CNOOC posts sharper-than-expected fall in 2013 earnings
HONG KONG (Reuters) - China's top offshore oil producer, CNOOC Ltd (0883.HK), posted an 11.4 percent slide in its 2013 net profit on Friday, lagging analysts' forecasts, as it struggled to deliver production growth and control costs amid weakening crude prices.
CNOOC (CEO.N) posted a net profit of 56.5 billion yuan ($9.09 billion) for last year, versus 63.7 billion yuan in 2012. The result compared with a consensus forecast of 63.2 billion yuan from 31 analysts polled by Thomson Reuters.
The state-run firm completed its $15.1 billion acquisition of Canadian energy firm Nexen Inc in February last year. It was China's largest overseas takeover that CNOOC says will boost its annual output by 20 percent and proven reserves by 30 percent.
Once an investor darling for its high-growth profile, CNOOC has been struggling to boost its output over the past few years as domestic fields age.
Its production grew 20.2 percent to 411.7 million barrels of oil equivalent (boe) in 2013, thanks to contributions from Nexen. But excluding the contribution, CNOOC produced 350.9 million boe last year, missing for the third year in a row its compound annual growth target of 6 to 10 percent set for the 2011-2015 period.
CNOOC has vowed it will still meet the five-year growth target, increasing its capital spending budget by as much as a third from last year to almost $20 billion and aiming to get 20 projects under construction this year while launching up to 10 more.
"These serve as a strong foundation for our development over the next few years and beyond," CNOOC Chairman Wang Yilin said in a statement.
CNOOC has said it is aiming for an up to 4.3 percent output increase to 353 million-366 million boe this year, excluding contributions from Nexen, above the company's guideline of 338 million-348 million boe announced at early 2013.
That means CNOOC's production, excluding Nexen, will have to grow around 20 percent in 2015 to achieve the five-year growth target, according to Reuters calculations.
The impact of CNOOC's output increase was partly offset by a 5.3 percent drop in realized crude prices and a 40 percent surge in operating costs to 30 billion yuan as a result of the Nexen acquisition. Like many oil companies around the world, CNOOC has been facing rising costs as it widens its exposure to unconventional energy such as oil sands.
CNOOC's shares were one of the worst performers among major exploration and production companies in 2013 due to worries about its output growth outlook and the premium it paid to acquire Nexen.
Some analysts say CNOOC overpaid for Nexen as it had underestimated the risks of monetizing the landlocked oil sands and shale gas assets in Canada that account for the bulk of Nexen's proven and probable reserves.
Shares of CNOOC ended up 1.15 percent on Friday ahead of the results announcement. The stock lost about 15 percent in the last three months, versus a 5 percent drop in the benchmark Hang Seng Index .HSI.
($1 = 6.0502 Chinese yuan)
(Reporting by Charlie Zhu; additional reporting by Bangalore newsroom; Editing by Matt Driskill)