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pww.comCNOOC Limited, 2023 Earnings Call, Mar 21, 2024 - SEHK:883

SEHK:883

Dongjin Wang [Non-Executive Chairman of the Board] 💬

Dongjin Wang, the Non-Executive Chairman of the Board of CNOOC Limited, provided opening remarks during the 2023 Annual Results Announcement. Below is a detailed summary of his statements:

  1. Welcome and Introduction:

    • Welcomed investors, analysts, and friends.
    • Extended a warm welcome on behalf of the Board of Directors and Management Team of CNOOC Limited.

  2. Commitment and Hard Work:

    • Acknowledged that 2023 was a year of commitment and hard work.
    • Highlighted that despite a complex external environment, CNOOC adhered to high-quality development.
    • Noted that the company consolidated reserve and production growth and continued quality improvement, cost control, and efficiency enhancement with record-high reserves and production.
    • Mentioned that the company's cost-competitive advantage was further consolidated and profitability maintained at a high level.

  3. Technological Innovation and Digital Transformation:

    • Emphasized the company's efforts to promote technological innovation and strengthen its ability to tackle key core technologies.
    • Noted good progress in digital transformation.

  4. Green Development and Integration:

    • Mentioned the steady implementation of the green development project.
    • Highlighted the promotion of the integration of the main oil and gas business with the new energy business.

  5. Corporate Governance and Shareholder Rewards:

    • Focused on high standards of corporate governance.
    • Actively rewarded shareholders, which was well recognized by the market, resulting in record-high share prices in both markets.

  6. Financial Performance:

    • Noted that in 2023, CNOOC delivered brilliant results.
    • Shared that the Board of Directors recommended a dividend payout of HKD 0.66 per share (tax-inclusive) for 2023.

  7. Future Outlook:

    • Expressed full confidence in CNOOC's high-quality development.
    • Announced plans to accelerate the pace of building a world-class energy company and create higher value returns for shareholders.

  8. Closing Remarks:

    • Invited everyone to continue working together to create a better tomorrow.

    • Concluded with a thank you.

Xin Wang [Chief Financial Officer] 💬

Xin Wang, the Chief Financial Officer of CNOOC Limited, provided a detailed overview of the company's operational and financial performance for the year 2023. Here is a summary of her remarks:

  1. Introduction

    • Welcomed everyone to the 2023 Annual Results Analyst Briefing.
    • Announced that she would share the operating and financial results for the year.

  2. Overview of 2023 Operating and Financial Results

    • Net production reached 678 million barrels of oil equivalent (BOE).
    • Net proved reserves reached 6,784 million BOE, both record highs.
    • Net profit was RMB 123.8 billion, and operating cash flow reached RMB 209.7 billion.
    • Recommended a year-end dividend of HKD 0.66 per share, tax inclusive.

  3. Profitability Despite Oil Price Fluctuations

    • Despite a 17% drop in Brent oil prices, the company maintained strong profitability with net profit above RMB 120 billion.
    • Compared to 2018, when oil prices were similar, net profit increased by 135% while international oil prices only increased by 14.7%.

  4. Business Highlights and Key Measures Adopted in 2023

    • Made nine new discoveries and successfully appraised 22 oil and gas structures.
    • Detailed major discoveries including Bozhong 26-6, Kaiping South, Qinhuangdao 27-3, Shenfu deep-play coalbed methane, and Lancetfish.
    • Discussed overseas breakthroughs in Guyana's Stabroek block and positive progress in Indonesia's Tangguh project.

  5. Reserves and Production Growth

    • Net proved reserves reached a record high of 6,784 million BOE with a reserve replacement ratio of 180%.
    • Net production increased by 8.7% year-on-year to 678 million BOE, a record high for the fifth consecutive year.

  6. New Projects Commissioned

    • Highlighted the Bozhong 19-6 condensate gas field Phase 1 and Lufeng 12-3 oilfield development projects.
    • Discussed production growth in Guyana and Brazil.

  7. Unconventional Natural Gas Production in Onshore China

    • Built three major unconventional natural gas production bases, with production tripling in five years.
    • Onshore China became a main driver of natural gas production growth.

  8. Enhancement of Quality and Efficiency

    • Improved core technical capabilities and refined management of operations.
    • Applied new drilling and completion models to reduce development cycles.
    • Expanded the application of engineering standardization and optimized offshore platform design, procurement, and construction.

  9. Green Development Initiatives

    • Strengthened energy conservation and carbon emission reduction.
    • Promoted integrated development of offshore wind power and oil and gas production.

  10. Financial Performance

    • Realized oil and gas prices in line with market trends, with both oil and gas sales revenue and net profit remaining at high levels.
    • Net profit attributable to shareholders reached RMB 123.8 billion, driven by reserves and production growth and quality and efficiency enhancement.
    • Operating cash flow rose 2% year-on-year despite lower international oil prices.
    • Healthy financial condition with shareholders' equity increasing by RMB 69.5 billion and total assets exceeding RMB 1 trillion.
    • Gearing ratio dropped to 15.2%.
    • Capital expenditure (CapEx) of RMB 129.6 billion supported reserves and production growth, technology research, and infrastructure construction.
    • Effective cost control with all-in cost of USD 28.83 per BOE, a decrease of 5.1% year-on-year.
    • OpEx of USD 7.54 per BOE, outperforming peers, with a 2.6% year-on-year decrease.

  11. Dividend Payout

    • Recommended a year-end dividend of HKD 0.66 per share, tax inclusive.
    • Annual dividends reached HKD 1.25 per share with a total payout ratio of 43.6%.

  12. Future Business Strategy and Targets

    • Press ahead with the three major programs of reserves and production growth, technological innovation, and green development.
    • Implement initiatives for quality and efficiency enhancement.
    • Continuously improve value creation capability to create greater value for shareholders.

  13. Response to Questions

    • Addressed a question about CapEx efficiency and the ability to maintain similar levels in 2026 to 2030.
    • Explained that the company's CapEx will be more than enough to meet the increasing production needs and that the level will stay high due to new discoveries and development opportunities.
    • Mentioned the potential for continued discoveries in China's onshore market, which is in the mid-stage of maturity.

These points cover the key aspects of Xin Wang's presentation and responses during the earnings call.

Yugao Xu [General Counsel, Compliance Officer & Joint Company Secretary] 💬

Yugao Xu addressed Neil Beveridge's question regarding the arbitration claim against Chevron concerning their purchase of Hess' rights in Ghana. Xu confirmed that ExxonMobil initiated an arbitration application against Hess on March 6, followed by Hess on March 11, and CNOOC on March 15. Xu emphasized that CNOOC will use all available legal tools to protect the company's best interests.

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