00883 CNOOC

From 2023 to 2024, especially since the beginning of 2024, CNOOC has accelerated the acquisition of new overseas exploration blocks. In 2023, it jointly obtained oil and gas exploration rights for new offshore blocks in Guyana with ExxonMobil. In 2024, it secured exploration rights for multiple offshore blocks in Mozambique, Iraq, Brazil, and Kazakhstan. Combined with its previous exploration rights in Brazil, the Gulf of Mexico, Africa, and domestic blocks, CNOOC now ranks among the industry leaders in terms of exploration scale.

CNOOC's current recoverable oil and gas reserves are sufficient to support rapid annual production growth for the next 5-10 years. However, production growth beyond 10 years will require substantial new proven reserves, necessitating continuous domestic and overseas discoveries to sustain long-term output increases. Strategically, CNOOC must accelerate the acquisition of new overseas exploration blocks to ensure growth beyond the next decade.

Offshore oil and gas resources represent the primary source of future global reserves and production growth. As a company specializing in offshore oil extraction, CNOOC has developed a competitive edge in low-cost exploration and development after years of technological and equipment advancements. Offshore exploration is characterized by high risk, high investment, long cycles, and high returns—aligning well with CNOOC's current low debt, net cash position, and long-term investment strategy for post-10-year growth.

CNOOC raised its annual exploration capital expenditure to around 20 billion yuan in 2021 when its oil and gas output exceeded 500 million barrels and profits reached over 70 billion yuan. Currently, with annual production surpassing 700 million barrels and profits around 150 billion yuan, exploration spending remains at 20 billion yuan. As future output and profits grow rapidly, CNOOC can appropriately increase overseas exploration expenditures to boost proven reserves. While higher exploration costs may reduce short-term profits, they are crucial for the company's sustainable development.