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CNOOC reports fall in 2013 profit

AIBING GUO and BENJAMIN HAAS

BEIJING (Bloomberg) -- CNOOC Ltd. reported a fall in 2013 profit as higher costs and lower crude prices crimped earnings. Net income fell 11% to 56.5 billion yuan ($9.1 billion) last year from 63.7 billion yuan in 2012, the company said in a statement to the Hong Kong stock exchange. That compared with the 64 billion-yuan mean of 18 analyst estimates compiled by Bloomberg. Sales increased 16% to 285.9 billion yuan.

CNOOC reiterated in January its average annual production growth target of 6% to 10% from 2011 to 2015 even though it is falling short of the goal. Nomura Holdings Inc. and Sanford C. Bernstein analysts downgraded the stock that month after the company forecast a lower-than-expected 5.6% output increase for 2014.

“The rapid increase in costs in recent years has drawn attention from all managerial levels,” Chairman Wang Yilin said in the statement. This year CNOOC “will further strive to control costs and enhance efficiency.”

As many as 10 new projects will start in 2014, and capital spending will climb as much as 33% to 120 billion yuan from a year earlier, CNOOC said in January. The company plans to increase its 2014 production, including Canadian-unit Nexen, to 422-435 MMboe.

CNOOC completed the purchase of Nexen last year, China’s largest foreign acquisition.

“The proportion of the company’s overseas assets has significantly increased and now become a significant part of the total assets,” Wang said in the statement. “Overseas projects also had a greater impact on the company’s business performance.”

CNOOC’s 2013 production, including Nexen, increased to about 411.7MMbbl, according to the statement. The company’s average realized crude price was $104.60, while Brent, benchmark for more than half of the crude trade worldwide, was at $108.70 per barrel last year, compared with $111.70 in 2012.

The stock has dropped 15% this year, compared with a 5.3% decline in the benchmark Hang Seng Index. The shares rose 1.2% to HK$12.32 before the earnings announcement.

03/28/2014

 

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