CNOOC : 2020 Strategy Preview

2020 Strategy Preview

January 13, 2020

Disclaimer

This presentation includes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, including statements regarding expected future events, business prospectus or financial results. The words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify such forward-looking statements. These statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate under the circumstances. However, whether actual results and developments will meet the expectations and predictions of the Company depends on a number of risks and uncertainties which could cause the actual results, performance and financial condition to differ materially from the Company's expectations, including but not limited to those associated with fluctuations in crude oil and natural gas prices, macro-political and economic factors, changes in the tax and fiscal regimes of the host countries in which we operate, the highly competitive nature of the oil and natural gas industry, the exploration and development activities, mergers, acquisitions and divestments activities, environmental responsibility and compliance requirements, foreign operations and cyber system attacks. For a description of these and other risks and uncertainties, please see the documents the Company files from time to time with the United States Securities and Exchange Commission, including the Annual Report on Form 20-F filed in April of the latest fiscal year.

Consequently, all of the forward-looking statements made in this presentation are qualified by these cautionary statements. The Company cannot assure that the results or developments anticipated will be realised or, even if substantially realised, that they will have the expected effect on the Company, its business or operations.

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Outline

Operating Strategy

2020 Operating Guidance

Outlook

3

2020 Operating Strategy

Steadily increase oil and gas reserves and production levels

Maintain cost competitiveness

Maintain prudent investment decision-making

Focus on shareholder returns

4

2020 Overview

Capex budget of RMB85-95 billion

Production target of 520-530 mmboe

Ten new projects to come on stream

Reserve Replacement Ratio (RRR) of 120%

Maintain high standards on HSE performance

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Capex Plan

Pursue profitable reserves and production and continue to increase Capex

(RMB bn)

100

85-95

80.2

80

62.6

60

40

20

0

2018		2019E				2020B
		Exploration		Development		Production		Others

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2020 Capex Breakdown

20% 20%

62%

38%

58%

Exploration		Development		Production		Others		China		Overseas

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Continue to Enhance Efforts on Exploration

Exploration strategy

• Strengthen value-driven exploration and ensure the sustainable growth
• Improve exploration effectiveness and reduce exploration costs
• China: Target mid-to-large size discoveries and strengthen exploration in new areas and frontiers
• Overseas: Focus on the acquisition of high-quality blocks in exploration hot spots

8

Domestic Exploration

Strategic discovery

Identify the hydrocarbon source and reservoir conditions at the basin or sag level

• Explore of potential hydrocarbon-rich sags
• Explore of new fields and new types in proved hydrocarbon- rich sags

Strategic breakthrough

Identify reserves growth areas at favorable exploration regions

• Breakthrough in areas based on strategic discoveries
• Breakthrough in frontiers based on strategic discoveries

Strategic expansion

• Rolling exploration and target assessment in mature areas

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Exploration Workload

坐标轴标题

Continue to strengthen value-driven exploration to support sustainable growth

Exploration wells

239227

2019E 2020B

3D Seismic ('000 km2)

坐标轴标题

24

27

2019E 2020B

Note: Excludes unconventional exploration wells (82 estimated in 2019 and 100 planned for 2020).

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Development and Production

Development Capex

• Actively promote important projects
• • China: Lingshui 17-2, Liuhua 16-2/20-2, etc.
  • Overseas: Liza oil field phase 2, etc.
• Strengthen the progress control of new projects and strive to bring on stream ahead of schedule

Production Capex

• Optimize infill drilling program to slow down decline and improve oilfield recovery

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Production Target

（mmboe）

600

400

200

0

520-530

503

36%	36%

64%

64%

2019E		2020B
		China		Overseas

2020 production target of 520-530 mmboe, with oil and gas representing 81% and 19%, respectively.

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New Projects in 2020

Project	Location	Expected	Peak Production	Working
Startup	(boe/d)	Interests
Liza oil field phase 1	Guyana	Commenced	120,000	25%
production
Penglai 19-3 oil field block 4	Bohai	First half	12,700	51%
adjustment/Penglai 19-9 oil field phase II
Qinhuangdao 33-1S oil field phase I	Bohai	First half	6,000	100%
Bozhong 19-6 gas field pilot area	Bohai	Second half	12,000	100%
development project
Luda 16-3/21-2 joint development project	Bohai	Second half	26,500	100%
Nanbao 35-2 oil field S1 area	Bohai	Second half	1,800	100%
Jinzhou 25-1 oil field 6/11 area	Bohai	Second half	16,500	100%
Liuhua 29-1 gas field development project	Eastern South	Second half	10,300	25%
China Sea
Liuhua 16-2 oil field/20-2 oil field joint
Eastern South	Second half	72,800	100%
development project	China Sea
Buzzard oil field phase II	UK	Second half	37,000	43.21%

10 new projects are scheduled to come on stream in 2020.

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Liza Oil Field Phase 1

Located in the Stabroek block offshore Guyana

Ultra-deepwater development project with a water depth of 1,500-1,900 meters

Facility details:

 One FPSO

 17 wells

Peak production: 120,000 boe/day

CNOOC Limited's interest: 25% (ExxonMobil acts as the operator)

Commenced production ahead of schedule on

December 2019

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Liuhua 16-2 Oil Field/20-2 Oil Field Joint Development Project

Located 230-240 kilometers from Hong

Kong in the South China Sea

Water depth of ~400 meters

Facility details:

 One FPSO

 18 wells

Peak production: 72,800 boe/day

CNOOC Limited's interest: 100%

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Luda 16-3/21-2 Joint Development Project

Located in Bohai with a water depth of ~25 meters

Facility details:

 One central platform

 Three wellhead platforms

 One production adjective platform

Peak production: 26,500 boe/day

CNOOC Limited's interest: 100%

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Bozhong 19-6 Gas Field Pilot Area Development Project

Located in Bohai with a water depth of ~22 meters

Facility details:

 One wellhead platform

 One boosting platform

Peak production: 12,000 boe/day

CNOOC Limited's interest: 100%

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A Long Pipe of Projects

Offshore China

• Penglai 25-6 oil field 3 area
• Panyu 10-4 oil field
• Liuhua 29-2 gas field
• Weizhou 12-8E oil field
• Weizhou 5-7 oil field
• Luda 6-2 oil field
• Luda 5-2N oil field Phase I
• Lingshui 17-2 gas fields
• Weizhou 11-2 oil field phase II
• Lufeng oil fields

	Overseas
 Caofeidian 2-1 oil field	 LLSW project
 Kenli 16-1 oil field	 Mero 1 oil field
 Luda 29-1 oil field	 Golden Eagle - Pacific gas field
 Bozhong 19-6 gas field phase I	 Madura gas fields
 Caofeidian 6-4 oil field	 Ravel oil field
 Bozhong 29-6 oil field	 Liza oil field phase 2
 Bozhong 8-4 oil field	 Flying Dutchman oil field
 Qinhuangdao 29-2 oil field	 Mero 2 oil field
 Wushi 17-2 oil fields	 Arctic LNG 2 project
.......	.......

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Lingshui 17-2 Gas Fields Development Project

First large-sizedeep-water independent gas field with a water depth of 1,450 meters Entered the development stage with development well drilling in December 2019

Created the world's first deepwater development model of semi-submersible platform with 10,000-ton oil storage

Stable gas supply of more than 3 billion cubic meters per year for the Guangdong-HongKong-Hainan area

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Future Projects of Stabroek Block

Liza oil field phase 2	Payara project
 FID was sanctioned in 2019	 Expected to come on stream as early
 First oil planned in 2022	as 2023
 Facilities include one FPSO and 30	 Facilities include one FPSO and 45
wells	wells
 Peak production: 220,000 boe/day	 Peak production: 220,000 boe/day

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Technology Advancement Free Up Heavy Oil Reserves

Research and experiment for technologies of

heavy oil thermal recovery

Luda 27-2-A22 well saw injection and production integration for the first time

• Simplified thermal recovery process
• Reduced thermal recovery costs
• Improved productivity
• Lowered development threshold

Huge potential for increasing reserves and

production

• At present, only 100 million tons are under development and annual output is less than 100,000 tons
• Proved in-place volume of heavy oil is approximately 600 million tons.

Thermal recovery Production plan in Bohai

(10k ton)

160

120

80

40

0

2019

2020

2021

2022

2023

2024

2025

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Focus on Shareholder Returns

Focus on shareholder returns and share the Company's

development results with shareholders.

Dividend distribution will continue to consider the following factors:

• Current and future earnings
• Financial position
• Capital expenditure plan
• Dividend level of international peers

Cash flow v.s. dividends

(RMB bn)

140.0
123.9
120.0
94.7
100.0

80.0 72.9

60.0		51.3			47.7	50.7
40.0							16.4	23.5
20.0	14.2
0.0
	2016			2017	2018
				Operating cash flow		Cash Capex		Dividend Paid

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Three-year Rolling Target

Focus on organic growth and accelerate reserves and production increase

600	~590
	(mmboe)

				~555
	503	520-530
				41%
			36%	41%
400	36%

200			64%	59%	59%
64%

0

2019 Estimate	2020 Budget		2021 Target	2022 Target
			China		Overseas

Note:

Production percentage of crude liquids and nature gas is expected to be 80% v.s. 20% in 2021.

Production percentage of crude liquids and nature gas is expected to be 78% v.s. 22% in 2022.

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