The largest offshore oil and natural gas exporter in China – Cnooc Ltd made an official statement, revealing a lower 2013 profit, which also missed the estimates of analysts. In addition, the companys earnings were influenced by higher operating costs and lower crude prices. However, despite the decreasing profit, the company announced that it plans to become more focused on deep-water and overseas projects and also to boost its capital spending during 2015.
Cnooc Ltd announced that its 2013 net income decreased by 11% from 63.7 billion yuan in 2012 and reached 56.5 billion yuan (9.1 billion dollars). The company also revealed that its sales increased by 16% last year and reached 285.9 billion yuan. Cnooc explained that although its net income fell, it is ready to face the challenges that lie ahead. The capital spending of the company is going to be increased by 14% to 30% in 2014.
Last week the company announced that it made its first independent deep-water discovery in South China Sea. It also said that 155 exploration wells are planned to be drilled in 2014.
The Chairman of Cnooc – Wang Yilin said in the companys statement, which was cited by the Wall Street Journal: “We now face new challenges in various areas including production growth and cost structure. In 2014, the company will further strive to control costs and enhance efficiency.”
In January this year the company confirmed its 6% to 10% target of annual production growth for the period between 2011 and 2015. The oil producer has not managed to reach a double-digit increase since 2011. On the other hand, Cnoocs announcement that it intends to increase its capital expenditure comes at a moment when some of it most serious competitors such as China Petroleum & Chemical Corp. and PetroChina Co. revealed they are considering to reduce their capital spending in 2014.
Analysts expect the company to increase its capital spending from 92.4 billion yuan in 2013 to between 105 and 120 billion yuan this year. Cnooc Ltd forecast a net production estimated to between 422 and 435 million barrels of oil equivalent in 2014.
Cnooc Ltd settled 1.15% higher at HKD 12.320 in Hong Kong before the earnings announcement, marking a one-year change of -17.32%. The company is valued at HKD 543.81 billion. Shares have dropped 15% this year.
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