The Company's oil and gas revenues were RMB16.0 billion (US$1.9 billion), a 13.0% year-over-year increase from RMB14.2 billion (US$1.7 billion). The significant increase in oil and gas revenues was partially a result of a 30.5% increase in natural gas production and a 12.7% increase in realized oil prices (USD $32.18/bbl). In the Period, the Company's total offshore China production increased by 9% year-over-year to 58.2 million boe (barrels of oil equivalent), exceeding internal budget. The working interest production from Indonesia business reached 17.9 million boe. As expected, higher than budgeted oil prices resulted in smaller net entitlement volume from Indonesia operations to the company.
"The Company's winning strategy continues to yield robust results and to deliver steady returns to shareholders. We are in particular glad to see that, with DF 1-1 on stream, our natural gas production has increased more than 30%." said Fu Chengyu, Chairman and Chief Executive Officer.
With RMB971 million (US$117 million) exploration expenditures for the Period, the Company completed drilling of 33 wells. The Company made three oil discoveries and eight appraisal successes offshore China. Appraisal results show that crude oil from BZ34-1 and JZ25-1(S) was API degree of 30 and 28 respectively, which is of significantly high quality in Bohai Bay, a region traditionally known for production of relatively heavier oil. Development expenditures increased by 43% year-over-year to RMB4.9 billion (US$587 million) for the Period, compared to RMB3.4 billion (US$410 million) for the first half of 2003. The Company's development spending continues to grow as 10 major projects are expected to come onstream in the second half of 2004 and 2005. "We are on track with all development projects. Appraisal successes of BZ34-1 and JZ25-1(S) , where higher quality crude reservoirs are identified, are very encouraging. Separately, we are taking advantage of the current favorable oil price environment to maximize offshore China production through additional enhanced recovery expenditure. Even though the incremental production carries higher costs, its financial case with high oil prices looks appealing," commented Zhou Shouwei, President of the Company. The Company's Board of Directors has approved an interim dividend of HK$0.03 per share (US$0.385 per ADS) and a special dividend of HK$0.05 per share (US$0.641 per ADS), boosting dividend by 25% yoy. "The board is committed to sharing profits with shareholders," commented Dr. Mark Qiu, CFO and SVP of the Company.
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