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George Ma
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May 1 11:18

Chinese oil producer CNOOC downgraded oil production forecast

  Decline in production will be mainly driven by foreign projects
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China's third-largest oil producer, China National Offshore Oil Corporation (CNOOC), reported a decline in the projected 2020 oil production range to 505-515 million barrels, equivalent to 1.38 million-1.41 million barrels per day. The company increased production in the first quarter to 1.45 mn barrels from 1.39 mn barrels per day last year and expected production to reach 1.42 mn - 1.45 mn barrels per day at the end of the year.

CNOOC noted that the new forecasts are based on a scenario that assumes recovery of oil prices to levels above US$40 in the third quarter, while the previous forecasts were made in January based on US$65 per barrel.
Decline in production will be mainly driven by foreign projects, such as Long Lake in Canada's bituminous sands and two oil shale projects in the US at Eagle Ford and Rokiz (formerly Niobrara), where CNOOC has 27% and 12% stakes respectively.
"Long Lake is uneconomical at the current low price and does not generate profit or cash flow," the company said, but stressed that it will only reduce volumes, as a complete halt to production will make it costly to restart in the future. Long Lake production reached a record high of 45,000 barrels per day in 2019. The Eagle Ford project was producing around 55,000 barrels per day.
With CNOOC's production growing by 9.5% in the first quarter, the company's revenue fell by 5.5% to US$5.6 bln. Management decided to reduce capital expenditures by US$1.4 bln this year to US$10.5 - US$12 bln figure.