Edgar Filing: CNOOC LTD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of September 2014

Commission File Number 1-14966

CNOOC Limited

(Translation of registrant’s name into English)

65th Floor

Bank of China Tower

One Garden Road

Central, Hong Kong

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X Form 40-F ___

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ___ No X

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			CNOOC Limited


	By:		/s/ Hua Zhong
	Name:		Hua Zhong
	Title:		Joint Company Secretary

Dated: September 5, 2014

EXHIBIT INDEX

Exhibit No.	Description
Exhibit 99.1	Announcement dated September 5, 2014, entitled “2014 Interim Report”.
Exhibit 99.2	Announcement dated September 5, 2014, entitled “Notification Letter and Request Form for Non-Registered Holders”.

Exhibit 99.1

Contents

2	CHAIRMAN’S STATEMENT

4	CEO’S STATEMENT

6	KEY FIGURES

7	BUSINESS OVERVIEW

10	INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

12	INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

14	INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

15	INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

16	NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

48	REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

49	OTHER INFORMATION

Chairman’s Statement

Dear Shareholders,

During the first half of 2014, the world’s economic growth continued to improve slowly. The Chinese economy gradually stabilized. International oil prices have been stable and rising. Faced with a complex macro-economic environment, the Company has executed its “New Leap Forward” strategy in a solid way and achieved satisfactory results.

Early this year, the Company carefully assessed the possible impacts of the macro-economic environment on its production and operation. In view of the rapidly rising costs in the past few years, we designated year 2014 as the “Year of Quality and Efficiency”, requiring staff at all levels to make greater efforts in cost-control and efficiency enhancement. In the first half of the year, we have carefully delineated different areas of responsibilities, developed effective measurements, advanced meticulous management and raised the level of awareness of all our employees on the goals of the Company. Initial achievements have been made through our solid and effective work.

The Company made solid progress in overall operation. On exploration, the Company continued the success in offshore China and made several medium and large scale new discoveries, further solidify the resource foundation of the Company’s “New Leap Forward” strategy. Commercial discoveries were also gradually made in overseas exploration and became a new source for the Company’s reserves addition.

On development and production, the Company overcame the challenges of less new start-up projects and managed the natural decline of mature oil and gas fields to maintain steady growth in oil and gas production as compared to the first half of 2013. Major oil and gas fields in offshore China maintained relatively high production efficiency and fundamental production remained stable. The integration of Nexen has progressed smoothly and the overall production was in line with our expectation, which provided strong support to the production growth of the Company. The construction of new projects progressed smoothly and is expected to add new momentum for the Company’s production growth in the second half of the year and in the years to come.

The Company has also maintained satisfactory earning capability and kept a healthy financial position. Benefiting from steady oil and gas production growth and rising international oil prices, net profit amounted to RMB 33.59 billion despite of a mild increase in cost per barrel. In view of the financial condition and in accordance with the dividend policy of the Company, the Board of Directors has declared an interim dividend of HK$ 0.25 per share (tax inclusive) for the first half of 2014.

The Company has always placed health, safety and environmental protection as its top priority. For the first half of the year, the Company has increased its efforts in monitoring and detecting hidden problems for pipeline and other operation facilities and ensured safety of the employees and stable production under complicated environment. In overseas, we strengthened our security measures and improved emergency response plan in areas where the overall situation is unstable, and ensured safety of our employees and the stable operation of our projects.

Dear shareholders, the Company is making a steady stride on its new development journey. We will work hard to strengthen our management, enhance the quality and efficiency of the development of the Company to create greater value for our shareholders.

	WANG Yilin
	Chairman

Hong Kong, 28 August 2014

CEO’s Statement

Dear Shareholders,

During the first half of 2014, we have actively pushed ahead different areas of our business in accordance with our theme of the year-“Year of Quality and Efficiency”. Good progress was made in the areas of production and operation and a healthy financial position was maintained.

REVIEW OF THE FIRST HALF OF THE YEAR

With the hard work and dedication of our entire staff, the Company has achieved smooth progress and good results in exploration, development and production for the first half of the year.

In the area of exploration, eight new discoveries and 20 successful appraisal wells were made in offshore China. Of these, Lingshui 17-2, located in Qiongdongnan Basin in Western South China Sea, was successfully tested and expected to be the first large-sized deepwater gas field made by our independent exploration. Luda 16-3 south structure, located in the southern Liaodong Bay in Bohai, is expected to be a medium-sized discovery after further appraisals. Another discovery, Kenli 16-1 structure, located along the southern slope of Laizhou Bay Sag in Bohai, reflects the good exploration potential of the area. Overseas, one new discovery and three successful appraisal wells were obtained, which will make contribution to the Company’s reserve growth.

On development and production, the Company’s net production of oil and gas reached 211.6 million BOE in the first half of the year, representing an increase of 6.8% year over year. Production volume in offshore China remained stable while production overseas continued to grow. In particular, the Long Lake project in Canada, the Eagle Ford project in the U.S. and the Missan oilfields in Iraq provided considerable support to the Company’s production growth.

The construction of new projects also progressed smoothly. Up to now, Kenli 3-2 oilfields, Panyu 10-2/5/8 and Wenchang 13-6 projects that were planned to be on stream within the year have already commenced production successfully. Of which, Kenli 3-2 oilfields is the first regional development project in offshore China, which confers the benefits of expanding rolling exploration, lowering oil and gas field development costs and enhancing economic efficiency. Other projects progressed on schedule.

Regarding the Company’s financial performance, oil and gas sales for the first half of the year reached RMB117.10 billion, representing an increase of 5.7% year over year. The increase was primarily attributable to the production growth and higher realized oil and gas prices. Due to rising costs, net profit for the period amounted to RMB33.59 billion and earnings per share were RMB0.75, representing a decline of 2.3% year over year. All-in cost was US$43.20 per BOE, representing an increase of 2.0% year over year.

Meanwhile, the Company has continued to implement the integration of Nexen, especially in the areas of management, resources development and corporate culture. Nexen’s KPIs of safety and environmental protection reached the history high. Production efficiency of Buzzard oilfield in the U.K. North Sea was further enhanced, and production operations of Long Lake oil sands project in Canada continued to improve. Overall progress reached the Company’s expectation.

OUTLOOK FOR THE SECOND HALF OF THE YEAR

There still exist uncertainty and challenges in the external environment for the Company’s business development in the second half of the year. Factors such as typhoons may adversely affect the production of the Company, and the difficulties in cost control should not be underestimated. We will unite our efforts and work hard to meet our annual production and business targets. To achieve this, the Company will focus its efforts in the following areas:

First, adhering to the theme of “Year of Quality and Efficiency”, we will continue to focus on improving the quality of our development, increasing our efficiency and making long-term efforts in cost control.

Second, we will speed up the appraisal of key exploration targets to ensure reserve additions. Meanwhile, we will strengthen exploration in new areas to pave the way for sustainable growth for the Company.

Third, we will steadily carry forward the construction of new projects and stablize production of matured oil and gas fields. We will also work effectively to minimize the impacts of negative factors such as typhoons on our production and strive to meet our production target for the year.

Fourth, we will strengthen our health, safety and environmental protection management to ensure safe and environmental friendly operation.

In summary, we will continue to strengthen our management, improve our quality and efficiency in order to meet various production and operation targets for year 2014, and continue to build a strong foundation for sustainable growth for the Company.

	LI Fanrong
	Chief Executive Officer

Hong Kong, 28 August 2014

Key Figures

	Six months ended 30 June
	2014		2013

Net profit, million RMB		33,593		34,383
Basic earnings per share, RMB		0.75		0.77

Total oil and gas sales, million RMB		117,095		110,799
Total revenue, million RMB		138,800		139,027

Interim dividend per share, HK$ (tax inclusive)		0.25		0.25

Net Production*
Crude and liquids, million barrels		171.3		161.2
Natural gas, billion cubic feet		233.9		214.4
Total, million BOE		211.6		198.1

*	Including our interest in equity-accounted investees, which is approximately 8.5 million BOE for the first half of 2014 and approximately 8.0 million BOE for the first half of 2013.

Business Overview

EXPLORATION

In the first half of 2014, the Company made a total of nine new discoveries and obtained 23 successful appraisal wells. Eight new discoveries and 20 successful appraisal wells were obtained out of a total of 62 exploration wells that were drilled in offshore China, resulting in a success rate of 46-62% of independent exploration wells. Among which, Lingshui 17-2, located in Qiongdongnan Basin in Western South China Sea, was successfully tested and expected to be developed into the first large-sized deepwater gas field made by our independent exploration. One new discovery and three successful appraisal wells were obtained overseas. In addition, approximately 12,000 km of 2D seismic data and 19,000 km² of 3D seismic data were acquired.

The Company’s major exploratory activities in the first half of 2014 are shown in the table below:

Wildcat

Appraisal Wells

Success +

Exploration Wells

Completed

Uncertain

Completed

Uncertain

Offshore China (Independent)

8+8

20+2

Offshore China (PSC)

0+1

0+0

Overseas

3+0

Seismic Data	2D (km)		3D (km2)

Independent		12,356		14,382
PSC		0		4,587

Total		12,356		18,969

ENGINEERING CONSTRUCTION, DEVELOPMENT AND PRODUCTION

In the first half of the year, the Company carefully organized its operation resources and made smooth progress in engineering construction. Up to now, Kenli 3-2 oilfields, Panyu 10-2/5/8 and Wenchang 13-6 projects, which were scheduled to start up in this year, have commenced production. Kenli 3-2 oilfields represents the first regional development of the Company helping to lower production cost and enhance the efficiency of oil and gas development.

The Company’s other projects have also been progressing smoothly. The platforms of Panyu 34-1/35-1/35-2 were mechanically completed. The offshore installation of platform top modules of Qinhuangdao 32-6 adjustment project was completed. The offshore installation for Enping 24-2 has been underway. Overseas, the Golden Eagle project in the U.K. North Sea is scheduled to commence production by the end of this year.

ENGINEERING CONSTRUCTION, DEVELOPMENT AND PRODUCTION (CONTINUED)

The Company’s total net production for the first half of the year continued to achieve stable growth and reached 211.6 million BOE, representing an increase of 6.8% over the same period last year. Among which, 131.2 million BOE were from offshore China, representing a decrease of 0.8% year over year. While the production of existing oil and gas fields in offshore China remained stable, total output has been affected by scheduled maintenance programs. Net production from overseas was 80.4 million BOE, representing a significant increase of 22.1% year over year, mainly attributable to the consolidation of two more months of production from Nexen year over year. Net production of the Company without taking into account of 36.3 million BOE from Nexen was 175.3 million BOE, representing an increase of 1.2% over the same period last year. The increase was mainly attributable to the significant increase in production year over year of the Eagle Ford shale oil and gas project in the U.S. and the Missan oilfields in Iraq.

In the second half of the year, the production operation is expected to be affected by adverse factors such as typhoons. The Company will carefully plan to ensure timely commencement of new projects and continue to strengthen measures to stabilize and enhance the performance of producing oil and gas fields in order to achieve the annual production target for the year.

The Company’s production by regions is shown in the table below:

	First half of 2014				First half of 2013
	Crude and		Natural		Crude and		Natural
	Liquids		gas		Liquids		gas
	(million				(million
	barrels)		(bcf)		barrels)		(bcf)

China
Bohai		70.1		25.7		72.3		23.7
Western South China Sea		15.0		63.6		12.7		60.2
Eastern South China Sea		25.9		22.8		27.3		26.6
East China Sea		0.3		4.9		0.2		5.5

Subtotal		111.4		116.9		112.5		116.0

Overseas
Asia (excluding China)		5.9		24.7		5.0		22.7
Oceania		0.7		17.3		0.7		15.5
Africa		13.6		–		13.0		–
North America (excluding Canada)		8.3		17.9		6.8		18.2
Canada		8.6		22.5		6.0		14.4
South America		4.2		24.0		4.1		23.0
Europe		18.5		10.6		13.1		4.6

Subtotal		59.9		117.0		48.6		98.4

Total		171.3		233.9		161.2		214.4

Total net production (million BOE)				211.6				198.1

CAPITAL EXPENDITURE

Our capital expenditure budget for 2014 is RMB105.0-120.0 billion. In the first half of 2014, the Company’s capital expenditure was RMB48.07 billion (excluding capitalised interests of RMB0.56 billion), representing a 27.2% increase year over year, of which capital expenditure of Nexen accounted for RMB8.97 billion. Capital expenditure for exploration, development and production was RMB11.28 billion, RMB30.98 billion and RMB5.44 billion, respectively, representing an increase of 45.4%, 24.4% and 15.0% year over year, respectively. The increase in capital expenditure was mainly due to increased workload together with cost inflation.

COST AND EXPENSES

Compared with the first half of 2013, the main increased cost items are as below: Our operating expenses increased 12.4% to RMB14,685 million in the first half of 2014 from RMB13,060 million in the first half year of 2013. Our depreciation, depletion and amortisation expenses increased 5.8% to RMB27,966 million in the first half of 2014 from RMB26,440 million in the first half of 2013. These increases were mainly due to two extra months of consolidation of Nexen in the first half of 2014 as compared to the same period in 2013. Our finance costs and exchange loss/(gain), net changed 57.6% and 120.7% to RMB2,302 million and RMB163 million in the first half of 2014 from RMB1,461 million and RMB(787) million in the first half of 2013, respectively. These changes were mainly due to the increased long-term interest-bearing debt and the appreciation of US dollars/HK dollars against Renminbi.

Save as disclosed in this interim report, there has not been any material change in our performance and the material factors underlying our results and financial position during the first half of the year.

Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2014

(All amounts expressed in millions of Renminbi, except per share data)

		Six months ended 30 June
	Notes	2014			2013
		(Unaudited)			(Unaudited)

REVENUE
Oil and gas sales	3		117,095			110,799
Marketing revenues	3		19,673			26,586
Other income			2,032			1,642

			138,800			139,027

EXPENSES
Operating expenses			(14,685	)		(13,060	)
Taxes other than income tax	6(ii)		(7,793	)		(7,486	)
Exploration expenses			(4,742	)		(4,360	)
Depreciation, depletion and amortisation			(27,966	)		(26,440	)
Special oil gain levy	4		(11,971	)		(11,871	)
Crude oil and product purchases	3		(18,481	)		(25,614	)
Selling and administrative expenses			(3,424	)		(3,276	)
Others			(1,289	)		(1,284	)

			(90,351	)		(93,391	)

PROFIT FROM OPERATING ACTIVITIES			48,449			45,636
Interest income			577			556
Finance costs	5		(2,302	)		(1,461	)
Exchange (loss)/gain, net			(163	)		787
Investment income			1,253			1,224
Share of profits of associates			85			116
Share of profit of a joint venture			533			645
Non-operating income, net			215			264

PROFIT BEFORE TAX			48,647			47,767
Income tax expense	6(i)		(15,054	)		(13,384	)

PROFIT FOR THE PERIOD ATTRIBUTABLE
TO OWNERS OF THE PARENT			33,593			34,383

		Six months ended 30 June
	Notes	2014		2013
		(Unaudited)		(Unaudited)

OTHER COMPREHENSIVE INCOME/(EXPENSE)
Items that may be subsequently
reclassified to profit or loss:
Net gain/(loss) on available-for-sale financial assets,
net of tax	8		1,358		(681	)
Exchange differences on translation
of foreign operations			1,261		(2,467	)
Share of other comprehensive income/(expense)
of associates			3		(30	)

OTHER COMPREHENSIVE INCOME/(EXPENSE)
FOR THE PERIOD, NET OF TAX			2,622		(3,178	)

TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE TO
OWNERS OF THE PARENT			36,215		31,205

EARNINGS PER SHARE FOR THE PERIOD
ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS
OF THE PARENT
Basic (RMB Yuan)	7		0.75		0.77
Diluted (RMB Yuan)	7		0.75		0.77

Details of the interim dividends declared for the period are disclosed in note 15 to the interim condensed consolidated financial statements.

Interim Condensed Consolidated Statement of Financial Position

30 June 2014

(All amounts expressed in millions of Renminbi)

		30 June		31 December
	Notes	2014		2013
		(Unaudited)		(Audited)

NON-CURRENT ASSETS
Property, plant and equipment	9		437,914		419,102
Intangible assets	10		16,786		17,000
Investments in associates			4,038		4,094
Investment in a joint venture			21,025		20,303
Available-for-sale financial assets	20		8,648		6,798
Deferred tax assets			2,344		2,729
Other non-current assets			5,525		4,895

Total non-current assets			496,280		474,921

CURRENT ASSETS
Inventories and supplies			10,179		9,153
Trade receivables	11		35,041		34,136
Derivative financial assets	20		493		329
Available-for-sale financial assets	20		59,654		51,103
Other current assets			14,928		11,295
Time deposits with maturity over three months			21,078		26,218
Cash and cash equivalents			25,559		14,318

Total current assets			166,932		146,552

CURRENT LIABILITIES
Loans and borrowings	13		27,702		49,841
Trade and accrued payables	12		49,970		48,558
Derivative financial liabilities	20		292		220
Other payables and accrued liabilities			27,534		16,914
Taxes payable			15,267		13,415

Total current liabilities			120,765		128,948

NET CURRENT ASSETS			46,167		17,604

TOTAL ASSETS LESS CURRENT LIABILITIES			542,447		492,525

		30 June		31 December
	Notes	2014		2013
		(Unaudited)		(Audited)

NON-CURRENT LIABILITIES
Loans and borrowings	13		106,136		82,011
Provision for dismantlement			43,608		41,146
Deferred tax liabilities			23,859		25,362
Other non-current liabilities			2,349		2,386

Total non-current liabilities			175,952		150,905

NET ASSETS			366,495		341,620

EQUITY
Equity attributable to owners of the parent
Issued capital	14		43,081		949
Reserves			323,414		340,671

TOTAL EQUITY			366,495		341,620

Interim Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2014

(All amounts expressed in millions of Renminbi)

	Equity attributable to owners of the parent
	Issued capital		Share premium and capital redemption reserve			Cumulative translation reserve			Statutory and non– distributive reserves		Other reserves			Retained earnings			Proposed final dividend			Total

Balances at 1 January 2013		949		42,129			(17,229	)		20,000		9,225			243,143			11,563			309,780
Profit for the period		–		–			–			–		–			34,383			–			34,383
Other comprehensive expense,
net of tax		–		–			(2,467	)		–		(711	)		–			–			(3,178	)

Total comprehensive
(expense)/income		–		–			(2,467	)		–		(711	)		34,383			–			31,205
2012 final dividend		–		–			–			–		–			183			(11,563	)		(11,380	)
Equity-settled share option
expenses		–		–			–			–		11			–			–			11

Balances at 30 June 2013
(Unaudited)		949		42,129			(19,696	)		20,000		8,525			277,709			–			329,616

Balances at 1 January 2014		949		42,132			(21,372	)		20,000		8,974			279,668			11,269			341,620
Profit for the period		–		–			–			–		–			33,593			–			33,593
Other comprehensive income,
net of tax		–		–			1,261			–		1,361			–			–			2,622

Total comprehensive income		–		–			1,261			–		1,361			33,593			–			36,215
Transfer upon abolition of
par value under the Hong Kong
Companies Ordinance *		42,132		(42,132	)		–			–		–			–			–			–
2013 final dividend		–		–			–			–		–			(71	)		(11,269	)		(11,340	)

Balances at 30 June 2014
(Unaudited)		43,081		–			(20,111	)		20,000		10,335			313,190			–			366,495

*	The Hong Kong Companies Ordinance (Chapter 622), becoming effective on 3 March 2014, abolishes the concept of nominal value and requirements for authorised share capital.

Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2014

(All amounts expressed in millions of Renminbi)

	Six months ended 30 June
	2014			2013
	(Unaudited)			(Unaudited)

Net cash generated from operating activities		55,829			52,602
Net cash used in investing activities		(43,890	)		(124,114	)
Net cash (used in)/generated from financing activities		(775	)		38,093

Net increase/(decrease) in cash and cash equivalents		11,164			(33,419	)
Cash and cash equivalents at beginning of period		14,318			55,024
Effect of foreign exchange rate changes, net		77			(107	)

Cash and cash equivalents at end of period		25,559			21,498

Notes to Interim Condensed Consolidated Financial Statements

30 June 2014

(All amounts expressed in millions of Renminbi unless otherwise stated)

1.	ORGANISATION AND PRINCIPAL ACTIVITIES

CNOOC Limited (the “Company”) was incorporated in the Hong Kong Special Administrative Region (“Hong Kong”) of the People’s Republic of China (the “PRC”) on 20 August 1999 to hold the interests in certain entities whereby creating a group comprising the Company and its subsidiaries (hereinafter collectively referred to as the “Group”). The Group is principally engaged in the exploration, development, production and sales of crude oil, natural gas and other petroleum products.

The registered office address of the Company is 65/F, Bank of China Tower, 1 Garden Road, Hong Kong.

In the opinion of directors of the Company (the “Directors”), the parent and the ultimate holding company of the Company is China National Offshore Oil Corporation (“CNOOC”), a company established in the PRC.

As at 30 June 2014, the Company had direct or indirect interests in the following principal subsidiaries, joint venture and associates:

Name of entity	Place of establishment	Nominal value of ordinary shares issued and paid-up/ registered capital	Percentage of equity attributable to the Group	Principal activities
Directly held subsidiaries:

CNOOC China Limited	Tianjin, PRC	RMB20 billion	100%	Offshore petroleum exploration, development, production and sales, and shale gas exploration in the PRC
China Offshore Oil (Singapore) International Pte Ltd	Singapore	SG$3 million	100%	Sales and marketing of petroleum products outside the PRC
CNOOC International Limited	British Virgin Islands	US$20,000,000,002	100%	Investment holding
CNOOC Finance (2003) Limited	British Virgin Islands	US$1,000	100%	Bond issuance
CNOOC Finance (2011) Limited	British Virgin Islands	US$1,000	100%	Bond issuance

Name of entity	Place of establishment	Nominal value of ordinary shares issued and paid-up/ registered capital	Percentage of equity attributable to the Group	Principal activities
Directly held subsidiaries (continued):
CNOOC Finance (2012) Limited	British Virgin Islands	US$1,000	100%	Bond issuance
CNOOC Finance (2013) Limited	British Virgin Islands	US$1,000	100%	Bond issuance
Indirectly held subsidiaries*:
CNOOC Deepwater Development Limited	Zhuhai, PRC	RMB8.5 billion	100%	Deepwater and low-grade oil and gas fields exploitation in the PRC and exploration, development, production and sales of oil and gas in the oil and gas fields of South China Sea
CNOOC Southeast Asia Limited	Bermuda	US$12,000	100%	Investment holding
CNOOC SES Ltd.	Malaysia	US$1	100%	Petroleum exploration, development and production in Indonesia
CNOOC Muturi Limited	Isle of Man	US$7,780,770	100%	Petroleum exploration, development and production in Indonesia
CNOOC NWS Private Limited	Singapore	SG$2	100%	Offshore petroleum exploration, development and production in Australia
CNOOC Exploration & Production Nigeria Limited	Nigeria	NGN10 million	100%	Petroleum exploration, development and production in Africa

Name of entity	Place of establishment	Nominal value of ordinary shares issued and paid-up/ registered capital	Percentage of equity attributable to the Group	Principal activities
Indirectly held subsidiaries* (continued):
CNOOC Iraq Limited	British Virgin Islands	US$1	100%	Providing services of petroleum exploration and development in the Republic of Iraq
CNOOC Canada Inc.	Canada	281,749,526 common shares with no par value	100%	Oil sands exploration, development and production in Canada
CNOOC Uganda Ltd	Uganda	1 million Uganda Shilling	100%	Petroleum exploration, development and production in Africa
Nexen Energy ULC	Canada	13,671,421,700 common shares with no par value	100%	Petroleum exploration, development and production in Canada
Nexen Petroleum U.K. Limited	England and Wales	GBP98,009,131	100%	Petroleum exploration, development and production in the UK
Nexen Petroleum Nigeria Limited	Nigeria	NGN30 million	100%	Petroleum exploration, development and production in Nigeria
OOGC America LLC	USA	N/A	100%	Petroleum exploration, development and production in the USA
Nexen Petroleum Offshore U.S.A. Inc.	USA	US$15,830	100%	Petroleum exploration, development and production in the USA
Nexen Marketing	Canada	N/A	100%	Sales and marketing of oil and gas products in Canada
Nexen Oil Sands Partnership	Canada	N/A	100%	Petroleum exploration, development and production in Canada

Name of entity	Place of establishment	Nominal value of ordinary shares issued and paid-up/ registered capital	Percentage of equity attributable to the Group	Principal activities
Indirectly held subsidiaries* (continued):
CNOOC Petroleum Brasil LTDA	Brazil	R$1,646,000,000	100%	Petroleum exploration, development and production in Brazil
CNOOC Nexen Finance (2014) ULC**	Canada	100 common shares with no par value	100%	Bond issuance
Joint venture:
Bridas Corporation	British Virgin Islands	US$102,325,582	50%	Investment holding
Associates:
Shanghai Petroleum Corporation Limited	Shanghai, PRC	RMB900 million	30%	Production, processing and technology consultation of oil, gas and relevant products in the PRC
CNOOC Finance Corporation Limited	Beijing, PRC	RMB4 billion	31.8%	Provision of deposit, transfer, settlement, loan, discounting and other financing services to CNOOC and its member entities
Northern Cross (Yukon) Limited	Canada	22,691,705 common shares with no par value	60%	Petroleum exploration, development and production in Canada

All subsidiaries are indirectly held through CNOOC International Limited, except CNOOC Deepwater Development Limited which is indirectly held through CNOOC China Limited.

CNOOC Nexen Finance (2014) ULC was incorporated on 12 March 2014, for issuing guaranteed notes (note 13).

1.	ORGANISATION AND PRINCIPAL ACTIVITIES (CONTINUED)

The above table lists the subsidiaries, joint venture and associates of the Company which, in the opinion of the Directors, principally affected the results for the period or formed a substantial portion of the total assets of the Group. To give details of other subsidiaries and associates would, in the opinion of the Directors, result in particulars of excessive length.

2.	BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared in accordance with International Accounting Standard 34 (“IAS 34”) Interim Financial Reporting and Hong Kong Accounting Standard 34 (“HKAS 34”) Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2013.

Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2013. The adoption of amendments to standards and interpretation effective for the current interim period commenced from 1 January 2014 does not have any material impact on the accounting policy adopted, interim financial position or performance of the Group.

3.	OIL AND GAS SALES AND MARKETING REVENUES

Oil and gas sales represent the invoiced value of sales of oil and gas attributable to the interests of the Group, net of royalties, obligations to governments and other mineral interest owners. Revenue from the sale of oil is recognised when the significant risks and rewards of ownership have been transferred, which is when title passes to the customer. Revenue from the production of oil and gas in which the Group has a joint interest with other producers is recognised based on the Group’s working interest and the terms of the relevant production sharing contracts. Differences between production sold and the Group’s share of production are not significant.

3.	OIL AND GAS SALES AND MARKETING REVENUES (CONTINUED)

Marketing revenues principally represent the sales of oil and gas purchased from the foreign partners under the production sharing contracts and revenues from the trading of oil and gas through the Company’s subsidiaries. The cost of the oil and gas sold is included in “Crude oil and product purchases” in the interim condensed consolidated statement of profit or loss and other comprehensive income. In addition, the Group’s trading activities in North America involves entering into contracts to purchase and sell crude oil, natural gas and other energy commodities, and use derivative contracts, including futures, forwards, swaps and options for hedging and trading purposes (collectively derivative contracts). Any change in the fair value of the derivative contracts is also included in marketing revenue.

4.	SPECIAL OIL GAIN LEVY

In 2006, a Special Oil Gain Levy (“SOG Levy”) was imposed by the Ministry of Finance of the PRC (“MOF”) at the progressive rates from 20% to 40% on the portion of the monthly weighted average sales price of the crude oil lifted in the PRC exceeding US$40 per barrel. MOF has decided to increase the threshold of the SOG Levy to US$55, with effect from 1 November 2011. Notwithstanding this adjustment, the SOG Levy will continue to have five levels and will be calculated and charged according to the progressive and valorem rates on the excess amounts. The SOG Levy paid can be claimed as a deductible expense for corporate income tax purposes and is calculated based on the actual volume of the crude oil entitled.

5.	FINANCE COSTS

Accretion expenses of approximately RMB1,150 million (six months ended 30 June 2013: approximately RMB893 million) relating to the provision for dismantlement liabilities have been recognised in the interim condensed consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June 2014.

TAX

(i)

Income tax

The Company and its subsidiaries are subject, on an entity basis, to income taxes on profits arising in or derived from the tax jurisdictions in which the entities of the Group are domiciled and operate. The Company is subject to profits tax at a rate of 16.5% (2013: 16.5%) on profits arising in or derived from Hong Kong, which is qualified as a foreign tax credit to offset the PRC corporate income tax starting from 1 January 2008.

The Company is regarded as a Chinese Resident Enterprise (as defined in the “Enterprise Income Tax Law of the People’s Republic of China”) by the State Administration of Taxation of the PRC. As a result, the Company is subject to the PRC corporate income tax at the rate of 25% starting from 1 January 2008.

The Company’s subsidiary in Mainland China, CNOOC China Limited, is a wholly-owned foreign enterprise. It is subject to corporate income tax at the rate of 25% under the prevailing tax rules and regulations.

Operating subsidiaries of the Group domiciled outside the PRC are subject to income tax at rates ranging from 10% to 62%.

(ii)

Other taxes

The Company’s PRC subsidiaries pay the following other taxes and dues:

–

Production taxes at the rate of 5% on independent production and production under production sharing contracts;

–

Resource taxes at the rate of 5% (reduced tax rates may apply to specific products and fields) on the oil and gas sales revenue (excluding production taxes) derived by oil and gas fields under production sharing contracts signed after 1 November 2011 and independent offshore oil and gas fields starting from 1 November 2011, which replaced the royalties for oil and gas fields, except for those under production sharing contracts signed before 1 November 2011 which will be subject to related resource taxes requirement after the expiration of such production sharing contracts;

–

Mineral resource compensation at the temporary rate of 1% (reduced tax rates may apply) on the oil and gas sales revenue derived by oil and gas fields under production sharing contracts signed after 1 November 2011 and independent offshore oil and gas fields starting from 1 November 2011;

–

Export tariffs at the rate of 5% on the export value of petroleum oil;

6.	TAX (CONTINUED)

(ii)

Other taxes (continued)

–

Business tax at rates of 3% to 5% or value-added tax at the rate of 6% on other income;

–

City construction tax at the rate of 1% or 7% on the actual paid production taxes, business tax and value-added tax;

–

Educational surcharge at the rate of 3% on the actual paid production taxes, business tax and value-added tax; and

–

Local educational surcharge at the rate of 2% on the actual paid production taxes, business tax and value-added tax.

In addition, other taxes paid and payable by the Company’s non-PRC subsidiaries include royalties as well as taxes levied on petroleum-related income, profit, budgeted operating and capital expenditures.

7.	EARNINGS PER SHARE

	Six months ended 30 June
	2014		2013
	(Unaudited)		(Unaudited)

Earnings:
Profit for the period attributable to
ordinary equity holders for the basic and
diluted earnings per share calculation		33,593		34,383

Number of shares:
Weighted average number of ordinary shares for
the purpose of basic earnings per share		44,647,455,984		44,646,305,984
Effect of dilutive potential ordinary shares under
the share option schemes		89,768,572		139,277,790

Weighted average number of ordinary shares for
the purpose of diluted earnings per share		44,737,224,556		44,785,583,774

Earnings per share – Basic (RMB Yuan)		0.75		0.77

– Diluted (RMB Yuan)		0.75		0.77

8.	NET GAIN/(LOSS) ON AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET OF TAX

	Six months ended 30 June
	2014			2013
	(Unaudited)			(Unaudited)

Available-for-sale financial assets:
Fair value change arising during the period		2,610			500
Reclassification adjustment for
net gain included in the investment income		(1,253	)		(1,224	)
Income tax effect		1			43

		1,358			(681	)

The other comprehensive income or loss of the Group’s available-for-sale investments was derived from investment of corporate wealth management products, liquidity funds and the investment in the equity securities of MEG Energy Corporation.

9.	PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2014, additions to the Group’s property, plant and equipment, including the property, plant and equipment acquired, amounted to approximately RMB46,179 million (six months ended 30 June 2013: approximately RMB190,309 million).

The interest of the Group in the North West Shelf (“NWS”) Project in Australia has been collateralised to the other partners of the project as security for certain of the Group’s liabilities relating to the project.

Included in the current period’s additions was an amount of approximately RMB867 million (six months ended 30 June 2013: approximately RMB1,103 million) in respect of interest capitalised in property, plant and equipment.

10.	INTANGIBLE ASSETS

The intangible assets of the Group comprise gas processing rights of the NWS Project, marketing transportation and storage contracts, drilling rig contracts and seismic data usage rights, software, goodwill and others. The intangible asset regarding the gas processing rights has been amortised upon the commercial production of the liquefied natural gas on a unit-of-production basis over the total proved reserves of the relevant asset. The intangible assets regarding the marketing transportation and storage contracts and drilling rig contracts are amortised on a straight-line basis over the life of the contracts ranging from 5 months to 20 years. Other identifiable intangible assets are amortised on a straight-line basis over a period ranging from 3 to 5 years.

Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed. Goodwill acquired through business combinations is held at the exploration and production (“E&P”) segment.

11.	TRADE RECEIVABLES

The credit terms of the Group are generally within 30 days after the delivery of oil and gas. Payment in advance or collateral may be required from customers, depending on credit rating. Trade receivables are non-interest bearing.

As at 30 June 2014 and 31 December 2013, substantially all the trade receivables were aged within 30 days. All customers have a good repayment history and no receivables are past due.

12.	TRADE AND ACCRUED PAYABLES

As at 30 June 2014 and 31 December 2013, substantially all the trade and accrued payables were aged within six months. The trade and accrued payables are non-interest bearing.

13.	LOANS AND BORROWINGS

Current

	Effective interest rate and final maturity	30 June 2014		31 December 2013
		(Unaudited)		(Audited)

Short-term loans
and borrowings
– General loan	LIBOR+0.5% to 0.85% per annum
	with maturity within one year		26,764		48,776

			26,764		48,776

Loans and borrowings
due within one year
– For Tangguh LNG	LIBOR+0.23% to 0.38% per annum
Project**	with maturity within one year	152	1,065
– Notes*		786	–

		938	1,065

		27,702	49,841

Non-current

	Effective interest rate and final maturity	30 June 2014		31 December 2013
		(Unaudited)		(Audited)

For Tangguh LNG	LIBOR+0.23% to 0.38% per annum
Project**	with maturity through 2021		1,123		1,190
Notes*			105,013		80,821

			106,136		82,011

13.	LOANS AND BORROWINGS (CONTINUED)

The principal amount of US$300 million of 5.500% guaranteed notes due in 2033 were issued by CNOOC Finance (2003) Limited, a wholly-owned subsidiary of the Company. The obligations of CNOOC Finance (2003) Limited in respect of the notes are unconditionally and irrevocably guaranteed by the Company.

The principal amount of US$1,500 million of 4.25% guaranteed notes due in 2021 and the principal amount of US$500 million of 5.75% guaranteed notes due in 2041 were issued by CNOOC Finance (2011) Limited, a wholly-owned subsidiary of the Company. The obligations of CNOOC Finance (2011) Limited in respect of the notes are unconditionally and irrevocably guaranteed by the Company.

The principal amount of US$1,500 million of 3.875% guaranteed notes due in 2022 and the principal amount of US$500 million of 5.000% guaranteed notes due in 2042 were issued by CNOOC Finance (2012) Limited, a wholly-owned subsidiary of the Company. The obligations of CNOOC Finance (2012) Limited in respect of the notes are unconditionally and irrevocably guaranteed by the Company.

The principal amount of US$750 million of 1.125% guaranteed notes due in 2016, the principal amount of US$750 million of 1.750% guaranteed notes due in 2018, the principal amount of US$2,000 million of 3.000% guaranteed notes due in 2023 and the principal amount of US$500 million of 4.250% guaranteed notes due in 2043 were issued by CNOOC Finance (2013) Limited, a wholly-owned subsidiary of the Company. The obligations of CNOOC Finance (2013) Limited in respect of the notes are unconditionally and irrevocably guaranteed by the Company.

The principal amount of US$1,250 million of 1.625% guaranteed notes due in 2017, the principal amount of US$2,250 million of 4.250% guaranteed notes due in 2024 and the principal amount of US$500 million of 4.875% guaranteed notes due in 2044 were issued by CNOOC Nexen Finance (2014) ULC, a wholly-owned subsidiary of Nexen Energy ULC in April 2014. The obligations of CNOOC Nexen Finance (2014) ULC in respect of the notes are unconditionally and irrevocably guaranteed by the Company.

During March 2005, Nexen issued US$250 million of notes. Interest is payable semi-annually at a rate of 5.2% and the principal is to be repaid in March 2015. In 2011, Nexen repurchased and cancelled US$124 million of principal of these notes. As at 30 June 2014, US$126 million of notes remain outstanding.

During May 2007, Nexen issued US$250 million of notes. Interest is payable semi-annually at a rate of 5.65% and the principal is to be repaid in May 2017. In 2011, Nexen repurchased and cancelled US$188 million of principal of these notes. As at 30 June 2014, US$62 million of notes remain outstanding.

During July 2009, Nexen issued US$300 million of notes. Interest is payable semi-annually at a rate of 6.2% and the principal is to be repaid in July 2019.

During April 1998, Nexen issued US$200 million of notes. Interest is payable semi-annually at a rate of 7.4% and the principal is to be repaid in May 2028.

During March 2002, Nexen issued US$500 million of notes. Interest is payable semi-annually at a rate of 7.875% and the principal is to be repaid in March 2032.

13.	LOANS AND BORROWINGS (CONTINUED)

During March 2005, Nexen issued US$790 million of notes. Interest is payable semi-annually at a rate of 5.875% and the principal is to be repaid in March 2035.

During May 2007, Nexen issued US$1,250 million of notes. Interest is payable semi-annually at a rate of 6.4% and the principal is to be repaid in May 2037.

During July 2009, Nexen issued US$700 million of notes. Interest is payable semi-annually at a rate of 7.5% and the principal is to be repaid in July 2039.

All the notes issued by Nexen mentioned above were guaranteed by the Company since 22 March 2013.

In connection with the Tangguh LNG Project in Indonesia, the Company delivered a guarantee dated 29 October 2007 in favor of Mizuho Corporate Bank, Ltd., which acts as the facility agent for and on behalf of various international commercial banks under a US$884 million commercial loan agreement dated 29 October 2007. The Company guarantees the payment obligations of the trustee borrower under the subject loan agreement and is subject to a maximum cap of approximately US$164,888,000. Together with the loan agreement dated 31 July 2006 with a maximum cap of approximately US$487,862,000, the total maximum guarantee cap is US$652,750,000. With the prepayment of portion of bank loans on 31 January 2014, the total maximum guarantee cap of the Company decreased to approximately US$164,888,000.

An agreement in respect of the sale of a 3.05691% interest of the Company in the Tangguh LNG Project to Talisman Energy Inc. (“Talisman”) for a consideration of US$212.5 million became effective on 1 January 2008. The transaction was completed through the equity transfer of an indirect subsidiary of the Company. The Company through its subsidiary continues to hold a 13.89997% interest in the Tangguh LNG Project after the sale.

In addition, a letter of credit agreement was signed between the Company and Talisman with execution of the aforesaid agreement. Accordingly, Talisman has delivered valid and unexpired standby letters of credit with the amount of US$120 million to the Company (as the beneficiary) as a counter-guarantee to offset the exposure of the Company’s guarantee for the aforesaid interest of 3.05691% in respect of the Tangguh LNG Project financing. With the prepayment of portion of bank loans on 31 January 2014, the amount of the standby letters of credit decreased to US$30 million.

There is no default of principal, interest or redemption terms of the loans and borrowings during the period.

14.	ISSUED CAPITAL

Number

of shares

capital

HK$ million

Issued

share capital

equivalent of

RMB million

Authorised:

Ordinary shares of HK$0.02 each

as at 31 December 2013

75,000,000,000

1,500

Ordinary shares with no par value

as at 30 June 2014

75,000,000,000

N/A

Issued and fully paid:

Ordinary shares of HK$0.02 each as

at 1 January 2013

44,646,305,984

893

949

Exercise of share options

1,150,000

–

As at 31 December 2013 (audited)

44,647,455,984

893

949

Transfer from share premium and

capital redemption reserve upon

abolition of par value

–

40,436

42,132

As at 30 June 2014 (unaudited)

44,647,455,984

41,329

43,081

The Hong Kong Companies Ordinance (Chapter 622), becoming effective on 3 March 2014, abolishes the concept of nominal value and requirements for authorised share capital.

15.

DIVIDENDS

On 28 August 2014, the board of Directors (the “Board”) declared an interim dividend of HK$0.25 (tax inclusive) per share (six months ended 30 June 2013: HK$0.25 (tax inclusive) per share), totalling approximately HK$11,162 million (tax inclusive) (equivalent to approximately RMB8,860 million (tax inclusive)) (six months ended 30 June 2013: approximately RMB8,891 million (tax inclusive)), based on the number of issued shares as at 30 June 2014.

Pursuant to the Enterprise Income Tax Law of the People’s Republic of China and related laws and regulations, the Company is regarded as a Chinese resident enterprise, and thus is required to withhold corporate income tax at the rate of 10% when it distributes dividends to its non-resident enterprise (as defined in the “Enterprise Income Tax Law of the People’s Republic of China”) shareholders, with effect from the distribution of the 2008 final dividend. In respect of all shareholders whose names appear on the Company’s register of members and who are not individuals (including HKSCC Nominees Limited, corporate nominees or trustees such as securities companies and banks, and other entities or organizations, which are all considered as non-resident enterprise shareholders), the Company will distribute the dividend after deducting corporate income tax of 10%.

16.	SHARE OPTION SCHEMES

The Company has adopted the share option schemes for the grant of options to the Company’s directors, senior management and other eligible grantees:

(i)

Pre-Global Offering Share Option Scheme (expired in 2011);

(ii)

2001 Share Option Scheme (expired in 2011);

(iii)

2002 Share Option Scheme (as defined in the “Other Information” section); and

(iv)

2005 Share Option Scheme (as defined in the “Other Information” section).

Details of these share option schemes are disclosed in the “Other Information” section in the interim report.

16.	SHARE OPTION SCHEMES (CONTINUED)

During the six months ended 30 June 2014, the movements in the options granted under all of the above share option schemes were as follows:

	Number of share options			Weighted average exercise price HK$

Outstanding as at 1 January 2014		383,178,934			9.75
Forfeited during the period		(36,853,934	)		9.77
Expired during the period		(20,550,000	)		3.15

Outstanding as at 30 June 2014		325,775,000			10.17

Exercisable as at 30 June 2014		325,775,000			10.17

No share options had been cancelled during the six months ended 30 June 2014.

As at 30 June 2014, the share options outstanding under these share option schemes represented approximately 0.73% of the Company’s shares in issue as at that date (31 December 2013: 0.86%).

No right to subscribe for equity or debt securities of the Company was granted by the Company to, nor have any such rights been exercised by, any other person during the six months ended 30 June 2014.

The assumptions on which the option pricing model is based represent the subjective estimation of the Directors as to the circumstances existing at the time the options were granted.

17.	RELATED PARTY TRANSACTIONS

As disclosed in note 1, the Company is a subsidiary of CNOOC, which is a state-owned enterprise subject to the control of the State Council of the PRC. The State Council of the PRC directly and indirectly controls a significant number of state-owned entities and organisations.

Comprehensive framework agreement with CNOOC in respect of a range of products and services

As the Group is controlled by CNOOC, transactions with CNOOC, its subsidiaries and associates (the “CNOOC Group”) are disclosed as related party transactions. The connected transactions or continuing connected transactions as defined in Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) in respect of items listed below also constitute related party transactions. The Company entered into a new comprehensive framework agreement with CNOOC on 6 November 2013 for the provision (1) by the Group to the CNOOC Group and (2) by the CNOOC Group to the Group, of a range of products and services which may be required and requested from time to time by either party and/or its associates in respect of the continuing connected transactions. The term of the new comprehensive framework agreement is for a period of three years from 1 January 2014. The new comprehensive framework agreement is substantially on the same terms as the terms contained in the comprehensive framework agreement entered into by the Company on 1 November 2010. The continuing connected transactions under the new comprehensive framework agreement and the relevant annual caps for the three years from 1 January 2014 were approved by the independent shareholders of the Company on 27 November 2013. The approved continuing connected transactions are as follows:

(1)

Provision of exploration, oil and gas development, oil and gas production as well as marketing, management and ancillary services by the CNOOC Group to the Group:

Provision of exploration and support services

Provision of oil and gas development and support services

Provision of oil and gas production and support services

Provision of marketing, management and ancillary services

FPSO vessel leases

(2)

Provision of management, technical, facilities and ancillary services, including the supply of materials by the Group to the CNOOC Group; and

(3)

Sales of petroleum and natural gas products by the Group to the CNOOC Group:

Sales of petroleum and natural gas products (other than long-term sales of natural gas and liquefied natural gas)

Long-term sales of natural gas and liquefied natural gas

17.	RELATED PARTY TRANSACTIONS (CONTINUED)

Pricing principles

The continuing connected transactions described above are based on negotiations with the CNOOC Group on normal commercial terms, or on terms no less favourable than those available to the Group from independent third parties, under prevailing local market conditions, including considerations such as volume of sales, length of contracts, package of services, overall customer relationship and other market factors.

For the continuing connected transactions referred to in paragraphs (1)(a) to (1)(d) above provided by CNOOC and/or its associates to the Group and paragraph (2) above provided by the Group to CNOOC and/or its associates, on the basis of the above pricing principle, such services must be charged in accordance with the following pricing mechanism and in the following sequential order:

(i)

state-prescribed prices; or

(ii)

where there is no state-prescribed price, market prices, including the local, national or international market prices; or

(iii)

when neither (i) nor (ii) is applicable, the costs of the CNOOC Group or the Group for providing the relevant service (including the cost of sourcing or purchasing from third parties) plus a margin of not more than 10%, before any applicable taxes.

The continuing connected transactions referred to in paragraph (1)(e) above provided by the CNOOC Group to the Group, on the basis of the above pricing principle, are at market prices on normal commercial terms which are calculated on a daily basis.

The continuing connected transactions referred to in paragraphs (3)(a) above provided by the Group to the CNOOC Group, on the basis of the above pricing principle, are at state-prescribed prices or local, national or international market prices and on normal commercial terms.

The continuing connected transactions referred to in paragraphs (3)(b) above provided by the Group to the CNOOC Group, on the basis of the above pricing principle, are at state-prescribed prices or local, national or international market prices and on normal commercial terms, which are subject to adjustment in accordance with movements in international oil prices as well as other factors such as the term of the sales agreement and the length of the relevant pipeline.

The following is a summary of significant related party transactions entered into in the ordinary course of business between the Group and its related parties during the period and the balances arising from related party transactions at the end of the period:

17.	RELATED PARTY TRANSACTIONS (CONTINUED)

(i)

Provision of exploration, oil and gas development, oil and gas production as well as marketing, management and ancillary services by CNOOC Group to the Group

	Six months ended 30 June
	2014 (Unaudited)		2013 (Unaudited)

Provision of exploration and support services		5,124		3,905
– Inclusive of amount capitalised under property,
plant and equipment		3,213		2,613
Provision of oil and gas development
and support services		17,187		12,000
Provision of oil and gas production
and support services (Note a)		3,681		3,581
Provision of marketing, management
and ancillary services (Note b)		300		320
FPSO vessel leases (Note c)		586		601

		26,878		20,407

(ii)

Provision of management, technical, facilities and ancillary services, including the supply of materials by the Group to CNOOC Group

The Group did not enter into any transactions in the above category for the periods from 1 January to 30 June of 2014 and 2013.

(iii)

Sales of petroleum and natural gas products by the Group to CNOOC Group

	Six months ended 30 June
	2014		2013
	(Unaudited)		(Unaudited)

Sales of petroleum and natural gas products
(other than long-term sales of natural gas
and liquefied natural gas) (Note d)		89,337		85,835
Long-term sales of natural gas
and liquefied natural gas (Note e)		3,257		3,126

		92,594		88,961

17.	RELATED PARTY TRANSACTIONS (CONTINUED)

(iv)

Transactions with CNOOC Finance Corporation Limited (“CNOOC Finance”)

(a)

Interest income received by the Group

	Six months ended 30 June
	2014		2013
	(Unaudited)		(Unaudited)

Interest income from deposits
in CNOOC Finance (Note f)		388		250

(b)

Deposits made by the Group

	30 June		31 December
	2014		2013
	(Unaudited)		(Audited)

Deposits in CNOOC Finance (Note f)		21,929		18,500

(v)

Balances with CNOOC Group

	30 June 2014		31 December 2013
	(Unaudited)		(Audited)

Amount due to CNOOC
– included in other payables and accrued liabilities		7,344		622
Amounts due to other related parties
– included in trade and accrued payables		19,219		18,090

		26,563		18,712

Amounts due from other related parties
– included in trade receivables		14,004		16,543
– included in other current assets		1,325		973

		15,329		17,516

17.	RELATED PARTY TRANSACTIONS (CONTINUED)

(vi)

Balance with a joint venture

	30 June 2014		31 December 2013
	(Unaudited)		(Audited)

Amount due from a joint venture
– included in other current assets		118		85

		118		85

(vii)

Transactions and balances with other state-owned entities

The Group enters into extensive transactions covering purchases or sales of crude oil, natural gas, property, plant and equipment and other assets, receiving of services, and making deposits and borrowings with state-owned entities, other than the CNOOC Group, in the normal course of business at terms comparable to those with other non state-owned entities. The purchases of property, plant and equipment and other assets, and receipt of services from these state-owned entities are individually not significant. The individually significant sales transactions with these state-owned entity customers: 8% (six months ended 30 June 2013: 16%) of the Group’s revenue in the six-month period ended 30 June 2014 is generated from crude oil and natural gas sold to two major customers, PetroChina Company Limited and China Petroleum and Chemical Corporation. These two customers are controlled by the Chinese government. Other transactions with enterprises which are controlled, jointly controlled or significantly influenced by the same government are individually not significant and are in the ordinary course of business. In addition, the Group has certain of its cash and time deposits and outstanding short-term bank loans with certain state-owned banks in the PRC as at 30 June 2014, as summarised below:

	30 June 2014		31 December 2013
	(Unaudited)		(Audited)

Cash and cash equivalents		13,320		5,202
Time deposits with financial institutions		4,122		6,605
Specified dismantlement fund accounts, included
in other non-current assets		3,920		2,581

		21,362		14,388

Short-term bank loans		1,846		15,547

Interest rates for the above time deposits, specified dismantlement fund accounts and short-term bank loans are at prevailing market rates.