May 1, 2023 [Reuters] – Chinese national oil and gas company CNOOC Ltd (0883.HK), ‘s first-quarter profit slipped 6.4% from a year ago, as lower realised oil prices squeezed margins despite higher output.

Net profit fell to 32.1 billion yuan ($4.64 billion) from 34.3 billion yuan ($4.96 billion) in the same period last year, according to the company’s filing with the Hong Kong Stock Exchange on Thursday.

The lower profit follows a 23.9% slide in realised oil prices versus a year ago when prices spiked in the immediate aftermath of Russia’s invasion of Ukraine in February 2022.

The listed arm of the state-backed CNOOC Group reported a 7.5% year-on-year increase in revenue to 97.7 billion yuan ($14.12 billion) over the first quarter.

CNOOC’s total net production during the period was 163.9 million barrels of oil equivalent (boe), up 8.6% on last year.

Domestic output increased by 5.5% while output from the company’s international operations in countries such as Brazil and Guyana increased by 16.6%.

The company has set a production target of a record 650 million to 660 million boe in 2023, as part of its medium-term goal of a 6% increase in average annual production by 2025.

As one of the world’s most cost-efficient producers, all-in production costs for the first quarter stood at $28.2 per barrel, down 7.7% on the same period last year.

Capex increased 46.1% to 24.74 billion yuan.

In March, CNOOC announced plans for a modest increase in capex from 100 billion yuan ($14.55 billion) last year to 100-110 billion yuan for 2023, as it targeted further development of nine projects and a reserve replacement ratio of greater than 130%.

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