CNOOC's net output fell 9.1% in the oil spill

Compared with the sharp increase in oil and gas production in the third quarter of last year by nearly 50% year-on-year, the performance of China National Offshore Oil Corporation (“CNOOC”) in the third quarter of this year appears to be more ugly.

CNOOC Limited announced its third-quarter results yesterday. CNOOC achieved a net production of 80.9 million barrels of oil equivalent, which was a decrease of 9.1% year-on-year. Market participants said that CNOOC’s achievement of annual production targets is difficult.

CNOOC's announcement pointed out that due to the natural decline of some oil producing fields and the temporary shutdown of the production of Penglai 19-3 oilfield in Bohai Bay, in the third quarter of 2011, CNOOC achieved a net production of 80.9 million barrels of oil equivalent, which was a decrease of 9.1% year-on-year.

CNOOC’s chief financial officer Zhong Hua stated on the afternoon conference call on the 26th that the cleanup of the oil spill in Penglai 19-3 oilfield is close to the end and it is subject to the judgment of the State Oceanic Administration. decision. Zhong Hua also stated that since the State Oceanic Administration ordered the Penglai 19-3 oilfield to stop recharging, stop drilling, and stop oil and gas production operations on September 2, the new net production loss was 40,000 barrels per day.

At the same time as production fell, CNOOC’s spending increased. CNOOC stated that due to the large number of development projects and the full amount of exploration work, CNOOC’s capital expenditure in the third quarter reached approximately RMB 10.55 billion, up 28.8% year-on-year.

In addition, thanks to rising oil and gas prices, CNOOC’s income has increased substantially. In the third quarter, CNOOC achieved an unaudited revenue from oil and gas sales of approximately RMB 46.26 billion, a substantial increase of 23.7% year-on-year. During the quarter, CNOOC’s average realized oil price was US$112.04/barrel, a significant year-on-year increase of 50.3%. The average realized gas price was US$5.18/1,000 cubic feet, which was a year-on-year increase of 20.0%.

For the crude oil and natural gas resources tax reform, Zhong Hua said that due to the fact that the payment of the resource tax has a certain role in replacing CNOOC’s previously paid mining site use fees, and that individual oil fields have tax deductions and preferential treatment, plus only two payments are required this year. Months, therefore, have little effect on CNOOC’s profit in the fourth quarter and this year.

CNOOC has previously lowered its annual production target for this year by more than 6%. The completion of the adjusted annual production target has become the top priority of CNOOC.

Renhao Ning, a researcher in the energy industry of China Investment Advisors, told reporters that the oil spill accident in Bohai Bay has not yet been completed and production of Penglai 19-3 oilfield cannot be resumed temporarily, which will definitely affect CNOOC’s oil production. Overall, due to a series of accidents and the impact of some oil production declines in production, CNOOC has certain difficulties in achieving its annual targets.