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Issuer Flash: CNOOC Limited

Issuer: Cnooc Limited | Document: Issuer Flash | Date: 2026-08-28 | Event: H1 2026 Interim Results

Report date: 2026-08-28 Event date: 2026-08-26 Event title: H1 2026 Interim Results

1. Flash Conclusion

CNOOC Limited's 1H 2026 interim results strengthen, rather than alter, the credit view in the 20 May 2026 issuer summary. Net production increased 3.7% year on year to 398.7 million barrels of oil equivalent (mmboe), oil and gas sales rose 20.0% to RMB206.1bn, and attributable profit increased 23.4% to RMB85.8bn. At US$29.7/boe, all-in cost remained within a range CNOOC describes as strongly competitive despite volatile oil markets. The combination of modest volume growth, materially higher sales, record interim profit and a stronger reported cash position supports the view that the listed company has meaningful standalone operating and liquidity resilience for an upstream issuer.

CNOOC reported five projects brought on stream, four discoveries and 16 successful appraisals, while maintaining its 2026 production target of 780-800mmboe and RMB112-122bn capital-expenditure budget. This indicates continuing operational delivery, but does not establish reserve replacement, project economics or the maintenance-versus-growth split of capital spending. The repayment base remains exposed to oil and gas prices, capital discipline and project delivery.

Liquidity also appears stronger at the interim date. Cash and cash equivalents more than doubled from RMB78.7bn at end-2025 to RMB161.7bn, time deposits rose to RMB152.7bn and loans and borrowings declined to RMB57.6bn. The record HK$0.94 per-share interim dividend, equivalent to approximately RMB38.8bn, is a significant shareholder distribution but represented a 45.2% payout ratio and was declared alongside the higher cash balances. It does not, on this evidence, weaken the previous credit view. The next full cash-flow disclosure remains important: it must show whether capex and distributions can continue to be internally funded if realised prices weaken.

2. Interim Earnings and Operating Delivery

The unaudited results announcement reports operating revenue of RMB242.7bn, up 16.9% year on year, and attributable profit of RMB85.8bn, or RMB1.81 per share, versus RMB69.5bn and RMB1.46 per share a year earlier. Oil and gas sales were RMB206.1bn. The E&P segment generated RMB84.4bn of the RMB85.9bn consolidated period profit, confirming that the improvement still principally reflects the upstream operating base rather than diversified repayment sources.

The 3.7% production increase places first-half production at roughly half of the 780-800mmboe full-year target. Five projects entered production, including projects in China and Buzios8 in Brazil, and both domestic and overseas output increased. This supports the prior assessment that the production programme and project pipeline are credit strengths, but does not eliminate overseas execution, fiscal or cash-repatriation risks. The announcement contains no project-level cash-flow or sensitivity analysis.

All-in cost was US$29.7/boe, compared with US$28.4/boe in Q1 2026 and US$27.9/boe for FY2025. The increase from those earlier reference points is modest, and the company continues to describe the level as competitive. The relevant credit reading is not that costs are immaterial, but that the issuer retained a favourable disclosed cost trajectory while growing production and profit. This event flash does not perform a peer-cost comparison. The next annual results should establish whether the full-year cost base, actual capex and realised prices preserve that resilience through a wider commodity-price cycle.

3. Balance Sheet, Liquidity and Capital Allocation

At 30 June 2026, total equity was RMB858.6bn, up from RMB805.2bn at 31 December 2025. Cash and cash equivalents were RMB161.7bn, time deposits RMB152.7bn and other current financial assets RMB11.9bn, against RMB57.6bn of loans and borrowings. This supports the existing net-cash-type liquidity framing, while later reporting is needed for a complete assessment of cash-flow generation, contingent obligations and debt maturity management.

Trade receivables rose to RMB44.0bn from RMB33.0bn at end-2025. The announcement says there were no significant past-due receivables; the expected-credit-loss allowance was RMB97m, or 0.22% of trade receivables. This is a working-capital point to monitor rather than evidence of impaired collection quality.

The declared interim dividend of HK$0.94 per share totals approximately RMB38.8bn, above RMB31.6bn for 1H 2025. The 45.2% payout ratio is consistent with management's stated 45% framework for 2025-2027, but makes lower-price cash-flow flexibility a continuing test. The company also disclosed small CPNA bond repurchases, including 3.60% of the 2037 notes and 3.97% of the 2039 notes outstanding. They show limited liability-management activity, but do not establish the maturity profile, future refinancing needs or the absence of refinancing pressure.

4. Credit Read-Through and Monitoring

The interim outcome reinforces three supportive elements of the existing credit view: a growing production base, a favourable issuer-specific cost trajectory and substantial reported liquidity relative to borrowings. CNOOC Limited also retains strategic linkage to CNOOC Group and the Chinese central-SOE framework. Those relationships can support market confidence and access to funding, but they are not a substitute for analysing CNOOC Limited's own operating performance or for confirming the guarantee terms of any individual note. This flash does not change the distinction between CNOOC Limited, CNOOC Group, finance issuing vehicles and direct PRC sovereign obligations.

The main remaining risk is the interaction of commodity prices, capex and shareholder distributions. Higher 1H profit and cash provide a cushion, but the announcement does not include a cash-flow statement, actual capex, realised prices, hedging information or reserve replacement. It is therefore not possible to conclude that post-dividend free cash flow will remain positive through a weaker price cycle. The RMB112-122bn capex plan and dividend framework are important upstream-credit sensitivities, not evidence of an immediate liquidity concern.

The current additional discussion on portfolio warning lines is directly relevant only in a limited way. This event confirms higher production and profit, a cost level the issuer calls competitive, and a dividend payout ratio consistent with the stated framework. It does not confirm the discussion's cash-flow threshold, reserve-replacement assumptions, maintenance-capex split, overseas exposure, support-premium repricing or transition-cost sensitivities. Those questions remain for the next issuer summary or primary-source updates.

5. Key Numbers

Metric 1H 2026 Comparator Credit reading
Net production 398.7mmboe +3.7% YoY Production grew while the full-year target was maintained.
Oil and gas sales RMB206.1bn +20.0% YoY Supports higher upstream earnings; price and volume components were not separately disclosed here.
Attributable profit RMB85.8bn +23.4% YoY Record interim profit; still principally linked to upstream performance.
All-in cost US$29.7/boe US$28.4/boe in Q1 2026 CNOOC describes the level as competitive; this flash does not include a peer-cost comparison.
Cash and cash equivalents RMB161.7bn RMB78.7bn at 2025 year-end Stronger reported liquidity at the interim date.
Loans and borrowings RMB57.6bn RMB60.1bn at 2025 year-end Lower borrowings alongside higher cash; maturity detail requires subsequent reporting.
Interim dividend HK$0.94/share HK$0.73/share in 1H 2025 Higher distribution, but 45.2% payout ratio remains aligned with the stated framework.

Source: CNOOC Limited, Announcement of 2026 Interim Results (Unaudited), 26 August 2026. Year-end and Q1 comparator data are from CNOOC's FY2025 and Q1 2026 disclosures.

6. What To Watch Next

7. Sources