, Hong Kong

CNOOC 1H16 results surpass expectations

Management can apparently improve efficiency.

China National Offshore Oil Corporation (CNOOC)  reported what Jefferies believes to be extraordinary 1H16 results.

According to a research note from Jefferies, excluding impairments, the company would have turned a small profit in the half; Jefferies was expecting a Rmb5.6B loss. Production was flat YoY despite a ~30% decline in oil prices and ~33% decline in capex spending.

Unit production costs declined 18% YoY. CNOOC also declared a HK$0.12/share dividend despite headline losses.

Here's more from Jefferies:

CNOOC's production exceeded our expectations by 2% while unit operating costs came in 22% below our forecasts. We either underestimated management's ability to improve efficiency or we under-rated the quality of CNOOC's assets. On many levels, both misjudgments say the same thing. Management has demonstrated that it can squeeze its assets for more production than expected at lower costs than expected.

We estimate the company generated Rmb12.1B (US$1.85B) of free cash flow in 1H16. In 1H16, CNOOC lowered its debt, maintained its net debt to equity ratio and improved its working capital ratios. Accomplishing this when oil prices dipped below US$30/bbl is an impressive achievement.

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Unemployment rate rises to 5.4% from February to April
The total number of unemployed people stands at 206,100.   The unemployment rate rose by 0.4 percentage points to 5.4%  from February to April, when compared to the January to March period.    Based on the data from the Census & Statistics Department (C&SD), the total number of unemployed people from February to April was 206,100, an increase of 17,600 from the preceding three-month period.   Meanwhile, the number of unemployed rose by around 25,000 to 142,000, translating to a rate of 3.8%.   With the increase in the number of jobless and underemployed individuals, total employment dropped to 3,559,200, whilst the labour force fell to 3,765,300.   The deterioration of Hong Kong’s labour market however should see an improvement in the coming months, according to Secretary for Labour & Welfare, Dr Law Chi-kwong.   The receding local epidemic situation and progressive relaxation of social distancing measures, the new round of Consumption Voucher Scheme, and Other relief measures including the 2022 Employment Support Scheme should help drive improvement in the employment sentiment, said the C&SD.