China’s Cnooc to Increase Output, Even as Oil Plunge Spurs Spending Cut

By Aibing Guo

(Bloomberg) — Cnooc Ltd., China’s biggest offshore oil and gas producer, plans to increase production by as much as 15 percent this year even as the plunge in the price of crude oil compels it to cut capital expenditure.

The Beijing-based explorer will produce 475 million to 495 million barrels of oil equivalent in 2015, it said in a statement to the Hong Kong stock exchange today. The company produced an estimated 432 million barrels of oil and gas in 2014.

Cnooc will cut capital spending to as little as 70 billion yuan ($11 billion) this year. Brent, a benchmark for more than half of the world’s crude trading, has dropped 48 percent in the past year, forcing the world’s oil companies to cut back on investment and costs.

Cnooc shares rose 3.5 percent to HK$10.64 at the close in Hong Kong today. The stock has declined 7.8 percent in the past year, compared with a 15 percent gain in the benchmark Hang Seng Index.

As many as seven new projects will start in 2015, the company said in the statement.

Cnooc’s production dropped 1 percent in 2011 and increased 3.4 percent in 2012, according to data compiled by Bloomberg. Its 2013 production, excluding Nexen, increased as much as 3.8 percent to 351 million barrels, according to Bloomberg calculations. Its 2014 target was 442 million to 435 million barrels.

Copyright 2015 Bloomberg.