Cnooc grows output and profits in successful bid to offset crude prices

(Bloomberg) — Cnooc Ltd. posted a rise in third-quarter profit after the company offset lower crude oil prices with increased output.

China’s largest offshore oil and gas driller said net income rose 9% to 36.9 billion yuan ($5.2 billion), from 33.9 billion yuan last year, according to a statement on Monday. The increase came despite a 14% slump in revenue to 99.3 billion yuan.

Brent crude prices, meanwhile, averaged around $79 a barrel over the quarter, about 8% lower than the same period in 2023 — a drop caused in part by weak demand in China. That forced the company to keep capital expenditure in check, which fell 2.2% to 32.2 billion yuan.

Cnooc is geared mostly to extraction, and unlike its bigger rivals PetroChina Co. and Sinopec, has little exposure to China’s faltering refining sector. But international prices are heavily influenced by economic conditions in the world’s biggest oil importer, which in turn has a major bearing on the company’s profitability.

Beijing’s recent steps to stimulate the economy are being closely watched for their impact on raw materials markets. Chief Financial Officer Wang Xin told a briefing that she expects the government’s measures will have a positive impact on China’s oil demand, without elaborating.

The state-owned firm has a prominent role in raising output to meet Beijing’s targets for energy security, a task that has taken on ever greater importance as the geopolitical landscape becomes more uncertain. Production in the third quarter rose to 179.6 million barrels of oil equivalent, from 167.9 million barrels last year.

In the first half, Cnooc and its parent contributed over 80% of China’s oil supply growth as the nation taps underdeveloped offshore fields to cut its import bill. The company also continues to push for oil further afield, winning four concessions in Brazil earlier this month.    

But its overseas expansion hasn’t come without controversy, and the Chinese firm is embroiled in a fight between western oil majors over a prolific discovery off the coast of Guyana.