Cnooc’s Profit Slides On Cheaper Oil Even as Output Grows

(Bloomberg) -- Cnooc Ltd.’s annual profits fell last year as weaker oil prices outweighed record production. 

The offshore driller reported 124 billion yuan ($17 billion) in net income for 2023, compared to 142 billion yuan a year earlier, it said in a stock filing on Thursday. Revenue fell to 417 billion yuan, from 422 billion yuan.

The country’s No. 3 oil and gas producer is more affected by oil price changes than its sister firms because it has much less exposure to downstream businesses such as refining. Global benchmark crude futures averaged 17% less in 2023 than in 2022, eating into the drilling profits. 

Crude and gas production rose to 678 million barrels of oil equivalent in 2023, the sixth straight annual increase. Cnooc in January said it’s aiming for 700-720 million barrels of production in 2024 and 780-800 million in 2025. Capital expenditure is expected at between 125-135 billion yuan this year, compared to 128 billion in 2023.

The company plans to stick with its recent strategy of maintaining stable oil output while focusing on boosting gas production, it said in the filing. It also announced a final dividend of HK$0.66 a share.

Commenting on a dispute with Chevron Corp. over a prolific oil field off the shores of Guyana, Board Secretary Xu Yugao confirmed that the company had filed for arbitration on March 15. 

Cnooc will do whatever it takes to protect the interests of the firm and its shareholders by legal means, he said at a briefing in Hong Kong. Guyana’s Stabroek block is expected to yield as much as 1.2 million barrels a day by 2027, Chief Financial Officer Wang Xin told the event.

A contraction in upstream spending, combined with a global refocusing on energy security, should support Brent crude prices at around $80 a barrel in 2024, Board Member Lin Boqiang said.

(Updates with arbitration comments over Guyana field in sixth paragraph)

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