China’s leading offshore oil producer CNOOC Ltd ( 0883.HK ) said its first-half net profit fell by almost a fifth - twice as much as the market had expected - and it cut its dividend by 40 percent to make room for its US$15.1 billion acquisition of Canadian oil firm Nexen Inc. Shares of the world’s largest oil explorer, which has only nine years worth of reserves based on its current production - one of the lowest ratios among global oil majors - fell more than 4 percent in Hong Kong on Tuesday, with investors disappointed in the deep interim dividend cut. CNOOC last month launched China’s richest foreign takeover bid by agreeing to buy Nexen, whose global portfolios include oil sands and shale gas. “My view is the market will be split in the second half ... those who think the Nexen deal will go ahead and is a good thing will think that 2013 is going to show good earnings per share growth ... those who don’t won’t,” said Simon Powell, head of Asian Oil and Gas Research at CLSA. If the deal closes in the fourth quarter, as scheduled, it would boost CNOOC’s 2013 production and earnings, barring a sharp fall in oil prices, analysts say. CNOOC has said the deal would increase its proven reserves by 30 percent and production by 20 percent. But CNOOC would also face the challenge of monetising potential reserves at a Nexen-operated oil sands project called Long Lake and retaining the Canadian firm’s staff in a highly competitive labour market, Powell said. Like other oil producers around the world, CNOOC is struggling to grow its production and cut costs as it moves further into the more costly development of unconventional resources such as Canadian oil sands and deepwater hydrocarbon in the South China Sea and Gulf of Mexico. The Nexen deal should help in China’s quest to gain both the technology and operating experience it would need later to extract potentially huge bitumen, heavy oil and shale oil resources at home, industry experts say. Little of China’s own such resources, and they are potentially substantial, have been exploited as Beijing focuses on cleaner unconventional energy such as tight gas, coalbed methane and shale gas. But, spurred by rising oil demand and a need to keep expensive oil imports in check, China will eventually need to develop its own oil sands, heavy oil and shale oil, using the expertise gained from Canada. January-June net profit dropped to 31.87 billion yuan (US$5.01 billion) from 39.34 billion yuan a year earlier a nd came in below an average forecast of 34.2 billion yuan by seven analysts polled by Reuters. CNOOC said it will pay an interim dividend of HK$0.15 per share - down 40 percent - to set aside capital for the Nexen buy. The company produced 160.9 million barrels of oil equivalent (boe) in the first half, down 4.6 percent year on year, as it felt the impact of a spill at its Penglai 19-3 field in eastern China’s Bohai Bay last year. It is still waiting for approval to resume production at the oilfield, co-owned and operated by ConocoPhillips. Total production lost in 2011 was 5.9 million BOE. CNOOC, valued at US$90 billion on the Hong Kong stock exchange, said it was confident it would hit its production target of 330-340 million boe set for this year, versus 331.8 million boe in 2011. January-June all-in costs hit US$34.6 per barrel, up 13.1 percent from the average level in the whole of 2011, partially offsetting an 8.1 percent increase in realised crude oil prices and a 20 percent rise in realised natural gas prices, CNOOC said. It attributed the increase to rising industry costs and changes in the company’s asset structure.