CNOOC's Profits Shine in 2011

CNOOC Limited announced its annual results for the 12 months ended December 31, 2011.

In 2011, the Company's average realized oil price amounted to $109.75 per barrel and its average realized natural gas price reached $5.15 per thousand cubic feet, representing an increase of 40.8 percent and 14.7 percent year-over-year (yoy), respectively. Benefiting from the rising realized oil and gas prices, the Company's oil and gas sales revenue reached RMB189.28 billion, up by 29.5 percent yoy while the net profit again hit a record high of RMB70.26 billion, up by 29.1 percent yoy.

In this year, the Company's net production reached 331.8 million barrels of oil equivalent (BOE), representing a slight increase of 0.7 percent (yoy), maintaining a steady growth in production. During the year, the Company experienced and overcame various challenges including suspension of production due to the oil spill accident on Penglai 19-3 oilfield which is operated under a production sharing contract.

Within the year, the Company achieved 13 discoveries and successfully appraised 18 oil and gas structures through independent exploration while our partner successfully appraised one oil and gas structure in offshore China. In respect of overseas exploration, we made 3 new discoveries and successfully appraised 2 oil and gas structures. The Company's reserve replacement ratio amounted to 158 percent. Furthermore, the Company has also strengthened its exploration and research activities in the new regions and new targets and made significant progress in the fields of the lithological traps in Bohai and high-temperature and high-pressure natural gas reservoir in Yinggehai. Meanwhile, deepwater exploration has also been carried out in an orderly manner.

There are 2 new projects that successfully commenced production in 2011 in offshore China where another 16 projects are currently under construction to support the future growth of offshore China.

In 2011, the Company's total capital expenditure reached $6.42 billion, up by 26.7 percent yoy, among which $1.46 billion was spent on exploration, $3.66 billion on development, and $1.18 billion on production, representing an increase of 31.1 percent and 50.8 percent, and a decrease of 18.0 percent, respectively.

During the period, attributed to the factors including the increase in the tax payment due to the rising realized oil and gas prices as well as the large increase in raw materials price and service fee, the Company's all-in cost rose 25.0 percent yoy to $30.58 per BOE.

Within the year, CNOOC Limited actively implemented its value-driven M&A strategy. Through the acquisition of Tullow's one-third interest in the exploration areas 1, 2 and 3A in Uganda, the Company has successfully extended to the core yet to be developed basin in East Africa. In addition, the Company has further expanded its business in the shale oil and gas sector in the United States, and increased its investment in oil sands in Canada through the acquisition of OPTI Canada Inc. to further bolster the development of unconventional resources.

Mr. Li Fanrong, CEO of the Company commented, "In the year of 2011, we were confronted with unprecedented difficulties. After the oil spill accident occurred on Penglai 19-3 oilfield, we have carried out another thorough safety inspection on offshore production operation, in addition to enhancing HSE management and emergency response capabilities. In the meantime, with focus on reserve and production growth, we have made a number of breakthroughs in exploration, development and overseas business."

In 2011, our basic earnings per share (EPS) reached RMB1.57. The Board of Directors has proposed a year-end dividend of HK$0.28 per share (tax inclusive).

Mr. Wang Yilin, Chairman of the Company commented, "To CNOOC Limited 2011 is not a peaceful year. Under the guidance of the Company's established strategies, we have achieved another record high sales revenue and net profit. We will strive forward in order to create more value for our shareholders and to make a greater contribution to the community."