CNOOC Boosts Production by 40.8% in 1H of 2010

CNOOC achieved a record net production of 149.0 million barrels of oil equivalent (BOE) in the first half of 2010, representing an increase of 40.8% year-on-year (YOY). The net profit amounted to RMB25.99 billion, up 109.6% YOY.

The production growth of the first half of 2010 was mainly driven by new projects brought on stream in 2009 and first half of this year and the outstanding performance of major producing fields. Up to now, 6 new projects have been announced to come on stream, 4 of which in the first half year.

During the period, the average realized oil price rose 55.2% YOY to US $76.59 per barrel, which was in line with the trend of international oil price.

Thanks to the production growth and rising realized prices, the Company's oil & gas sales and net profit for the first half of the year surged 108.0% and 109.6% to RMB67.64 billion and RMB25.99 billion respectively.

For exploration, the Company and its partners made 9 new discoveries and 7 successful appraisals in the first half of the year. In offshore China, we have achieved several breakthroughs, such as the significant discovery of Penglai 9-1 and mid-sized discoveries including Kenli 6-4, Enping 24-2 and Liuhua 16-2.

During the period, the Company continued to take cost control measures and achieved significant outcomes. Our all-in cost for the first half of the year was US $23.85 per barrel, in which the operating cost was down 15.3% from 2009 to US$6.80 per barrel. Such reduction was mainly attributable to the strong production growth, which brought down the fixed cost components in the unit cost.

In the first half of 2010, we carried out our established M&A strategy. Through our joint venture with Bridas Energy Holdings, we have established a solid platform for the business development in South America. In addition, we successfully inked the technical service contract for Missan oil field in Iraq and increased the shares of ownership in the Panyu 4-2/5-1 oil field.

During the period, our Health, Safety and Environmental protection (HSE) performance continued to lead the industry. Responding to the enhancement of HSE awareness in the industry, we further strengthened our operation safety management and improved oil spill response capability. There has been no major accident in the past 10 years.

"In the first half of 2010, we have harvested extraordinary results. New projects were brought on stream as planned and record production growth was achieved, laying a solid base for realizing the full year production target. In addition, we have successfully completed several M&A projects which will further fuel the development of the Company," Mr. Yang Hua, President of CNOOC said.

Mr. Fu Chengyu, Chairman and Chief Executive Officer of the Company commented, "Thanks to the Company's outstanding capability in terms of operation and cost control, we continued to improve our profitability while maintaining an excellent record in HSE. In the future, we'll stick to our established strategies to bring more return to our shareholders."

In the first half of the year, CNOOC's earnings per share reached RMB 0.58. In view of the Company's sound financial position, the board has decided to pay an interim dividend of HK$ 0.21 per share.

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