Dear shareholders, 

In the year of 2023, global economy was faced with heightened downward pressure, and the average international oil prices dropped significantly. In spite of the challenging external environment, China Ocean Oil Holding Limited pursued high-quality development effectively, achieved record-high reserves and production, and maintained a high level of profitability. We remain committed to high-standard corporate governance and actively rewarding shareholders. Our efforts were well received by the capital market and our share prices recorded new highs. On behalf of the Board, I would like to express my sincere gratitude to all shareholders for your trust and support to the Company.

During the past year, we maintained a value-oriented approach and implementing effective measures, sustaining the growth momentum in oil and gas exploration. We made a total of 9 new discoveries, the net proved reserves reached the best level in history and the reserve life remained over 10 years for the seventh consecutive year. In China, we successfully discovered several oil and gas fields with proved in-place volume over 100 million tons respectively, and discovered China’s first large deep-play coalbed methane field with proved in-place volume of over 100 billion cubic meters. Overseas, one more oil field with proved in-place volume over 100 million tons was discovered in Guyana. We have further strengthened natural gas exploration, so as to lay a solid foundation for the development of three trillion-cubic-meter gas areas in the South China Sea, Bohai, and onshore China.

We adhered to the integration of exploration and exploitation, continued to promote application of engineering standardization, and accelerated the pace of reserves-to- production conversion. We actively pushed forward the construction of major projects, and a number of key projects were successfully brought on stream during the year. Through fine waterflooding, oil stabilization and water-cut control, we maintained stable production from producing oilfields and further refined the development of oilfields. The net production of oil and gas reached 678 million BOE, hitting a record high for the fifth consecutive year. Bohai remained the largest crude oil production base in China.

We advanced technological innovation, continuously enhanced our capability to tackle key technological challenges, and made significant progress in our digital transformation. China’s first domestically-made subsea production system, which can operate in a water depth of 500 meters, has produced over a hundred million cubic meters of gas. “Shenhai-1” has become the world’s first super-large deepwater platform with capabilities of remote control operation. Liuhua oil field has realised remote production operation through typhoon automatic control mode for the first time..

We steadily implemented green development initiatives, facilitated the integration of new energy business with oil and gas operation, and gradually promoted the development of zero-carbon and negative-carbon sectors. During the year, we completed the construction of the Bohai oilfields onshore power project. The world’s first semi-submersible “Double Hundred” deep-sea floating wind power project started operation. China’s first offshore CCS demonstration project was officially launched. Our efforts to manage energy consumption and carbon intensity continued to improve through measures such as flare gas recycling, green electricity substitution and waste heat recovery.

By implementing quality and efficiency enhancement initiatives, we have witnessed steady improvement of our high quality development. The Company achieved an operating revenues of RMB416.6 billion and net profits attributable to equity shareholders of the Company of RMB123.8 billion, maintaining a strong profitability despite lower international oil prices. We have reinforced our research in key indicators and precisely implemented measures to reduce costs and enhance efficiency. Our all-in cost was US$28.83 per BOE, further strengthening our cost competitiveness. To share the accomplishment with our shareholders, the Board of Directors has recommended the payment of a final dividend of HK$0.66 per share (tax inclusive) for 2023.

While maintaining a robust development of our business, we have consistently adhered to high standards of safety management and our operations maintained safe and stable throughout the year. We uphold the concept of “harmonious development of economy, environment and society” and actively fulfill our social responsibilities. Our corporate image has been improving and brand value continues to grow.

Looking ahead to 2024, China Ocean Oil Holding Limited will focus on increasing reserves and production, targeting both oil and gas with a greater emphasis on gas exploration, so as to achieve steady growth. We will strengthen our research and innovation capabilities, promote digital and intelligent transformation to empower the development of our oil and gas business. Furthermore, we will reinforce our efforts to conserve energy and reduce carbon emissions, and actively improve the distribution of new energy and new business to drive green development. We will continuously enhance quality and efficiency, and tap the potential for cost reduction in order to continuously strengthen our value creation capability.

Headwinds are no stranger to sailors, and hardships are no stranger to pacesetters. In the year of 2024, we will accelerate the pace of building a world-class energy company and strive to create greater value for our shareholders.

Prince Abdulmalik Bolkiah Hassan    
Chairman
Hong Kong, 21 March 2024