October 25, 2017 / 11:11 AM / in a month

UPDATE 1-CNOOC Q3 revenue rises; only halfway to 2017 spending goal

* CNOOC likely to spend 60 billion yuan in capex for 2017

* Gas sales jumped but location of gas fields creates challenge

* Revenue up 16.9 pct, best Q3 performance since 2015

* Worldwide crude production fell y-o-y in Q3 (Recasts to add comments on capital spending, adds details throughout.)

BEIJING, Oct 25 (Reuters) - Third-quarter revenue rose at CNOOC Ltd, the listed arm of China National Offshore Oil Co, because of higher oil and natural gas prices but the company’s capital spending has lagged its goal.

Earnings from the main oil and gas business in the quarter ending on Sept. 30 rose to 35.94 billion yuan ($5.41 billion), up 16.9 percent from 30.7 billion yuan a year ago, marking the best third quarter performance since 2015, the company said on Wednesday.

Capital spending plans have lagged projection and the company is likely to only spend 60 billion yuan in 2017, the lower end of its target of 60 billion to 70 billion yuan, Xie Weizhi, CNOOC’s chief financial officer said during a conference call with reporters.

Capital spending in the third quarter was flat from a year ago at 11.8 billion yuan. For the first nine months of the year, CNOOC spent only 33.18 billion yuan, only half of the full-year goal.

“Looking at the progress of projects in the first nine months, we are under pressure to spend 70 billion yuan this year,” Xie said, without specifying why spending was below target.

Overall revenue gained in the quarter as higher oil and gas prices offset a decline in oil output during the period. However, natural gas sales revenue jumped 22 percent as production increased and prices rose.

Total crude oil production worldwide fell to 95.6 million barrels in the third quarter from 97.6 million barrels a year ago, with output from both domestic and overseas oilfields dropping, the company said. Gas output rose to 119.8 billion cubic feet from 115.7 billion cubic feet in the previous year.

The state-owned firm reported a realized oil price of $50.87 per barrel for the third quarter, up 20.4 percent from the year ago period. Natural gas prices rose 15.9 percent from a year earlier.

Even with the stronger natural gas sales, Xie lamented the fact that CNOOC’s gas fields are not well-placed to meet surging gas demand in north China.

“The Chinese government has paid a great deal of attention to gas consumption. Most of our gas fields are in the South China Sea area, creating challenges for gas sales. There is a mismatch between our production and sales market,” Xie said. ($1 = 6.6445 Chinese yuan renminbi) (Reporting by Meng Meng and Aizhu Chen; Editing by Christian Schmollinger)

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