China National Offshore Oil Corporation (CNOOC) plans to pump more funds into exploration this year as the Chinese economy looks set for another year of rapid growth.
A large hike in natural gas volumes were partly behind a surge in net profit to a record high last year but the company warned that rising costs could hurt the bottom line in the medium term.
“[This year] is expected to be a year of stable growth for the company with increased investment in exploration and more than 10 new projects under construction,” CNOOC wrote in today’s results statement, which showed an 84.5% surge in net profit from 29.49 billion yuan ($3.73 billion) to 54.41 billion yuan.
“In this regard, the company’s capital expenditure is expected to continue to rise. We expect that the rapid growth of the company’s production will continue over the next few years.”
CNOOC chief executive Yang Hua identified the South China Sea as a “critical driving force” for the company’s development in the medium to long term.
Last year was already a busy one for the state-run company in terms of exploration with 13 new discoveries made. Nine new oil and gas fields began production and the company made its shale gas debut in the US.
The increased activity nudged exploration expenses up over 72% to 5.58 billion yuan with Yang singling out increasing costs as “one of the steep challenges” facing the company.
Total operating expenses climbed last year from 64.87 billion yuan to 111.65 billion yuan, which eroded much of the gain in oil and gas revenues from 83.91 billion yuan to 149.12 billion yuan.
A 44.4% rise in net production to 328.8 million barrels of oil equivalent helped the top line with sales volumes for natural gas alone surging almost 57% to 65.4 million boe.
The average realised natural gas price was up 6.5% at $4.27 per thousand cubic feet of gas. This was due to CNOOC raising domestic natural gas prices “for certain through negotiations,” it wrote in today’s results announcement.
