Exploration & Development Laid Solid Foundation Lowering Costs

Source: www.gulfoilandgas.com 3/27/2015, Location: Asia

CNOOC Limited announced its 2014 annual results for the year ended December 31, 2014.

In 2014, the Company achieved various breakthroughs in exploration and the reserve replacement ratio for the year was 112%. Benefitting from the Company’s innovations in “thinking outside the box”, technology and management, the Company made 20 new commercial discoveries and appraised 18 oil and gas structures successfully. In the Western South China Sea, the milestone deepwater gas discovery Lingshui 17-2 marks a breakthrough in our independent deepwater exploration. A number of mid-to-large sized crude oil discoveries were made in Bohai, and at the end of 2014, the Company’s net proved reserves were approximately 4.48 billion barrels of oil equivalent (“BOE”), laying a solid foundation for the Company’s sustainable development.

Last year, the Company achieved outstanding performance in development and production as oil and gas projects came on stream at a strong pace. A total of 13 new projects commenced production in succession. Including the Golden Eagle project in the UK North Sea, many of the new projects came on stream ahead of schedule and under budget. At the beginning of the year, the first large-scale deepwater gas field Liwan 3-1 successfully delivered first production, representing a new breakthrough for the Company’s deepwater oil and gas field development. In 2014, net oil and gas production reached 432.5 million BOE, an increase of 5.1% year-over-year (“yoy”), meeting the production target set at the beginning of the year.

In overseas development, the Company’s integration with Nexen made remarkable progress and other overseas operations also progressed smoothly. All of Nexen’s assets performed well as evidenced by Buzzard production exceeding target for the second year in a row with high production efficiency and increasing production efficiency for the oil sands project at Long Lake in Canada.

During the period, our financial statements reflected that lowering costs and enhancing efficiency program achieved expected outcomes. The Company proactively promoted “the Year of Quality and Efficiency” program throughout the year to review and strengthen cost-control measures. Under this program, the Company continued to streamline the management flow in exploration, development and production, and to lower costs for projects under construction. The Company also strengthened the integration of exploration and development, and improved efficiencies for oil and gas fields.

In 2014, the Company’s average realized oil price was US$96.04 per barrel, a decrease of 8.2% yoy, while the average realized natural gas price was US$6.44 per thousand cubic feet, an increase of 11.4% yoy. In addition, the Company’s oil and gas sales revenue were RMB218.21 billion, representing a decline of 3.6% yoy. The Company’s all-in cost was US$42.30 per BOE, a decrease of 6.0% yoy, and net profit amounted to RMB60.20 billion, an increase of 6.6% yoy.

In 2014, the Company’s capital expenditures were RMB107.0 billion, representing an increase of 17.7% yoy.

Mr. Li Fanrong, CEO of the Company, said, “In 2014, the entire Company focused on cost control, which effectively improved production and operational efficiency, helped the Company meet its various targets set at the beginning of the year, and laid a solid foundation for the Company’s sustainable development in response to the impact of low oil prices. In 2015, the Company will adjust its operating strategy to adapt to a more complex and changing environment in order to meet all the targets for the year.”

In 2014, the Company’s basic earnings per share was RMB1.35. The Board of Directors have proposed a year-end dividend of HK$0.32 per share (tax inclusive).

Mr. Wang Yilin, Chairman of CNOOC Limited, said, “2014 was a particularly challenging year for the Company. Faced with different challenges, we have maintained our confidence, worked hand in hand to map out our long-term strategy and tackled our immediate problems in order to achieve solid growth in different areas of our business. This year, we will continue to promote the ‘New Leap Forward’ strategy, proactively carry out innovative measures, and enhance quality and efficiency in order to build a solid foundation for our long-term development.”


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