Chinese offshore giant, China National Offshore Oil Corp. or CNOOCCEO , reported net loss of RMB 7.74 billion ($1.2 billion) for the first half of 2016. The company had posted a net income of RMB 14.73 billion ($2.40 billion) in the year-ago period. The downside primarily stemmed from a substantial decline in realized oil prices .
In the first half of 2016, oil and gas sales revenues were RMB 55.08 billion ($8.42 billion), down 38.5% from RMB 89.59 billion ($14.59 billion) in the year-ago period.
CNOOC, which is China's dominant producer of offshore crude oil and natural gas, achieved net production of 241.5 million barrels of oil equivalent (MMBoe), up approximately 0.6% from the year-ago level. The improvement was mainly attributable to the production contribution from newly commenced projects in Bohai and the Western South China Sea. Production from offshore China inched up 2.4% to 160.1 MMBoe, whereas production from overseas dipped 2.9% to 81.5 MMBoe, both on a year-over-year basis. In the reported period, production percentage in China and overseas was 66% and 34%, respectively.
The company's average realized oil price plunged 34.5% year over year to $37.70 per barrel. Realized gas price decreased 16.2% from the year-ago level to $5.49 per thousand cubic feet. This was mainly due to the downward adjustment of natural gas prices by the Chinese government in the second half of 2015, which led to price cuts of some of the gas fields in offshore China.
CNOOC LTD ADR Price, Consensus and EPS Surprise
In the reported period, operating expenses of $7.42 Boe declined 22.7% year over year. The company's all-in cost was $34.86 per Boe, down 15.5% year over year. This was primarily due to effective cost control.
During the first half of 2016, CNOOC made six new discoveries and drilled 26 successful appraisal wells. Of these, six new discoveries and 20 successful appraisal wells were spud in offshore China and six successful appraisal wells were drilled overseas. Out of the four projects scheduled to be commissioned in the year, Kenli 10-4 oilfield and Panyu 11-5 oilfield have already started production. The other two new projects are also progressing smoothly.
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked players from the energy sector are Devon Energy Corporation DVN , NGL Energy Partners LP NGL and Enbridge Energy Partners L.P. EEP . All these stocks sport a Zacks Rank #1 (Strong Buy).
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