2018 Mid-Year Review - ltd.cnooc.com.cnltd.cnooc.com.cn/attach/0/1808231643540301881.pdf · Net...
Transcript of 2018 Mid-Year Review - ltd.cnooc.com.cnltd.cnooc.com.cn/attach/0/1808231643540301881.pdf · Net...
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2018 Mid-Year Review
August 23, 2018
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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 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 those associated with fluctuations in crude oil and natural gas prices, the exploration or development activities, the capital expenditure requirements, the business strategy, whether the transactions entered into by the Group can complete on schedule pursuant to the terms and timetable or at all, the highly competitive nature of the oil and natural gas industries, the foreign operations, environmental liabilities and compliance requirements, and economic and political conditions in the People’s Republic of China. For a description of these 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 realized or, even if substantially realized, that they will have the expected effect on the Company, its business or operations.
Disclaimer
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Overview
Operating Results and Highlights
Financial Performance and Analysis
Outlook
Agenda
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Overview
Pursued progress in operation while ensuring stability with production in-line Put quality first and gave priority to performance, and
committed to high-quality development
8 new discoveries were made, with successful breakthrough in offshore China and overseas
two out of five new projects planned for 2018 already came on stream
Net production was 238.1 million boe*, in-line with expectation
Financial status maintained healthy and production costs remained excellent All-in cost of US$31.83/boe under effective cost control
Net profit of RMB 25.48 billion, EPS of RMB 0.57
Significant increase in free cash flow
Seize opportunity to increase investment and promote the key projects Proactively invest in world-class oil and gas projects
Vigorously promote major projects progress
Increase dividend payments: interim dividend HK$0.30 per share (tax inclusive) Focus on safety production and green development
*Including our interest in equity-accounted investees
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1H 2018 1H 2017 Change%
Production (mm boe) 238.1 237.9 0.1%
- Crude and liquids (mm bbls) 194.1 198.2 -2.1%
- Natural gas (bcf) 256.9 231.4 11.0%
Realized oil price (US$/bbl) 67.36 50.43 33.6%
Realized gas price (US$/mcf) 6.42 5.68 13.0%
Oil & gas sales (RMB mm) 90,309 74,943 20.5%
Net profit (RMB mm) 25,477 16,250 56.8%
Basic EPS (RMB) 0.57 0.36 56.8%
Results Summary
Operating Results and Highlights
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4,059
401
3D Seismic
Overseas
China - PSC
China - Independent
Exploration Activities
26
41
4
2
3
2
Wildcat Appraisal
*Excluding unconventional wells
Increased appraisal wells to accelerate the evaluation of oil and gas fields, and ensure reserve and production levels Success rate of independent exploration wells in offshore China reached 54-65%
4,460 (km2)
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45
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Exploration Achievements
Successful Appraisals
Discoveries
Bohai
Bozhong 19-6-3
Bozhong 19-6-4
Bozhong 19-6-5
Bozhong 19-6-6
Bozhong 13-1S-3d
Bozhong 13-1S-4d
Bozhong 13-1S-5d
Bozhong 13-1S-6d
Bozhong 29-6-2
Bozhong 29-6-3/Sa
Bozhong 29-6-4
Bozhong 29-6-6
Bozhong 29-6-7
Bozhong 29-6S-2
Bozhong 29-6S-3
Nanbao 35-2-A39H
Nanbao 35-2-A40H
Penglai 7-6-9
Kenli 4-1-2
Western South China Sea
Weizhou 11-12-3d
Weizhou 11-12-4d
Weizhou 11-12-7d
Weizhou 11-12-8d/Sa
Weizhou 11-12-9d/Sa
Weizhou 11-12-11
Weizhou 11-12-12d/Sa
Wushi 16-1W-5d
Wushi 16-1-7d/Sa
Ledong 10-1-6
Eastern South China Sea
Enping 10-2-2
Lufeng 14-4-4d
Xijiang 34-3-2
Lufeng 12-3-2
Discoveries
Guyana
Ranger
Pacora
Western South China Sea
Ledong 10-2
Weizhou 10-3E
Wushi 23-5N
Eastern South China Sea
Enping 10-2
Enping 15-2
Lufeng 12-3 Successful Appraisals
Guyana
Liza-5
Brazil
NW11
Offshore China
Overseas
6 new discoveries and 33 successful appraisal wells were achieved in offshore China Overseas, we made 2 new discoveries and 2 successful appraisal wells
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Two Discoveries of Hundred Million Ton-class in Bohai
Bozhong 29-6 to be a hundred million ton-class oil field
Located in Yellow River Mouth’s central sub-sag, with an average water depth of 23 meters
8 appraisal wells were drilled and encountered oil pay zones with average thickness of approximately 32 meters
Bozhong 19-6 to be a hundred million ton-class oil equivalent gas field
Located in the Bozhong Sag in Bohai, with an average water depth of 24 meters
Bozhong 19-6-1 was successfully drilled in 2017 and encountered oil pay zones with a total thickness of ~25 meters and gas pay zones of ~348 meters
6 wells have been drilled and appraisal will be completed by the end of October
Bozhong 19-6-4 achieved high test production recently, with an average of ~11 million cubic feet natural gas and ~1,900 barrels condensate oil per day, respectively
Proved to be a high abundance, high productivity and high quality gas field
Bohai
Bozhong 29-6
Bozhong 19-6
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Significant Exploration Breakthrough in South China Sea
South China Sea
Enping 15-1
Enping 10-2
Enping 15-2
Lufeng 12-3
New discovery of Lufeng 12-3 Located in Lufeng Sag in the Pearl River Mouth
Basin, with an average water depth of 242 meters
Discovery well Lufeng 12-3-1 encountered oil pay zones with a total thickness of ~36 meters
The largest commercial discovery under PSC in recent years and is expected to become a mid-size oil field
CNOOC Limited holds 60.8% of equity interest
New discoveries of Enping 10-2 and Enping 15-2 Located in Enping Sag in the Pearl River Mouth
Basin, with an average water depth of 87 meters
Discovery wells Enping 10-2-1 and Enping 15-2-1 encountered oil pay zones with a total thickness of ~54 meters and ~21 meters respectively
Proved the exploration potential of the northern part of Enping Sag and are expected to be jointly developed with Enping 15-1 and become a mid-size oil field
Note: According to the Regulation of Petroleum Reserves Estimation of
China, a mid-size oil and gas structure is defined as a structure with
recoverable oil resources of ≥2,500~<25,000 thousand cubic meters.
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Liza
2015 2018
Payara Snoek Liza
Deep Turbot Ranger Pacora Longtail
0.8-1.4
2.25-2.75
3.2
4.0
New Discovery Increases Recoverable Resources to More than 4 Billion Oil- equivalent Barrels at the Stabroek Block Guyana
Huge resource potential
The first discovery within the Stabroek block was Liza,
made in 2015
8 successful discoveries have been made to date
Recoverable resources are estimated to be more than 4
billion boe
CNOOC Limited holds 25% interest Billion Boe
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155.8 152.9
82.1 85.2
0
150
300
1H2017 1H2018
China Overseas
237.9 238.1
Production in line with Expectation
(mmboe)
1H production reached 238.1 mmboe, in line with expectation.
2018 full year production target of 470-480 mmboe remains unchanged.
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1H 2018* 1H 2017*
Crude and Liquids
(mm bbls)
Natural Gas (bcf)
Total (mm boe)
Crude and Liquids
(mm bbls)
Natural Gas (bcf)
Total (mm boe)
China
Bohai 78.5 30.2 83.6 80.4 26.7 84.9
Western South China Sea 19.9 46.7 27.8 18.4 50.2 26.9
Eastern South China Sea 29.3 58.8 39.1 34.4 41.7 41.3
East China Sea 0.8 10.2 2.4 0.8 11.4 2.7
Others - 0.3 0.05 - - -
Subtotal 128.5 146.2 152.9 134.0 130.0 155.8
Overseas
Asia (Ex. China) 12.1 29.0 17.3 9.5 25.1 14.1
Oceania 0.7 17.3 4.0 0.4 14.1 3.2
Africa 11.9 - 11.9 14.2 - 14.2
North America (Ex. Canada) 9.2 23.3 13.1 8.4 22.9 12.2
Canada 11.3 6.5 12.4 9.0 7.9 10.3
South America 5.1 30.8 10.4 4.0 25.3 8.3
Europe 15.3 3.9 16.0 18.8 6.1 19.8
Subtotal 65.6 110.7 85.2 64.3 101.3 82.1
Total 194.1 256.9 238.1 198.2 231.4 237.9
* Including our interest in equity-accounted investees, which is approximately 10.6 mm boe in 1H 2018 and 8.4 mm boe in 1H 2017. In 1H 2018, production percentage of China and overseas was 64% v.s. 36%; Crude and liquids and natural gas was 82% v.s. 18%.
Production Summary
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Production Costs Remain Excellent, and Profitability Continuously Improved
39.82
34.67 32.54 31.83
51.27
41.40
52.65
67.36
0
10
20
30
40
50
60
70
2015 2016 2017 1H2018
All-in Cost Realized Prices
Utilize the oil price cycle to optimize the cost structure and continuously improve the profitability per boe
(US$/boe)
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Intensify Exploration and Development Activities
50.1
70.0-80.0
0
20
40
60
80
100
2017 2018E
系列 1
In 2018, focus on both oil and gas development, substantially increase
Capex and accelerate investment in new projects
(RMB bn)
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Two out of five new projects planned for this year already
commenced production and other projects proceed as planned.
New Projects in 2018
Project Location Status Expected Startup
Peak Production
(boe/d)
Working Interests
Stampede oil field United States Commenced production First half >40,000 25%
Weizhou 6-13 oil field Western South China Sea
Commenced production First half 6,300 100%
Penglai 19-3 oil field 1/3/8/9 comprehensive adjustment project Bohai Onshore
construction Second half 36,200 51%
Dongfang 13-2 gas fields Western South China Sea
Onshore construction Second half 43,400 100%
Wenchang 9-2/9-3/10-3 gas fields Western South China Sea
Installation and commissioning Second half 14,300 100%
* Production at Stampede continues to ramp up; designed capacity is 80,000 boe/d.
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Long Lake
Appomattox
Stabroek
Libra
Buzzard
Egina Uganda
Missan
Key Overseas Projects Progressed Smoothly
Egina: FPSO arrived at the production site, commenced commissioning
Uganda: FEED of upstream project completed and promote the negotiation of pipeline
Buzzard Phase II: Front-End Engineering Design(FEED) completed , Final Investment Decision(FID) approved in May
Missan: Increase production enhancement measures and promote new well drilling, production continues to ramp up
Long Lake: Continue to optimize the producing project, promote the K1A pipeline recovery, FID of LLSW project approved in April, the first tanker of bitumen has arrived in Huizhou
Appomattox: Offshore commissioning underway as scheduled
Stabroek: Continue to explore the resource potential,Liza Phase I development is progressing smoothly, FID of Liza Phase II is expected by the end of 2018
Libra: Single well production of Extended Well Testing (EWT) is 42,000 boe/day; FID of Mero1 has been approved, FPSO is under conversion in Dalian shipyard
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Overseas
Mero oil field
Egina oil field
Preowei oil field
Appomattox oil field
LLSW project
Meadow Creek oil sand project
Tangguh Phase II
Penglai 25-6 oil field 3 wellblock
Luda 29-1 oil field
Huizhou 32-5 comprehensive adjustment
Huizhou 33-1 oil field
Dongfang 1-1 gas field SE area/Ledong 22-1 south area
Wenchang 13-2 comprehensive adjustment
Wushi 17-2 oil fields
Wushi 23-5 oil fields
Lufeng oil fields
Liuhua 29-2 oil field
Liuhua 21-2 oil field
Liuhua 16-2/20-2 joint
development
Liuhua 29-1 gas field
Lingshui 17-2 gas fields
Luda 5-2N oil field
Nanbao 35-2 oil filed S1 area
Weizhou 12-8E oil field
Liza oil field Phase I
Liza oil field Phase II
Buzzard oil field Phase II
Kingfisher oil field
Tilenga oil field
Hokchi oil field
TT-3A oil field
New Projects to Support Production Growth
Offshore China
Luda16-3 oil field
Luda 21-2 oil field
Luda 6-2 oil field
Caofeidian 6-4 oil field
Caofeidian 11-1/11-6 comprehensive
adjustment
Qinhuangdao 33-1S oil field
Bozhong 19-6 gas field Phase I
Jinzhou 25-1 oil field 6/11 wellblock
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Lingshui 17-2 Gas Project in South China Sea
First large-size deepwater gas field made by independent exploration in offshore China
Located in Lingshui sag in the deepwater area of Qiongdongnan Basin, with an average water depth of 1,450 meters
The discovery well Lingshui 17-2-1 was drilled successfully in 2014
Proved the exploration potential in deepwater area of Qiongdongnan Basin
Development and construction kicked off
The development project launched in June
The total investment is estimated at RMB20 billion
Designed capacity is 343 million cubic feet
It will accelerate the deepwater gas development in South China Sea and become the main driver of the Company’s gas production going forward
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Lufeng Oil Fields in South China Sea
Located in Lufeng Sag in Eastern South China Sea, with water depth of 140-330 meters
Complete the feasibility study, will complete the basic design in April 2019 and start construction
3 producing oil fields, 4 appraisal oil fields, 1 redevelopment oil field
Joint development of new and producing oil fields to reduce cost
LF13-2 DPP
(Existing)
LF13-2 WHP
(Existing)
LF13-1 DPP
(Existing)
FSO
Existing Pipeline,15km
Existing flexible pipeline
to FSOU,1.7km
LF7-2 DPP
(Existing)
New Pipeline
23.8km
LF14-4 DPP(New)
LF22-1 SPS
(New) New Cable ,19km
LF15-1 DPP
(New)
New Cable,23.8km
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Accelerated the development of Liza Phase I
FID of Liza Phase I was sanctioned in July, 2017
17 development wells will be drilled
First oil planned in 2020, with peak production
expected to be 120,000 boe/day
CNOOC Limited holds 25% interest
Liza Phase II project
Plan the Liza Phase II and subsequent development
projects
Peak production of Liza Phase II is expected to be
220,000 boe/day
Peak production of the third phase is expected to be
180,000 boe/day
The collective discoveries to date have established
the potential for producing over 750,000 boe/day
Development at Stabroek Block in Guyana
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Large-size deepwater field
Discovered in 2003, 130km away from Nigeria coast
Water Depth of 1,400 – 1,700 meters
Peak production of 200,000bbls/day
Stretch goal: first oil start at the end of 2018
CNOOC Limited holds 45% interest
Accelerate the construction and installation
FPSO arrived at the field site, commenced commissioning
Natural gas export riser was installed successfully
Subsea Production System: construction of all subsea
Christmas Tree was completed
The OLT was launched successfully and the
commissioning was finished
Egina Project in Nigeria
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Appomattox Project in USA
Key Facts
Located in the US Gulf of Mexico 130 km from
Louisiana
Water depth of 2,200 meters
FID announced in July, 2015
Interests: CNOOC 21%, Shell 79% (Operator)
Development Progress
The host platform and oil & gas flowlines have been
installed
Offshore commissioning operations are underway
Installation of the subsea infrastructure is in progress
Expected to commence production in late 2019, with
peak production of 175,000 boe/day
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Health, safety and environmental protection are always our top priority
OSHA statistics maintained at good level in the first half
1H 2018 1H 2017
Rate of Recordable Cases 0.08 0.10
Rate of Lost Workdays Cases
(per 200,000 man hours) 0.03 0.03
Health, Safety and Environment (HSE)
Financial Performance and Analysis
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(RMB mm) 1H 2018 1H 2017 Change%
Revenue
Oil and gas sales 90,309 74,943 20.5% Market revenues 12,538 14,237 -11.9% Other revenue 2,802 3,182 -11.9% Revenue subtotal 105,649 92,362 14.4%
Expenses Operating expenses (11,610) (11,299) 2.8% Taxes other than income tax (4,245) (3,752) 13.1% Exploration expenses (2,260) (2,673) -15.5% DD&A (27,221) (31,824) -14.5% Special oil gain levy (1,117) - - Impairment and provision (159) (305) -47.9% Crude oil and product purchases (11,700) (13,538) -13.6% SG&A (3,135) (3,188) -1.7% Others (2,964) (3,698) -19.8%
Expenses subtotal (64,411) (70,277) -8.3% Profit/from Operating Activities 41,238 22,085 86.7%
Interest income 327 309 5.8% Finance costs (2,471) (2,704) -8.6% Exchange gains, net 254 294 -13.6% Investment income 1,675 1,063 57.6% Share of profits of associates 237 166 42.8% (loss)/profit attributable to a joint venture (6,509) 275 -2466.9% Other income, net 766 28 2635.7%
Profit before tax 35,517 21,516 65.1% Income tax expense (10,040) (5,266) 90.7% Net profit 25,477 16,250 56.8%
Key Financial Items - Consolidated
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16,250
25,477
16,103
413
4,603 233 612
604
737
1,117 -
6,713
4,774
99.1% 4.5% 2.5%
28.3% 6.9% 1.4% 3.8% 41.3%
29.4%
3.7%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
56.8%
Net profit rose significantly, mainly due to realized oil price increase and effective cost control.
Movement of Net Profit
(RMB mm)
28
396.0 380.0
134.3 132.3
122.7 105.0
471.6 478.4
144.0 110.9
37.4 28.0
Cash, cash equivalent and time deposits with maturity
over three months
Other Current Assets
Non-current Assets
Other Liabilities
Debt
Equity
(RMB bn) Jun. 30, 2018 Dec. 31, 2017
Movement of Financial Position
Total assets mainly include:
RMB391.9 bn of PP&E
Equity increased RMB16.0 bn:
Net profit of RMB25.5 bn
Dividend paid RMB11.3 bn
Currency translation differences, application of new standards, and other comprehensive income
*Gearing ratio = Interest Bearing Debt / (Interest Bearing Debt + Equity)
As at June 30, 2018 As at Dec 31, 2017
Total Assets (RMB bn): 653.0 617.2
Gearing Ratio*: 25.3% 25.8%
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(人民币百万元)
14,059
23,480
58,406
1,865 1,500 918
21,222
28,998
2,456 592
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Movement of Cash and Cash Equivalents
The balance of RMB37.2 bn resulted from net operating cash inflow and cash capex outflow was sufficient to cover debt repayment.
(RMB mm)
30
The Capex amounted to 21 billion in the first half of 2018, and investment is expected to accelerate in the second half of the year .
0.0
20.0
40.0
60.0
80.0
1H2017 1H2018 2018E
4.8 4.1
14.0 12.4
2.6 4.4
Exploration Development Production Other
70.0-80.0
21.0 21.4
Note: Above amounts exclude capitalized interest of RMB1.1 bn and RMB1.3 bn in 1H2017 and 1H2018 respectively
Accelerate Investment in 2H 2018
(RMB bn)
31
7.16 8.00
19.56 17.50
0.62 1.25 2.02 2.16
2.38 2.92
0
10
20
30
40
1H2017 1H2018
Opex DD&A Dismentalment SG&A Taxes other than income tax
31.83 31.74
In spite of oil price recovery and industry cost inflation, we maintained our cost competitiveness
Excluding the exchange rate impact, the all-in cost of 1H 2018 would be US$30.56/BOE
Maintained Excellent All-in Cost
All-in cost(US$/boe)
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19.56 17.50
1H2017 1H2018
7.16 8.00
1H2017 1H2018
Cost Analysis
Opex
DD&A
Opex of US$8.00/boe, up 11.7% YoY.
Despite RMB appreciation against USD
and increase in raw materials and fuel
prices, Opex remains under effective
control
DD&A of US$17.50/boe, down 10.5%
YoY, mainly due to change in production
mix and increased reserve
(US$/boe)
(US$/boe)
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(1) Based on closing share price of HK$13.12 as of July 31, 2018
(2) Exchange rate quoted as HK$1 = RMB0.86852 as of July 31, 2018
2018 interim dividend: HK$0.30 per share (tax inclusive)
An increase of HK$0.10 per share, or 50%, from 2017 interim dividend.
Dividend yield of 4.6%(1).
Interim dividend payment will be approximately RMB 11.63 billion(2),
representing about 8.5% of free cash at the end of July 2018.
Time arrangement:
Book close period: September 10 - September 14
Payment date: October 16
Dividend up 50% YoY
Outlook
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Bohai will Stabilize Production at 30 Million tons in the Next 10 Years
Bohai acreage amounts to 45,700 square kilometers
76 oil and gas fields have been discovered and 45 in production
With the improvement of exploration degree, the amount of resources is
increasing
0
500
1000
1500
2000
2500
3000
3500
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Future production plan of Bohai
(10k ton)
Producing oil field New oil field
Low permeability-marginal-heavy oil field
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30 million ton level production for next 10 years
The Sustainable and High-quality Development of Bohai Oil Field
We pursue intrinsic safety and low carbon emission. We protect while developing and develop under the protection.
Action plan to enhance environmental protection
To stabilize the production of producing fields
To make progress on the development of low permeability, marginal, and heavy oil reservoir
To accelerate the development of new fields
Zero discharge of production wastewater
Zero record of blowout
Zero accident of oil spill pollution
37
169 179
193 206
237
260
289
320
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017 2018E 2019E 2020E
Natural Gas Demand Natural Gas Supply
(Billion cubic meters)
Strong Growth in Domestic Gas Demand Resulted in Undersupply
Develop low-carbon energy to protect the environment
Source: NBS, Morgan Stanley research report
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Steady Increase in Natural Gas Reserves and Production
Gas reserves and production increase gradually
6,323 6,731 6,993
7,486 7,543
4,477 4,757
5,355 5,844 5,911
2013 2014 2015 2016 2017
CNOOC Limited Offshore China
Natural gas reserves in the last five years
220 223
2016 2017 2020 2025
(Thousand boe/day)
Production outlook of natural gas
(bcf)
39
Production target of 470-480 mmboe
Capex budget of RMB70-80 billion
Five new projects to come on stream in 2018
Reserve Replacement Ratio(RRR) > 100%
Maintain high standards on HSE performance
2018 Overview
40
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