(Aug. 26, 2009 - Chinavestor) China National Offshore Oil Company or CNOOC ltd. (NYSE:CEO) reported 2009 first half interim results today morning. Both revenues and net profit deteriorated, leaving sloppy investors with an idea that this company is a toast, at least for the short term. But looking behind the numbers another picture reveals.
The facts: Total revenue for the first six months of 2009 for CNOOC ltd. (NYSE:CEO) amounted to RMB40,640 million ($5.950 billion), a decrease of 42.0% compared to same period last year. Not surprisingly, total profit took a hit as well and plunged -55.0% to RMB12.40 billion ($1.815 billion).
But taking a look at the company from a distance, the picture is not as bad.
One of the reasons for such a dramatic drop in revenues and profit is that the Company started our from a high point. According to the chart above, the 2008 H1 was the best ever six months period for the company. And the good numbers back a year ago were attributed to record high crude prices, not to blockbuster oil production or cost control. Remember, price of crude hit $145/barrel just one year ago, compared to earlier lows of $36 earlier this year or current $70.
Despite weaker international oil prices in the first half of 2009, CNOOC Ltd. (NYSE:CEO) managed to increase production to 105.8 million barrel-of-oil-equivalent (BOE), representing an increase of 15.2%. For a major oil producer a double digit production growth is very impressive. Sinopec (NYSE:SNP), China's largest refiner with significant oil production of its own, managed to eke out a 1.2% oil production increase compared to last year. "China Petroleum & Chemical Corp. (SNP) 2009 H1 Profit Triples, Announces Dividend". Petrochina (NYSE:PTR) will report interim results within days, but don't expect a 10% oil production growth either.
What makes this growth even more appealing is that most of the growth came from foreign, underdeveloped projects with future potential. CNOOC Ltd. (CEO) reported the successful commencement of the Phase I of OML 130 deep water field off Nigeria besides the Tangguh LNG terminal in Indonesia coming on-stream in early July 2009. Altogether these foreign fields produced 15.0 million BOE, an increase of 38.9% from same period last year.
CNOOC Ltd. (NYSE:CEO) has plenty of cash, most of it generated from operations. To make its shares more appealing, the company announced a cash dividend of $HK0.20/share or $2.58/ADR if the ORD:ADR ratio of 1:100 is true.
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