CNOOC Profit Up, More Cost Cuts coming

China's top offshore oil producer CNOOC Ltd said on Friday its 2014 net profit rose 6.5 percent, beating forecasts, as cost cuts and higher output helped it offset the slide in global oil prices.

CNOOC, China's third largest oil company, reported a net profit of 60.2 billion yuan ($9.69 billion) for last year, up from 56.5 billion yuan a year earlier. That beat a consensus forecast of 52.3 billion yuan from 23 analysts polled by Thomson Reuters.

For the current year, CNOOC said cost cuts twinned with production growth will remain its priorities as it braces for long-term weakness in oil prices. Last month, CNOOC said it planned to cut 2015 capital expenditure by 26-35 percent to 70 billion-80 billion yuan, while still trying to raise output by up to 15 percent.

"The company...has sensed the pinch of the 'cold winter'," CNOOC's chairman Wang Yilin said in the firm's earnings filing. "In 2015, we may face even more severe environment for our exploration and development."

The clampdown on CNOOC's costs echoes moves by Chinese oil majors PetroChina (PCCYF) and Sinopec Corp . International oil prices have skidded about 50 percent since June, and a government-led probe into graft in the state sector has added to pressure to rein in spending.

CNOOC attributed its profit rise in part to a 6 percent decrease in its production cost to $42.3 per barrel of oil equivalent (BOE) last year.

Meanwhile its oil and gas output rose 5.1 percent year on year to 432 million BOE in 2014, as more than 10 new projects commenced production. These included Liwan 3-1, the first major deepwater gas field in offshore China.

CNOOC said it achieved a reserve replacement ratio of 112 percent last year, and had net proven reserves of 4.48 billion BOE at year-end.

Earlier this week, PetroChina, Asia's largest oil and gas producer, vowed to further slash spending and divest more assets this year after posting a worse-than-expected 67 percent earnings slide for the fourth quarter.

Meanwhile Sinopec Corp, which on Sunday posted its first quarterly loss since becoming a public company in 2000, said it plans to cut capital expenditure by 12 percent this year.

Reporting by Charlie Zhu