Cnooc 1H profit drops 56pc on plung­ing crude prices

The Pak Banker - - COMPANIES/BOSS -

BEI­JING: Cnooc Ltd., China's big­gest off­shore oil and gas ex­plorer, posted a 56 per­cent de­cline in profit for the first half of this year. Net in­come dropped to 14.73 bil­lion yuan ($2.3 bil­lion), or 0.33 yuan a share, from 33.59 bil­lion yuan, or 0.75 yuan, a year ear­lier, the Bei­jing-based ex­plorer said in a state­ment to the Hong Kong stock ex­change Wed­nes­day. That ex­ceeded the 13.9-bil­lion yuan av­er­age of three an­a­lyst es­ti­mates com­piled by Bloomberg.

Cnooc, which de­pends purely on oil ex­plo­ration and pro­duc­tion for rev­enue, is most ex­posed to oil's plunge this year and must rely on cost cuts and cap­i­tal spend­ing curbs to boost profit, said La­ban Yu, a Hong Kong-based an­a­lyst at Jef­feries Group LLC. The strat­egy paid off last year, when it posted a sur­prise 6.6 per­cent profit in­crease. Brent crude has av­er­aged about $59 a bar­rel in the first half of the year, down 45 per­cent from the same pe­riod in 2014. The bench­mark for half of the world's oil this month slipped be­low $45 for the first time since 2009. "There isn't much Cnooc can do to im­prove earn­ings prospects in the sec­ond half if crude prices fail to re­bound," Yu said be­fore the earn­ings was re­leased. Net pro­duc­tion in the pe­riod rose 14 per­cent to 240 mil­lion bar­rels of oil equiv­a­lent. "The de­vel­op­ment of the Com­pany in the fu­ture will be driven by both pro­duc­tion and eco­nomic ef­fi­ciency in­stead of only by pro­duc­tion vol­ume," Chair­man Yang Hua said in the state­ment. "We will em­pha­size eco­nomic pro­duc­tion vol­ume rather than fo­cus solely on pro­duc­tion growth."

Cnooc's oil and gas sales fell to 77 bil­lion yuan in the first six months from 117 bil­lion yuan a year ago. Cnooc plans to in­crease pro­duc­tion by as much as 15 per­cent this year, while cut­ting cap­i­tal ex­pen­di­ture by as much as 35 per­cent to 70 bil­lion yuan, the ex­plorer said in Fe­bru­ary. The com­pany in April re­it­er­ated its out­put tar­get for this year of 475 mil­lion to 495 mil­lion bar­rels of oil equiv­a­lent this year, de­spite the plunge in crude prices.

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