CNOOC's third-quarter net income rises 2.7% on higher oil prices

What happened

CNOOC Ltd reported third-quarter net income of 33.30 billion yuan ($5 billion), up 2.7% from a year earlier, as higher oil prices lifted earnings. Third-quarter revenue rose 7.6% to 112.91 billion yuan, and nine-month net income rose 16.8%.

Confirmed

Global impact / market context

Higher oil sales revenue more than offset weaker natural gas sales revenue, so profit depends heavily on oil prices. For investors, that means oil price moves can quickly change CNOOC's revenue and earnings, while lower gas revenue remains a drag.

Analyst inference

CNOOC's average realised oil price rose 32.1% to $88.03 per barrel in the quarter, which lifted oil sales revenue 23.6% to 86.45 billion yuan. All-in cost was $30.57 per barrel, leaving room between selling price and cost.

Analyst inference

What to watch

1. Natural gas sales revenue fell 7% to 12.82 billion yuan in the third quarter, while natural gas output fell 2.9% to 755.3 billion cubic feet over nine months. Confirmed
2. If oil prices fall from the third quarter's $88.03 per barrel, CNOOC's oil sales revenue and net income could shrink because profit is tied to the gap between price and cost. Analyst inference
3. Watch whether CNOOC changes capital spending, which means money put into oil and gas projects, given production rose and overseas output grew faster than output in China. Proposed

Evidence

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