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CNOOC: Reshaping Cost Competitiveness, Steady Progress Made in All Businesses in 2016

HONG KONG, March 23, 2017 /PRNewswire/ — CNOOC Limited (the "Company", SEHK: 00883, NYSE: CEO, TSX: CNU) today announced its 2016 annual results for the year ended December 31, 2016.

In 2016, the Company has overcome many difficulties and made smooth progress in exploration, development and production, and continued to maintain a reasonable ratio of exploration investment, and ensured the mid to long-term sustainable development with a higher workload. During the year, the Company made 14 commercial discoveries and successfully appraised 25 oil and gas structures. Oil and gas reserves made by independent new discoveries in offshore China continued to maintain at a higher level. New breakthroughs have also been made in explorations in new areas, while multiple overseas large-scale high-quality projects are progressing smoothly. Reserve replacement ratio excluding economic revisions was 145% for the year despite the low oil prices. As at the end of 2016, the Company's net proved reserves were approximately 3.88 billion barrels of oil equivalent (BOE).

The Company successfully met its annual oil and gas production target upon further Capex cuts, with net oil and gas production reaching 476.9 million BOE. The four projects planned for 2016 have commenced production smoothly during the year, including Kenli 10-4 oilfield, Panyu 11-5 oilfield, Weizhou 6-9/6-10 comprehensive adjustment project and Enping 18-1 oilfield.

For the last three years, the Company has unrelentingly pursued a management concept centered around cost control and improved efficiency, and formulated a workable and development plan. In 2016, the Company paid further attention to quality and efficiency and struck a balance between the Company's short-term survival and long-term development. It pursued growth with value, in order to make the production output more efficient. As a result, its ability for sustainable development has improved overall.

In 2016, the Company's average realized oil price was US$41.40 per barrel, representing a decline of 19.3% year-over-year (yoy), while the average realized natural gas price was US$5.46 per thousand cubic feet, representing a decline of 14.6% yoy. In addition, the Company's oil and gas sales revenue was RMB121.3 billion, representing a decline of 17.2% yoy. In the face of oil price fluctuations — which are beyond the Company's control — the Company has consistently put efficiency enhancement as the key in dealing with industry cycles. In 2016, the Company's all-in cost was US$34.67 per BOE, a decrease of 12.9% yoy. The net profit was RMB637 million.

During the year, the Company's capital expenditures were RMB49.0 billion, representing a decrease of 26.3% yoy.

In 2016, the Company's basic earnings per share was RMB 0.01. The Board of Directors have proposed a year-end dividend of HK$0.23 per share (tax inclusive).

Mr. Yang Hua, Chairman and CEO of CNOOC Limited, said, "In 2016, the Company has maintained a strong cost competitiveness despite low oil prices and sluggish global economic growth. 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. Looking ahead, the Company will continue to adhere to a value-driven approach and enhance the core competitiveness of the core oil and gas business, so as to secure the long and sustainable development of the Company."

Notes to Editors:

More information about the Company is available at http://www.cnoocltd.com.

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This press release 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 but not limited to 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 their 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 and other 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 press release are qualified by these cautionary statements. The Company cannot assure that the results or developments anticipated will be realised or, even if substantially realised, that they will have the expected effect on the Company, its business or operations.

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For further enquiries, please contact:

Mr. Yan Cao
Deputy General Manager, Investor Relations Department
CNOOC Limited
Tel: +86-10-8452-1417
Fax: +86-10-8452-1441
E-mail: [email protected]

Ms. Iris Wong
Hill+Knowlton Strategies Asia
Tel: +852 2894 6263
Fax: +852-2576 1990
E-mail: [email protected]

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