Skip to main content

A man walks past the headquarters of the state-owned China National Offshore Oil Corp. (CNOOC) in Beijing, China Saturday, Dec. 8, 2012.Andy Wong/The Associated Press

China's CNOOC Ltd. has written off hundreds of millions of dollars' worth of overseas assets, marking another setback for the state-run energy giant as it copes with plunging oil prices.

The $842-million impairment is tied to properties in North America and the U.K. North Sea, the company said in an investor presentation on Friday.

CNOOC bolstered its presence in both regions after it acquired struggling Nexen Inc. in a contentious 2012 takeover, ushering in new restrictions on state-run firms seeking a foothold in Alberta's oil sands.

The writedown is the latest stumbling block for CNOOC's international operations amid the extended slump in global oil prices. Nexen is also shutting its crude-oil trading desk in Calgary, a move that is expected to lead to 100 job cuts. The Globe and Mail reported this week that those cuts are in addition to the 400 positions eliminated in the company's North American and U.K. divisions last week.

CNOOC is seeking to slash expenses this year by as much as 35 per cent from the levels of a year ago. "In 2015, the company will adjust its operating strategy to adapt to a more complex and changing environment in order to meet all the targets for the year," chief executive Li Fanrong said in a statement.

For years China gorged on assets in Canada's energy sector, but some of the investments made by its state-controlled firms have underperformed. Nexen's Long Lake oil sands project has struggled to reach full capacity, for example, while China Investment Corp.'s stake in Penn West Petroleum Ltd. has suffered amid the oil-price downturn.

A Bloomberg report on Friday said state-run PetroChina Co. is in talks with unnamed international oil companies over plans to swap assets in North America, with negotiations primarily centred on its oil sands properties.

"We may try asset swaps for our North America assets, mostly in Canada, as the low crude environment makes it hard to find willing buyers," PetroChina vice-chairman Wang Dongjin was quoted as saying.

PetroChina last year paid $1.1-billion for full control of Athabasca Oil Corp.'s Dover oil sands project. It is also building a separate steam-driven project called MacKay River, with production of 35,000 barrels per day targeted for this year.

CNOOC did not break down the properties it has impaired. A spokeswoman for Nexen in Calgary referred questions to the company's Beijing headquarters, which did not respond to a request for comment.

The company's holdings in Alberta include stakes in Syncrude Canada Ltd. and MEG Energy Corp. In December, CNOOC started production at its steam-driven Kinosis project, which has 20,000 barrels per day of capacity.

In the U.K. North Sea, the company operates the Buzzard field in a joint venture with Suncor Energy Inc. and BG Group. It also operates the Golden Eagle project, which started pumping crude last October.

CNOOC said full-year earnings rose 6.6 per cent over the previous year to 60.2 billion yuan. Revenue slipped 3.9 per cent on falling crude prices it said. Production rose 5.1 per cent to 432.5 million barrels of oil equivalent per day.