issue is settled."
CNOOC's board proposed to pay an interim dividend of 15 HK cents per share, down from 25 HK cents for last year's first half. The payout represents 17.2 per cent of its net profit, down from 23.3 per cent last year. The decision to cut the dividend came after considering funding needs for the Nexen deal and was partly aimed at "maintaining financial flexibility and to support the company's long-term growth".