CNOOC's innovative high net profit doubled year-on-year in oil and gas production in the first half of the year

China National Offshore Oil Corporation announced on the 19th that in the first half of 2010, CNOOC’s net oil and gas production increased significantly by 40.8% year-on-year, reaching a record 149 million barrels of oil equivalent. The company's net profit increased by 109.6% to 25.99 billion yuan***.

In the 2010 interim results announcement submitted to the Hong Kong Stock Exchange on the same day, CNOOC chairman Fu Chengyu attributed the company’s substantial growth to “rapidly increased production and higher international oil prices”.

According to reports, the growth of CNOOC's oil and gas production in the first half of the year mainly came from the contribution of new production projects in 2009 and the first half of 2010, as well as the good performance of oil and gas fields. Up to now, CNOOC has announced the successful launch of six new projects, of which four occurred in the first half of the year.

In line with the trend of international oil prices, CNOOC’s average oil price in the first half of the year increased by 55.2% year-on-year, reaching US$76.59 per barrel.

Thanks to the simultaneous increase in production and oil and gas prices, CNOOC’s oil and gas sales revenue surged 108% year-on-year to RMB 67.64 billion.

In terms of exploration, CNOOC and its partners have obtained nine new discoveries in the first half of the year and successfully evaluated seven oil and gas-bearing structures.

Fu Chengyu said that in the future, the sources of CNOOC’s production growth will mainly include China’s offshore areas, China’s deep-sea areas in South China Sea and overseas assets.

In the first half of the year, CNOOC continued to implement a number of cost control measures. The company's main cost of barrel oil is US$23.85, of which barrel oil operation fee is US$6.80, a decrease of 15.3% compared to the whole year of 2009. CNOOC stated that the decline in operating expenses for barrel oil was mainly due to the relatively constant increase in output and the relatively fixed cost.

In the first half of 2010, CNOOC Limited established a joint venture with the Brazilian Bridas Energy Holdings Limited (BEH) to establish a solid platform for future business development in South America. In addition, it also signed a technical service contract for the Missan oil field in Iraq and increased its interest in the Panyu 4-2/5-1 oilfield.

Fu Chengyu stressed that the future mergers and acquisitions will also be one of the important driving forces for CNOOC’s long-term development. The acquisition business of CNOOC has been making steady progress. Taking the existing development strategy as a guide, every merger and deal transaction that CNOOC reached must take into account the balance among resources, returns and risks, and ultimately achieve the goal of increasing value for shareholders.

The occurrence of the oil spill in the Gulf of Mexico has raised concerns about the high-risk nature of the offshore oil industry. CNOOC stated that in the first half of the year, the company's health, safety and environmental protection performance continued to maintain its leading position in the industry. Under the environment where the awareness of health, safety and environmental protection in the entire industry has increased, CNOOC has further strengthened its operational safety management and oil spill response capacity building.

In the first half of the year, CNOOC’s basic earnings per share reached 0.58 yuan***. The board of directors decided to pay an interim dividend of 2010 for HK$0.21 per share.