CNOOC : 2018 Annual report

NYSE: CEO, SEHK: 00883, TSX: CNU

2018

ANNUAL REPORT

Company Profi le

CNOOC Limited (the "Company", together with its subsidiaries, the "Group" or "we"), incorporated in the Hong Kong Special Administration Region ("Hong Kong") in August 1999, was listed on the New York Stock Exchange (code: CEO) and The Stock Exchange of Hong Kong Limited (code: 00883) on 27 and 28 February 2001, respectively. The Company was admitted as a constituent stock of the Hang Seng Index in July 2001. The Company's American Depositary Receipts ("ADRs") was listed on the Toronto Stock Exchange (code: CNU) on 18 September 2013.

The Group is the largest producer of offshore crude oil and natural gas in China and one of the largest independent oil and gas exploration and production companies in the world. The Group mainly engages in exploration, development, production and sale of crude oil and natural gas.

The Group's core operation areas are Bohai, Western South China Sea, Eastern South China Sea and East China Sea in offshore China. Overseas, the Group has oil and gas assets in Asia, Africa, North America, South America, Oceania and Europe.

As at 31 December 2018, the Group owned net proved reserves of approximately 4.96 billion BOE, and its average daily net production was 1,301,438 BOE (unless otherwise stated, all amounts of reserve and production in this report include our interests in equity method investees). The Group had total assets of approximately RMB678.8 billion.

Content

2Financial Summary

3Operating Summary

6Chairman's Statement

8Business Overview

8Overview

10Exploration

11Engineering Construction, Development and Production

13Regional Overview

17Sales and Marketing

18Research and Development

18Risk Management and Internal Control System

19Risk Factors

24Health, Safety and Environmental Protection

25Corporate Citizen

25Human Resources

28Corporate Governance Report

47Directors and Senior Management

54Report of the Directors

63Management's Discussion and Analysis

67Independent Auditors' Report

71Consolidated Statement of Profi t or Loss and Other Comprehensive Income

72Consolidated Statement of Financial Position

73Consolidated Statement of Changes in Equity

74Consolidated Statement of Cash Flows

75Notes to Consolidated Financial Statements

128Supplementary Information on Oil and Gas Producing Activities (Unaudited)

141Notice of Annual General Meeting

147Glossary

148Company Information

Financial Summary

(All amounts expressed in millions of RMB)

Consolidated Statement of Profit or Loss and Other Comprehensive Income (Audited)

Year ended 31 December

	2014	2015	2016	2017	2018
Total revenues	274,634	171,437	146,490	186,390	226,963
Total expenses	(193,719)	(153,981)	(148,902)	(149,340)	(146,724)
(Finance costs)/interest income, net	(3,701)	(5,245)	(5,345)	(4,391)	(4,241)
Share of profi ts/(losses) of
associates and a joint venture	1,006	1,903	(76)	855	(5,187)
Investment income	2,684	2,398	2,774	2,409	3,685
Profi t/(loss) before tax	82,513	17,130	(5,275)	36,357	75,177
Income tax (expense)/credit	(22,314)	3,116	5,912	(11,680)	(22,489)
Profi t for the year	60,199	20,246	637	24,677	52,688

Consolidated Statement of Financial Position (Audited)

As at 31 December

	2014	2015	2016	2017	2018
Current assets	140,708	140,211	122,045	138,838	190,082
Property, plant and equipment	463,222	454,141	432,465	395,868	407,337
Investments in associates and
a joint venture	25,250	28,413	29,995	29,146	24,701
Intangible assets	16,491	16,423	16,644	15,070	15,717
Total assets	662,859	664,362	637,681	617,219	678,779
Current liabilities	(103,498)	(84,380)	(67,090)	(61,412)	(70,242)
Non-current liabilities	(179,751)	(193,941)	(188,220)	(175,832)	(191,172)
Total liabilities	(283,249)	(278,321)	(255,310)	(237,244)	(261,414)
Equity	379,610	386,041	382,371	379,975	417,365

2 CNOOC LIMITED Annual Report 2018

Operating Summary

Year ended 31 December

	2014	2015	2016	2017	2018
Production
Net production of crude
and liquids (barrels/day)					705,366
China	626,791	761,019	739,378	706,955
Bohai	403,927	477,904	455,002	433,591	433,325
Western South China Sea	80,493	89,958	98,351	96,543	109,381
Eastern South China Sea	141,166	190,525	182,848	173,192	159,312
East China Sea	1,206	2,632	3,177	3,629	3,347
Overseas	305,345	338,440	321,131	335,887	317,224
Asia (excluding China)	37,237	45,640	48,577	57,395	59,240
Oceania	4,297	3,350	4,278	3,691	4,251
Africa	76,838	83,677	80,297	73,625	59,844
North America (excluding Canada)	49,814	54,692	48,078	46,785	53,120
Canada	48,183	46,712	40,304	57,711	64,026
Europe	87,918	103,258	98,672	95,750	73,678
South America	1,058	1,110	926	929	3,066
Subtotal	932,137	1,099,459	1,060,509	1,042,842	1,022,589
Net production of
natural gas (mmcf/day)					825.0
China	643.3	731.9	648.7	721.4*
Bohai	137.9	136.9	134.3	149.3	165.0
Western South China Sea	341.7	314.3	273.9	273.5	265.2
Eastern South China Sea	136.8	234.9	185.9	238.2	345.4
East China Sea	26.8	45.8	54.6	56.3	49.4
Overseas	546.6	482.1	472.5	432.8	453.9
Asia (excluding China)	154.4	140.0	150.2	141.4	164.2
Oceania	111.2	93.5	111.4	96.5	111.1
North America (excluding Canada)	112.7	134.6	127.3	130.3	126.4
Canada	117.5	68.4	48.9	38.7	34.5
Europe	50.7	45.5	34.8	25.8	17.6
Subtotal	1,189.9	1,214.0	1,121.2	1,154.2	1,278.9
Total net production (BOE/day)					845,171*
China	735,533	884,346	848,322	827,941*
Bohai	426,913	500,719	477,380	458,473	460,822
Western South China Sea	138,972	143,676	144,835	142,870	154,248
Eastern South China Sea	163,970	229,679	213,835	212,895	216,877
East China Sea	5,678	10,271	12,273	13,016	11,580
Overseas	401,804	423,319	405,320	412,832	398,187
Asia (excluding China)	65,280	70,987	75,780	82,958	88,662
Oceania	26,092	21,673	26,107	22,598	26,034
Africa	76,838	83,677	80,297	73,625	59,844
North America (excluding Canada)	68,396	76,915	69,290	68,507	74,184
Canada	67,770	58,115	48,448	64,167	69,783
Europe	96,370	110,842	104,473	100,046	76,615
South America	1,058	1,110	926	929	3,066
Total	1,137,337	1,307,664	1,253,643	1,240,773	1,243,357
Net production in equity
method investees					28,159
Crude and liquids (barrels/day)	23,510	24,588	22,592	22,144
Natural gas (mmcf/day)	140.2	149.6	155.0	146.4	173.7
Subtotal (BOE/day)	47,640	50,357	49,280	47,355	58,080
Total (BOE/day)	1,184,977	1,358,022	1,302,922	1,288,128	1,301,438

CNOOC LIMITED Annual Report 2018 3