CNOOC Reports Production Growth For Q1

CNOOC reported offshore China oil and gas production increase of 7.2% in the first quarter of 2004 from the same quarter last year to reach the level of 314,382 barrels of oil equivalent (boe) per day. Crude oil and liquids production was 273,054 barrels per day and natural gas production was 237 million cubic feet per day offshore China. The increase was largely due to an 11.8% increase in crude oil and liquids production in Eastern South China Sea and an 98.1% increase in natural gas production from Western South China Sea.

Overseas assets contributed a total working interest production of 9.1 mmboe and EBITDE of RMB627.8 mm (US$75.8 mm), stronger than what was budgeted.

Reported net entitlement production for the company was 362,672 barrels of oil equivalent (boe) per day. Crude oil and liquids production and natural gas production was 306,980 boe per day and 323 mmcf per day, respectively.

Total unaudited revenues were RMB7.78 billion (US$940.2 million) for the first quarter of 2004, a 3.8% increase from the first quarter of 2003. This revenue growth was a result of higher production volume partially offset by slight decrease in realized oil and gas prices. The average realized oil and gas prices were US$29.79 per barrel and US$2.8 per thousand cubic feet respectively in the first quarter. "This quarter's production growth offshore China was encouraging. The key value driver for overseas operations, cash flow, performed better than expected. We had a good start," commented Mr. Fu Chengyu, Chairman and Chief Executive Officer, "We are however not relaxing."

"The first quarter offshore China costs performed well. We are managing costs very closely. Production offshore China is back-loaded this year, some costs components are as well," said Mark Qiu, Chief Financial Officer.

WZ 12-1N came on stream earlier this year with expected peak production of 14,400 boe per day. CNOOC Limited confirmed a number of discoveries in Bohai Bay. "It was another solid quarter, all 13 major development projects are progressing on track. We are going to meet key operating targets for the year," commented Mr. Zhou Shouwei, President of the Company.

In February, the Company acquired additional equity interest in the Tangguh LNG Project in Indonesia. As a result, CNOOC's stake in the project increased from 12.5% to 16.96%.


    First Quarter and Year-to-Date Production Summary
                                   2003                     2004
    Crude Oil & Liquids (b/d)        Q1          YTD          Q1         YTD
    Bohai Bay                    125,679      125,679    129,530     129,530
    Western South China Sea       67,072       67,072     61,279      61,279
    Eastern South China Sea       71,365       71,365     79,801      79,801
    East China Sea                 2,718        2,718      2,444       2,444
    Overseas                      41,944       41,944     33,926      33,926
       Subtotal (b/d)            308,777      308,777    306,980     306,980

    Natural Gas (mmcf/d)
    Bohai Bay                         42           42         45          45
    Western South China Sea           87           87        173         173
    Eastern South China Sea            -            -          -           -
    East China Sea                    15           15         19          19
    Overseas                          97           97         86          86
       Subtotal (mmcf/d)             242          242        323         323

    Total Production (boe/d)     351,378      351,378    362,672     362,672


     First Quarter and Year-to-Date Revenue and Expenditure (Unaudited)

                     RMB millions                  US$ millions(1)
                     2003           2004           2003         2004
                     Q1      YTD    Q1      YTD    Q1    YTD    Q1     YTD
    Sales Revenue

    Crude oil and 6,966.0 6,966.0 7,094.8 7,094.8 841.6  841.6  857.2  857.2
     liquids

    Natural gas      487.4  487.4   619.9   619.9  58.9   58.9   74.9   74.9
    Marketing         16.4   16.4    34.5    34.5   2.0    2.0    4.2    4.2
    Revenue, net
    Others            29.4   29.4    32.5    32.5   3.6    3.6    3.9    3.9
       Total      7,499.2 7,499.2 7,781.8 7,781.8 906.0  906.0  940.2  940.2

    Capital
    Expenditures
    Exploration     285.4   285.4   363.6   363.6  34.5   34.5   43.9   43.9
    Development   1,116.5 1,116.5 1,804.8 1,804.8  134.9  134.9  218.0 218.0

    Others            0.3     0.3     3.3     3.3   0.0    0.0    0.4    0.4
       Total      1,402.1 1,402.1 2,171.7 2,171.7 169.4  169.4  262.4  262.4

    (1)  Converted to US dollars at; RMB 8.2771 = US$1.00
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