CNOOC's 1H Net Profit Falls 55%, Production Up 15.2%

Bohai Bay, China
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CNOOC announced that the Company realized another accomplishment in production. The Company's total net oil and gas production reached 105.8 million barrels-of-oil-equivalent (BOE), representing an increase of 15.2% YOY, in which crude oil production reached 87.3 million barrels, representing an increase of 20.1% and natural gas production reached 106.3 billion cubic feet, slightly down 3.5% YOY.

In the first half of the year, affected by relatively low oil price, our realized oil price was recorded at US $49.35 per barrel. Benefiting from the price change of the new contracts, the average realized gas price has increased 6.6% to US $3.90 per thousand cubic feet. The Company's revenue recorded 40.65 billion RMB, oil and gas sales recorded 32.52 billion RMB and net profit reached 12.40 billion RMB.

In the first half of the year, the Company achieved excellent production performance, which was mainly attributable to the following factors: the major projects put into production in 2008 including Wenchang oilfields, Xijiang 23-1 and platform B of Penglai 19-3 Phase II have shown good performance during the first half of the year, which drove the production growth steadily. In offshore China, our new oil and gas fields including Panyu 30-1, Bozhong 28-2S and Qinhuangdao 33-1 have been put into production successfully. Overseas, Akpo oilfield, the Phase I of Nigeria OML130, a huge deep-water project, came on stream successfully and became an important source to boost our overseas production. Also, Tangguh LNG project in Indonesia began to operate in early July.

In the first half of the year, the Company also achieved encouraging exploration results, with 10 new discoveries and 8 successful appraisals, and breakthroughs both in frontier and new area, which enlarged our growth potential on exploration front. The Company announced a new medium sized discovery of Jinzhou 20-2 North in Liaodong Bay; other discoveries in adjacent area around Shijiutuo uplift, including Qinhuangdao 29-2, Qinhuangdao 35-4, Bozhong 2-1 and Qinhuangdao 36-3, will drive rolling exploration activities in the area and become a new contributor to our reserves additions.

In addition, we have successfully appraised 8 oil and gas structures. It is worth mentioning that both appraisal wells in Liwan 3-1, the first deepwater gas discovery in offshore China, turned out to be successful, which again proved the reserve scale as we expected.

In the first half of the year, part of the raw material prices dropped as a result of the financial crisis. But due to the long cycle of construction and development of the oil industry, services and raw material prices lags still bring us heavy pressure from the cost control aspect. Over the years, through effective management, technology innovation and regional development, the Company's all-in cost for the first half of the year was US$19.50 per barrel, decreased by 1.4% compared to last year. We have successfully controlled costs and maintained the leading position among global peers. Thanks to the streamlined management and improved conservation measures, we managed to lower the operating cost by 3.8%.

In the first half of the year, we have signed a sale and purchase agreement through a 50:50 joint venture. Under the agreement, the joint venture acquired a 20% working interest in Block 32, offshore Angola. Block 32, with acreage of 5,090 square kilometers, is an oil rich deepwater exploration block with 12 oil discoveries.

Mr. Fu Chengyu, Chairman and Chief Executive Officer commented, "In the first half 2009, with continued uncertainties in the market, we have kept enforcing our effective management system and cost control, and have ensured significant increase of production and new projects to come online. It's worth pointing out that the exploration activities for the first half of the year have been fruitful, laying a good foundation for the Company's future reserve enhancement."

In the first half of the year, CNOOC Ltd.'s earnings per share reached RMB 0.28. Based on the stable financial status of the Company, the board has decided to pay an interim dividend of HK$ 0.2 per share.


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