Everbright Securities: CNOOC (00883)'s oil and gas production reserves reached a new high in 25, and the resilience of performance during the period of declining oil prices was highlighted

The Zhitong Finance App learned that Everbright Securities released a research report saying that in 2025, international oil prices fluctuated and declined, and the average price of oil futures was 68.19 US dollars/barrel, -14.6% compared with the same period last year. CNOOC (00883) overcame the downward pressure of international oil price shocks and continued to make efforts to increase storage and production and strictly control costs, and its profitability resilience was prominent. The company achieved annual oil and gas equivalent production of 777.3 million barrels of oil equivalent, an increase of 7% over the previous year. Among them, crude oil production increased by 5.8%; natural gas production increased sharply by 11.6%. The bank believes that as the geographical conflict drives up oil prices, the strategic value of the company's energy insurance and supply is highlighted.

The main contents of the research report are as follows:

Event: The company released its 2025 annual report. In 2025, the company achieved total revenue of 398.2 billion yuan, -5.3% year-on-year, and realized net profit of 122.1 billion yuan, or -11.5% year-on-year. In the 2025Q4 single quarter, the company achieved total revenue of 85.7 billion yuan, -9.3% year-on-month, and realized net profit to mother of 201 billion yuan, -5.5% year-on-year, and -38.0% month-on-month.

Comment: Increased storage and production combined to improve quality and efficiency, highlighting the resilience of 25-year performance

International oil prices fluctuated and declined in 2025. The average price of oil futures was 68.19 US dollars/barrel, -14.6% year over year. The company overcame the downward pressure of the international oil price shock and continued to make efforts to increase storage and production and strictly control costs, and its profitability and resilience were prominent. The company's cash flow performance was steady. The annual cash flow from operating activities was 209 billion yuan, -5.4% year-on-year. The company's annual weighted average ROE was 15.7%, -3.8pct year over year. The company adheres to a prudent financial policy. The balance ratio as of the end of December '25 was 26.7%, down 2.3 pct from the end of '24.

Continuing to increase storage and production, oil and gas production reserves reached a new high in 25 years

The company adheres to the main line of value exploration, and its oil and gas reserves have reached a new high. For the first time, it won Wood Mackenzie's “National Petroleum Company Exploration Company of the Year” award. In 2025, a total of 6 new oil and gas discoveries were obtained, and 28 oil and gas containing structures were successfully evaluated. Net proven reserves reached 7.77 billion barrels of oil equivalent, an increase of 6.9% over the previous year. Within China, the newly discovered Longkou 25-1 was successfully evaluated, and Qinhuangdao 29-6 was successfully evaluated, fully revealing the good exploration prospects of shallow layers in the Bohai Sea. Overseas, Guyana's Stabroek block successfully evaluated the Lukanani and Ranger oil fields, continuously strengthening the block's resource base. Additionally, four new exploration projects have been obtained in Iraq, Kazakhstan and Indonesia, further enriching the overseas oil and gas asset portfolio.

The company's oil and gas production reached a new high, and the benefits of developing oilfields are remarkable

A number of new projects were successfully put into operation in 2025. The utilization rate and recovery rate of oil field reserves continued to increase, and oil and gas equivalent production reached 777.3 million barrels of oil equivalent throughout the year, an increase of 7% over the previous year. Among them, crude oil production increased by 5.8%; natural gas production increased sharply by 11.6%, providing beneficial support for the company to maintain profit resilience. The company deepened oil stabilization and water control, and applied intelligent injection technology on a large scale to help reduce the natural decline rate of China's offshore oil fields to 9.5% and maintain a good level. Overseas, production in various projects such as South America and North America has continued to grow, and has become an important source of production growth for the company. In terms of realized prices, in 2025, the company achieved an average price of 66.47 US dollars/barrel, -13.4% year over year, and the average realized natural gas price was 7.95 US dollars/thousand cubic feet, +3.0% year over year.

Excellent cost control ability. The main cost of barrel oil fell 2.2% year on year in '25

The company further consolidated its competitive cost advantage. In 2025, the main cost of barrels of oil was 27.90 US dollars/barrel of oil equivalent, -2.2% compared with the same period last year. Among them, the operating cost of barrel oil was 7.46 US dollars/barrel of oil equivalent, -2.0% compared with the same period. The company insisted on improving quality, reducing costs and increasing efficiency, and barrel oil operating costs were well controlled. The DD&A for barrel oil was $14.82 per barrel of oil equivalent, +0.5% year over year. The main reason was the combined impact of changes in production structure and exchange rate changes. Taxes on barrels other than income tax were -15.5% year-on-year, mainly due to falling international oil prices. The company will continue to strengthen cost control, adhere to a cost-leading strategy, and build a solid foundation for the company's performance during the oil price fluctuation period.

The 25-year dividend rate of 45% highlights the value of maintaining high dividends

The company's annual dividend for 2025 was HK$1.28 per share (tax included), with a dividend payout ratio of 45%. In 2025-2027, under the premise of approval by the shareholders' meeting, the company's annual dividend payment rate will not be less than 45%, and the company will adjust the dividend policy in due course in accordance with changes in the market environment, adhering to the principle of returning shareholders, and comprehensively considering factors such as the wishes, strategic plans, and business conditions of the company's shareholders. The company maintains a high dividend payout rate, which shows that the company focuses on shareholder returns and shares development results. In the context of low interest rates, companies with high dividends and continuous dividends are scarce in the mainland market. The company adheres to a stable high dividend policy, and the investment value is outstanding.

In '26, the company will maintain high capital expenditure to support steady growth in production

In 2025, the company completed a total capital expenditure of 120.5 billion yuan, a year-on-year decrease of 9.1%. Among them, exploration, development and production investments were +1.0%, -14.3%, and +4.2%, respectively. Exploration and production capital expenses remained basically the same. Changes in development capital expenditure were mainly affected by workload arrangements. In 2026, the company will focus on the main oil and gas industry and continue to pursue effective production. The capital expenditure budget is 112-122 billion yuan, and the production target for 26 is 780-800 million barrels of oil equivalent. The target center is 1.6% year-on-year increase. The company will focus on high-quality development, pursue effective output, and maintain steady growth in production scale.

Geographical conflict boosts oil prices, and the strategic value of the company's energy security and supply is highlighted

The US-Iran conflict continues, Iran maintains its blockade of the Strait of Hormuz, cuts off energy exports to the Middle East, and the crude oil supply side has been drastically impacted, driving up oil prices widely. As the main force of energy insurance and supply in China, the company will continue to maintain high capital expenditure. Against the backdrop of increased uncertainty in the external environment and large fluctuations in oil prices, the company will continue to increase storage and production, continue to strengthen oil and gas resource exploration, continuously strengthen natural gas market development, and highlight the strategic value of energy insurance and supply.

Risk warning: Crude oil and natural gas prices fluctuate greatly, project progress falls short of expectations, and risk of cost fluctuations.