Cnooc revenue tumbles as oil rout overpowers output boost

AIBING GUO

HONG KONG (Bloomberg) -- Cnooc Ltd., China’s biggest offshore oil and gas producer, posted a 32% decline in third-quarter sales as slumping oil prices overwhelmed a boost in production and a cut in spending.

Revenue from oil and natural gas output was 36.3 billion yuan ($5.7 billion) in the three months ended Sept. 30 while output rose 24%, the Beijing-based explorer said in a statement to the Hong Kong stock exchange Wednesday. Cnooc doesn’t disclose profits quarterly.

“Cnooc’s has delivered an output beyond most people’s expectations,” Neil Beveridge, an analyst at Sanford C. Bernstein & Co., said by phone from Hong Kong. “Cnooc has performed very well and better than expected” given the drop in oil prices and pressure to control costs, he said.

Brent, the benchmark for more than half of the world’s crude, averaged about $51/bbl in the third quarter, compared with more than $103 a year ago. Shares of Cnooc, which earns almost all its income from oil and gas production, have dropped 31% in the past year as the explorer’s efforts to raise output and cut costs were stymied by crude’s plunge.

Rising Output

Realized oil prices during the quarter fell 51% from a year ago to $48.84/bbl, Cnooc said in the statement. Net oil and gas production rose 24% to 127.5 MMboe, compared with 103 MMbbl a year ago.

The company made three new discoveries and drilled 14 successful appraisal wells in the quarter while cutting capital spending 44% to 14.8 billion yuan, it said in the statement.

Cnooc shares declined 2% to HK$8.57 before the statement was released. Cnooc’s first-half profit dropped 56% to 14.73 billion yuan, the company said in August.