UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _________________ to _______________
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OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report ________________
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Commission File Number 1-14966
CNOOC LIMITED
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Hong Kong
(Jurisdiction of incorporation or organization)
65th Floor, Bank of China Tower
One Garden Road, Central
Hong Kong
(Address of principal executive offices)
Hua Zhong
65th Floor, Bank of China Tower
One Garden Road, Central
Hong Kong
Tel +852 2213 2500
Fax +852 2525 9322
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class
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Name of each exchange on which registered
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American depositary shares, each representing 100 shares
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New York Stock Exchange, Inc.
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Shares
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New York Stock Exchange, Inc.(1)
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Securities registered or to be registered pursuant to Section 12(g) of the Act. None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
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Shares
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44,646,305,984
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý No ¨
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No ý
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant is required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ¨
International Financial Reporting Standards as issued by the International Accounting Standards Board ý
Other ¨
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.
Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No ý
(1) Not for trading, but only in connection with the registration of American depositary shares.
Page
Definitions
Unless the context otherwise requires, references in this annual report to:
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“CNOOC” are to our controlling shareholder, China National Offshore Oil Corporation, a PRC state-owned enterprise, and its affiliates, excluding us and our subsidiaries;
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“CNOOC Limited” are to CNOOC Limited, a Hong Kong limited liability company and the registrant of this annual report;
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“Our company”, “Company”, “Group”, “we”, “our” or “us” are to CNOOC Limited and its subsidiaries;
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“ADRs” are to the American depositary receipts that evidence our ADSs;
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“ADSs” are to our American depositary shares, each of which represents 100 shares;
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“Cdn$” are to Canadian dollar, the legal currency of Canada;
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“China” or “PRC” are to the People’s Republic of China, excluding for purposes of geographical reference in this annual report, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan;
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“Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China;
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“Hong Kong Stock Exchange” or “HKSE” are to The Stock Exchange of Hong Kong Limited;
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“HK$” are to Hong Kong dollar, the legal currency of the Hong Kong Special Administrative Region;
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“HKICPA” are to the Hong Kong Institute of Certified Public Accountants;
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“HKFRS” are to all Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards and Interpretations approved by the Council of the HKICPA;
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“IASB” are to the International Accounting Standards Board;
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“IFRS” are to all International Financial Reporting Standards, including International Accounting Standards and Interpretations, as issued by the International Accounting Standards Board;
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“Nexen Inc.” or “Nexen” are to Nexen Inc., a Canada-based energy company previously listed on the TSX and the NYSE, which was acquired by us in 2013;
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“Nexen Energy ULC” are to Nexen Energy ULC, a Canadian unlimited liability company and an amalgamated company arising from CNOOC Canada Holding ULC and Nexen Inc.. Nexen Energy ULC now manages all of our assets in North and Central America as well as the assets previously managed by Nexen Inc.;
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“NYSE” are to the New York Stock Exchange;
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“Rmb” are to Renminbi, the legal currency of the PRC;
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“TSX” are to the Toronto Stock Exchange; and
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“US$” are to U.S. dollar, the legal currency of the United States of America.
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Conventions
We publish our financial statements in Renminbi. Unless otherwise indicated, we have translated amounts from Renminbi into U.S. dollars solely for the convenience of the reader at the noon buying rate for cable transfers of Renminbi per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of the Federal Reserve Board on December 31, 2013 of US$1.00=Rmb 6.0537. We have translated amounts in Hong Kong dollars solely for the convenience of the reader at the noon buying rate for cable transfers of Hong Kong dollars per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of the Federal Reserve Board on December 31, 2013 of US$1.00=HK$7.7539. We have also translated amounts in Canadian dollars solely for the convenience of the reader at the noon buying rate for cable transfers of Canadian dollars per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of the Federal Reserve Board on December 31, 2013 of US$1.00=Cdn$1.0637. We make no representation that the Renminbi amounts, Hong Kong dollar amounts or Canadian dollar amounts could have been, or could be, converted into U.S. dollars at those rates on December 31, 2013, or at all. For further information on exchange rates, see “Item 3—Key Information—Selected Financial Data.”
Totals presented in this annual report may not add correctly due to rounding of numbers.
For the years 2011, 2012 and 2013, approximately 23%, 36% and 52%, respectively, of our reserves were evaluated by our internal reserve evaluation staff, and the remaining were based upon estimates prepared by independent petroleum engineering consulting companies and reviewed by us. Our reserve data for 2011, 2012 and 2013 were prepared in accordance with the SEC’s final rules on “Modernization of Oil and Gas Reporting”, which became effective for accounting periods ended on or after December 31, 2009. Except as otherwise stated, all amounts of reserve and production in this report include our interests in equity method investees.
In calculating barrels-of-oil equivalent amounts, we have assumed that 6,000 cubic feet of natural gas equals one BOE, with the exception of natural gas from South America, Oceania, Indonesia in Asia and Yacheng 13-1/13-4 gas field in the Western South China Sea, for which we have used actual thermal unit for such conversion purpose.
Glossary of Technical Terms
Unless otherwise indicated in the context, references to:
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“API gravity” means the American Petroleum Institute’s scale for specific gravity for liquid hydrocarbons, measured in degrees.
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“appraisal well” means an exploratory well drilled after a successful wildcat well to gain more information on a newly discovered oil or gas reserve.
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“developed oil and gas reserves” are reserves of any category that can be expected to be recovered:
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(i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and
(ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving any well.
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“exploratory well” means a well drilled to find either a new field or a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well, or a stratigraphic test well.
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“LNG” means liquefied natural gas.
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“net wells” means a party’s working interest in wells.
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“proved oil and gas reserves” means those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations— prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
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(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geosciences and engineering data.
(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geosciences, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geosciences, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
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“PSC” means production sharing contract. For more information about PSC, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”
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“share oil” means the portion of production that must be allocated to the relevant government entity under our PSCs in the PRC.
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“undeveloped oil and gas reserves” means reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.
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(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.
(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
For further definitions relating to reserves:
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“reserve replacement ratio” means, for a given year, total additions to proved reserves, which consist of additions from purchases, discoveries and extensions and revisions of prior reserve estimates, divided by production during the year. Reserve additions used in this calculation are proved developed and proved undeveloped reserves; unproved reserve additions are not used. Data used in the calculation of reserve replacement ratio is derived directly from the reserve quantity reconciliation prepared in accordance with U.S. Accounting Standards Codification 932-235-50, which reconciliation is included in “Supplementary Information on Oil and Gas Producing Activities” beginning on page F-79 of this annual report.
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Our reserve replacement ratio reflects our ability to replace proved reserves. A rate higher than 100% indicates that more reserves were added than produced in the period. However, this measure has limitations, including its predictive and comparative value. Reserve replacement ratio measures past performance only and fluctuates from year to year due to differences in the extent and timing of new discoveries and acquisitions. It is also not an indicator of profitability because it does not reflect the cost or timing of future production of reserve additions. It does not distinguish between reserve additions that are developed and those that will require additional time and funding to develop. As such, reserve replacement ratio is only one of the indices used by our management in formulating its acquisition, exploration and development plans.
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“reserve life” means the ratio of proved reserves to annual production of crude oil or, with respect to natural gas, to wellhead production excluding flared gas, also known as reserve-to-production ratio.
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“seismic data” means data recorded in either two-dimensional (2D) or three-dimensional (3D) form from sound wave reflections off of subsurface geology.
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“success” means a discovery of oil or gas by an exploratory well. Such an exploratory well is a successful well and is also known as a discovery. A successful well is commercial, which means there are enough hydrocarbon deposits discovered for economical recovery.
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“wildcat well” means an exploratory well drilled on any rock formation for the purpose of searching for petroleum accumulations in an area or rock formation that has no known reserves or previous discoveries.
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References to:
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bbls means barrels, which is equivalent to approximately 0.134 tons of oil (33 degrees API);
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mmbbls means million barrels;
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BOE means barrels-of-oil equivalent;
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mcf means thousand cubic feet;
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mmcf means million cubic feet;
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bcf means billion cubic feet, which is equivalent to approximately 28.32 million cubic meters; and
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BTU means British Thermal Unit, a universal measurement of energy.
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This annual report 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 prospects 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 forward-looking statements address, among others, such issues as:
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the amount and nature of future exploration, development and other capital expenditures,
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wells to be drilled or reworked,
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development projects,
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exploration prospects,
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estimates of proved oil and gas reserves,
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development and drilling potential,
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expansion and other development trends of the oil and gas industry,
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business strategy,
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production of oil and gas,
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development of undeveloped reserves,
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expansion and growth of our business and operations,
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oil and gas prices and demand,
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future earnings and cash flow, and
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our estimated financial information.
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These statements are based on assumptions and analysis made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance and financial condition to differ materially from our expectations, including those associated with fluctuations in crude oil and natural gas prices, our exploration or development activities, our capital expenditure requirements, our business strategy, whether the transactions entered into by us can complete on schedule pursuant to their terms and timetable or at all, the highly competitive nature of the oil and natural gas industry, our foreign operations, environmental liabilities and compliance requirements, and economic and political conditions in the PRC and overseas. For a description of these and other risks and uncertainties, see “Item 3—Key Information—Risk Factors.”
Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements. We cannot assure that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us, our business or our operations.
Our consolidated financial statements for the years ended December 31, 2011, 2012 and 2013 included in this annual report on Form 20-F have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.
In accordance with rule amendments adopted by the U.S. Securities and Exchange Commission, or the SEC, which became effective on March 4, 2008, we are not required to provide reconciliation to Generally Accepted Accounting Principles in the United States.
The statistical information set forth in this annual report on Form 20-F relating to China is taken or derived from various publicly available government publications that have not been prepared or independently verified by us. This statistical information may not be consistent with other statistical information from other sources within or outside China.
Not applicable, but see “Item 6—Directors, Senior Management and Employees—Directors and Senior Management.”
Not applicable.
The following tables present selected historical financial data of our company as of and for the years ended December 31, 2009, 2010, 2011, 2012 and 2013. Except for amounts presented in U.S. dollars, the selected historical consolidated statement of financial position data and consolidated statement of profit or loss and other comprehensive income data as of and for the years ended December 31, 2009, 2010, 2011, 2012 and 2013 set forth below are derived from, should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and their notes under “Item 18—Financial Statements” and “Item 5—Operating and Financial Review and Prospects” in this annual report. As disclosed above under “Special Note on the Financial Information and Certain Statistical Information Presented in This Annual Report”, our consolidated financial statements as of and for the years ended December 31, 2009, 2010, 2011, 2012 and 2013 have been prepared and presented in accordance with IFRS.
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Year ended December 31,
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2009
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2010(1)
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2011
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2013
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(in millions, except per share and per ADS data)
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Statement of Profit or Loss and Other Comprehensive Income Data:
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Operating revenues:
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Oil and gas sales
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83,914 | 146,134 | 189,279 | 194,774 | 226,445 | 37,406 | ||||||||||||||||||
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Marketing revenues
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20,752 | 32,446 | 50,469 | 50,771 | 55,495 | 9,167 | ||||||||||||||||||
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Other income
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529 | 1,456 | 1,196 | 2,082 | 3,917 | 647 | ||||||||||||||||||
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Total operating revenues
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105,195 | 180,036 | 240,944 | 247,627 | 285,857 | 47,220 | ||||||||||||||||||
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Expenses:
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Operating expenses
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(12,490 | ) | (15,647 | ) | (18,264 | ) | (21,445 | ) | (30,014 | ) | (4,958 | ) | ||||||||||||
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Taxes other than income tax
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(3,888 | ) | (7,109 | ) | (10,332 | ) | (15,632 | ) | (15,937 | ) | (2,632 | ) | ||||||||||||
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Exploration expenses
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(3,234 | ) | (5,483 | ) | (5,220 | ) | (9,043 | ) | (17,120 | ) | (2,828 | ) | ||||||||||||
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Depreciation, depletion and amortization
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(15,943 | ) | (26,756 | ) | (30,521 | ) | (32,903 | ) | (56,456 | ) | (9,326 | ) | ||||||||||||
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Special oil gain levy
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(6,357 | ) | (17,706 | ) | (31,982 | ) | (26,293 | ) | (23,421 | ) | (3,869 | ) | ||||||||||||
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Impairment and provision
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(7 | ) | (27 | ) | (22 | ) | (31 | ) | 45 | 7 | ||||||||||||||
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Crude oil and product purchases
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(20,455 | ) | (32,236 | ) | (50,307 | ) | (50,532 | ) | (53,386 | ) | (8,819 | ) | ||||||||||||
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Selling and administrative expenses
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(2,264 | ) | (3,039 | ) | (2,854 | ) | (3,377 | ) | (7,859 | ) | (1,298 | ) | ||||||||||||
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Others
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(232 | ) | (888 | ) | (835 | ) | (1,230 | ) | (3,206 | ) | (529 | ) | ||||||||||||
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Total expenses
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(64,870 | ) | (108,891 | ) | (150,337 | ) | (160,486 | ) | (207,354 | ) | (34,252 | ) | ||||||||||||
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Profit from operating activities
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40,325 | 71,145 | 90,607 | 87,141 | 78,503 | 12,968 | ||||||||||||||||||
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Interest income
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638 | 618 | 1,196 | 1,002 | 1,092 | 181 | ||||||||||||||||||
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Finance costs
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(535 | ) | (1,122 | ) | (1,707 | ) | (1,603 | ) | (3,457 | ) | (571 | ) | ||||||||||||
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Exchange gains, net
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54 | 995 | 637 | 359 | 873 | 144 | ||||||||||||||||||
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Investment income
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200 | 427 | 1,828 | 2,392 | 2,611 | 431 | ||||||||||||||||||
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Share of profits of associates
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173 | 199 | 320 | 284 | 133 | 22 | ||||||||||||||||||
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Share of profits/(losses) of a joint venture
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- | 199 | 247 | (311 | ) | 762 | 126 | |||||||||||||||||
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Non-operating income/(expenses), net
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(34 | ) | 142 | (563 | ) | 908 | 334 | 55 | ||||||||||||||||
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Profit before tax
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40,821 | 72,603 | 92,565 | 90,172 | 80,851 | 13,356 | ||||||||||||||||||
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Year ended December 31,
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2009
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2010(1)
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2011
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2013
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(in millions, except per share and per ADS data)
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Income tax expense
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(11,335 | ) | (18,193 | ) | (22,310 | ) | (26,481 | ) | (24,390 | ) | (4,029 | ) | ||||||||||||
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Profit for the year
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29,486 | 54,410 | 70,255 | 63,691 | 56,461 | 9,327 | ||||||||||||||||||
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Earnings per share (basic)(2)
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0.66 | 1.22 | 1.57 | 1.43 | 1.26 | 0.21 | ||||||||||||||||||
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Earnings per share (diluted) (3)
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0.66 | 1.21 | 1.57 | 1.42 | 1.26 | 0.21 | ||||||||||||||||||
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Earnings per ADS (basic) (2)
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66.01 | 121.81 | 157.28 | 142.66 | 126.46 | 20.89 | ||||||||||||||||||
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Earnings per ADS (diluted) (3)
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65.86 | 121.39 | 156.63 | 142.14 | 126.07 | 20.82 | ||||||||||||||||||
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Dividend per share
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Interim
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0.176 | 0.181 | 0.204 | 0.122 | 0.198 | 0.03 | ||||||||||||||||||
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Proposed final
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0.176 | 0.211 | 0.227 | 0.259 | 0.252 | 0.04 | ||||||||||||||||||
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As of December 31,
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2009
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2010(1)
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2011
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2012
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2013
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(in millions)
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Statement of Financial Position Data:
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Cash and cash equivalents
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22,615 | 27,287 | 23,678 | 55,024 | 14,318 | 2,365 | ||||||||||||||||||
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Available-for sale financial assets
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8,582 | 18,940 | 27,576 | 61,795 | 51,103 | 8,442 | ||||||||||||||||||
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Held-to-maturity financial assets
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- | 3,040 | 23,467 | - | - | - | ||||||||||||||||||
|
Current assets
|
70,871 | 99,384 | 131,923 | 170,894 | 146,552 | 24,209 | ||||||||||||||||||
|
Property, plant and equipment, net
|
165,320 | 186,678 | 220,567 | 252,132 | 419,102 | 69,231 | ||||||||||||||||||
|
Investments in associates
|
1,727 | 1,781 | 2,822 | 3,857 | 4,094 | 676 | ||||||||||||||||||
|
Investments in a joint venture
|
- | 20,823 | 20,175 | 20,160 | 20,303 | 3,354 | ||||||||||||||||||
|
Intangible assets
|
1,230 | 1,148 | 1,033 | 973 | 17,000 | 2,808 | ||||||||||||||||||
|
Long term available-for-sale financial assets
|
3,120 | 8,616 | 7,365 | 7,051 | 6,798 | 1,123 | ||||||||||||||||||
|
Total assets
|
242,268 | 318,430 | 384,264 | 456,070 | 621,473 | 102,660 | ||||||||||||||||||
|
Current loans and borrowings
|
122 | 21,194 | 19,919 | 28,830 | 49,841 | 8,233 | ||||||||||||||||||
|
Current liabilities
|
31,042 | 68,423 | 70,216 | 82,437 | 128,948 | 21,301 | ||||||||||||||||||
|
Long term loans and borrowings, net of current portion
|
18,570 | 9,859 | 18,076 | 29,056 | 82,011 | 13,547 | ||||||||||||||||||
|
Total non-current liabilities
|
37,291 | 34,241 | 51,192 | 63,853 | 150,905 | 24,927 | ||||||||||||||||||
|
Total liabilities
|
68,333 | 102,664 | 121,408 | 146,290 | 279,853 | 46,228 | ||||||||||||||||||
|
Capital stock
|
43,078 | 43,078 | 43,078 | 43,078 | 43,081 | 7,116 | ||||||||||||||||||
|
Shareholders’ equity
|
173,936 | 215,766 | 262,856 | 309,780 | 341,620 | 56,432 | ||||||||||||||||||
|
(1)
|
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
|
|
(2)
|
Earnings per share (basic) and earnings per ADS (basic) for each year from 2009 to 2013 have been computed, without considering the dilutive effect of the shares underlying our share option schemes and, as applicable, convertible bonds, by dividing profit by the weighted average number of shares and the weighted average number of ADSs of 44,669,199,984 and 446,692,000, respectively, for 2009, 44,669,199,984 and 446,692,000, respectively, for 2010, 44,668,570,359 and 446,685,704, respectively, for 2011, 44,646,305,984 and 446,463,060, respectively, for 2012, and 44,646,825,847 and 446,468,258, respectively, for 2013, in each case based on a ratio of 100 shares to one ADS.
|
|
(3)
|
Earnings per share (diluted) and earnings per ADS (diluted) for each year from 2009 to 2013 have been computed, after considering the dilutive effect of the shares underlying our share option schemes and, as applicable, convertible bonds, by using 44,771,714,329 shares and 447,717,143 ADSs for 2009, 44,821,187,466 shares and 448,211,875 ADSs for 2010, 44,853,615,010 shares and 448,536,150 ADSs for 2011, 44,808,042,330 shares and 448,080,423 ADSs for 2012 and 44,787,119,089 shares and 447,871,191 ADSs for 2013.
|
|
Year ended December 31,
|
||||||||||||||||||||||||
|
2009
|
2010(1)
|
2011
|
2012
|
2013
|
2013
|
|||||||||||||||||||
|
Rmb
|
Rmb
|
Rmb
|
Rmb
|
Rmb
|
US$
|
|||||||||||||||||||
|
(in millions, except percentages and ratios)
|
||||||||||||||||||||||||
|
Other Financial Data:
|
||||||||||||||||||||||||
|
Capital expenditures paid(2)
|
39,376 | 28,332 | 36,823 | 54,331 | 79,716 | 13,168 | ||||||||||||||||||
|
Cash provided by/(used for):
|
||||||||||||||||||||||||
|
Operating activities
|
49,624 | 70,883 | 116,171 | 92,574 | 110,891 | 18,318 | ||||||||||||||||||
|
Investing activities
|
(37,307 | ) | (64,203 | ) | (99,036 | ) | (63,797 | ) | (170,032 | ) | (28,087 | ) | ||||||||||||
|
Financing activities
|
(9,403 | ) | (1,610 | ) | (20,246 | ) | 2,584 | 18,601 | 3,073 | |||||||||||||||
|
Gearing ratio(3)
|
9.7 | % | 12.6 | % | 12.6 | % | 15.7 | % | 27.8 | % | 27.8 | % | ||||||||||||
|
(1)
|
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
|
|
(2)
|
Capital expenditures paid exclude those relating to acquisition of oil and gas properties.
|
|
(3)
|
Interest bearing debt divided by the sum of interest bearing debt and equity.
|
The following table sets forth the noon buying rates between U.S. dollars and Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board for the periods indicated:
|
Noon Buying Rate
|
||||
|
Period
|
End
|
Average(1)
|
High
|
Low
|
|
(Rmb per US$1.00)
|
||||
|
2009
|
6.8259
|
6.8295
|
6.8470
|
6.8176
|
|
2010
|
6.6000
|
6.7603
|
6.8330
|
6.6000
|
|
2011
|
6.2939
|
6.4475
|
6.6364
|
6.2939
|
|
2012
|
6.2301
|
6.2990
|
6.3879
|
6.2221
|
|
2013
|
6.0537
|
6.1412
|
6.2438
|
6.0537
|
|
October 2013
|
6.0943
|
—
|
6.1209
|
6.0815
|
|
November 2013
|
6.0922
|
—
|
6.0993
|
6.0903
|
|
December 2013
|
6.0537
|
—
|
6.0927
|
6.0537
|
|
January 2014
|
6.0590
|
—
|
6.0600
|
6.0402
|
|
February 2014
|
6.1448
|
—
|
6.1448
|
6.0591
|
|
March 2014
|
6.2164
|
—
|
6.2273
|
6.1183
|
|
(1)
|
Determined by averaging the noon buying rates on the last business day of each month during the relevant period.
|
On March 31, 2014, the noon buying rate between U.S. dollars and Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board was Rmb 6.2164 to US$1.00.
The following table sets forth the noon buying rates between U.S. dollars and Hong Kong dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board for the periods indicated.
|
Noon Buying Rate
|
||||
|
Period
|
End
|
Average(1)
|
High
|
Low
|
|
(HK$ per US$1.00)
|
||||
|
2009
|
7.7536
|
7.7513
|
7.7618
|
7.7495
|
|
2010
|
7.7810
|
7.7692
|
7.8040
|
7.7501
|
|
2011
|
7.7663
|
7.7793
|
7.8087
|
7.7634
|
|
2012
|
7.7507
|
7.7556
|
7.7699
|
7.7493
|
|
2013
|
7.7539
|
7.7565
|
7.7654
|
7.7503
|
|
October 2013
|
7.7530
|
—
|
7.7545
|
7.7524
|
|
November 2013
|
7.7526
|
—
|
7.7535
|
7.7512
|
|
December 2013
|
7.7539
|
—
|
7.7550
|
7.7517
|
|
January 2014
|
7.7642
|
—
|
7.7663
|
7.7534
|
|
February 2014
|
7.7608
|
—
|
7.7645
|
7.7547
|
|
March 2014
|
7.7567
|
—
|
7.7669
|
7.7563
|
|
(1)
|
Determined by averaging the noon buying rates on the last business day of each month during the relevant period.
|
On March 31, 2014, the noon buying rate between U.S. dollars and Hong Kong dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board was HK$7.7567 to US$1.00.
The following table sets forth the noon buying rates between U.S. dollars and Canadian dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board for the periods indicated.
|
Noon Buying Rate
|
||||
|
Period
|
End
|
Average(1)
|
High
|
Low
|
|
(Cdn$ per US$1.00)
|
||||
|
2009
|
1.0461
|
1.1373
|
1.2995
|
1.0289
|
|
2010
|
1.0009
|
1.0353
|
1.0776
|
0.996
|
|
2011
|
1.0168
|
0.9857
|
1.0605
|
0.9448
|
|
2012
|
0.9958
|
0.9994
|
1.0417
|
0.971
|
|
2013
|
1.0637
|
1.0347
|
1.0697
|
0.9839
|
|
October 2013
|
1.0429
|
—
|
1.0454
|
1.0282
|
|
November 2013
|
1.0597
|
—
|
1.0597
|
1.0414
|
|
December 2013
|
1.0637
|
—
|
1.0697
|
1.0577
|
|
January 2014
|
1.1116
|
—
|
1.1171
|
1.0612
|
|
February 2014
|
1.1075
|
—
|
1.1137
|
1.0952
|
|
March 2014
|
1.1053
|
—
|
1.1251
|
1.0965
|
|
(1)
|
Determined by averaging the noon buying rates on the last business day of each month during the relevant period.
|
On March 31, 2014, the noon buying rate between U.S. dollars and Canadian dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board was Cdn$1.1053 to US$1.00.
Not applicable.
Not applicable.
We urge you to consider carefully the risks described below. Although we have established the Enterprise Risk Management system to identify, evaluate and manage risks, our business activities are subject to the following risks, each of which could have a material adverse effect on our operations and financial condition.
Risks Relating to Our Operations
Our business, revenues and profits fluctuate with changes in oil and gas prices
Prices for crude oil may fluctuate widely in response to relatively minor changes in the supply and demand for oil, market uncertainty and various other factors that are beyond our control, including, but not limited to overall economic conditions, consumer demand for oil, political developments, the ability of petroleum producing nations to set and maintain production levels and prices, the price and availability of other energy sources, domestic and foreign government regulations, and weather conditions.
In addition, our typical contracts with gas buyers include provisions for periodic resets and adjustment formulas that depend on a basket of crude oil prices and inflation as well as various other factors. These resets and adjustment formulas can result in natural gas price fluctuations.
Even relatively modest declines in crude oil and/or natural gas prices may adversely affect our business, revenues and profits. Lower oil and gas prices may result in the write-off of higher cost reserves and other assets and may lower our earnings or cause losses. Lower oil and gas prices may also reduce the amount of oil and natural gas we can produce economically and render existing contracts that we have entered into uneconomical.
The oil and gas reserve estimates in this annual report may require substantial revision as a result of future drilling, testing, production and oil and gas price changes
The reliability of reserve estimates depends on a number of factors, including the quality and quantity of technical and economic data, the prevailing oil and gas prices for our production, the production performance of reservoirs, extensive engineering judgments, and the fiscal regime in the PRC and overseas countries where we have operations or assets.
Many of the factors, assumptions and variables involved in estimating reserves are beyond our control and may prove to be incorrect over time. In addition, many of the factors involved in estimating reserves over which we do have control, such as the recovery factor estimates and the projected production decline rates, may also prove to be incorrect over time. Consequently, the results of drilling,
testing and production and oil and gas price changes may require substantial upward or downward revisions in our initial reserve data.
Any failure to replace reserves and develop our proved undeveloped reserves could adversely affect our business and our financial position
Exploring for, developing and acquiring reserves is highly risky and capital intensive. Our exploration and development activities involve inherent risks, including the risk that we will not encounter commercially productive oil or gas reservoirs and the wells we drill may not be productive or not sufficiently productive to recover a portion or all of our investment. In addition, approximately 59.7% of our proved reserves were undeveloped as of December 31, 2013. Our future success will depend on our ability to develop these reserves in a timely and cost-effective manner. There are various risks in developing reserves, mainly including construction, operational, geophysical, geological and regulatory risks.
Our future prospects largely depend on our capital expenditures, which are subject to various risks
Our ability to maintain and increase our revenues, profit and cash flows depends upon continuous capital spending, which is subject to a number of contingencies, some of which are beyond our control. These variables include: cash flows from operations, the availability and terms of external financing, our ability to execute our project plans and commence production on time, weather conditions, the availability of services and facilities, approvals required from the PRC and foreign governments for certain capital expenditures and investments, and economic, political and other conditions in the PRC and overseas where we have operations or assets.
Therefore, our actual capital expenditures and investments in the future may differ significantly from our current planned amounts. If we are unable to obtain sufficient funding for our operations or development plans, our business, revenues, profit and cash flows could be adversely affected.
Any failure to implement our natural gas business strategy may adversely affect our business and financial position
As part of our business strategy and to meet increasing market demand in China, we continue to expand our natural gas business. In addition to the risks that affect our business generally, this strategy involves certain risks and uncertainties, including our limited market share compared to PetroChina Company Limited, or PetroChina, and China Petroleum & Chemical Corporation, or Sinopec, and the underdeveloped natural gas transportation and supply infrastructure and market in China. We are evaluating the options to invest in CNOOC’s LNG projects in China. However, we have not decided whether to exercise these options. The options are subject to various conditions including certain governmental approvals, the prospects of such projects and, if applicable, independent shareholders’ approval.
Mergers and acquisitions may expose us to additional risks and uncertainties, and we may not be able to realize the anticipated benefits from mergers and acquisitions
In the past few years, we expanded our operations into Argentina, the U.S., Canada, Uganda, United Kingdom and certain other countries through mergers and acquisitions. For example, we completed our significant acquisition of Nexen, a Canada-based energy company previously listed on the TSX and the NYSE, in February 2013. We may continue to pursue opportunities for mergers and acquisitions to expand our business in the future.
In light of political instability, unexpected changes to fiscal regime and various other factors, there may be uncertainties with respect to the operations of those merged and acquired overseas assets. In particular, we may face increasing exploration and environmental risks arising from Nexen’s unconventional resources development, including oil sands, shale gas and coalbed methane. The relatively high production cost of Nexen’s oil sands operations may negatively affect our overall profitability. In addition, acquisitions may result in the incurrence and inheritance of debts and other
liabilities, assumption of potential legal liabilities in respect of the acquired businesses, and incurrence of impairment charges related to goodwill and other intangible assets, any of which could harm our results of operations and financial condition. In particular, if any of the acquired businesses fails to perform as we expect, we may be required to recognize a significant impairment charge, which may materially and adversely affect our results of operations. Further, we may face other risks and uncertainties as we become subject to additional regulatory requirements as a result of the acquisition of Nexen. Therefore, we may not be able to achieve the anticipated economic return. Also, the increase in the scale of our operations may increase our operational risks.
Achieving the advantages of the Nexen acquisition will depend partly on the efficient combination of the activities of the Company and Nexen, two companies that functioned independently and were incorporated in different countries, with geographically dispersed operations and with different business cultures.
The integration process involves inherent costs and uncertainties. We expect the acquisition of Nexen will expand our existing business and assets and create sustainable growth opportunities, synergies and other benefits. However, our anticipated benefits may not develop. In addition, implementation of the acquisition and the successful integration of Nexen will also require management time and attention, as well as those employees with the appropriate skill sets for the tasks associated with such integration. The integration process may also adversely affect our profitability because we will incur additional costs, such as depreciation and employee costs, during such process. Any failures, material delays or unexpected costs of the integration process could therefore have a material adverse effect on our business, results of operations and financial condition.
CNOOC largely controls us and we regularly enter into related party transactions with CNOOC and its affiliates
CNOOC indirectly owned or controlled 64.44% of our shares as of March 31, 2014. As a result, CNOOC is able to control the composition of the board of directors of our company, or our Board, determine the timing and amount of our dividend payments and otherwise control us. If CNOOC takes actions that favor its interests over ours, our results of operations and financial position may be adversely affected.
In addition, we regularly enter into transactions with CNOOC and its affiliates. Some of our transactions with CNOOC and its affiliates constitute connected transactions under The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, or the Hong Kong Stock Exchange Listing Rules. Furthermore, these connected transactions are subject to review by the Hong Kong Stock Exchange and may also be subject to the prior approval of our independent shareholders. For example, we have obtained independent shareholders’ approval in respect of certain continuing connected transactions under a comprehensive framework agreement with CNOOC and its affiliates on November 27, 2013. If we do not obtain these approvals, we will not be allowed to effect these transactions and our business operations and financial condition could be adversely affected.
Under current PRC law, CNOOC has the exclusive right to enter into PSCs with foreign oil and gas companies for petroleum resources exploitation in offshore China. Although CNOOC has undertaken to us that it will transfer all of its rights and obligations under any new PSCs to us, except those relating to its administrative functions, the interests of CNOOC in entering into PSCs with international oil and gas companies may differ from our interests, especially with respect to the criteria for determining whether, and on what terms, to enter into PSCs. Our future business development may be adversely affected if CNOOC does not enter into new PSCs on terms that are acceptable to us.
Our business performance relies heavily on our sales to large domestic customers and a substantial drop in such sales could have a material adverse effect on our results of operations
We sell a significant proportion of our production to Sinopec, PetroChina and CNOOC-affiliated companies. However, we currently do not have long-term crude oil sales contracts with these customers.
Our business, results of operations and financial condition could be adversely affected if any of them significantly reduced their crude oil purchases from us.
We may have limited control over our investments in joint ventures and our operations with partners
Quite a few of our operations are conducted with partners or in joint ventures in which we may have limited ability to influence or control their operation or future development. Our limited ability to influence or control the operation or future development of such joint ventures could materially and adversely affect the realization of our target returns on capital and lead to unexpected future costs.
Blowout or other incidents may result in platform explosions, fire accidents and oil spills
Our operations are mainly conducted in challenging or environmentally sensitive locations, in which the consequences of a blowout, spill, explosion, fire or other incidents could be more severe than in other locations. Although we have adopted standard workflow procedures and various measures to control the risks of blowout or other incidents, we cannot assure you that we could avoid the potential losses caused by blowout or other incidents. If one or more blowout or other incidents occur, platform explosions and fire accidents caused by such incidents may result in casualties, property losses and environmental damages, which may have a material adverse effect on our business, financial condition and results of operation.
We maintain various insurance coverage for our operations against certain types of potential losses. For detailed information on our insurance coverage, see “Item 4—Information on the Company—Business Overview—Operating Hazards and Uninsured Risks.” However, our ability to insure against our risks is limited by the availability of relevant insurance products in the market. In addition, we cannot assure you that our insurance coverage is sufficient to cover any losses that we may incur, or that we will be able to successfully claim our losses under our existing insurance policies in a timely manner or at all. If any of our losses is not covered by our insurance policies, or if the insurance compensation is less than our losses or not paid in a timely manner, our business, financial condition and results of operations could be materially and adversely affected.
We conduct exploration and development in deepwater areas in both offshore China and overseas by cooperating with our partners and by ourselves. Operations in deepwater may require a significant amount of time between discovery and initial production, thus increasing the risks involved in these operations. Also, operations in deepwater are more difficult, risky and costly than those in shallower water and are subject to certain risks including well control and other catastrophic events. The consequences of blowouts and other catastrophic events occurring in deepwater operations can be more difficult, uncertain and time-consuming to remedy.
Extreme weather conditions may have a material adverse impact on us and could result in losses that are not covered by insurance
Our exploration, development and production activities can be adversely affected by extreme weather conditions, which could result in loss of hydrocarbons, environmental pollution, damage to our properties, cessation of activities, delay of project plans, shareholders lawsuits, government penalty, and increases in costs of drilling, completing and operating wells.
We maintain insurance coverage against some, but not all, potential losses. We do not maintain business interruption insurance for all of our oil and gas fields. We may suffer material losses resulting from uninsurable or uninsured risks or insufficient insurance coverage.
The current or future activities of our controlling shareholder, CNOOC, or its affiliates in certain countries that are the subject of U.S. sanctions could result in negative media and investor attention to us and possible imposition of sanctions on CNOOC, which could materially and adversely affect our shareholders
We cannot predict the interpretation or implementation of government policy at the U.S. federal, state or local levels with respect to any current or future activities by CNOOC or its affiliates in countries or with individuals or entities that are the subject of U.S. sanctions. Similarly, we cannot predict whether U.S. sanctions will be further tightened, or the impact that such actions may have on CNOOC. It is possible that the United States could subject CNOOC to sanctions due to these activities. Certain U.S. state and local governments and colleges have restrictions on the investment of public funds or endowment funds, respectively, in companies that are members of corporate groups with activities in certain countries that are the subject of U.S. sanctions, such as Iran and Sudan. It is possible that the activities of CNOOC or its affiliates may affect the investment in our shares by such U.S. state and local governments and colleges.
It is possible that, as a result of activities by CNOOC or its affiliates in countries that are the subject of U.S. sanctions, we may be subject to negative media or investor attention, which may distract management, consume internal resources and affect investors’ perception of our company.
In recent years, the U.S. Government has implemented a number of sanctions targeting non-U.S. companies that engage in certain Iran-related transactions. The Iran Sanctions Act, as amended, or ISA, the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, or CISADA, the National Defense Authorization Act for Fiscal Year 2012, or NDAA, the Iran Threat Reduction and Syria Human Rights Act of 2012, or TRA, the Iran Freedom and Counter-Proliferation Act of 2012, or IFCA, Executive Order 13622 of July 31, 2012, and Executive Order 13645 of June 3, 2013 authorize the imposition of sanctions on companies that engage in, among other things, certain activities related to Iran’s energy, petrochemical, shipping or shipbuilding sectors, and in certain instances, on their parent companies. It is possible that the U.S. Government could determine that CNOOC or its affiliates engage in activities targeted by U.S. sanctions. If the U.S. President determined that CNOOC or one of its affiliates engaged in targeted activities, CNOOC and/or its affiliate could be subject to U.S. sanctions, which range from restrictions on U.S. exports or bank financing to outright blocking of CNOOC or its affiliate’s property within U.S. jurisdiction. If the most extreme sanction, blocking, were applied to CNOOC’s property, including controlled subsidiaries, we could be prohibited from engaging in business activities in the United States or with U.S. individuals or entities, and U.S. transactions in our securities and distributions to U.S. individuals and entities with respect to our securities could also be prohibited.
As required by the Iran Threat Reduction and Syria Human Rights Act of 2012, which added a disclosure requirement to the Securities Exchange Act of 1934, we are providing certain information regarding our non-controlled affiliates’ activities. To our knowledge, in 2013, China Oilfield Services Limited (COSL), one of our non-controlled affiliates, continued to provide certain drilling and other related services in Iran in relation to subcontracting agreements entered into in 2009, as it did in 2012. We cannot predict at this time whether U.S. sanctions will be imposed on any of our affiliates.
Our business and financial condition may be adversely affected by a severe and prolonged global economic downturn and adverse economic conditions
The global economy has recovered moderately from the recession following the 2008 financial market disruptions and the European sovereign debt crisis. However, concerns about the systemic impact of a prolonged recession and adverse economic conditions, energy costs, geopolitical issues and the availability and cost of credit have contributed to increased market volatility and diminished expectations for economic growth around the world. The complex economic outlook has negatively affected business and consumer confidence and contributed to volatility levels. We cannot predict the short- and long-term impacts of these events on our business and financial condition, which could be materially and adversely affected.
Our unconventional oil and gas operations carry additional risks and uncertainties
Oil sands, shale oil and gas and coalbed methane (“CBM”) are unconventional oil and gas resources produced through the application of relatively new and expensive technologies. As a result, our unconventional oil and gas operations are subject to the challenges of immature technology and also expose us to higher environmental compliance standards and requirements. In the event of any failure to
comply with such standards and requirements, such failure may lead to public concerns about our unconventional oil and gas operations, which may also harm our corporate reputation.
Our projects may not be completed on time or within budget
We are involved in a variety of projects at any given time, including exploration and development projects, and the construction and expansion of projects facilities. Project delays may adversely affect expected revenues and cost overruns may adversely affect project economics. Our ability to complete projects on time and within budget depends on many factors beyond our control, including the need for government and regulatory approvals, especially the approvals from environmental agencies, the availability of equipment and personnel, weather, accidents, equipment breakdown, unexpected or uncontrollable increases in the costs of materials or labor and processing capacity.
Oil and gas transportation may expose us to the risk of financial loss and damaged reputation
Oil and gas transportation involves certain risks, which may expose us to the risk of financial loss and damaged reputation. Our oil and gas transportation involves marine, land and pipeline transportation, which are subject to hazards such as capsizing, collision, acts of piracy and damage or loss from severe weather conditions, explosion, and oil and gas spills and leakages. These hazards could result in serious personal injury or loss of human life, significant damage to property and equipment, environmental pollution, impairment of operations, risk of financial loss and damaged reputation. We may not be insured against all of these risks and uninsured losses and liabilities arising from these hazards could reduce the funds available to us for capital, exploration and investment spending, which could have a material adverse effect on our business, financial condition and results of operations.
Pipeline and export infrastructure in North America is limited
An increase in the supply of crude oil and natural gas from unconventional sources in North America has reduced commodity prices in North America relative to many other markets. The increased supply in North America is expected to fill existing North American pipeline infrastructure. Without new transportation and export infrastructure, the current transportation network in North America may not be able to accommodate the increased volumes of crude oil and natural gas expected from the development of unconventional oil and gas, including oil and gas produced from our oil sands and shale gas properties in western Canada. This, in turn, could delay the development of our oil and gas reserves in western Canada. In addition, North America has limited export infrastructure and without new export infrastructure, we may be required to sell our production into the North American markets at lower prices than are available in other markets, which could materially and adversely affect our financial performance.
Our lands in western Canada could be subject to aboriginal claims
Aboriginal peoples in Canada have claimed aboriginal title and rights to a substantial portion of western Canada, including the lands on which our shale gas and oil sands interests, and those of most other oil sands and shale gas operators in Alberta and British Columbia of Canada, are located. As a result, aboriginal consultation on surface activities is required and may result in timing uncertainties or delays of future development activities. Such claims, if successful, could have a significant adverse effect on our oil sands and shale gas developments in Canada.
The energy marketing operations of Nexen expose us to the risk of trading losses
Nexen has an energy marketing business, which primarily markets Nexen’s proprietary crude oil and natural gas production and also engages in market optimization activities including the purchase and sale of third-party production. The energy marketing operations of Nexen expose us to the risk of financial losses from various sources, which may have a material adverse effect on our financial performance. Nexen’s energy marketing team maintains a portfolio comprised of long and short physical and financial positions, which may be significant in size or number at any time. This portfolio of positions is managed based on a trading thesis for expected future pricing levels and trends in forward or regional markets. Unanticipated volatility in commodity price levels and trends
upon which those positions are based may cause a position to decrease in value. The transportation and storage assets and contracts undertaken by Nexen’s energy marketing business may decrease in value due to changes in temporal and regional commodity pricing.
Risks Relating to the Petroleum Industry
The oil and natural gas industries are very competitive
We compete in the PRC and international markets with national oil companies, major integrated oil and gas companies and various other independent oil and gas companies for oil and gas properties or leases, customers, capital financing and business opportunities, including desirable oil and gas prospects. We also compete for the equipment and personnel required to explore, develop and operate oil and gas properties. Competition may result in shortage of these resources, customers or opportunities, and also an over-supply of oil and gas, which could negatively impact our business, financial condition and results of operations.
Political, economic and security risks and changes in laws and regulations could have an adverse effect on our operations overseas
We currently have operations and assets in various foreign countries and regions, including Indonesia, Brazil, Iraq, Australia, Nigeria, Uganda, Argentina, the United States, Canada, the United Kingdom and certain other countries, and may expand our operations into other countries to further enhance our reserve base and diversify our geographic risk profile.
Some of the countries in which we have operations may be considered politically and economically unstable. A portion of our revenue is derived from operations in these countries. As a result, our financial condition and operating results could be significantly affected by risks associated with international activities, including, civil unrest and general strikes, political instability, risk of war and acts of terrorism, changes in governmental policies or social instability or other political, economic or diplomatic developments in or affecting these foreign nations which are not within our control, including, among other things, a change in crude oil or natural gas pricing policy, expropriation, nationalization, renegotiation or nullification of existing concessions and contracts, cost recovery, taxation policies, foreign exchange and repatriation restrictions, changing political conditions and currency controls.
Our operations are subject to laws and regulations in countries in which we operate. Changes in such laws and regulations could change environmental protection requirements and increase taxes, royalties and other amounts payable to governments or governmental agencies. Such changes may increase our cost of compliance or tax burden, which could materially and adversely affect our net income and result of operations.
In addition, the operations and assets that we currently have or in the future may have in foreign countries and regions may be materially and adversely affected by trade or economic sanctions that may be imposed by other countries due to their deteriorated relations with each other.
War and acts of terrorism could materially and adversely affect us
We have operations and assets in various countries and regions, including Indonesia, Brazil, Iraq, Australia, Nigeria, Uganda, Argentina, the United States, Canada, the United Kingdom and certain other countries, some of which are deemed to be subject to a high degree of political risk. We face the risks of kidnapping, damage to property and business interruption caused by terrorism activities and strikes. Acts of terrorism and strikes could materially and adversely affect our business, financial condition and results of operations.
We are required to obtain government or other regulatory approvals in order to operate
Our oil and gas operations require approvals from domestic as well as various international, federal, state, provincial, territorial and local governmental authorities in order to meet the requirement of laws and regulations designed to govern the activities of oil and gas in the process through exploration,
development and production. These laws and regulations may impose significant liabilities on a failure to comply with their requirements including the possibility of administrative, civil and criminal penalties, cancellation or suspension of permits or authorizations, investigations or other proceedings. If we are unable to obtain any necessary approvals, our business, financial condition, reputation and results of operations could be materially and adversely affected.
We may be penalized if we fail to comply with existing or future environmental laws and regulations
Our business is subject to environmental protection laws and regulations in the PRC, as well as other jurisdictions where we operate. The environmental laws and regulations to which we are subject may become increasingly strict and have an increasing impact on our operations. Our compliance with such laws or regulations may require us to incur significant capital expenditures or other obligations or liabilities, which could create a substantial financial burden on us. Furthermore, these jurisdictions may impose fees and fines for the discharge of waste substances or serious environmental pollution, and authorize a government, at its discretion, to close or suspend any facility which fails to comply with orders requiring it to cease or cure operations causing environmental damage.
We have established an Enterprise Risk Management System to identify, evaluate and manage the risks that we face. In addition, to help address various health, safety, security, environmental and operational risks, we have established a comprehensive management system to improve our employees’ awareness of our health, safety and environmental policies in our business operations and strengthen their skills of risk identification and risk management. We also continuously focus on workplace safety and prevention of oil spills or other adverse environmental events. However, there can be no assurance that our management systems and controls will function as intended at all times, or that our operations will be able to conform with our management systems and controls at all times. Substantial liabilities and other adverse impacts could result if our management systems and controls cannot adequately identify all process safety, personal safety and environmental risks or provide effective mitigations.
Risks Relating to the PRC
Changes in PRC laws and regulations could have an adverse effect on our operations
We are the largest producer of offshore crude oil and natural gas in the PRC. The PRC government exercises control over the PRC petroleum industry, including licensing, exploring, producing, distributing, pricing, taxing, importing, exporting and allocating of various resources. We have benefited from various favorable PRC government policies, laws and regulations that have been enacted to encourage the development of the offshore petroleum industry. We cannot guarantee that the legal and fiscal regimes affecting our businesses will remain substantially unchanged or that we will continue to benefit from favorable PRC government policies.
For instance, in 2011, the State Council of the PRC amended the Provisional Regulation of PRC Resource Tax and as a result, since November 1, 2011, the royalties payable to the PRC government have been replaced by resource tax, currently at 5% of the sales revenues from crude oil and natural gas. For detailed information on the resource tax, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”
From 2011, the Ministry of Finance and the State Administration of Taxation of the PRC promulgated the Circular on Printing and Issuing the Pilot Proposals for the Conversion from Business Tax to Value-Added Tax and various supporting Circulars. As a result, since January 1, 2012, the business tax in certain industries and regions has been replaced by value-added tax. This tax reform is very complex and may have some financial impact on the Company.
In addition, existing PRC regulations require us to obtain various PRC government licenses and other approvals, including in some cases approvals for amendments and extensions of existing licenses and approvals to conduct exploration and development activities off the shores of China. If we are unable to obtain any necessary approvals, our reserves and production would be adversely affected.
Government control of currency conversion and future movements in exchange rates may adversely affect our operations and financial condition
A portion of our Renminbi revenue may need to be converted into other currencies by our wholly owned subsidiary in the PRC, CNOOC China Limited, to meet our substantial requirements for foreign currencies, including: debt service on foreign currency denominated debt, overseas acquisitions of oil and gas properties, purchases of imported equipment, and payment of dividends declared in respect of shares held by international investors.
Foreign exchange transactions under the capital account, including principal payments with respect to foreign currency denominated obligations, are subject to the approval requirements of the State Administration for Foreign Exchange.
The value of Renminbi against U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The appreciation of Renminbi against U.S. dollar may cause a decrease in our oil sales, since the benchmark oil prices are usually in U.S. dollars.
Certain legal restrictions on dividend distribution may have a material adverse effect on our cash flows
We are a holding company. Our businesses are owned and conducted through various wholly owned subsidiaries, including CNOOC China Limited, our wholly owned subsidiary in the PRC. Accordingly, our future cash flows will consist principally of dividends and other distributions from our subsidiaries. Our PRC subsidiary’s ability to pay dividends and other distributions to us is subject to PRC laws and regulations. For example, legal restrictions in the PRC permit payment of dividends only out of profits determined in accordance with PRC accounting standards and regulations. Substantially all our dividend payments result from dividends paid to us as a holding company by CNOOC China Limited. CNOOC China Limited must follow the laws and regulations of the PRC and its articles of association in determining its dividends. As a wholly foreign owned enterprise in China, CNOOC China Limited should provide for a reserve fund and staff and workers’ bonus and welfare fund, each of which is appropriated from net profit after taxation but before dividend distributions according to the prevailing accounting rules and regulations in the PRC. Therefore, there is a risk that we may not be able to maintain sufficient cash flows due to these restrictions on dividend distribution.
Proceedings instituted by the SEC against five Mainland China -based accounting firms, including the affiliate of our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act
In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Mainland Chinese affiliates of the ‘‘big four’’ accounting firms (including the Mainland affiliate of our auditors) and also against Dahua (the former BDO affiliate in China). The Rule 102(e) proceedings initiated by the SEC relate to these firms’ failure to produce documents, including audit work papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in Mainland China are not in a position lawfully to produce documents directly to the SEC because of restrictions under PRC law and specific directives issued by the China Securities Regulatory Commission. The issues raised by the proceedings affect equally all audit firms based in Mainland China and all China-based businesses with securities listed in the United States.
In January 2014, the administrative judge reached an Initial Decision that the "big four " accounting firms in Mainland China should be barred from practicing before the SEC for six months. Although the principal auditor of our financial statements is Deloitte Touche Tohmatsu in Hong Kong which is not subject to the proceedings or the Initial Decision, our auditors use their Mainland affiliate to assist in the auditing of the Mainland China components of our operations. However, it is
currently impossible to determine the ultimate outcome of this matter as the accounting firms have indicated their intention to file a petition for review of the Initial Decision and pending that review the effect of the Initial Decision is suspended. It will, therefore, be for the Commissioners of the SEC to make a legally binding order specifying the sanctions if any to be placed on these audit firms. Once such an order was made, the accounting firms would have a further right to appeal to the US Federal courts, and the effect of the order might be further suspended pending the outcome of that appeal.
Depending upon the final outcome, listed companies in the United States with major Mainland China operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which may result in their delisting. Moreover, any negative news about the proceedings against these audit firms may erode investor confidence in China-based, United States listed companies and the market price of our ADSs may be adversely affected.
We were incorporated with limited liability on August 20, 1999 in Hong Kong under the Companies Ordinance (Chapter 32 of the Laws of Hong Kong, the predecessor to Chapter 622 of the Laws of Hong Kong, or the Hong Kong Companies Ordinance, which came into effect on March 3, 2014). Our company registration number in Hong Kong is 685974. Under the Hong Kong Companies Ordinance, we have the capacity, rights, powers and privileges of a natural person of full age and may do anything which we are permitted or required to do by our articles of association or any enactment or rule of law. Our registered office is located at 65th Floor, Bank of China Tower, One Garden Road, Central, Hong Kong, and our telephone number is 852-2213-2500.
The PRC government established CNOOC, our controlling shareholder, as a state-owned offshore petroleum company in 1982 under the Regulation of the PRC on the Exploitation of Offshore Petroleum Resources in Cooperation with Foreign Enterprises. CNOOC assumed certain responsibility for the administration and development of PRC offshore petroleum operations with foreign oil and gas companies.
Prior to CNOOC’s reorganization in 1999, CNOOC and its various affiliates performed both commercial and administrative functions relating to oil and natural gas exploration and development in offshore China.
In 1999, CNOOC transferred all of its then current operational and commercial interests in its offshore petroleum business, including the related assets and liabilities, to us. As a result, we and our subsidiaries are the only vehicles through which CNOOC engages in oil and gas exploration, development, production and sales activities both in and outside the PRC.
CNOOC retained its commercial interests in operations and projects not related to oil and gas exploration and production, as well as all of the administrative functions it performed prior to the reorganization.
CNOOC has undertaken to us that:
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we will enjoy the exclusive right to exercise all of CNOOC’s commercial and operational rights under PRC laws and regulations relating to the exploration, development, production and sales of oil and natural gas in offshore China;
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it will transfer to us all of its rights and obligations under any new PSCs and geophysical exploration operations, except those relating to its administrative functions;
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it will not engage or be interested, directly or indirectly, in oil and natural gas exploration, development, production and sales in or outside the PRC;
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we will be able to participate jointly with CNOOC in negotiating new PSCs and to set out our views to CNOOC on the proposed terms of new PSCs;
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we will have unlimited and unrestricted access to all data, records, samples and other original data owned by CNOOC relating to oil and natural gas resources;
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we will have an option to invest in LNG projects in which CNOOC invested or proposed to invest, and CNOOC will at its own expense help us to procure all necessary government approvals needed for our participation in these projects; and
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we will have an option to participate in other businesses related to natural gas in which CNOOC invested or proposed to invest, and CNOOC will procure all necessary government approvals needed for our participation in such business.
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The undertakings from CNOOC will cease to have any effect:
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if we become a wholly owned subsidiary of CNOOC;
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if our securities cease to be listed on any stock exchange or automated trading system; or
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12 months after CNOOC or any other PRC government-controlled entity ceases to be our controlling shareholder.
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In February 2013, we completed the acquisition of Nexen. Incorporated in Canada in 1971, Nexen is an independent global energy company. Upon completion of the acquisition, the Company established its North and Central America headquarters in Calgary, Canada, to be responsible for operating the Company’s businesses in North and Central America as well as Nexen’s global operations.
For information on our capital expenditures, see “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Cash Used in Investing Activities.”
Overview
We are an upstream company specializing in the exploration, development and production of oil and natural gas. We are the dominant oil and natural gas producer in offshore China and, in terms of reserves and production, we are also one of the largest independent oil and natural gas exploration and production companies in the world. As of the end of 2013, we had net proved reserves of approximately 4.43 billion BOE (including approximately 0.29 billion BOE under our equity method investees). In 2013, we had a total net oil and gas production of 1,127,967 BOE per day (including net oil and gas production of approximately 45,173 BOE per day under our equity method investees).
Competitive Strengths
We believe that our historical success and future prospects are directly related to a combination of our strengths, including the following:
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large and diversified asset base with significant exploitation opportunities;
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sizable operating areas in offshore China with demonstrated exploration potential;
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successful independent exploration and development track record;
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access to capital and technology and reduced risks through PSCs in offshore China; and
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experienced management team and a high level of corporate governance standard.
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Large and diversified asset base with significant exploitation opportunities
We have a large net proved reserve base spread across offshore China and globally. As of December 31, 2013, we had approximately 4.43 billion BOE of net proved reserves. Our core operating area, offshore China, contributed approximately 55% of our net proved reserves, while overseas contributed the balance of 45%.
In addition to offshore China, we have a diversified global portfolio which provides us with further exploration and exploitation potential. We have a strong track record of successfully acquiring and operating many quality overseas upstream assets worldwide. Currently, we have assets in resource rich countries such as Indonesia, Australia, Nigeria, Uganda, the United States, Canada, the United Kingdom and Brazil.
As of December 31, 2013, approximately 59.7% of our net proved reserves were classified as net proved undeveloped. Our large proved reserve base gives us the opportunity to achieve substantial production growth.
Sizable operating areas in offshore China with demonstrated exploration potential
We are the dominant oil and gas producer in offshore China, a region that we believe has substantial exploration upside. As of December 31, 2013, our total major exploration areas acreage in offshore China was approximately 257 thousand km2. We believe that offshore China is relatively underexplored, compared to other prolific offshore exploration areas such as the shallow water of the U.S. Gulf of Mexico, providing us with substantial exploration upside.
We have maintained an active drilling exploration program, which continues to demonstrate the exploration potential of offshore China. During 2013, we and our foreign partners together drilled a total of 100 exploratory wells in offshore China, of which 47 were wildcat wells. During the same year, we and our foreign partners made 10 new discoveries in offshore China.
Successful independent exploration and development track record
We have a strong record of growing our reserves base for oil and natural gas, both independently and with our foreign partners through PSCs. In recent years, we have been adding reserves and production mainly through independent exploration and development. As of the end of 2013, in offshore China, approximately 82.3% of our net proved reserves were independent and approximately 69.6% of our production came from independent projects.
In 2013, in offshore China, our independent exploration resulted in 10 new discoveries. We also successfully appraised 15 oil and gas structures. On the development front, in 2013, our major new development projects progressed smoothly with 6 new projects on stream in offshore China.
Access to capital and technology and reduced risks through PSCs in offshore China
Our parent, CNOOC, holds exclusive right from the PRC government to enter into PSCs with foreign partners relating to the petroleum resources exploitation in offshore China. CNOOC assigned us all of its rights and obligations under then-existing PSCs in 1999 and has undertaken to assign to us its future PSCs except for those relating to its administrative functions. PSCs help us minimize our offshore China finding costs, exploration risks and capital requirements because our foreign partners are responsible for all costs associated with exploration under the usual case. Our foreign partners recover their exploration costs only when a commercially viable discovery is made and production begins.
For more information about PSCs, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”
Experienced management team and a high level of corporate governance standard
Our senior management team has extensive experience in the oil and gas industry. Most of our executives have been with CNOOC, our controlling shareholder, since its inception in 1982. Many of our management team and staff members have worked closely with international partners both within and outside China through numerous joint operations.
We have a proven track record of complying with a high level of corporate governance standard, which was recognized by the industry. For example, we were awarded the “Corporate Governance Recognition Awards — Asia’s Icon on Corporate Governance” by Corporate Governance Asia Magazine and the “2013 Excellence in Management and Corporate Governance Awards-Platinum” by The Asset in 2013.
Business Strategy
We intend to continue expanding our oil and gas exploration and production activities. The principal components of our strategy are as follows:
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focus on reserve and production growth;
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develop natural gas business; and
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maintain prudent financial policy.
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Focus on reserve and production growth
As an upstream company specializing in the exploration, development, production and sales of oil and natural gas, we consider reserve and production growth as top priority. We plan to increase our reserves and production through drill bits and value-driven acquisitions. We will continue to concentrate independent exploration efforts on major operating areas, especially in offshore China. In the meantime, we will continue to enter into PSCs with foreign partners to lower capital requirements and exploration risks. In 2013, we achieved a reserve replacement ratio of 327%.
We increase production primarily through the development of proved undeveloped reserves. As of December 31, 2013, approximately 59.7% of our proved reserves were classified as proved undeveloped, which gives us the opportunity to achieve future production growth, as long as these proved undeveloped reserves are developed faster than the depletion rate of our currently producing reserves.
Develop natural gas business
We plan to capitalize on the growth potential of the PRC natural gas market, and continue to explore and develop natural gas fields. To the extent we invest in businesses and geographic areas where we have limited experience and expertise, we plan to structure our investments as alliances or partnerships with partners possessing the relevant experience and expertise.
In 2014, the large-size gas field Liwan 3-1 in deepwater South China Sea will commence production. We expect that our natural gas production would continue to increase accordingly.
Maintain prudent financial policy
We will continue to maintain our prudent financial policy. As an essential part of our corporate culture, we continue to promote cost consciousness among both our management team and other employees. Also, in our performance evaluation system, cost control is always one of the most important key performance indicators.
Aiming to control production cost, we plan to actively promote the regional development of oil and gas field groups and to apply up-to-date offshore engineering, drilling and production technologies to our operations.
Currently, we have a strong financial profile. We intend to maintain our financial strength by managing key measures such as capital expenditures, cash flows and costs per BOE. We also intend to actively manage our account receivables and inventories to enhance liquidity and improve profitability. We will continue to monitor our foreign currency denominated assets and debts and to manage exposure to foreign exchange rate fluctuations.
Selected Operating and Reserves Data
The following table sets forth our operating data and our net proved reserves as of the date and for the periods indicated.
Our reserve data for 2011, 2012 and 2013 were prepared in accordance with the SEC’s final rules on “Modernization of Oil and Gas Reporting”, which became effective for accounting periods ended on or after December 31, 2009.
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Year ended December 31,
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2011
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2012
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2013
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Net Production(1):
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Oil (daily average bbls/day)
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708,286 | 742,765 | 912,603 | |||||||||
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Gas (daily average mmcf/day)
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1,171.7 | 1,109.7 | 1,247.4 | |||||||||
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Oil equivalent (BOE/day)
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909,000 | 935,615 | 1,127,967 | |||||||||
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Net Proved Reserves (end of period):
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Oil (mmbbls)
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1,873.3 | 2,031.1 | 2,290.2 | |||||||||
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Gas (bcf)
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5,627.4 | 6,005.3 | 6,323.3 | |||||||||
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Synthetic Oil (mmbbls)
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87.4 | 137.0 | 736.4 | |||||||||
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Bitumen (mmbbls)
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8.6 | 12.6 | 33.8 | |||||||||
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Total (million BOE)
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2,921.1 | 3,202.6 | 4,138.7 | |||||||||
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Total with equity method investees (million BOE)(1)
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3,190.1 | 3,491.9 | 4,427.6 | |||||||||
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Annual reserve replacement ratio(2)
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167% | 187% | 337% | |||||||||
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Annual reserve replacement ratio(1)
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158% | 188% | 327% | |||||||||
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Estimated reserve life (years)
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9.3 | 9.8 | 10.5 | |||||||||
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Estimated reserve life (years)(1)
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9.6 | 10.2 | 10.8 | |||||||||
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Standardized measure of discounted future net cash flow (million Rmb)
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339,234 | 356,998 | 389,022 | |||||||||
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(1)
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Including our interest in equity method investees. |
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(2)
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For information on the calculation of this ratio, see “Terms and Conventions—Glossary of Technical Terms—reserve replacement ratio.”
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For the years 2011, 2012 and 2013, approximately 23%, 36% and 52%, respectively, of our reserves were evaluated by our internal reserve evaluation staff and the remaining were based upon estimates prepared by independent petroleum engineering consulting companies and reviewed by us. For further information regarding our reserves, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Operations—The oil and gas reserve estimates in this annual report may require substantial revision as a result of future drilling, testing, production and oil and gas price changes” and “Item 4—Information on the Company—Business Overview—Exploration, Development and Production.”
Summary of Oil and Gas Reserves
The following table sets forth summary information with respect to our estimated net proved reserves of crude oil and natural gas as of the dates indicated.
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Net proved reserves
at December 31,
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Net proved reserves
at December 31, 2013
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2011
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2012
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Crude Oil
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Natural Gas
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Synthetic Oil
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Bitumen
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Total
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(mmboe)
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(mmboe)
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(mmbbls)
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(bcf)
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(mmbbls)
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(mmbbls)
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(mmboe) (1)
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Developed
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Offshore China
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Bohai
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632.9 | 579.6 | 478.5 | 331.2 | — | — | 533.7 | |||||||||||||||||||||
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Western South China Sea
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230.4 | 207.8 | 98.1 | 654.2 | — | — | 210.8 | |||||||||||||||||||||
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Eastern South China Sea
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213.4 | 209.5 | 123.4 | 317.8 | — | — | 176.4 | |||||||||||||||||||||
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East China Sea
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8.4 | 7.1 | 0.4 | 33.3 | — | — | 5.9 | |||||||||||||||||||||
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Subtotal
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1,085.1 | 1,004.0 | 700.3 | 1,336.6 | — | — | 926.8 | |||||||||||||||||||||
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Overseas
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Asia (excluding China)
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68.0 | 105.3 | 24.3 | 414.9 | — | — | 98.9 | |||||||||||||||||||||
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Oceania
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34.9 | 30.2 | 8.3 | 182.9 | — | — | 44.4 | |||||||||||||||||||||
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Africa
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46.4 | 44.2 | 58.9 | — | — | — | 58.9 | |||||||||||||||||||||
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North America (excluding Canada)
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47.0 | 105.4 | 84.5 | 193.2 | — | — | 116.7 | |||||||||||||||||||||
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Canada (2)
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— | — | 0.1 | 195.0 | 208.8 | 241.4 | ||||||||||||||||||||||
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Europe
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— | — | 128.2 | 26.3 | — | — | 132.6 | |||||||||||||||||||||
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South America
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— | — | 1.7 | — | — | — | 1.7 | |||||||||||||||||||||
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Subtotal
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196.3 | 285.1 | 306.0 | 1,012.3 | 208.8 | — | 694.6 | |||||||||||||||||||||
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Total Developed
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1,281.4 | 1,289.1 | 1,006.2 | 2,348.9 | 208.8 | — | 1,621.3 | |||||||||||||||||||||
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Undeveloped
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Offshore China
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Bohai
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466.9 | 586.3 | 609.1 | 221.7 | — | — | 646.1 | |||||||||||||||||||||
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Western South China Sea
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356.3 | 414.4 | 130.2 | 1,851.1 | — | — | 438.7 | |||||||||||||||||||||
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Eastern South China Sea
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306.5 | 340.5 | 233.6 | 796.4 | — | — | 366.3 | |||||||||||||||||||||
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East China Sea
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60.0 | 63.6 | 19.5 | 269.8 | — | — | 64.4 | |||||||||||||||||||||
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Subtotal
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1,189.7 | 1,404.9 | 992.4 | 3,139.0 | — | — | 1,515.5 | |||||||||||||||||||||
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Overseas
|
||||||||||||||||||||||||||||
|
Asia (excluding China)
|
155.3 | 102.2 | 59.3 | 474.4 | — | — | 141.7 | |||||||||||||||||||||
|
Oceania
|
75.8 | 66.6 | 7.6 | 203.1 | — | — | 47.7 | |||||||||||||||||||||
|
Africa
|
87.3 | 91.5 | 96.5 | — | — | — | 96.5 | |||||||||||||||||||||
|
North America (excluding Canada)
|
131.7 | 248.3 | 90.5 | 156.4 | — | — | 116.5 | |||||||||||||||||||||
|
Canada
|
— | — | — | — | 527.6 | 33.8 | 561.4 | |||||||||||||||||||||
|
Europe
|
— | — | 37.8 | 1.5 | — | — | 38.0 | |||||||||||||||||||||
|
Subtotal
|
450.1 | 508.6 | 291.6 | 835.4 | 527.6 | 33.8 | 1,001.8 | |||||||||||||||||||||
|
Total Undeveloped
|
1,639.8 | 1,913.5 | 1,283.9 | 3,974.4 | 527.6 | 33.8 | 2,517.3 | |||||||||||||||||||||
|
TOTAL PROVED
|
2,921.1 | 3,202.6 | 2,290.2 | 6,323.3 | 736.4 | 33.8 | 4,138.7 | |||||||||||||||||||||
|
Equity method investees
|
269.0 | 289.3 | 199.3 | 519.9 | — | — | 288.9 | |||||||||||||||||||||
|
Total with equity method investees
|
3,190.1 | 3,491.9 | 2,489.5 | 6,843.2 | 736.4 | 33.8 | 4,427.6 | |||||||||||||||||||||
|
(1)
|
In calculating barrels-of-oil equivalent amounts, we have assumed that 6,000 cubic feet of natural gas equals one BOE, with the exception of natural gas from South America, Oceania, Indonesia in Asia and Yacheng 13-1/13-4 gas fields in the Western South China Sea, which we have used actual thermal unit for such conversion purpose.
|
|
(2)
|
As Canada contained over 15% of the Group’s total proved reserves as at the end of 2013, the Group’s proved reserves and production data in Canada are disclosed separately for year 2013. For year 2012 and before, Canada’s numbers are included in North America (if applicable) and disclosed on a combined basis.
|
The following tables set forth net proved crude oil reserves, net proved natural gas reserves and total net proved reserves, as of the dates indicated, for our independent and non-independent operations in each of our operating areas.
Total Net Proved Crude and Liquids Reserves
(mmbbls)
|
As of December 31,
|
As of December 31, 2013
|
|||||||||||||||||||
|
2011
|
2012
|
Developed
|
Undeveloped
|
Total
|
||||||||||||||||
|
Offshore China
|
||||||||||||||||||||
|
Bohai
|
1,000.4 | 1,067.2 | 478.5 | 609.1 | 1,087.6 | |||||||||||||||
|
Western South China Sea
|
250.5 | 224.8 | 98.1 | 130.2 | 228.3 | |||||||||||||||
|
Eastern South China Sea
|
316.1 | 354.0 | 123.4 | 233.6 | 357.0 | |||||||||||||||
|
East China Sea
|
17.7 | 19.8 | 0.4 | 19.5 | 19.8 | |||||||||||||||
|
Subtotal
|
1,584.7 | 1,665.7 | 700.3 | 992.4 | 1,692.6 | |||||||||||||||
|
Overseas
|
||||||||||||||||||||
|
Asia (excluding China)
|
81.8 | 65.0 | 24.3 | 59.3 | 83.6 | |||||||||||||||
|
Oceania
|
19.0 | 16.7 | 8.3 | 7.6 | 15.9 | |||||||||||||||
|
Africa
|
133.7 | 135.7 | 58.9 | 96.5 | 155.4 | |||||||||||||||
|
North America (excluding Canada)
|
54.1 | 297.6 | 84.5 | 90.5 | 175.0 | |||||||||||||||
|
Canada
|
— | — | 208.9 | (1) | 561.4 | (2) | 770.3 | |||||||||||||
|
Europe
|
— | — | 128.2 | 37.8 | 166.0 | |||||||||||||||
|
South America
|
— | — | 1.7 | — | 1.7 | |||||||||||||||
|
Subtotal
|
288.6 | 515.0 | 514.8 | 853.0 | 1,367.8 | |||||||||||||||
|
Total
|
1,873.3 | 2,180.7 | 1,215.1 | 1,845.3 | 3,060.4 | |||||||||||||||
|
Equity method entities
|
196.3 | 200.7 | 102.1 | 97.2 | 199.3 | |||||||||||||||
|
Total with equity method investees
|
2,069.6 | 2,381.5 | 1,317.2 | 1,942.5 | 3,259.7 | |||||||||||||||
|
(1)
|
Including Synthetic oil 208.8 mmbbls and crude oil 0.1 mmbbls.
|
|
(2)
|
Including Synthetic oil 527.6 mmbbls and Bitumen 33.8 mmbbls.
|
Total Net Proved Natural Gas Reserves
(bcf)
|
As of December 31,
|
As of December 31, 2013
|
|||||||||||||||||||
|
2011
|
2012
|
Developed
|
Undeveloped
|
Total
|
||||||||||||||||
|
Offshore China
|
||||||||||||||||||||
|
Bohai
|
596.2 | 592.5 | 331.2 | 221.7 | 552.9 | |||||||||||||||
|
Western South China Sea
|
2,017.2 | 2,384.9 | 654.2 | 1,851.1 | 2,505.4 | |||||||||||||||
|
Eastern South China Sea
|
1,222.4 | 1,175.7 | 317.8 | 796.4 | 1,114.2 | |||||||||||||||
|
East China Sea
|
303.7 | 305.9 | 33.3 | 269.8 | 303.1 | |||||||||||||||
|
Subtotal
|
4,139.5 | 4,459.0 | 1,336.6 | 3,139.0 | 4,475.6 | |||||||||||||||
|
Overseas
|
||||||||||||||||||||
|
Asia (excluding China)
|
848.7 | 800.4 | 414.9 | 474.4 | 889.4 | |||||||||||||||
|
Oceania
|
467.8 | 409.5 | 182.9 | 203.1 | 386.0 | |||||||||||||||
|
Africa
|
— | — | — | — | — | |||||||||||||||
|
North America (excluding Canada)
|
171.4 | 336.4 | 193.2 | 156.4 | 349.6 | |||||||||||||||
|
Canada
|
— | — | 195.0 | - | 195.0 | |||||||||||||||
|
Europe
|
— | — | 26.3 | 1.5 | 27.8 | |||||||||||||||
|
South America
|
— | — | — | — | — | |||||||||||||||
|
Subtotal
|
1,487.9 | 1,546.3 | 1,012.3 | 835.4 | 1,847.7 | |||||||||||||||
|
Total
|
5,627.4 | 6,005.3 | 2,348.9 | 3,974.4 | 6,323.3 | |||||||||||||||
|
Equity method investees
|
422.0 | 513.7 | ||||||||||||||||||