CNOOC Reported Record Net Profit in 2003

China Offshore Oil Fields
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CNOOC Limited announced its annual results for the 12 months ended December 31, 2003. In the past year, the Company generated oil and gas revenues of Rmb 28.1 billion (USD 3.4 billion), an increase of Rmb 4.3 billion (USD 524 million), or 18.2%, from 2002. Net income reached a historical high of Rmb 11.98 billion (USD 1.45 billion) under the U.S. GAAP or 11.54 billion (USD 1.39 billion) under the HK GAAP, a year-over-year increase of Rmb 2.89 billion (USD 350 million) and 31.9% under the U.S. GAAP or Rmb 2.30 billion (USD 278 million) and 24.9% under the HK GAAP. Meanwhile, profit margin improved from 38.8% to 41.0% due to higher realized oil price and lower exploration expenses incurred in 2003. The Board has authorized a HKD 0.12 per share (US$ 0.308 per ADS) normal dividend and a HKD 0.18 per share (US$ 0.462 per ADS) special dividend.

"High commodity prices helped push CNOOC's profit to a record level in 2003. Even with slight increases in costs, we continue to see margin expansions in operating results. Exploration program delivered impressive results. They have laid foundation for further growth of the Company in the future, "said Fu Chengyu, Chairman and Chief Executive Officer.

In 2003, three development projects commenced production. The Company achieved annual production of 130.2 million boe while maintaining its competitive costs structure with all-in production costs of US$11.08 per boe. The Company's new exploration program resulted in nine discoveries and ten appraisal successes in 2003, achieving a reserve replacement ratio of 238% offshore China with 260 million boe incremental reserve addition. As of December 31, 2003, net oil and gas reserves totaled approximately 2.1 billion boe. "In 2003, we achieved high reserve replacement with lower exploration expenses than those in 2002, maintained competitive production costs and met development targets despite operating challenges and technical difficulties," commented Zhou Shouwei, President of the Company.

The Board of Directors has approved a year-end dividend of HKD 30 cents per share, including a normal dividend of HKD 12 cents and a special dividend of HKD 18 cents per share, which together with the interim dividend of HKD 32 cents per share, will give a total of HKD 62 cents per share dividend. "The financial performance of the Company in 2003 was excellent. The special dividend is an extra-bonus to our shareholders, reflecting this management's confidence in the Company's future and its optimism in commodity price movement," commented Mark Qiu, Chief Financial Officer and Senior Vice President of the Company.

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