CNOOC posts 6.5% rise in 2014 profit, vows cost cuts amid low oil prices

[HONG KONG] China's top offshore oil producer CNOOC Ltd said on Friday its 2014 net profit rose 6.5 per cent, beating forecasts, as cost cuts and higher output helped it offset the slide in global oil prices.

CNOOC, China's third largest oil company, reported a net profit of 60.2 billion yuan (S$13 billion) for last year, up from 56.5 billion yuan a year earlier. That beat a consensus forecast of 52.3 billion yuan from 23 analysts polled by Thomson Reuters.

For the current year, CNOOC said cost cuts twinned with production growth will remain its priorities as it braces for long-term weakness in oil prices.

Last month, CNOOC said it planned to cut 2015 capital expenditure by 26-35 per cent to 70 billion-80 billion yuan, while still trying to raise output by up to 15 per cent.

"The company...has sensed the pinch of the 'cold winter',"CNOOC's chairman Wang Yilin said in the firm's earnings filing.

"In 2015, we may face even more severe environment for our exploration and development."

The clampdown on CNOOC's costs echoes moves by Chinese oil majors PetroChina and Sinopec Corp.

International oil prices have skidded about 50 per cent since June, and a government-led probe into graft in the state sector has added to pressure to rein in spending.

CNOOC attributed its profit rise in part to a 6 per cent decrease in its production cost to US$42.3 per barrel of oil equivalent (BOE) last year.

Meanwhile its oil and gas output rose 5.1 per cent year on year to 432 million BOE in 2014, as more than 10 new projects commenced production. These included Liwan 3-1, the first major deepwater gas field in offshore China.

CNOOC said it achieved a reserve replacement ratio of 112 per cent last year, and had net proven reserves of 4.48 billion BOE at year-end.

Earlier this week, PetroChina, Asia's largest oil and gas producer, vowed to further slash spending and divest more assets this year after posting a worse-than-expected 67 per cent earnings slide for the fourth quarter.

Meanwhile Sinopec Corp, which on Sunday posted its first quarterly loss since becoming a public company in 2000, said it plans to cut capital expenditure by 12 per cent this year.

REUTERS