CNOOC's Net Production, Profit Results Surge in 2008

CNOOC has announced that its annual results for the 12 months ended December 31, 2008 hit another record high.

During the period, our net production reached 195.4 million (mm) barrels of oil equivalent (BOE), representing a strong growth of 14.0% from 2007. The solid production growth mainly relies on the contribution of new fields and strong performance of the producing fields.
In 2008, our net profit soared 42.0% to 44.4 billion RMB, hitting another record high, maintaining the growth momentum for eight years since our listing. Stable growth of net production and higher realized oil and gas prices are two main factors for the 38.1% growth of oil & gas sales, which amounts to 100.83 billion RMB. The average realized oil and gas prices increased 34.9% and 16.3% year on year (YOY), respectively to reach US $89.39 per barrel and US $3.83 per thousand cubic feet.

In 2008, we spent US $938 million on exploration, up 40.8% YoY, while our development Capex and production Capex reached US $3,492 million and US $687 million respectively.

The continued active investment proved to be a strong support to the steady growth of all of our business segments during the year.
In terms of exploration, we have made 13 independent discoveries, 2 PSC discoveries and 11 independent appraisals. It is worth mentioning that the appraisal result of Jin Zhou 25-1 is encouraging, which further confirmed our confidence to build it into the largest light crude oil field in offshore China. Like other oil companies, due to oil price decrease, our reserves under SEC definition have been revised down, resulting in a 60% reserve replacement ratio (RRR). However, thanks mainly to the contribution from discoveries, our organic RRR in 2008 reached 111%.

Despite the many challenges, such as typhoons and service constraints we have faced during the year, our major development projects have not been affected significantly. While most of the 20 projects under construction went smoothly, we successfully brought on stream PL19-3 phase II platform B, Xijiang 23-1 and Wenchang oil fields.

In 2008, the Company continued to exercise stringent cost control policy. Our all-in cost of US $19.78 per barrel is still competitive compared with industry peers.

Mr. Yang Hua, The President and CFO of CNOOC Ltd. said, "Although the Company faced financial crisis and oil price plunge in 2008, we still achieved remarkable results. I am proud of our outstanding operating and management capabilities which have once again been proved by the strong production growth, competitive cost structure and record net profit."

In 2008, our earnings per share (EPS) reached 0.99 RMB Yuan, representing an increase of 37.5%. The board has proposed a year-end dividend of HK$0.20 per share. Together with an interim dividend of HK$0.20 per share, our dividend to shareholders in 2008 amounted to HK$0.40 per share.

"I would like to attribute the outstanding business performance and healthy financial status of 2008 to the excellent implementation of our established strategies and prudent financial policy. The Company's decision to reward our shareholders by cash reflects not only our commitment to shareholder return, but the management's confidence in our operations and the Company's prospect as well," Mr. Fu Chengyu, Chairman and CEO of the Company commented.