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CNOOC to cut capex and raise production levels

03rd February 2015

CNOOC Limited has announced its business strategy and development plan for the year 2015 in which it plans to cut capital expenditure by up to 35 per cent whilst boosting production levels

CNOOC Limited has announced its business strategy and development plan for the year 2015 in which it plans to cut capital expenditure by up to 35 per cent whilst boosting production levels

The company’s net production target for 2015 is in the range of 475 to 495 million barrels of oil equivalent (BOE), of which production from China and overseas accounts for approximately 67 per cent and 33 per cent respectively.

The net production targets set for 2016 and 2017 are around 509 and 513 million BOE respectively. The estimated net production for 2014 is approximately 432 million BOE.

“In response to challenges from falling oil prices, we will control our costs and strive for the effective implementation of our capital expenditure plan in order to improve the overall performance of the company,” said Zhong Hua, CFO of the CNOOC.

There will be seven new projects coming on stream, including the Jinzhou 9-3 comprehensive adjustment project which has already commenced production.

Both the Kenli 10-1 project and the Bozhong 28/34 comprehensive adjustment project located in Bohai are expected to reach peak production of around 36-30,000 BOE per day respectively.

Within the year, the company plans to drill around 162 exploration wells and acquire approximately 36,000 kilometres of 2-Dimensional (2D) seismic data as well as approximately 14,000 square kilometres of 3-Dimensional (3D) seismic data. The reserve replacement ratio (RRR) is targeted at over 100 per cent.

The total capital expenditure budget is in the range of around USD 11.18bn to USD 12.79bn (RMB 70bn to RMB 80bn) in 2015 with a decrease of 26-35 per cent over the estimated realised capital expenditure for 2014, among which the capital expenditures for exploration, development and production account for around 21 per cent, 67 per cent and 10 per cent respectively. The company expects to achieve all of its annual targets by cost control and efficiency enhancement despite the lower capital expenditure.

Li Fanrong, CEO of CNOOC, commented, “Facing the complicated and highly volatile macro environment in 2015, the company will continue to strengthen the management of internal operations and make efforts to meet annual operational targets. Meanwhile, the company will ensure an appropriate balance between short-term return and long-term development, and implement prudent capital investment plan in order to continuously carry out its ‘New Leap Forward’ strategy.”

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