CNOOC tightens belt as net rises 15pc

Mainland oil and gas giant CNOOC (0883) said it will reduce capital spending and output target this year amid the sharp drop in global oil prices.

The state-backed company saw its net profit grow 15.9 percent from a year ago to 61.05 million yuan (HK$66.65 million) last year, driven by production growth and cost control, higher than the market estimation.

Revenue from oil and gas sales increased 5.7 percent to 197.2 billion yuan. Earnings per share were 1.37 yuan and a final dividend of 45 HK cents was declared. The full-year dividend totaled 78 HK cents. Capital expenditure expanded by 27.2 percent to 79.6 billion yuan in 2019. Chief executive Xu Keqiang said they previously set a Capex target at between 85 billion yuan and 95 billion yuan and an output target of 525 million barrels of oil equivalent, but have not decided the scale of reduction.

CNOOC produced a record of 506.5 million BOE last year and the all-in cost dropped for a six consecutive year to US$29.78 (HK$232.28) per BOE. The company's realized oil prices dropped 5.8 percent to US$63.34 per barrel while gas prices slid 2.2 percent to US$6.27 per thousand cubic feet.

It said its reserve life remained above 10 years in 2019, with a reserve replacement ratio of 144 percent.

Chairman Wang Dongjin said CNOOC saw limited impacts on its operations from the epidemic in the first quarter and its February oil and gas production were higher than a year earlier.

The firm also said it is studying a plan to acquire the natural gas terminal assets of its parent company.