2017 Mid-Year Review. August 24, 2017

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Warren Simmons
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1 2017 Mid-Year Review August 24,

2 Disclaimer This presentation includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including statements regarding expected future events, business prospectus or financial results. The words expect, anticipate, continue, estimate, objective, ongoing, may, will, project, should, believe, plans, intends and similar expressions are intended to identify such forward-looking statements. These statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes are appropriate under the circumstances. However, whether actual results and developments will meet the expectations and predictions of the Company depends on a number of risks and uncertainties which could cause the actual results, performance and financial condition to differ materially from the Company s expectations, including those associated with fluctuations in crude oil and natural gas prices, the exploration or development activities, the capital expenditure requirements, the business strategy, whether the transactions entered into by the Group can complete on schedule pursuant to the terms and timetable or at all, the highly competitive nature of the oil and natural gas industries, the foreign operations, environmental liabilities and compliance requirements, and economic and political conditions in the People s Republic of China. For a description of these risks and uncertainties, please see the documents the Company files from time to time with the United States Securities and Exchange Commission, including the Annual Report on Form 20-F filed in April of the latest fiscal year. Consequently, all of the forward-looking statements made in this presentation are qualified by these cautionary statements. The Company cannot assure that the results or developments anticipated will be realized or, even if substantially realized, that they will have the expected effect on the Company, its business or operations. 2

3 Agenda Overview Operating Results Financial Performance Outlook 3

Overview Accomplished 1H targets with outstanding production performance 14 new discoveries were made, with successful breakthroughs in offshore China and overseas Four out of five new projects

4 Overview Accomplished 1H targets with outstanding production performance 14 new discoveries were made, with successful breakthroughs in offshore China and overseas Four out of five new projects planned for 2017 already came on stream Net production was million boe*, outperformed our budget for the same period Further efforts on cost control and efficiency enhancement All-in cost of $31.74/boe, down 9.0% YoY Net profit of RMB billion, EPS of RMB 0.36 EBITDA of RMB billion, up 50.9% YoY Healthy financial status Gearing ratio further decreased to 27.5% Abundant free cash flow Interim dividend of HK$0.20 per share (tax inclusive) Continuous focus on HSE *Including our interest in equity-accounted investees 4

5 Results Summary 1H H 2016 Change% Production (mm boe) % - Crude and liquids (mm bbls) % - Natural gas (bcf) % Realized oil price (US$/bbl) % Realized gas price (US$/mcf) % Oil & gas sales (RMB mm) 74,943 55, % Net profit/(loss) (RMB mm) 16,250-7,735 - Basic EPS (RMB)

6 Operating Results

Further Efforts on Quality and Efficiency Enhancement Exploration Address value-driven exploration philosophy, attach equal importance to the quantity and quality of oil and gas resources, prioritize

7 Further Efforts on Quality and Efficiency Enhancement Exploration Address value-driven exploration philosophy, attach equal importance to the quantity and quality of oil and gas resources, prioritize high-return assets Focus on innovation driven strategy, promote both exploration technology and management innovation in order to boost exploration results Development and production Effectively manage and control Opex Focus on innovation of management, technology and business model in order to further lower the threshold of new projects Overseas development Further optimize the asset portfolio Global presence with world-class oil and gas assets 7

Exploration Activities 3 1 32 2 20 (km 2

8 Exploration Activities (km 2 ) 2,255 1,234 4,022 Overseas China - PSC China - Independent Wildcat Appraisal 3D Seismic *Excluding unconventional wells 8

Exploration Achievements Offshore China Overseas Bohai Bozhong 19-6 Bozhong 29-6 Bozhong 29-6S Kenli 3-2S Kenli 4-1 Bozhong 36-2 Penglai 19-1 Discoveries Western South China Sea Weizhou 11-12W

9 Exploration Achievements Offshore China Overseas Bohai Bozhong 19-6 Bozhong 29-6 Bozhong 29-6S Kenli 3-2S Kenli 4-1 Bozhong 36-2 Penglai 19-1 Discoveries Western South China Sea Weizhou 11-12W Weizhou 11-2E Wushi 23-5S Wenchang 19-9 Wenchang 9-3S Eastern South China Sea Lufeng 14-8 Bohai Successful Appraisals Bohzhong 26-3-B8 Bozhong 29-6S-1Sa Bozhong d Bozhong dSa Kenli Kenli 6-5-2d Kenli 6-5-2dSa Luda 27-2S-3d Penglai 7-6-4d Penglai 7-6-5d Western South China Sea Wushi 16-1W-3d Wushi 16-1W-4d Discovery Stabroek Snoek-1 Successful Appraisals Libra NW7 Stabroek Liza-4 13 new discoveries and 12 successful appraisal wells were achieved in offshore China. Overseas, we made 1 new discovery and 2 successful appraisal wells. 9

Exploration Achievements Bozhong 36-1 Bohai Successful appraisal of Bozhong 36-1 Located in the east of Yellow River Mouth Sag Discovery well BZ36-1-1 encountered oil pay zones with total thickness

10 Exploration Achievements Bozhong 36-1 Bohai Successful appraisal of Bozhong 36-1 Located in the east of Yellow River Mouth Sag Discovery well BZ encountered oil pay zones with total thickness of ~72 meters Two successful appraisal wells were made High production from shallow heavy oil was achieved, and tested to flow at 468 BOE per day Expected to be mid-to-large sized oilfields Stabroek Block Final Investment Decision (FID) of Liza Phase I was announced in June 2017 Successfully drilled Payara-1ST1/ST2 well, Snoek-1 well and Liza-4 well in 1H 2017 The recoverable resources of Stabroek Block are estimated at billion BOE CNOOC Limited owns 25% of working interests Note: According to the Regulation of Petroleum Reserves Estimation of China, a mid-size oil and gas structure is defined as a structure with recoverable oil resources of 2,500~<25,000 thousand cubic meters and a large-size oil and gas structure is defined as a structure with recoverable oil resources of 25,000~< 250,000 thousand cubic meters. 10

11 Production Outperformed Budget (mmboe) H2016 1H2017 China Overseas 1H production achieved mmboe, completing 52% of full-year target and outperforming budget for the same period full year production target of mmboe remains unchanged. 11

12 Production Summary China Crude and Liquids (mm bbls) 1H 2017* 1H 2016* Natural Gas (bcf) Total (mm boe) Crude and Liquids (mm bbls) Natural Gas (bcf) Total (mm boe) Bohai Western South China Sea Eastern South China Sea East China Sea Overseas Subtotal Asia (Ex. China) Oceania Africa North America (Ex. Canada) Canada South America Europe Subtotal Total * Including our interest in equity-accounted investees, which is approximately 8.4 mm boe in 1H 2017 and 9.1 mm boe in 1H In 1H 2017, production percentage of China and overseas was 65% v.s. 35%; Crude and liquids and natural gas was 83% v.s. 17%. 12

New Projects Brought on Stream as Planned Project Location Status Penglai 19-9 oil field comprehensive adjustment Enping 23-1 oil fields BD gas field

production Commenced production Commenced production Installation and commissioning Expected Startup Peak Production (boe/d) Working Interests First half 13,000

13 New Projects Brought on Stream as Planned Project Location Status Penglai 19-9 oil field comprehensive adjustment Enping 23-1 oil fields BD gas field Hangingstone Project Weizhou 12-2 oil field Phase II Bohai Eastern South China Sea Indonesia Canada Western South China Sea Commenced production Commenced production Commenced production Commenced production Installation and commissioning Expected Startup Peak Production (boe/d) Working Interests First half 13,000 51% First half 24, % Second half 25,500 40% Second half 18,100 25% Second half 11, % Four out of five new projects planned for this year already commenced production. 13

Buzzard Phase II Development Production remained stable and operation efficiency continued to improve Continuous lowering of Opex Field Development Plan (FDP) of Buzzard Phase II has been

14 Buzzard Phase II Development Production remained stable and operation efficiency continued to improve Continuous lowering of Opex Field Development Plan (FDP) of Buzzard Phase II has been approved Commence production: 2020 Peak production: 35,000 barrels/day Opex Operation Efficiency (US$/boe) % 85.07% 81.37% 92.74% H H

Long Lake-Resume Production and Improve Cash Flow Stable and encouraging production Production recovered to the level before the accident Infill drillings offset production decline to maintain stable

15 Long Lake-Resume Production and Improve Cash Flow Stable and encouraging production Production recovered to the level before the accident Infill drillings offset production decline to maintain stable volume Opex decreased for consecutive several years and annual operating cash flow expected to turn positive Optimize organizational structure and improve management efficiency Refine processing procedures and optimize blending program (mboe/day) Production 37.1 (US$/boe) Opex H H

restart 一般披露 Sustain the base Research optimization and restart programs of the upgrader K1A

16 Long Lake Development Strategy Stop the bleeding Improve safety Reduce cost Produce positive cash flow Fill the plant Implement infill drilling programs Research K1A recovery program to accelerate the restart 一般披露 Sustain the base Research optimization and restart programs of the upgrader K1A sustainment pads Long Lake Southwest (LLSW) sustainment pads Target to be the safest and lowest cost SAGD Operator. 16

fourth consecutive year Controlled cost with Opex of US$7.16/boe, down by 3.

17 Reshape Cost Competitiveness Significant results achieved in quality and efficiency enhancement in 1H 2017 : Further strengthening of quality and efficiency program, with all-in cost down for the fourth consecutive year Controlled cost with Opex of US$7.16/boe, down by 3.5% YoY Managed the breakeven of new projects under US$35 Realized positive operating cash flow in all overseas business units 17

18 All-in cost Due to effective cost control, all-in cost decreased by 9.0% YoY (US$/boe) H2016 1H2017 Opex DD&A Dismentalment SG&A Taxes other than income tax 18

19 Cost Analysis Opex (US$/boe) Opex of US$7.16/boe, down 3.5% YoY, due to effective cost control and the exchange rate changes. 1H2016 1H2017 DD&A (US$/boe) H H2017 DD&A of US$19.56/boe, down 10.7% YoY, mainly due to recognized impairment in 2016, reserves revision and the exchange rate changes. 19

20 Improve Profitability The Company s profitability continued to improve EBITDA of RMB bn significantly increased by 50.9% YoY. (RMB mm) EBITDA 55,746 36,937 1H2016 1H2017 Note: EBITDA=Net profit +Income tax-interest income + Finance cost + Exchange losses +DD&A+ Dismantlement 20

21 Health, Safety and Environment (HSE) Health, safety and environmental protection are always our top priority. OSHA statistics maintained at good level in the first half. 1H H 2016 Rate of Recordable Cases Rate of Lost Workdays Cases (per 200,000 man hours)

22 Financial Performance

23 Key Financial Items - Consolidated (RMB mm) 1H H 2016 Change% Revenue Oil and gas sales 74,943 55, % Market revenues 14,237 10, % Other income 3,182 1, % Revenue subtotal 92,362 66, % Expenses Operating expenses (11,299) (11,257) 0.4% Taxes other than income tax (3,752) (3,683) 1.9% Exploration expenses (2,673) (3,419) -21.8% DD&A (31,824) (35,129) -9.4% Impairment and provision (305) (10,359) -97.1% Crude oil and product purchases (13,538) (9,463) 43.1% SG&A (3,188) (2,812) 13.4% Others (3,698) (1,506) 145.6% Expenses subtotal (70,277) (77,628) -9.5% Profit/(Loss) from Operating Activities 22,085 (10,796) - Interest income % Finance costs (2,704) (3,175) -14.8% Exchange gains/(losses), net 294 (308) - Investment income 1,063 2, % Share of profits of associates % Share of profit of a joint venture % Non-operating income, net % Profit/(Loss) before tax 21,516 (11,647) - Income tax(expense)/credit (5,266) 3,912 - Net profit/(loss) 16,250 (7,735) - 23

24 Movement of Net Profit ( 人民币百万元 (RMB ) mm) 27,000 22, % 42.7% 3, % 7.8% 6.1% -12.2% -9.1% % 9,178 17,000 12, % -3.1% , % % 7,000 2,000 20, ,250-3,000 (7,735) -8,000 24

25 Movement of Financial Position (RMB bn) Cash, cash equivalent and time deposits with maturity over three months Other Current Assets Non-current Assets Other Liabilities Debt Equity Jun. 30, 2017 Dec 31, Total assets mainly include: RMB415.2 bn of PP&E Equity increased RMB2.4 bn: Net profit of RMB16.3 bn Dividend paid RMB8.9 bn Currency translation differences and other comprehensive income As at June 30, 2017 As at Dec 31, 2016 Total Assets (RMB bn): Gearing Ratio*: 27.5% 28.2% *Gearing ratio = Interest Bearing Debt /(Interest Bearing Debt + Equity) 25

26 Movement of Cash and Cash Equivalents ( 人民币百万元 ) 70,000 (RMB mm) 60,000 50,000 21,706 40,000 48,847 30,000 20,000 10,000 24,734 1, , ,735 14,059 - The balance of RMB27.14 bn resulted from net operating cash inflow and cash capex outflow was sufficient to cover debt repayment. 26

Capex 80 (RMB bn) 60-70 60 40 20 0 22.0 21.4 2.3 2.6 15.3 14.0 4.3 4.8 1H2016 1H2017 2017B Exploration Development Production Other In the first half, total capex decreased by 2.

27 Capex 80 (RMB bn) H2016 1H B Exploration Development Production Other In the first half, total capex decreased by 2.7% YoY, mainly due to the YoY decrease in development Capex according to the adjusted work schedule. Note: Above amounts exclude capitalized interest of RMB0.63 bn and RMB1.13 bn in 1H2016 and 1H2017 respectively 27

28 Interim Dividend 2017 interim dividend: HK$0.20 per share (tax inclusive) Dividend yield of 4.9 % (1). Interim dividend payment will be approximately RMB7.69 billion (2), representing about 8.0% of free cash at the end of July Time arrangement: Book close period: September 11 - September 15 Payment date: October 12 (1) Based on closing share price of HK$8.74 as of July 31, 2017 (2) Exchange rate quoted as HK$1 = RMB as of July 31,

29 Outlook

30 Operating Strategy Sustainable development Capital efficiency Asset return Balance short-term and mid-to-long term Maintain prudent financial policy and improve capital productivity Optimize asset portfolio and focus on asset return 30

target of 450-460 mmboe, five new projects to come on

31 2017 Targets Capex of RMB60-70 billion Prioritize profitability and improve investment return Production target of mmboe, five new projects to come on stream in 2017 Maintain high standards on HSE performance 31

32 A Long Pipe of Projects Ahead Offshore China Penglai 19-3 oil field 1/3/8/9 comprehensive adjustment Penglai19-9 oil field phase II comprehensive adjustment Bozhong 34-9 oil field Wenchang 9-2/9-3/10-3 gas fields Dongfang 13-2 gas field Huizhou 33-1 oil filed Overseas Weizhou 6-13 oil field Enping 23-7 oil field Luda 16-3 oil field Luda 21-2 oil field Caofeidian 6-4 oil field Liuhua 16-2/20-2 joint development Caofeidian 11-1/11-6 comprehensive adjustment Qinhuangdao 33-1S oil field Wenchang 13-2 comprehensive adjustment Liuhua 21-2 oil field Lingshui 17-2 gas fields Wushi 17-2 oil field Stampede oil field Liza Phase I Egina oil field Buzzard Phase II Appomattox oil field 32

33 坐标轴标题 Reserve Life Expected to Rise Again Under current oil prices, reserve life at the end of 2017 is expected to rise again RRR of 2017 in Bohai estimated to be over 100% Reserve from new projects including Liza, Libra and Kingfisher to be booked Reserve from Long Lake oil sand project to be booked again Reserve Life (Year) E 33

34 Great Reserve Potential of Bohai Reserves Reserves in Bohai EUR P1 R/P ratio H2017 R/P Ratio Proved reserve in Bohai accounted for approximately a quarter of our total reserve. Compared with the adjacent oilfield A, North Sea and US GoM, the exploration degree of Bohai is much lower. In comparison, it is estimated that Bohai will have a long, stable and high production period. Oil field Field Area (1000 km²) Total No. of Exploration Wells Exploration Wells/1000 km² Proved Reserve (billion tons of oil equivalent) Bohai Oilfield A 33 6, North Sea* 103 5, US GoM* 87 6, *Source: Wood Mackenzie 34

35 35

2017 Annual Results. March 29, 2018

2017 Annual Results. March 29, 2018 2017 Annual Results March 29, 2018 1 Disclaimer This presentation includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including