Issuer Flash: CNOOC Limited

Report date: 2026-11-02 Event date: 2026-10-30 Event title: Q3 2026 Operating and Financial Results

1. Flash Conclusion

CNOOC Limited's unaudited results for the first nine months of 2026 reinforce the existing view of a strong upstream operating franchise, while illustrating the earnings sensitivity that prevents production growth from being read as a stable cash-flow guarantee. Net production rose 2.7% year on year to 593.7 million barrels of oil equivalent (mmboe), oil and gas sales rose 19.5% to RMB305.4bn, and attributable profit rose 16.8% to RMB119.1bn. The realised crude and liquids price increased 26.4% to US$86.32/bbl, a much larger percentage change than production. Higher prices therefore form an important part of the earnings context; the results do not establish resilience at the same profit level under lower prices.

The event also shows a less comfortable cost and reinvestment picture. Nine-month all-in cost rose to US$30.57/boe from US$27.35/boe a year earlier, while capital expenditure increased 4.5% to RMB89.9bn. These figures do not by themselves indicate a credit problem, but the rise in costs matters if realised prices retreat. Nine projects commenced production in the period, supporting delivery of the production programme, though the disclosures reviewed do not establish project returns or reserve replacement.

The separate unaudited quarterly report shows that liquidity remained substantial at 30 September: the CAS balance sheet recorded RMB329.5bn of cash at bank and on hand and the cash-flow statement recorded RMB164.8bn of closing cash and cash equivalents. These measures must not be added, and their difference is not fully reconciled in the quarterly report. Nine-month operating cash flow was RMB199.6bn, against RMB81.7bn of cash paid for long-term assets and RMB24.8bn paid for dividends or profits and interest combined. That leaves substantial cash-flow headroom on those cash items, although RMB38.6bn of dividends payable remained on the balance sheet. The operating and liquidity evidence reinforces the existing credit view; sustaining this coverage through a weaker oil-price cycle remains the key test.

2. Operating Delivery and Earnings

The 593.7mmboe nine-month result comprised 408.5mmboe in China, up 1.9%, and 185.1mmboe overseas, up 4.3%; the geographic components do not sum exactly to the consolidated total because of rounding. Management attributes domestic growth partly to projects including Kenli 10-2 and overseas growth partly to Guyana and Brazil. The wider mix contributes to production, but exposure to foreign partners, fiscal regimes and repatriation remains relevant to the credit analysis. This event does not quantify those risks or show a new impairment.

Q3 production alone was 194.9mmboe, compared with 193.7mmboe a year earlier, an increase of about 0.6%. This is slower than the nine-month growth rate and illustrates why aggregate year-to-date performance should not be mistaken for an accelerating quarterly trend. Q3 attributable profit of RMB33.3bn increased 2.7%, while Q3 oil and gas sales increased 18.5% to RMB99.3bn. The different growth rates do not establish a single cause for profit growth lagging sales: detailed expense and tax movements require further examination.

For nine months, realised crude and liquids prices rose to US$86.32/bbl from US$68.29/bbl, whereas realised natural gas prices rose to US$8.13/mcf from US$7.86/mcf. Oil and gas sales rose to RMB305.4bn from RMB255.5bn. Higher realised crude prices provide an important explanation for the stronger sales base, but the figures do not isolate the contribution of each price, product mix and volume effect. The underlying exposure remains to upstream prices and costs rather than to a diversified downstream earnings stream.

Five discoveries and 23 successful appraisals were reported, and nine new projects commenced production, including four in Q3. These are evidence of operational activity and potential future supply; discoveries and appraisals are not equivalent to proved reserve additions, and project starts alone do not demonstrate commercial returns. Monitoring should focus on whether the pipeline converts into economic reserves and sustainable production without disproportionate reinvestment.

3. Costs, Investment and Liquidity

The nine-month all-in cost of US$30.57/boe was US$3.22/boe, or about 11.8%, above the same period of 2025. Operating expenditure per boe rose from US$7.12 to US$7.60. The issuer says it remains cost competitive, but no current peer comparison has been made for this flash. The increase deserves attention even though the disclosed realised crude price also rose sharply: if oil prices fall, rising unit costs can compress margins. The disclosed figures do not quantify cash break-even prices or establish how much of the cost change is structural.

Capital expenditure of RMB89.9bn in nine months was up 4.5% year on year. It included RMB55.1bn of development spending, RMB14.3bn of exploration and RMB19.5bn of production capitalisation. The company reported Q3 capex of RMB27.9bn, down 1.9% year on year. These categories do not identify a maintenance-versus-growth split. The nine-month amount represents about 74–80% of the RMB112–122bn full-year capex budget stated at the interim results; that arithmetic is a comparison with earlier guidance, not a confirmation that the guidance has been reiterated or will be met. Timing and the scope of spending must be considered before projecting the full year.

The unaudited CAS balance sheet at 30 September reports RMB329.5bn of cash at bank and on hand, compared with RMB214.7bn at end-2025. The cash-flow statement reports RMB164.8bn of cash and cash equivalents at September, versus RMB78.7bn at the start of the year; the two cash measures are not interchangeable, and the quarterly report does not explain the full difference. Long-term borrowings of RMB4.3bn and bonds payable of RMB50.8bn, together with RMB4.0bn of non-current liabilities due within one year, are substantially below the reported cash amounts. The latter category is broader than a disclosed current-debt figure; these numbers do not provide a full debt maturity or restricted-cash analysis.

Operating cash flow was RMB199.6bn in nine months, up from RMB171.7bn a year earlier. Cash paid for fixed, intangible and other long-term assets was RMB81.7bn, while the combined cash outflow for dividends or profits and interest was RMB24.8bn. Subtracting both cash items from operating cash flow gives about RMB93.1bn of indicative headroom before other investing and financing flows; it is not a standard company-defined free-cash-flow measure. The reported RMB89.9bn capex and cash expenditure on long-term assets use different measures and should not be substituted. The balance sheet also records RMB38.6bn of dividends payable at September. The interim dividend declared was HK$0.94 per share, approximately RMB38.8bn, with an approximately 45.2% payout ratio, calculated as the reported aggregate interim dividend divided by interim attributable profit; the payable and combined cash-flow line must not be treated as proof of the payment date or a dividend-only cash outflow.

The 9M income statement also records RMB7.24bn of asset impairment losses, against RMB0.07bn a year earlier. The reviewed quarterly report does not explain the asset-level cause, so it would be premature to infer the affected projects or recurrence. This merits follow-up because asset quality and the economics of reinvestment matter to future credit strength.

4. Credit Read-Through

The disclosure supports continued confidence in CNOOC Limited's ability to deliver production and generate substantial earnings in a favourable price environment. Project starts and higher overseas and domestic production are consistent with the operating strengths described in the existing issuer summary. They do not remove exposure to commodity prices, execution, reserve replacement or overseas operating conditions. Rising all-in cost and the continuing capital programme are counterweights to the stronger earnings headline, particularly if prices reverse.

The June additional discussion proposed monitoring post-dividend operating cash coverage, domestic asset quality and overseas risk, among other warning lines. This event provides current price, production, unit cost and capital-spending observations relevant to those questions. Nine-month operating cash flow of RMB199.6bn is already above the discussion's hypothetical RMB175–185bn annual or trailing-12-month warning range; the periods differ, so this is not a like-for-like test and it does not validate the threshold. The results do not verify reserve-replacement assumptions, maintenance capex split, overseas cash repatriation or support-premium repricing. Those are analytical hypotheses or open monitoring questions, not company guidance or established triggers. No change to the legal distinction between the listed company, its parent and individual debt issuers or guarantors follows from these results.

5. Key Numbers

Sources: CNOOC Limited, 2026 Third Quarter Review and Third Quarterly Report of 2026, 30 October 2026. Figures are unaudited and rounded.

6. What To Watch Next

• The next cash-flow statement and balance sheet for dividend settlement, cash generation, capex and the movement in cash and debt, including any restrictions and maturity detail.
• The assets and causes behind the nine-month impairment, and whether further charges affect future production or reserves.
• Full-year production and expenditure against the targets stated at the interim results, alongside realised prices and all-in costs. Assess changes in guidance from direct subsequent disclosure.
• Reserve replacement and project economics, including whether domestic offshore production requires rising maintenance spending; do not equate discoveries with proved reserves.
• Overseas project execution, fiscal and payment or repatriation constraints where supported by reliable evidence, and any change to rating-agency support language or issue-level guarantee terms.
• Whether weaker prices and the dividend framework leave adequate room for investment without sustained use of the cash buffer.

7. Sources

• CNOOC Limited, Announcement: Third Quarterly Report of 2026, 30 October 2026, https://www1.hkexnews.hk/listedco/listconews/sehk/2026/1030/2026103000586.pdf. Unaudited CAS consolidated balance sheet, income and cash-flow statements.
• CNOOC Limited, 2026 Third Quarter Review, 30 October 2026, https://ltd.cnooc.com.cn/english/investorrelations/resultspresentations/results/202610/P020261030603688585622.pdf. Primary source for production, prices, costs, results and expenditure.
• CNOOC Limited, CNOOC Limited Brings On-stream 9 New Projects in the First Three Quarters of 2026, 30 October 2026, https://www.cnoocltd.com/english/presscenter/pressreleases/2026/202610/t20261030_123124.html. Primary source for geographic production drivers and project developments.
• CNOOC Limited, 2026 Mid-year Review, 26 August 2026, https://ltd.cnooc.com.cn/english/investorrelations/resultspresentations/results/material/2026Mid-yearReviewEN.pdf. Source for earlier 2026 capital expenditure budget.
• CNOOC Limited, Announcement of 2026 Interim Results (Unaudited), 26 August 2026, https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0826/2026082600422.pdf. Source for June liquidity and the declared interim dividend; amounts are not represented as September balances.