Cnooc Ltd., China’s biggest offshore oil and gas explorer, posted annual profit that exceeded analyst estimates as cost cuts countered a decline in energy prices.
Net income dropped 66 percent to 20.2 billion yuan ($3.1 billion) from 60.2 billion yuan a year earlier, the Beijing-based explorer said in a statement to the Hong Kong stock exchange on Thursday. That beat the 17.7 billion yuan mean of 18 analyst estimates compiled by Bloomberg. Oil and natural gas output rose nearly 15 percent and capital expenditures fell 38 percent to 66.5 billion yuan.
“With oil prices once again plummeting towards the end of the year, worldwide oil and gas industry is experiencing a ‘cold winter’,” Chairman Yang Hua said in the statement. “We maintained an intensive exploration program while lowering our exploration capital expenditures.”
Brent, the benchmark for half of the world’s crude trading, dropped to an average of $54 per barrel in 2015 from $99 the year before, slashing earnings from Royal Dutch Shell Plc to Chevron Corp. and forcing Exxon Mobil Corp. to cut its drilling budget to a 10-year low. State-owned Cnooc in January announced an output reduction for the first time since 1999 to cope with low crude prices.
Shares fell 2.3 percent to HK$8.96 before the earnings were announced. Cnooc has gained 11 percent this year, compared with a 7 percent decrease in Hong Kong’s benchmark Hang Seng Index.
Oil has climbed back from a 12-year low this year on speculation stronger demand and falling U.S. output will ease a global surplus. The Organization of Petroleum Exporting Countries and other producers including Russia plan to meet in Doha next month to discuss limiting output to reduce a global oversupply.
Rival PetroChina Co.’s profit tumbled to the lowest since 1999 as the company reported a 25 billion yuan writedown Wednesday. Net income at China’s biggest oil and gas producer dropped 67 percent to 35.5 billion yuan from 107 billion yuan. Sales fell 24 percent to 1.73 trillion yuan.
Cnooc said in January it will produce 470 million to 485 million barrels of oil equivalent this year. The lower-end of the company’s production target sets output this year at about 1.29 million barrels a day, a drop of more than 68,000 barrels a day. The company said it will chop spending to a maximum 60 billion yuan this year.