CNOOC joins ExxonMobil in Chevron dispute over oil-rich Guyana; reports profit decrease as production grows

Bloomberg News March 21, 2024

(Bloomberg) – CNOOC Ltd.’s annual profits fell last year as weaker oil prices outweighed record production.

Guyana's Stabroek block (Source: Hess Corporation)

The offshore driller reported 124 billion yuan ($17 billion) in net income for 2023, compared to 142 billion yuan a year earlier, it said in a stock filing on Thursday. Revenue fell to 417 billion yuan, from 422 billion yuan.

The country’s No. 3 oil and gas producer is more affected by oil price changes than its sister firms because it has much less exposure to downstream businesses such as refining. Global benchmark crude futures averaged 17% less in 2023 than in 2022, eating into the drilling profits.

Crude and gas production rose to 678 MMboe in 2023, the sixth straight annual increase. CNOOC in January said it’s aiming for 700-720 MMbbl of production in 2024 and 780-800 MMbbl in 2025. Capital expenditure is expected at between 125-135 billion yuan this year, compared to 128 billion in 2023.

The company plans to stick with its recent strategy of maintaining stable oil production while focusing on boosting gas production, it said in the filing. It also announced a final dividend of HK$0.66 a share.

Commenting on a dispute with Chevron Corp. over a prolific oil field off the shores of Guyana, Board Secretary Xu Yugao confirmed that the company had filed for arbitration on March 15.

CNOOC will do whatever it takes to protect the interests of the firm and its shareholders by legal means, he said at a briefing in Hong Kong. Guyana’s Stabroek block is expected to yield as much as 1.2 MMbpd by 2027, Chief Financial Officer Wang Xin told the event.

A contraction in upstream spending, combined with a global refocusing on energy security, should support Brent crude prices at around $80 a barrel in 2024, Board Member Lin Boqiang said.

Lead image: A China National Offshore Oil Corp. filling station in Shanghai. (Photographer: Raul Ariano/Bloomberg)

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