&#34;We cannot control oil prices, but we can control costs. By controlling costs, the company's competitive advantage can persist.&#34; On March 26, at the 2025 annual performance meeting, Huang Yongzhang, Vice Chairman, Executive Director, CEO, and President of China National Offshore Oil Corporation (CNOOC) (600938.SH/00883.HK), stated that geopolitical risks have intensified oil price fluctuations and increased uncertainty in the international energy landscape. The cyclical ups and downs are the norm in the industry, and the fundamental way to cope with cycles lies in the internal capabilities of the enterprise.
CNOOC is China's largest offshore crude oil and natural gas producer. Compared to the integrated operations of China Petroleum (601857.SH/00857.HK) and China Petrochemical (600028.SH/00386.HK), the performance of CNOOC, a pure upstream oil and gas exploration and development company, is more closely related to oil price changes. Since the end of February, when the U.S. and Israel launched military strikes against Iran, the situation in the Middle East has remained tense, and international oil prices have &#34;remained high.&#34; Currently, the global benchmark Brent crude oil futures main contract is still close to $110 per barrel, nearly 50% higher than pre-war levels. As a beneficiary of high oil prices, according to calculations by The Paper, CNOOC's A-shares and H-shares have seen a cumulative increase of about 15% since early March.
CNOOC's Senior Vice President and Chief Financial Officer Mu Xiuping stated at the performance meeting that recent oil price fluctuations have been significant, and the company's oil prices are linked to international benchmark oil types. &#34;The company's sales oil prices are usually settled one month in advance. The recent rise in international oil prices is overall beneficial to the company, and as it is accounted for, it will gradually reflect in the company's performance.&#34;
Will oil companies quickly increase production under the temptation of high oil prices?
&#34;Whether the recent price increase will affect our capital expenditures this year or in the future depends on the overall situation's development. From the current perspective, the situation still has uncertainties. How long can oil prices remain at relatively high levels? No one can answer that.&#34; CNOOC's Senior Vice President Yan Hongtao stated that they will continue to track and assess the overall situation's development to determine the next specific steps. Currently, they are still advancing steadily according to the usual pace, established task goals, and workload.
The annual report disclosed that under the circumstance of a 14.6% year-on-year decline in Brent oil prices, CNOOC achieved an operating income of 398.22 billion yuan in 2025, a year-on-year decrease of 5.3%; the net profit attributable to shareholders of the parent company was 122.08 billion yuan, a year-on-year decrease of 11.5%. The decline in profit was less than the decline in oil prices during the same period, and the increase in reserves and production, as well as improvements in quality and efficiency, partially offset the adverse effects of falling oil prices; the main cost per barrel of oil was $27.9 per barrel of oil equivalent, a year-on-year decrease of 2.2%. Last year, CNOOC's oil and gas reserves and production both reached historical highs, with a year-on-year increase of 7%, entirely from endogenous growth.
The Paper noted that compared to the similar oil prices in 2021, CNOOC's profitability significantly improved last year: despite a 3.8% decrease in Brent oil prices, the company's net production increased by 35.7% compared to 2021, and the main cost per barrel of oil decreased by 5.4%, resulting in a 73.7% increase in net profit attributable to the parent company
Huang Yongzhang emphasized that CNOOC adheres to the strategy of resource supremacy and low cost. &#34;As an E&amp;P (Exploration and Production) company, reserves are the most important foundation for sustainable growth. The company's annual exploration investment remains at a relatively high level, and internationally we will actively acquire high-quality resources to solidify our reserve base.&#34; He stated that production is crucial, and after increasing production, many costs can be diluted. In addition to management, the company is also enhancing cost control through technological improvements, such as unmanned platforms and AI+, to maintain cost advantages in the industry.
&#34;Increasing reserves and production has always been the core business.&#34; Yan Hongtao revealed that CNOOC's 14th Five-Year Plan is still being drafted, and specific data has not yet been released, but there will be a significant increase in both oil and gas production.
He also mentioned that focusing on long-term reserve and production growth targets, CNOOC has strengthened its efforts in acquiring overseas exploration blocks in the past one to two years. &#34;We currently have a certain cash flow, and if it weren't for the recent escalation of the situation in the Middle East, international oil prices are actually at a low point, which is more favorable for finding ideal overseas asset acquisition opportunities.&#34;
The annual report shows that CNOOC's net operating cash inflow has exceeded 200 billion yuan for four consecutive years, with free cash flow reaching 97.4 billion yuan; the debt-to-asset ratio at the end of the period is 26.7%, and the capital debt ratio has dropped to 8.0%; the full-year dividend payout ratio for 2025 is 45%

00883

CNOOC executives stated at the 2025 annual performance meeting that despite increased volatility in oil prices, the company will adhere to a low-cost strategy to maintain its competitive advantage. High oil prices benefit from international tensions, with prices nearing $110 per barrel. The company's performance is closely related to oil prices, and the recent rise in oil prices is overall favorable for the company; however, future capital expenditures will depend on the overall situation. The annual report shows that the operating revenue for 2025 is expected to be 398.22 billion yuan, a year-on-year decrease of 5.3%

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How to view the temptation of high oil prices? CNOOC executives: No one knows how long high oil prices will last, sticking to a low-cost strategy