[HONG KONG] Top Chinese offshore oil and gas producer CNOOC Ltd said on Tuesday it is aiming for an up to 14.6 per cent increase in output this year but will slash capital spending by as much as 35 per cent in response to the recent plunge in oil prices.
An over 50 per cent slide in crude prices since June due to slowing global demand and growing US shale output is putting a heavy burden on oil companies around the world. The slump has wiped billions of dollars from their stock market values in recent months, and squeezed the spending of many oil majors.
In a filing with the Hong Kong bourse, CNOOC said its capital expenditure will fall 26-35 per cent to 70 billion to 80 billion yuan (US$11.19 billion-US$12.79 billion) this year, the first such decline since 2010.
The spending cuts are deeper than some analysts' estimates of 8 per cent. Other major Chinese oil firms PetroChina and Sinopec are also expected to unveil lower budgets for 2015 when they release their annual results in late March.
CNOOC, which in early 2013 paid a hefty premium to acquire Canada-based oil producer Nexen for US$15.1 billion in China's biggest foreign corporate takeover, said it plans to produce 475 million-495 million barrels of oil equivalent (boe) this year, compared with estimated output of 432 million boe in 2014.
Shares of CNOOC have lost more than a fifth of their value in the past six months, making it one of the worst performers among the world's major explorers in the period, as the recent oil price slump fuelled investor concerns about its production and profit outlook.