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China's CNOOC hit by market downturn

The country's largest producer boasts of steady string of discoveries even as oil and gas revenues were lower.

By Daniel J. Graeber
China's CNOOC hit by market downturn
China's largest oil producer reports a steep decline in revenue last year, but says it is maintaining a focus on cutting costs. File photo by Stephen Shaver/UPI | License Photo

March 23 (UPI) -- After reporting steep declines in yearly oil and gas revenue, Chinese company CNOOC said Thursday its focus on cost control was relentless.

China National Offshore Oil Corp. turned in one of its worst performances in five years with oil and gas revenues down 17 percent from 2015.

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When oil prices hit historic lows last year, CNOOC, the country's largest producer, lowered its production forecast for 2016 by 3.5 percent and pledged to put cost control and efficiency at the forefront of its agenda.

"The company unrelentingly pursued a management concept centered around cost control and improved efficiency, maintained prudent financial policies, and realized sound and steady growth in every business," Chairman and CEO Yang Hua said in a statement Thursday.

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The company said last year that spending would be cut by 11 percent from 2015 levels. In its annual statement, CNOOC said capital spending cuts were sharper at 26.3 percent year-over-year.

Most major oil and gas companies are expecting improvements this year as the market recovers from last year's slump. In 2016, CNOOC said it realized an average oil price of $41.40 per barrel, a decline of 19.3 percent from 2015.

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The price for Brent crude oil, the international benchmark, was trading around $51 per barrel in early Thursday trading. Crude oil prices were under pressure in early March after China lowered its economic growth estimate.

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In terms of output, CNOOC boasted that it made 14 commercial discoveries and ended 2016 with 3.9 billion barrels of oil equivalent in net proved reserves.

"Oil and gas reserves made by independent new discoveries in offshore China continued to maintain at a higher level," the company stated.

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