CNOOC warns of $1.2bn first half loss

SHANGHAI: China’s main offshore oil and gas producer CNOOC will lose more than $1 billion in the first half of this year because of low oil prices, it told shareholders in a profit warning.

On the basis of a “preliminary assessment” it expects a net loss of 8.0 billion yuan ($1.2 billion) for the first six months, it said in a statement to the Hong Kong stock exchange, compared to a net profit of 14.7 billion yuan in the same period last year.

It would be the company’s first half-year loss since it started trading on the Hong Kong market in 2000, Bloomberg News reported.

CNOOC cited a “further decline” in crude oil prices for the loss as well as provisions for oil sands assets in Canada, according to the statement Thursday, but gave no details.

CNOOC acquired Canada’s Nexen Energy in 2013 for $15 billion.

“CNOOC paid too much for Nexen’s oil sands assets, so they have to write down some of it as the current price leaves no chance for the expensive operations to turn a profit,” Tian Miao, an analyst with policy researcher North Square Blue Oak, told Bloomberg.

CNOOC stock was down 2.09 percent in Hong Kong near midday on Friday following the announcement.

Plunging crude prices have hurt other Chinese energy firms. PetroChina in April reported a loss of 13.79 billion yuan for the first quarter, reversing from a net profit of 6.15 billion yuan in the same period last year.