2017 Annual Results. March 29, 2018

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1 2017 Annual Results March 29,

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 and Highlights Financial Performance and Analysis Outlook 3

Overview Great achievements made in exploration, and reserve life substantially extended 19 new discoveries were made and 16 oil and gas structures were successfully appraised Reserve replacement

3 years* Projects progressed smoothly and production exceeded target All five projects planned at the beginning of the year successfully commenced production Net production was 470.

4 Overview Great achievements made in exploration, and reserve life substantially extended 19 new discoveries were made and 16 oil and gas structures were successfully appraised Reserve replacement ratio achieved 305% and reserve life extended to 10.3 years* Projects progressed smoothly and production exceeded target All five projects planned at the beginning of the year successfully commenced production Net production was million boe* Innovation drove quality and efficiency enhancement, resulting in cost decrease and profit growth All-in cost of US$32.54/boe Net profit of RMB billion Healthy financial status Gearing ratio further decreased to 25.8% Abundant free cash flow Final dividend of HK$0.30 per share (tax inclusive) Steady HSE performance *Including our interest in equity-accounted investees 4

5 Results Summary 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) 151, , % Net profit (RMB mm) 24, Basic EPS (RMB)

6 Operating Results and Highlights

7 Exploration Activities ,226 (km²) 3,163 1,711 9,352 Overseas China - PSC China - Independent Wildcat *Excluding unconventional wells Appraisal 3D Seismic Exploration Workload in the last 5 years Appraisal well Wildcat Pursued robust exploration program despite Capex challenges under the low oil price environment in the past 3 years. 7

New Discoveries in 2017 China Bohai Western South China Sea Bozhong 29-6 Weizhou 11-2E Bozhong 29-6S Weizhou 11-12 Bozhong 19-6

South China Sea Bozhong 29-1 E Lufeng 14-8 Lufeng 8-1S Overseas Stabroek Snoek Turbot Success Rate of Independent Exploration Wells

8 New Discoveries in 2017 China Bohai Western South China Sea Bozhong 29-6 Weizhou 11-2E Bozhong 29-6S Weizhou Bozhong 19-6 Wenchang 9-3S Kenli 3-2S Wenchang 19-9 Kenli 4-1 Wushi 23-5/23-5S Penglai 19-1 Wushi 22-8 Bozhong 13-1S Bozhong 26-3 W/N Eastern South China Sea Bozhong 29-1 E Lufeng 14-8 Lufeng 8-1S Overseas Stabroek Snoek Turbot Success Rate of Independent Exploration Wells in Offshore China Reached 48-61% In 2017, we achieved 19 new discoveries and exploration breakthroughs in both offshore China and overseas. 8

9 Exploration Breakthroughs Offshore China 17 new discoveries were made and 14 oil and gas structures were successfully appraised in offshore China Longkou 7-6 Kenli 6-4/5/6 Wushi 16-1W/Wushi 23-5 Bozhong 36-1 Bohai Lufeng 14-8 Lufeng 8-1S Effectively appraised 4 mid-to-large sized oil fields: Bozhong 36-1, Kenli 6-4/5/6, Longkou 7-6 and Wushi 16-1W/Wushi 23-5, which laid a solid reserve foundation Successfully made new discoveries of Lufeng 14-8 and Lufeng 8-1S, which significantly enhanced the scale of reserves in Lufeng area Sustainable achievement in rolling exploration South China Sea 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. 9

10 Exploration Breakthroughs Offshore China Strengthened gas exploration activities and achieved significant breakthroughs Bozhong 19-6 Bohai Deep natural gas exploration in Bohai Bozhong 19-6 is expected to be the largest ever natural gas discovery in Bohai Basin Revealed huge gas exploration potential in the buried hills in Bohai Make great contributions to clean energy supply for the Beijing-Tianjin-Hebei region Ledong 10-1 South China Sea High temperature and ultra-high pressure natural gas exploration in Western South China Sea Exploration potential of Ledong 10 Area in Yinggehai Basin has been confirmed Explored the new area of natural gas in South China Sea 10

Exploration Breakthroughs Overseas Made further inroads in overseas exploration, optimized the Company s strategic oversea layout UK Canada Gulf of Mexico Ireland Senegal and its surroundings Beijing

11 Exploration Breakthroughs Overseas Made further inroads in overseas exploration, optimized the Company s strategic oversea layout UK Canada Gulf of Mexico Ireland Senegal and its surroundings Beijing Guyana Nigeria Gabon Congo Uganda Brazil Successive discoveries were made at Stabroek Block in Guyana, which became one of CNOOC Limited s most successfully exploration projects overseas Successful appraisal of Libra structure in Brazil with reserve in line with expectation Successful appraisal of Preowei-3 well in Nigeria following the significant discovery of Owowo expanded the reserve scale 11

12 Proved Reserves Reaching Historic High (mmboe) 3, ,841 YB Production Revisions Discoveries M&A Others YE and Extensions Reserve replacement ratio achieved 305% Reserve replacement ratio excluding M&A was 289% 12

13 坐标轴标题 Reserve Life Extended Significantly Reserve life extended to 10.3 years Significant reserve addition from discoveries and extensions in offshore China Reserves from new projects including Liza Phase I and Libra were booked Reserves from the Long Lake oil sand project were re-booked Reserve Life (Year)

14 Production Exceeded Target 600 (mmboe) % % % 64% B 2017 China Overseas Net production exceeded the production target set at the beginning of

15 Production Summary China Crude and Liquids (mm bbls) Natural Gas Total Crude and Liquids Natural Gas (bcf) (mm boe) (bcf) (mm bbls) Total (mm boe) Bohai Western South China Sea Eastern South China Sea East China Sea Others Subtotal Overseas Asia (Ex. China) Oceania Africa North America (Ex. Canada) Canada South America Europe Subtotal Total * Including our interests in equity-accounted investees, which is approximately 17.3 mm boe in 2017 and 18.0 mm boe in In 2017, production percentage of China and overseas was 64% v.s. 36%; Crude and liquids and natural gas was 83% v.s. 17%. 15

New Projects in 2017 Project Location Startup Penglai 19-9 oilfield comprehensive adjustment Peak Production (boe/d) Working Interests Bohai First half 13,000 51% Enping 23-1 oilfields Eastern South

16 New Projects in 2017 Project Location Startup Penglai 19-9 oilfield comprehensive adjustment Peak Production (boe/d) Working Interests Bohai First half 13,000 51% Enping 23-1 oilfields Eastern South China Sea First half 24, % BD gas field Indonesia Second half 25,500 40% Hangingstone Project Canada Second half 18,100 25% Weizhou 12-2 oil field Phase II Western South China Sea Second half 11, % Five new projects commenced production in There are currently over 20 projects under construction. 16

Regional Resource Allocation and Optimization Help Improve Quality and Efficiency HYSY 102 FPSO Youyi FPSO The Bonan operating company of Bohai oilfield improved regional development and coordinated

17 Regional Resource Allocation and Optimization Help Improve Quality and Efficiency HYSY 102 FPSO Youyi FPSO The Bonan operating company of Bohai oilfield improved regional development and coordinated overall resources allocation Bozhong 34-1 oilfield Kenli oilfield Integrated infrastructure and regional development The oil pipeline network and the power grid are interconnected and the production facilities are optimized so that new oilfield construction can fully utilize facilities of old oilfields Dongying terminal Longkou terminal 17

18 Innovation Promotes Bohai Heavy Oil Thermal Recovery Luda 21-2 oilfield heavy oil development platform Luda 21-2B thermal recovery platform Luda 21-2A conventional development platform Development strategy: develop heavy oil relying on light oil platform to reduce development cost Scale application: Add thermal recovery platform of heavy oil development to regular platform to test key technology Demonstration effect: Probing economical and effective ways for scaled thermal recovery of heavy oil reserves 18

19 Capital Efficiency Enhancement Efforts on innovation and efficiency enhancement were continued, investment and costs were controlled effectively Operation efficiency of each business unit continued to improve Unit investment in production capacity continued to decline (RMB bn/mm tons) China s Production Capacity Investment (mm tons)

2 billion boe Liza Phase I project Development progress Final Investment Decision (FID) of Liza Phase I was approved in July

20 Key Project Stabroek in Guyana Huge resource potential Seven exploration discoveries have been made, including Snoek and Turbot in 2017 and Ranger and Pacora in 2018 to date According to the Operator, recoverable resources amounted to 3.2 billion boe Liza Phase I project Development progress Final Investment Decision (FID) of Liza Phase I was approved in July 2017 Actively promote Liza Phase II and Liza Phase III Liza Phase I will commence production in 2020, with peak production of 120,000 b/d 20

Exploration Activities 10 new appraisal wells have been drilled so far and 2 appraisal wells will be drilled in 2018.

21 Key Project Libra in Brazil FPSO (Pioneiro de Libra) In November 2017, the Libra Consortium declared the commerciality of the NW Area. The new field was named Mero field, which includes 4 production units of Mero 1, Mero 2, Mero 3 and Mero 4. Exploration Activities 10 new appraisal wells have been drilled so far and 2 appraisal wells will be drilled in According to the Operator, Mero field s total recoverable resources is estimated to be 3.3 billion barrels of oil. Development and production An extended well test has been implemented to test the Mero 2 and Mero 3 areas, starting production in November The Pioneiro de Libra FPSO has a daily operational capacity rate up to 50,000 barrels of crude oil. FID of Mero 1 has been approved. It has entered the construction phase. Mero 1 is expected to come on stream in 2021, with maximum production capacity of 180,000 barrels of oil per day. 21

Key Project Long Lake in Canada Achieved improvements in production and reserves Effective operations management drove improved production efficiency Infill wells & improved reservoir performance

22 Key Project Long Lake in Canada Achieved improvements in production and reserves Effective operations management drove improved production efficiency Infill wells & improved reservoir performance enhanced production volume Recoverable reserves significantly increased Asset value enhancement Continuous decline of Opex in recent years Positive operating cash flow achieved for the full year Production (mboe/day) (US$/boe) Opex Note: Long Lake is currently producing at 45,000boe/d. 22

production in 2019/2020, with production capacity of 20,000 b/d Promote Long Lake Southwest (LLSW) project FID

23 Key Project Long Lake in Canada Optimize research for upgrader restart program Evaluation continues to determine optimal upgrader configuration for restart Promote K1A pipeline recovery Expected to resume production in 2019/2020, with production capacity of 20,000 b/d Promote Long Lake Southwest (LLSW) project FID expected to be approved in the first half of 2018 Expected to come on stream in 2020/2021, with the production of 20,000 b/d 23

24 Health, Safety and Environment (HSE) Health, safety and environmental protection are always our top priority We promoted the awareness for safety, prompted the culture for safety and achieved safe and stable operations for production OSHA statistics maintained at good level in Rate of Recordable Cases Rate of Lost Workdays Cases (per 200,000 man hours)

25 Financial Performance and Analysis

26 Key Financial Items - Consolidated (RMB mm) Change% Revenue Oil and gas sales 151, , % Trading income 28,907 20, % Other income 5,595 4, % Revenue subtotal 186, , % Expenses Operating expenses (24,282) (23,211) 4.6% Taxes other than income tax (7,210) (6,941) 3.9% Exploration expenses (6,881) (7,359) -6.5% DD&A (61,257) (68,907) -11.1% Special oil gain levy (55) - - Impairment and provision (9,130) (12,171) -25.0% Crude oil and product purchses (27,643) (19,018) 45.4% SG&A (6,861) (6,493) 5.7% Others (6,021) (4,802) 25.4% Expenses subtotal (149,340) (148,902) 0.3% Profit/(loss) from Operating Activities 37,050 (2,412) - Interest income % Finance costs (5,044) (6,246) -19.2% Exchange profits/(losses), net 356 (790) % Investment income 2,409 2, % Share of profits of associates 302 (609) % Share of profit of a joint venture % Non-operating income, net % Profit/(loss) before tax 36,357 (5,275) - Income tax (expense)/credit (11,680) 5, % Net profit 24,

27 Movement of Net Profit 50,000 (RMB mm) 45,000 40,000 35,000 7,650 3,041 1,660 1,071 1,202 1,146 17,592 30,000 25, ,000 15,000 10,000 5,000 32,223 24, *The one-off impacts of non-cash items in 2017 included: 1) asset impairment of RMB9.13 billion and 2) write-off of deferred tax asset increased income tax expense of RMB3.38 billion resulted from U.S. tax reform. 27

28 Movement of Financial Position (RMB bn) Dec 31, 2016 Dec 31, 2017 Cash, cash equivalent and time deposits with maturity over three months Other Current Assets Total assets mainly include: RMB395.9 bn of PP&E Non-current Assets Other Liabilities Debt Equity Equity decreased by RMB2.4 bn: Net profit of RMB24.7 bn Dividend paid RMB16.5 bn Currency translation differences decreased by RMB10.1 billion As at Dec 31, 2016 As at Dec 31, 2017 Total Assets (RMB bn): Gearing Ratio*: 28.2% 25.8% *Gearing ratio = Interest Bearing Debt /(Interest Bearing Debt + Equity) 28

29 Cash Flow Position 120,000 (RMB mm) 100,000 80,000 47,734 60,000 40,000 94,734 9,669 4,488 1,450 20,871 1,821 20, ,448 13,735 12,

30 Strengthen 加强现金流管理 Cash Flow Management The Company maintained prudent financial policy, strengthened cash flow management and balanced Capex and dividend payment (RMB bn) Operating cash flow Issuance of notes Capex payment Dividend Repayment of notes 30

Capex In 2017, Capex was RMB50.1 billion 60 50 40 30 20 10 0 (RMB bn) 49.0 50.1 6.3 7.1 33.2 31.5 9.2 11.

31 Capex In 2017, Capex was RMB50.1 billion (RMB bn) Exploration Development Production Others Note: Above amounts exclude capitalized interest of RMB1.43 bn and RMB2.49 bn in 2016 and 2017 respectively 31

32 All-in cost All-in cost decreased by 6.2% YoY, mainly due to effective cost control and reserve growth (US$/boe) Opex DD&A Dismentalment SG&A Taxes other than income tax 32

33 Cost Analysis Opex (US$/boe) Although oil price and the raw material prices increased in the past year, the Company managed to control the operating costs effectively (US$/boe) DD&A DD&A of US$19.89/boe, down 10.1% YoY, mainly attributable to the increasing reserves of producing fields and the impairment of oil and gas assets of the previous year

34 Dividend Recommendation Proposed year-end dividend: HK$0.30 per share (tax inclusive) Payout ratio of 73.0% (1) Dividend yield of 4.4% (2) Final dividend payment will be approximately RMB10.83 billion (1), representing about 10.1% of free cash at the end of February 2018 Proposed time arrangement: Book close period: June 11 - June 15 Payment date: July 10 (1)Exchange rate quoted HK$1= RMB as of February 28, 2018 (2)Based on closing share price of HK$11.40 as of February 28,

35 Outlook

2018 Operating Strategy Steadily increase oil and gas reserve and production levels Continue to reinforce quality and efficiency enhancement Strengthen innovation

36 2018 Operating Strategy Steadily increase oil and gas reserve and production levels Continue to reinforce quality and efficiency enhancement Strengthen innovation and technology-driven philosophy Maintain prudent financial policy and investment decision-making Pursue a green, healthy and environment-friendly development model 36

37 2018 Overview Capex budget of RMB70-80 billion Production target of mmboe Five new projects to come on stream in 2018 Reserve Replacement Ratio(RRR) > 100% Maintain high standards on HSE performance 37

38 Sustainable Production Growth The Company will pursue quality growth and profitable production to drive growth and improve shareholder returns 600 (mmboe) ~485 ~ % 36% 42% 42% % 64% 58% 58% Budget 2019 Target 2020 Target China Overseas 38

39 39

2017 Mid-Year Review. August 24, 2017

2017 Mid-Year Review. August 24, 2017 2017 Mid-Year Review August 24, 2017 1 Disclaimer This presentation includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including