CNOOC Limited Issuer Summary

Report date: 2026-05-20
Issuer: CNOOC Limited
Ticker reference: CNOOC / HKEX 00883 and 80883 / SSE 600938
Relevant bond reference: major CNOOC Finance and CNOOC Petroleum North America notes for which CNOOC Limited guarantees are identified in 2025 Annual Report note 27, subject to issue-by-issue documentation review; capped project-related guarantees such as Tangguh LNG III are treated separately

1. Business Snapshot and Recent Developments

CNOOC Limited is China’s largest offshore crude oil and natural gas producer and one of the world’s larger independent upstream E&P issuers. “Independent” here means that the company is not an integrated oil company with substantial refining, petroleum product sales, chemicals, power generation and city gas operations; rather, its main source of debt repayment is the exploration, development, production and sale of crude oil and natural gas. For bond investors, the primary question is how far the company’s low-cost upstream asset base, net-cash-type financial profile, and support expectations from CNOOC Group and the Chinese government in light of energy security can absorb oil price volatility, sustained capital expenditure, overseas asset risk and the guarantee perimeter of individual bonds.

This report distinguishes clearly between CNOOC Limited, its parent China National Offshore Oil Corporation (“CNOOC Group”), issuing vehicles such as CNOOC Finance, and the Chinese government / SASAC. CNOOC Limited is the listed core subsidiary of CNOOC Group, and CNOOC Group is its controlling shareholder. The 2025 Annual Report identifies CNOOC Group as the substantial ultimate holding company holding approximately 62.13% of CNOOC Limited’s total issued shares. However, when assessing CNOOC Limited’s foreign-currency bonds, these are not direct obligations of the Chinese government. Government support expectations, the strategic importance of CNOOC Group, and CNOOC Limited guarantees provide credit support, but the legal claim, issuer, guarantor, governing law and covenants of each bond must be reviewed separately.

FY2025 was a year in which production growth and cost control absorbed the impact of lower oil prices. CNOOC Limited’s 2025 net production was 777.3 million BOE, up 7.0% year on year. Net proved reserves were 7.773 billion BOE, up 6.9% year on year, implying a reserve life of approximately 10 years on a simple calculation. In 2025, oil and gas sales revenue was RMB335.7bn, net profit attributable to shareholders was RMB122.1bn, operating cash flow was RMB209.0bn, and all-in cost was US$27.90/BOE. Average realised oil price fell by 13.4%, from US$76.75/bbl in 2024 to US$66.47/bbl in 2025, but earnings, operating cash flow and net cash headroom all remained sufficiently strong for a high-grade investment-grade issuer.

1Q2026 is also important as the latest disclosure at the time of initial coverage. In the company’s announcement dated 2026-04-28, 1Q2026 net production reached a record high of 205.1 million BOE, up 8.6% year on year. Domestic China production was 140.0 million BOE and overseas production was 65.1 million BOE, with contributions from Kenli 10-2 and the Yellowtail Project in Guyana, among others. Oil and gas sales revenue for the quarter was approximately RMB97.0bn, net profit attributable to shareholders was RMB39.14bn, all-in cost was US$28.41/BOE, and capex was RMB33.02bn. Since the company absorbed lower oil prices in FY2025 and production growth together with higher prices supported earnings in 1Q2026, the current direction of travel is not deteriorating, at least in the near term.

That said, it is insufficient to read CNOOC Limited simply as “a strong Chinese SOE and therefore stable.” The company is not a regulated-tariff utility; it is an upstream company directly exposed to oil and gas prices. The 2025 results showed that the company could withstand lower Brent through production growth and low costs, but net profit still fell by 11.5% year on year. Compared with integrated companies with substantial natural hedges from refining, downstream and marketing operations, operating cash flow is more exposed to compression during a prolonged decline in crude oil prices. Credit analysis should therefore consider both government support expectations and standalone E&P risk.

The company profile and recent developments are summarised below.

2. Industry Position and Franchise Strength

CNOOC Limited’s business franchise is supported by its institutional position in China’s offshore oil and gas development, deepwater and offshore development capabilities, low-cost operations, and participation in large overseas projects. Unlike issuers such as Sinopec Group, which have large refining, marketing and chemicals operations, CNOOC Limited’s strength lies in the upstream asset base itself. For China, offshore oil and gas is an important resource frontier with remaining room to increase domestic supply, and is linked to energy security, reducing import dependence, natural gas supply, and self-reliance in deepwater technology. This policy relevance is a major difference from a purely private E&P company.

CNOOC Group’s official overview describes the group as China’s largest offshore oil and gas producer and a state-owned mega company established in 1982 with State Council approval. The group’s main businesses span oil and gas exploration and development, professional technical services, refined product sales and fertilisers, natural gas and power generation, financial services, and new energy such as offshore wind. Within the group, CNOOC Limited is the most important listed platform responsible for upstream assets. CNOOC Group’s broad business scope and government ownership context provide credit support, but CNOOC Limited itself should still be assessed as a listed company focused on upstream operations.

In China, CNOOC Limited’s core areas are Bohai, Western South China Sea, Eastern South China Sea, East China Sea and onshore unconventional gas. As of end-2025, approximately 64.5% of the company’s net proved reserves and approximately 69.1% of net production came from China. Domestic production was 536.9 million BOE, up 9.0% year on year, including 401.8 million BOE of crude and liquids and 799.5bcf of natural gas. A high share of domestic production strengthens the linkage with the parent and government support. At the same time, the development efficiency, natural decline rates, exploration success, reserve additions, offshore safety and environmental regulation of domestic offshore resources directly affect standalone credit quality.

Bohai is CNOOC Limited’s largest crude oil production base. In 2025, the company reported appraisal of 100-million-ton-class oilfields such as Qinhuangdao 29-6 and start-ups including Bozhong 26-6 Phase I, Luda 5-2 North Phase II, Caofeidian 6-4 and Kenli 10-2 Phase I. Bohai’s strengths are existing infrastructure, development experience including in shallow waters, and continuous near-field exploration. From a credit perspective, it supports production and cash flow as a relatively low-risk domestic base within offshore E&P.

Western South China Sea has a stronger natural gas profile, with Shenhai-1, Lingshui, Weizhou and Dongfang as important assets. Natural gas has a clearer policy relevance than crude oil because it is linked to China’s energy transition, city gas, industrial fuel and winter supply. In 2025, exploration and appraisal results included Weizhou 10-5 / 10-5 South and Lingshui 17-2 / 25-1, while Dongfang 29-1, Wenchang 9-7 and Dongfang 1-1 block 13-3, among others, came on stream. Growth in gas production partly mitigates the risk of an oil-only profile, but gas prices are affected by buyers, contracts, regions and policy, and are not always more stable than oil prices.

The overseas business is a source of growth and, at the same time, a source of credit complexity. As of end-2025, overseas assets accounted for approximately 35.5% of net proved reserves and approximately 30.9% of net production. South America has become the largest overseas reserve and production region, with Brazil’s Mero / Buzios and Guyana’s Stabroek block as key assets. CNOOC Limited holds a 25% interest in Guyana Stabroek, where the Yellowtail Project commenced production in 2025. The company indicates that eight projects are expected to be in production in the block by 2030. This is a major strength from a production growth perspective, but it also entails host-government, partner governance, FPSO, deepwater development, tax, local political, environmental regulatory and regional security risks.

North America, Africa, Oceania and Europe are also not negligible. Canada’s Long Lake showed production growth through efficiency improvements, but oil sands are affected by cost, environmental issues, Canadian policy and price differentials. Uganda’s Kingfisher is under development, where infrastructure, government relations, pipeline issues and regional politics are important. Australia’s NWS LNG is meaningful in the context of stability and gas supply to Asia. In Europe, in addition to Buzzard / Golden Eagle in the U.K. North Sea, the Annual Report discloses involvement in Russia’s Arctic LNG 2 LLC, which requires careful review of sanctions, geopolitics, fund transfers and partner constraints.

Low cost is another major element of CNOOC Limited’s franchise. The 2025 all-in cost was US$27.90/BOE, down 2.2% year on year. Operating expenses per BOE were also US$7.46, down from US$7.61 in 2024. In offshore E&P, even with reserves, credit quality weakens if development costs, drilling, FPSOs, subsea facilities, taxes, dismantlement costs and repair costs increase. CNOOC Limited has been able to use this cost discipline as a “breakwater” for profitability. Fitch also cites large operating scale and superior cost control as factors supporting the company’s standalone credit profile.

3. Segment Assessment, Reserve Life and Project Pipeline

For CNOOC Limited’s segment assessment, credit analysis is better served by looking at regional and resource-based production, reserves, development projects and risk quality than by focusing on accounting segment profit. The company’s disclosures show E&P, trading business and corporate as operating segments, but substantive credit judgement is determined by the assessment of the asset portfolio: domestic offshore China, domestic onshore gas, overseas deepwater, LNG, oil sands and African development.

Production and reserves increased in both China and overseas in 2025. China net production was 536.9 million BOE and overseas production was 240.4 million BOE. Net proved reserves were 5.016 billion BOE in China and 2.757 billion BOE overseas, for a total of 7.773 billion BOE. Simply dividing end-2025 reserves by 2025 production gives a reserve life of approximately 10.0 years. In addition, reserves increased from 7.271 billion BOE at end-2024 to 7.773 billion BOE at end-2025, while the company produced 777.3 million BOE in 2025. A simple movement calculation implies reserve additions of approximately 1.28 billion BOE, or about 1.6x production. This is not an official reserve replacement ratio stated by the company, but it shows that the resource base increased even as production grew in 2025.

The strength of the domestic base is not merely a matter of large production volumes. CNOOC Limited has long-standing exploration, development and production experience in offshore China and combines foreign partner cooperation, proprietary development and accumulated technology, supported by CNOOC Group’s PSC authority and government relationships. The Annual Report states that, at end-2025, approximately 90.0% of China reserves and approximately 87.8% of China production came from independent oil and gas fields. This shows that the company is not simply dependent on PSCs with foreign majors, but is increasing production through its own operating and development capabilities.

Overseas assets strengthen credit quality in terms of scale and diversification, but they should not be read simplistically as “diversified, therefore safe.” Brazil and Guyana are global deepwater growth regions and may provide long-term reserves and production expansion. At the same time, development costs, operators, partners, FPSO schedules, tax regimes, government sharing arrangements and environmental compliance are complex. Canada’s Long Lake has a 100% working interest and therefore stronger control, but it carries oil sands cost and environmental risk. Uganda has resource potential, but commercialisation entails infrastructure and political risk. For Russia-related assets, the management of sanctions, fund transfers and valuation risk matters more than the size of the assets.

The major development projects make CNOOC Limited’s medium-term growth reasonably visible. In 2025, 16 new projects came on stream, including Bozhong 26-6 Phase I, Kenli 10-2 Phase I, Brazil Buzios 7 and Guyana Yellowtail. In 1Q2026, Huizhou 25-8 comprehensive adjustment and Penglai 19-3 secondary adjustment also came on stream, and other projects were reported to be progressing smoothly. These projects support reserve-to-production conversion through improved recovery at existing fields, containment of natural decline, new deepwater production and expanded gas production.

This development pipeline has two sides from a credit perspective. On the positive side, annual production growth partially offsets lower oil prices and supports scale and capital market access. On the negative side, continued production growth requires substantial annual capex, and if capex is cut sharply when oil prices fall, future production will decline. CNOOC Limited’s 2026 plan calls for production of 780-800 million BOE and oil and gas capex of RMB112-122bn, close to actual 2025 oil and gas capex of RMB118.8bn. In other words, the company will continue to make large investments in order to maintain high production and reserve conversion.

Natural gas and low-carbon initiatives are important for long-term business adaptability, but they do not materially change the near-term credit conclusion. Gas production in 2025 was 1,037.3bcf, up 11.6% year on year, and the share of natural gas is rising. In low-carbon areas, the company has disclosed initiatives such as green electricity substitution, offshore wind and CCUS. These support policy importance and long-term licence to operate, but the main source of debt repayment for the time being remains oil and gas production. This report therefore treats low-carbon initiatives as a positive factor, but not as something that removes the oil price sensitivity of the E&P business.

4. Financial Profile, Oil Price Sensitivity and Free Cash Flow Resilience

CNOOC Limited’s financial profile is very conservative for an upstream company. At end-2025, total assets were RMB1,098.6bn, total liabilities were RMB293.4bn and total equity was RMB805.2bn. Interest-bearing debt was RMB69.8bn, comprising loans and borrowings of RMB60.1bn and lease liabilities of RMB9.7bn, and the gearing ratio was 8.0%. In comparison, cash and cash equivalents were RMB78.7bn, time deposits within one year were RMB136.0bn and current other financial assets were RMB26.0bn, amounting to approximately RMB240.7bn for these three items alone. Even after simply deducting interest-bearing debt, there is approximately RMB170.9bn of headroom.

This liquidity and capital structure is central to CNOOC Limited’s credit strength. Upstream E&P companies are prone to sharp declines in operating cash flow when oil prices fall. For highly leveraged companies, the same oil price decline can more easily lead to downgrades, higher funding costs, capex cuts and production declines. Because CNOOC Limited maintains a balance sheet close to a net cash profile, a downward phase in the oil price cycle is less likely to translate immediately into refinancing risk.

Key financial metrics are as follows.

Profitability in 2025 was strong despite lower oil prices. Total revenues were RMB398.2bn, down 5.3% year on year, while oil and gas sales were RMB335.7bn, down 5.6% year on year. Oil sales volume and gas sales volume increased, but revenue was pressured by the decline in realised oil price to US$66.47/bbl. In contrast, realised gas price increased by 3.0% to US$7.95/mcf, and gas sales revenue rose by 16.9% year on year to RMB55.9bn. Higher gas sales partly mitigated lower oil prices, but did not fully offset the decline in oil sales revenue.

Cost control was the largest support in 2025. All-in cost was US$27.90/BOE and operating expenses per BOE were US$7.46. Exploration expenses increased to RMB15.4bn in 2025, but operating expenses per BOE declined. Depreciation, depletion and amortisation increased in line with production growth, but impairment and provision fell from RMB8.0bn in 2024 to RMB3.8bn in 2025. In other words, the decline in earnings was mainly price-driven and was not due to a material deterioration in operating efficiency.

In cash flow terms, operating cash flow broadly absorbed capex, dividends and debt repayment. Net cash flows from operating activities were RMB209.0bn in 2025, and capital expenditure on the cash flow statement was RMB111.6bn. Simple operating CF minus cash capex was RMB97.5bn. Dividends paid in the same year were RMB60.4bn and interest paid was RMB3.1bn, leaving roughly RMB35-40bn of internal headroom after capex and dividends. In addition, the company repaid RMB19.7bn of bonds and loans in 2025 and reduced interest-bearing debt.

Price sensitivity is best read not through a precise model but through the actual change from 2024 to 2025. In 2025, realised oil price fell by 13.4%, but production growth, higher gas prices, cost control and lower capex limited the decline in operating CF to 5.4%. This shows that while CNOOC Limited’s E&P business is sensitive to oil prices, it can absorb short-term price declines well. However, this should not be assumed to hold automatically under a deeper decline or a prolonged low-price environment.

Based on this table, under the current base case, CNOOC Limited is likely to be able to fund its 2026 capex budget with operating cash flow. Fitch also states its view that the company will maintain a net cash position over the medium term and be able to fund capex through operating cash flow. However, if 2026 oil and gas capex remains elevated near the company’s RMB112-122bn plan and dividends are maintained in line with the policy of 45% or above, even a roughly 20% decline in operating CF versus 2025 would significantly narrow post-dividend headroom. If Brent is materially below Fitch’s assumptions, gas prices are also weak, and delays or capex overruns at deepwater projects overlap, the company may need to draw down its net cash buffer.

The dividend policy is neutral to moderately constraining for credit. CNOOC Limited has stated a policy for 2025-2027 of maintaining an annual dividend payout ratio of at least 45%, subject to shareholder approval and other conditions. The total 2025 dividend was approximately 45.0% of net profit attributable to ordinary shareholders based on the company’s calculation. This is manageable under current earnings capacity and net cash, but if oil prices remain weak for a prolonged period, the prioritisation of dividends, capex, debt repayment and overseas investment will become more important. For credit investors, the key issue is not the dividend itself, but whether financial policy remains conservative even in a low-price environment.

Overall, CNOOC Limited’s standalone financial profile is very strong among upstream E&P companies. Earnings will decline if oil prices fall, but low costs, high operating CF, net cash, low short-term debt and strong access to banks and capital markets mean that issuer credit quality is unlikely to deteriorate rapidly through a normal price cycle. The weakness is that the financial profile is so strong that oil price risk can become less visible. Investors should not underweight oil price, capex, reserve replacement and overseas project risks simply because the company has net cash.

5. Structural Considerations for Bondholders

For bondholders, the most important point is to recognise CNOOC Limited’s strong credit quality while strictly distinguishing which legal entity provides the claim. Note 27 of CNOOC Limited’s Annual Report lists notes issued by CNOOC Finance (2003) Limited, CNOOC Finance (2011) Limited, CNOOC Finance (2012) Limited, CNOOC Finance (2013) Limited, CNOOC Finance (2014) ULC, CNOOC Finance (2015) Australia Pty Ltd, CNOOC Finance (2015) U.S.A. LLC, CNOOC Petroleum North America ULC and others, and describes these notes as fully and unconditionally guaranteed by CNOOC Limited. This is a significant support for bondholders.

However, this is a CNOOC Limited guarantee, not a Chinese government guarantee. Even though CNOOC Group is the controlling shareholder, has high policy importance as a central Chinese SOE, and Fitch assesses the linkage between CNOOC Group and CNOOC Limited, individual bonds do not necessarily have a direct Chinese government guarantee. Support expectations may be reflected in spreads and ratings, but legal recovery begins with claims against the issuer and guarantor. Therefore, in individual investment decisions, the guarantee language, ranking, governing law, tax, cross default, negative pledge, change of control, NDRC / SAFE, sanctions and remittance constraints must be reviewed issue by issue.

Related-party transactions also need to be treated as part of structural analysis. The 2025 Annual Report states that sales to the five largest customers accounted for approximately 63% of total revenue, of which sales to related parties accounted for approximately 55%. It also notes that sales to CNOOC Group / associates accounted for 59% of revenue. This shows that CNOOC Limited is a deeply integrated operating platform within CNOOC Group. From a credit perspective, this reinforces integration with the parent and government, while also distinguishing it from a private E&P company with a fully independent customer base.

Related-party transactions have both credit-supportive and governance-risk aspects. On the positive side, CNOOC Group’s ecosystem of sales, services, finance, equipment, LNG and domestic energy supply supports CNOOC Limited’s business continuity and market access. On the negative side, pricing, service fees, intra-group fund transfers, deposits with CNOOC Finance and parent policy may not fully align with the interests of the listed subsidiary’s minority shareholders or bond investors. These transactions are approved and disclosed as continuing connected transactions in the Annual Report, but credit analysis should continue to monitor their transparency and economic rationale.

This report leaves some issues on individual bond legal protections as unverified. Annual Report note 27 alone allows confirmation of the outstanding principal amount, maturity, coupon and CNOOC Limited guarantee for the notes. However, without reading the full offering circular, negative pledge, cross default, events of default, tax gross-up, governing law, submission to jurisdiction, sanctions, NDRC / SAFE, change of control, asset sale and merger covenants cannot be assessed. CNOOC Limited’s issuer credit is strong, but this distinction matters for the pricing of specific bonds.

6. Capital Structure, Liquidity and Funding

CNOOC Limited’s liquidity is very strong. Current liabilities at end-2025 were RMB91.3bn, well below current assets of RMB295.4bn. Current loans and borrowings were only RMB1.3bn, down sharply from RMB20.1bn at end-2024. Cash and cash equivalents were RMB78.7bn, time deposits within one year were RMB136.0bn and current other financial assets were RMB26.0bn. Together, these total RMB240.7bn, more than sufficient to cover short-term debt and also well above total interest-bearing debt.

Loans and borrowings at end-2025 were RMB60.1bn, of which RMB1.3bn was current and RMB58.8bn was non-current. Interest-bearing debt including lease liabilities was RMB69.8bn, down from RMB91.9bn at end-2024. Fitch describes a net cash balance of CNY181bn including wealth management products and short-term time deposits, and unused bank facilities of CNY51bn. Combining liquidity confirmed from the company’s Annual Report with Fitch’s reported bank lines, normal refinancing risk is quite low.

Long-term note maturities are long-dated and diversified. As of end-2025, outstanding notes included CNOOC Finance (2013)’s 2029 2.875% notes, CNOOC Petroleum North America ULC’s 2028, 2032, 2035, 2037 and 2039 notes, CNOOC Finance (2003)’s 2033 notes, CNOOC Finance (2011)’s 2041 notes, CNOOC Finance (2012)’s 2042 notes, CNOOC Finance (2013)’s 2043 and 2049 notes, CNOOC Finance (2014) ULC’s 2044 notes, and CNOOC Finance (2015) Australia’s 2045 notes. In 2025, CNOOC Finance (2015) U.S.A. LLC’s 2025 3.5% notes were redeemed.

There is no major near-term maturity concentration in this debt structure. Current notes are RMB611mn and current loans are RMB697mn. Because current debt is small, CNOOC Limited can rely on cash, time deposits and operating CF even if short-term markets temporarily close. The credit issue is therefore not short-term liquidity, but medium- to long-term capex, dividends, large overseas projects and cash flow under lower oil prices.

Another capital structure issue is the dismantlement provision. Provision for dismantlement was RMB116.0bn at end-2025, up from RMB99.7bn at end-2024. This is a natural liability-like item for an offshore E&P company, and actual payments will occur over a long period, but it represents a future burden not visible from loans and borrowings alone. Investors need to consider long-term capital needs including decommissioning, environmental remediation and asset retirement obligations, in addition to the small amount of interest-bearing debt.

Overall, CNOOC Limited’s liquidity is currently a clear strength for issuer credit quality. High operating CF, low short-term debt, long maturities, ample cash and time deposits, bank lines and the relationship with CNOOC Group make it unlikely that refinancing concerns will emerge under normal market stress or a temporary oil price decline. The rating focus is more on sovereign and parent support, prolonged low oil prices, capex discipline, dividends and overseas project risk than on short-term liquidity.

7. Rating Agency View

Rating agencies assess CNOOC Limited’s credit strength through both its “strong standalone E&P” profile and its linkage with a Chinese central SOE group. This report has reviewed Fitch through public text via MarketScreener / ENP, S&P through a public issuer ranking, and Moody's only through a headline; the full issuer reports from each agency have not been reviewed. On 2026-04-21, Fitch affirmed CNOOC Limited’s Long-Term Foreign- and Local-Currency IDR at A with a Stable Outlook, and also assigned an A rating to the senior unsecured rating and notes guaranteed by CNOOC Limited. Fitch assesses the standalone credit profile at a, citing large operating scale, low production costs and strong financials. At the same time, the company’s IDR is also supported by linkage with parent CNOOC, CNOOC’s government-related entity status, and its role in China’s energy security.

The important point in Fitch’s view is that CNOOC Limited is strong even on a standalone basis. 2025 production of 2.1mmboepd, all-in cost of US$27.90/BOE, proved reserves of 7.77bnboe, reserve life of approximately 10 years, and a net cash position support the standalone profile. At the same time, Fitch notes that the company lacks midstream / downstream integration and is therefore exposed to crude price volatility compared with more integrated high-rated peers.

Fitch’s downgrade sensitivity is highly relevant in practice. Fitch cites negative rating action on the China sovereign or a significant weakening of CNOOC’s support incentives for CNOOC Limited as downgrade factors. This means that even if standalone financials do not deteriorate materially, ratings and spreads could move if the agency’s view of sovereign or parent support changes. CNOOC Limited’s issuer credit is connected not only to oil prices, but also to the China sovereign, central SOE policy, and CNOOC Group’s business and support stance.

In S&P Global Ratings’ public issuer ranking, CNOOC Ltd. is shown at A+ / Stable, with a standalone assessment of a, business risk of Strong and financial risk of Modest. The same table shows China National Offshore Oil Corp., China National Petroleum Corp. and China Petroleum & Chemical Corp. also at A+ / Stable, indicating that China’s three major oil-related central SOEs sit in the same high investment-grade range. S&P’s full issuer report has not been reviewed for this report, and detailed triggers are therefore unverified.

For Moody's, a Cbonds headline refers to CNOOC Finance (2012) Limited at A1 with a stable outlook, but the full Moody's text has not been obtained. This report therefore uses Moody's only as a supplemental cross-check. A future rating-focused update should review Moody's full rating action, support assumption, BCA, government support uplift and rating rationale for the guaranteed notes.

The rating-agency views are broadly consistent with this report’s analysis. On a standalone basis, CNOOC Limited is strong due to its low-cost upstream E&P business and net cash financial profile. Including support, China’s energy security considerations and linkage with CNOOC Group provide high-grade investment-grade credit support. However, high ratings should not be treated as a substitute for individual bond guarantees or sovereign guarantees. Ratings incorporate support expectations, but they do not guarantee legal claims.

8. Credit Positioning

CNOOC Limited’s relative positioning needs to be assessed across multiple axes: the Chinese sovereign, policy banks, Chinese central SOEs, the three major national oil companies, regulated utilities, Asian NOCs and pure upstream companies. The closest comparables include CNPC / PetroChina, Sinopec Group / Sinopec Corp., State Grid, Chinese policy banks, PETRONAS, PTTEP, INPEX, and BP / Eni / TotalEnergies. However, the comparison axis differs in each case, and the relative strength cannot be determined mechanically in a single peer table.

Compared with the Chinese sovereign and policy banks, CNOOC Limited carries greater business risk. The Chinese government’s support capacity, SASAC oversight and energy security role support the credit, but CNOOC Limited’s debt is not a direct obligation of the Chinese government. Policy banks are more directly tied to government policy finance, and support is more readily read as explicit. By contrast, CNOOC Limited has business risks related to oil prices, development, overseas assets and HSSE. Therefore, to value it at the same spread as policy banks, investors need to examine carefully the differences in individual bond guarantees and business risk.

Compared with CNPC / PetroChina, CNOOC Limited is more offshore / upstream-focused and smaller in scale, but its financial profile is very conservative. PetroChina has a broader presence across upstream, pipelines, refining, marketing, natural gas and overall domestic energy supply. CNOOC Limited has greater specialisation in domestic offshore and overseas deepwater assets, and its net cash and low costs are strengths. On the other hand, it is weaker than PetroChina in terms of integration and the depth of domestic gas, pipeline and marketing networks.

Compared with Sinopec Group, CNOOC Limited has less chemicals and downstream risk, but greater direct sensitivity to oil prices. Sinopec has large downstream, marketing and chemicals operations and high policy importance, but is constrained by chemicals losses and thin refining margins. CNOOC Limited does not have downstream margin issues such as chemicals losses, but is directly driven by upstream prices and reserve replacement. When oil prices are high, CNOOC Limited’s profitability is easier to understand, but when oil prices fall sharply, earnings are more exposed to compression because it lacks a downstream hedge.

Compared with PETRONAS and PTTEP, CNOOC Limited is readily understood as an Asian NOC / upstream issuer. PETRONAS is an integrated NOC owned by the Malaysian government, with strong links to LNG, gas, downstream, dividends and government finances. PTTEP is more upstream-focused and has a government support context through Thailand’s PTT Group. CNOOC Limited has upstream sensitivity closer to PTTEP, but stronger scale, policy importance and net cash financials as a Chinese central SOE. At the same time, overseas political risk, deepwater project risk and oil price sensitivity are common factors.

In one line, CNOOC Limited can be positioned as follows: “support is less direct than for a sovereign or policy bank, but linkage with the government and parent is stronger than for an ordinary upstream company”; “cash flow is less stable than for a regulated utility such as State Grid, but downstream and chemicals margin risk is smaller than at Sinopec”; and “integration is less extensive than at PetroChina / PETRONAS / European majors, but net cash and low costs are very strong.”

This report has not reviewed live spreads, OAS, CDS or same-maturity peer curves, and therefore does not conclude whether market relative value is cheap or expensive. Actual investment decisions should examine how much compensation CNOOC Limited guaranteed bonds offer versus the Chinese sovereign, policy banks, CNPC / PetroChina, Sinopec, State Grid, PETRONAS, PTTEP and same-maturity global E&P peers for oil price sensitivity, government support, guarantees, liquidity, maturity, currency and legal terms.

From a purely credit perspective, CNOOC Limited guaranteed bonds are among the more defensive credits within Chinese central SOE energy issuers. Low costs, net cash, policy importance, A/A+ ratings and linkage with the controlling shareholder are supportive. However, the company has more business cyclicality than policy banks or regulated utilities, and narrower business diversification than integrated majors. Whether the spread adequately compensates for those constraints is the central investment judgement.

9. Key Credit Strengths and Constraints

CNOOC Limited’s largest credit strength is its dominant position in China’s offshore oil and gas sector. The company plays a central role in the exploration, development and production of domestic offshore resources, and is linked to China’s energy security, natural gas supply, deepwater technology and increased domestic resource production. CNOOC Group’s position as a state-owned mega company, SASAC oversight and the very strong support incentives cited by Fitch strongly support the company’s supported credit profile.

The second strength is its large, low-cost upstream asset base. End-2025 net proved reserves of 7.773 billion BOE, 2025 production of 777.3 million BOE, reserve life of approximately 10 years, and all-in cost of US$27.90/BOE are strong for an upstream issuer. Even when oil prices decline, low unit costs help preserve cash margins. This is an important difference versus E&P issuers with high-cost assets or short reserve lives.

The third strength is financial conservatism. At end-2025, interest-bearing debt was RMB69.8bn, while cash / time deposits within one year / current financial assets were approximately RMB240.7bn. Current debt was only RMB1.3bn, and operating CF was RMB209.0bn. This combination lowers short-term refinancing risk and provides room to absorb downside in the oil price cycle or a temporary increase in project capex.

The fourth strength is continuous production growth and reserve growth. In 2025, the company increased production by 7.0% while also increasing reserves by 6.9%. Production also increased by 8.6% in 1Q2026. This indicates that CNOOC Limited is not merely depleting its existing assets, but is able to renew its resource base through exploration, development, enhanced recovery and new projects.

The fifth strength is market access and ratings. Fitch A / Stable and the A+ / Stable rating in S&P’s public table support access to foreign-currency bond markets under normal conditions. CNOOC Limited is recognised as a key operating platform of CNOOC Group and is a representative reference issuer in Chinese energy SOE credit for domestic and overseas lenders / investors.

The main constraint is oil price sensitivity from upstream concentration. In 2025, realised oil price fell by 13.4% and net profit attributable to shareholders declined by 11.5%. Production growth and low costs absorbed the impact, but if crude oil prices remain weak for an extended period, operating CF, post-dividend FCF and capex flexibility would come under pressure. Because natural hedges from refining, marketing and chemicals are thin, direct commodity price sensitivity is higher than for integrated majors.

The second constraint is the ongoing burden of capex and reserve replacement. Oil and gas capex was RMB118.8bn in 2025, and the 2026 budget is RMB112-122bn. If an upstream company stops investing, future production will decline. CNOOC Limited’s financial profile is strong, but preserving FCF through investment cuts alone could weaken reserve life and the production profile over the medium term.

The third constraint is overseas asset risk. The overseas asset base is diversified across Brazil, Guyana, Canada, Uganda, Nigeria, Australia, the U.K., Russia and other locations, but it carries country risk, sanctions, tax, local content, environmental permits, operator risk, partner risk and security risk. Deepwater projects in particular are large-scale developments, and the impact of delays or cost overruns cannot be ignored.

The fourth constraint is the gap between government support and legal guarantees. Support expectations from CNOOC Group and the Chinese government are strong, but CNOOC Limited bonds do not carry a direct Chinese government guarantee. CNOOC Limited guarantees can be confirmed in Annual Report note 27, but the terms of individual OCs have not been reviewed in this report. It is important not to conflate supported ratings with legal claims.

In summary, the company’s strengths are its linkage with CNOOC Group / Chinese central SOE status, China’s largest offshore oil and gas platform, reserve life of approximately 10 years, low all-in cost of US$27.90/BOE, net-cash-type financial profile, the existence of notes guaranteed by CNOOC Limited, and rating levels of Fitch A / Stable and S&P public table A+ / Stable. Constraints are the absence of a direct Chinese government guarantee, oil price sensitivity from upstream concentration, the burden of ongoing capex and reserve replacement, overseas and deepwater project risks, dividend policy, unreviewed individual OCs, and sensitivity to sovereign and parent support assessments.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is a combination of lower oil prices, sustained capex and maintained dividends. CNOOC Limited absorbed an oil price decline of the magnitude seen in 2025 well. However, if Brent remains below Fitch’s assumptions or the company’s investment assumptions for a prolonged period, gas prices are also weak, overseas project capex increases, and the dividend policy of at least 45% is maintained, post-dividend FCF would shrink materially. Even then, near-term default risk would remain low, but net cash erosion, rating-agency assessment of financial headroom and spreads could react earlier.

The second downside is deterioration in reserve replacement and project execution. CNOOC Limited’s credit quality depends not only on production growth itself, but on its ability to grow production while maintaining reserve life. If exploration success declines, major projects are delayed and natural decline at existing fields is faster than expected, the production profile several years out would weaken. Even if near-term financials are strong, reserves and future production are the foundation of credit quality for an upstream company.

The third downside is overseas geopolitical, sanctions and operating risk. Deepwater developments in Guyana and Brazil are major growth drivers, but they carry risks related to host governments, tax regimes, partners, environmental litigation, FPSOs, local content, politics and security. In Uganda, infrastructure and government relations are important. Russia-related assets create credit uncertainty around sanctions, fund transfers, valuation and operational involvement. These factors alone are unlikely to undermine issuer credit quality, but they could affect market valuation if they overlap with lower oil prices.

The fourth downside is a change in parent or government support assessment. Fitch cites negative rating action on the China sovereign or a weakening of CNOOC’s support incentive as downgrade sensitivities. If China’s sovereign rating, central SOE support stance, CNOOC Group’s financial and policy obligations, or CNOOC Limited’s position in group strategy changes, ratings and spreads could move before standalone financials deteriorate.

The fifth downside is weak terms in individual bonds. Even with a CNOOC Limited guarantee, investors must confirm the issuer, guarantor, governing law, events of default, cross default, negative pledge, tax gross-up, NDRC / SAFE and sanctions clauses. Even for a strong issuer, weak terms in a specific bond can change relative value. For long-dated bonds in particular, it is important to understand how the contract absorbs energy transition, overseas assets, sanctions and changes in government support.

Monitoring indicators are realised oil price, Brent, realised gas price, operating CF, oil and gas capex, dividends, reserve additions, reserve life, deepwater projects such as Guyana / Brazil, country risks such as Russia / Uganda / Canada, HSSE incidents, rating actions by China sovereign / CNOOC Group / Fitch / S&P / Moody's, and guarantee / negative pledge / cross default / NDRC / SAFE clauses in individual OCs.

Future monitoring should prioritise 2026 interim results, 3Q2026 operating review, FY2026 production guidance, oil and gas capex, all-in cost, reserve additions, CNOOC Group / China sovereign rating actions, individual note OCs and live spreads. At the time of initial coverage, 1Q2026 started well, but upstream issuer credit quality is not determined by a single quarter. It is necessary to confirm in 2H2026 whether production growth can be maintained within the scope of capex and FCF.

11. Credit View and Monitoring Focus

CNOOC Limited’s current credit quality sits in the high-grade investment-grade range among Chinese central SOE energy issuers, and it is appropriate to view the company as a strong upstream E&P credit even on a standalone basis, supported by low costs, net cash and large reserves. The near-term direction is stable. In 2025, even though realised oil price declined by 13.4%, financial resilience was maintained through production growth, all-in cost of US$27.90/BOE, operating CF of RMB209.0bn and liquid financial assets of RMB240.7bn. Production and earnings also increased in 1Q2026, so the probability of a rapid deterioration in credit quality is currently low. However, because the company is upstream-heavy, earnings, post-dividend FCF and spreads could move quickly if a deep decline in oil prices, capex overruns, maintained dividends and overseas project delays occur at the same time.

Strong credit support does not eliminate oil price sensitivity. While CNOOC Limited guarantees support many notes, they are not direct Chinese government guarantees, and high Fitch / S&P ratings are not a substitute for legal claims. Investment decisions need to confirm the issuer, guarantor, ranking, governing law, negative pledge, cross default, tax gross-up, NDRC / SAFE and sanctions clauses for each bond.

Going forward, priority should be given to 2026 interim results, production guidance, capex, all-in cost, realised oil and gas prices, reserve additions, dividend policy, CNOOC Group / China sovereign rating actions, Fitch / S&P / Moody's updates, individual bond OCs and live spreads. In particular, the next point to confirm is how comfortably the 2026 production target of 780-800 million BOE and RMB112-122bn capex can be executed within operating CF and post-dividend capacity.

12. Short Summary & Conclusion

CNOOC Limited is China’s largest offshore crude oil and natural gas producer and a listed core upstream platform under CNOOC Group. It is a high-quality central SOE E&P credit supported by China energy security-related support expectations and a low-cost, net-cash financial profile. Earnings declined in 2025 due to lower oil prices, but financial resilience remained strong, supported by production growth, proved reserves of 7.773 billion BOE, all-in cost of US$27.90/BOE, operating CF of RMB209.0bn, and liquidity far exceeding interest-bearing debt of RMB69.8bn. At the same time, its upstream concentration leaves sensitivity to oil prices, capex and overseas project risks, and investors should not equate CNOOC Limited guaranteed bonds with direct Chinese government-guaranteed bonds. The guarantee scope and terms of individual bonds need to be reviewed.

13. Sources

Primary company and group sources

• CNOOC Limited official annual reports page, accessed 2026-05-20: https://www.cnoocltd.com/english/investorrelations/reports/annualreport/
• CNOOC Limited, Annual Report 2025, published 2026-04-09: https://www.cnoocltd.com/english/investorrelations/reports/annualreport/material/e00883-2025AnnualResults-en.pdf
• CNOOC Limited, 2025 annual results press release, 2026-03-26: https://www.cnoocltd.com/english/presscenter/pressreleases/2026/202603/t20260326_120621.html
• CNOOC Limited, Q1 2026 operating results press release, 2026-04-28: https://www.cnoocltd.com/english/presscenter/pressreleases/2026/202604/t20260428_121081.html
• CNOOC Limited official quarterly reports page, accessed 2026-05-20: https://www.cnoocltd.com/english/investorrelations/reports/quarterlyreport/
• CNOOC Limited official Key Operating Areas page, accessed 2026-05-20: https://www.cnoocltd.com/english/aboutus/keyoperatingareas/
• CNOOC Group official Company Overview, accessed 2026-05-20: https://www.cnooc.com.cn/English/aboutus_322/companyoverview/

Rating and bond sources

• Fitch, "Fitch Affirms CNOOC Limited at 'A'; Outlook Stable", 2026-04-21, via MarketScreener / ENP Newswire: https://www.marketscreener.com/news/fitch-affirms-cnooc-limited-at-a-outlook-stable-ce7f59dbd988f32d
• S&P Global Ratings, issuer ranking for global E&P and integrated companies, 2026-02-16, public/search-visible table used for rating and peer positioning: https://www.spglobal.com/ratings/en/regulatory/article/issuer-ranking-global-exploration-and-production-and-integrated-companies-strongest-to-weakest-s101666467
• Cbonds headline, Moody's action on CNOOC Finance (2012) Limited, 2026-04-29, used only as a supplemental cross-check because the full Moody's text was not accessed: https://cbonds.com/news/3893899/
• CNOOC Limited Annual Report 2025 note 27, loans and borrowings, note guarantees and debt maturity information.

Internal project files

• issuer_summary/issuers/cnooc_limited/data/cnooc_limited_credit_data_20260520.json
• issuer_summary/issuers/cnooc_limited/working/cnooc_limited_20260520_writing_plan.md

14. Unverified / Pending

1. Individual offering circulars and supplemental offering circulars were not reviewed issue by issue. Before investing in a specific note, confirm issuer, guarantor, guarantee scope, ranking, negative pledge, cross default, events of default, change of control, tax gross-up, governing law, NDRC / SAFE and sanctions / exchange-control language.
2. Full Fitch, S&P and Moody's issuer-specific reports were not all accessed directly. Fitch text was available via MarketScreener / ENP Newswire; S&P details were taken from the public/search-visible issuer-ranking table; Moody's was only available as a Cbonds headline.
3. CNOOC Group latest full group financials and detailed government support materials were not obtained. Parent and government linkage assessment is based on CNOOC Limited annual report, CNOOC Group official overview and Fitch public rating text.
4. Detailed commodity-price sensitivity, hedge position, project-level economics and reserve replacement by project were not fully modelled. The oil-price sensitivity in this report is based on 2024-2025 actual changes and qualitative analysis.
5. Live bond prices, spreads, OAS, CDS and same-maturity peer comparisons were not available in this workspace. No relative-value conclusion is made.