|
o
|
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
o
|
SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Date
of event requiring this shell company report
_______
|
|
Title
of each class
|
Name
of each exchange on which registered
|
|
|
American
depositary shares, each representing 100 shares of par value HK$0.02
per
share
|
New
York Stock Exchange, Inc.*
|
|
|
Shares
of par value HK$0.02 per share
|
New
York Stock Exchange, Inc.**
|
|
Large
accelerated filer
|
|
Accelerated
filer
|
|
Non-accelerated
filer
|
|
x
|
|
o
|
|
o
|
|
·
|
to
correct an inadvertent typographical error found in the Report of
Independent Registered Public Accounting
Firm;
|
|
·
|
to
clarify disclosures related to “Oil and gas properties” contained in Note
3 to the Financial Statements – “Summary of Significant Accounting
Policies;”
|
|
·
|
to
clarify disclosures contained in Note 4 to the Financial Statements
–
“Acquisitions;”
|
|
·
|
to
clarify disclosures related to “Accounting for convertible bonds”
contained in Note 38 to the Financial Statements – “Significant
Differences Between Hong Kong GAAP and US
GAAP;”
|
|
·
|
to
clarify accounting methods used in the Company’s earnings per share
calculation in Note 15 to the Financial Statements – “Earnings Per
Share;”
|
|
·
|
to
separately present the oil and gas producing activities information
of an
equity investee and to provide additional information on costs incurred
in
“Supplementary Information on Oil and Gas Producing Activities
(Unaudited).”
|
|
Exhibit
No.
|
Document
|
|
1.1
|
Articles
of Association of the Registrant, as amended in 2005.*
|
|
1.2
|
Memorandum
of Association of the Registrant, incorporated by reference to Exhibit
3.2
to our Registration Statement on Form F-1 filed with the Securities
and
Exchange Commission (File Number: 333-10862).
|
|
2.1
|
Form
of Indenture, incorporated by reference to Exhibit 2.1 to our annual
report on Form 20-F for fiscal year 2002 filed with the Securities
and
Exchange Commission (File Number: 1-14966).
|
|
2.2
|
Trust
Deed dated December 15, 2004 among CNOOC Limited, CNOOC Finance (2004)
Limited and J.P. Morgan Corporate Trustee Services Limited, incorporated
by reference to Exhibit 2.2 to our annual report on Form 20-F for
fiscal
year 2004 filed with the Securities and Exchange Commission (File
Number:
1-14966).
|
|
4.1
|
The
Asset Swap Agreement dated July 20, 1999 between CNOOC
and Offshore Oil Company Limited, incorporated by reference to
Exhibit 10.1 to our registration Statement on Form F-1 filed with
the
Securities and Exchange Commission (File Number: 333-10862).
|
|
4.2
|
The
Asset Allocation Agreement dated July 20, 1999 between CNOOC and
Offshore
Oil Company Limited, incorporated by reference to Exhibit 10.2 to
our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.3
|
The
Reorganization Agreement dated September 13, 1999 between CNOOC,
Offshore
Oil Company Limited and CNOOC Limited, incorporated by reference
to
Exhibit 10.3 to our Registration Statement on Form F-1 filed with
the
Securities and Exchange Commission (File Number: 333-10862).
|
|
4.4
|
Form
of the Equity Transfer Agreement between CNOOC and CNOOC Limited
incorporated by reference to Exhibit 10.4 to our Registration Statement
on
Form F-1 filed with the Securities and Exchange Commission (File
Number:
333-10862).
|
|
4.5
|
Form
of the Transfer Agreement dated October 1, 1999 between CNOOC and
Offshore
Oil Company Limited regarding the transfer of the rights and obligations
of CNOOC under the 37 production sharing contracts and one geophysical
exploration agreement, incorporated by reference to Exhibit 10.5
to our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.6
|
Form
of Equity Transfer Agreement between China Offshore Oil East China
Sea
Corporation and Offshore Oil Company Limited regarding the transfer
of the
rights and obligations under Joint Venture Contract of Shanghai Petroleum
and Natural Gas Company Limited dated July 28, 1992 to Offshore Oil
Company Limited, incorporated by reference to Exhibit 10.6 to our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.7
|
Transfer
Agreement dated September 9, 1999 between CNOOC and Offshore Oil
Company
Limited regarding the transfer of the rights and obligations of CNOOC
under the Natural Gas Sale and Purchase Contract dated December 22,
1992
to Offshore Oil Company Limited, incorporated by reference to Exhibit
10.7
to our Registration Statement on Form F-1 filed with the Securities
and
Exchange Commission (File Number: 333-10862).
|
|
4.
8
|
Transfer
Agreement dated September 9, 1999 between CNOOC and Offshore Oil
Company
Limited regarding the transfer of the rights and obligations of CNOOC
under the Natural Gas Sale and Purchase Contract dated November 7,
1992 to
Offshore Oil Company Limited, incorporated by reference to Exhibit
10.8 to
our Registration Statement on Form F-1 filed with the Securities
and
Exchange Commission (File Number:333-10862).
|
|
4.9
|
Transfer
Agreement dated September 9, 1999 among CNOOC, Offshore Oil Company
Limited, the four PRC subsidiaries and CNOOC's affiliates regarding
the
transfer of the rights and obligations of the technical services
agreements to Offshore Oil Company Limited, incorporated by reference
to
Exhibit 10.9 to our Registration Statement on Form F-1filed with
the
Securities and Exchange Commission (File Number: 333-10862).
|
|
4.10
|
Nanshan
Terminal Leasing Agreement dated September 9, 1999 between CNOOC,
Hainan
China Oil and Offshore Natural Gas Company and Offshore Oil Company
Limited, incorporated by reference to Exhibit 10.10 to our Registration
Statement on Form F-1 filed with the Securities and Exchange Commission
(File Number: 333-10862).
|
|
4.11
|
Trademark
License Agreement dated September 9, 1999 between CNOOC, offshore
Oil
Company Limited and CNOOC Limited, incorporated by reference to Exhibit
10.11 to our Registration Statement on Form F-1 filed with the Securities
and Exchange Commission (File Number: 333-10862).
|
|
4.12
|
Trademark
License Agreement dated September 9, 1999 between China Offshore
Oil
Marketing Company, CNOOC Limited and Offshore Oil Company Limited
and
CNOOC Limited, incorporated by reference to Exhibit 10.12 to our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.18
|
Property
Leasing Agreement dated September 9, 1999 between Wui Hai Enterprise
Company Limited and Offshore Oil Company Limited in respect of the
office
premises at 6th, 7th and 8th Floors, CNOOC Plaza, No. 6 Dong Zhi
Men Wai
Xiao Jie, Beijing, incorporated by reference to Exhibit 10.18 to
our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.19
|
Property
Leasing Agreement dated September 9, 1999 between China Offshore
Oil
Western South China Sea Corporation and Offshore Oil Company Limited
in
respect of the office premises at 1st to 9th Floors, Nantiao Road,
Potou
District Zhangjiang, Guangdong, incorporated by reference to Exhibit
10.19
to our Registration Statement on Form F-1 filed with the Securities
and
Exchange Commission (File Number: 333-10862).
|
|
4.20
|
Property
Leasing Agreement dated September 9, 1999 between China Offshore
Oil Bohai
Corporation and Offshore Oil Company Limited in respect of the office
premises at 1st to 7th Floors and 9th Floor, 2-37 He Kou Jie, Tanggu
District, Tianjin, incorporated by reference to Exhibit 10.20 to
our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.21
|
Property
Leasing Agreement dated September 9, 1999 between China Offshore
Oil East
China Sea Corporation and Offshore Oil Company Limited in respect
of the
office premises at 20th, 22nd and 23rd Floors, 583 Ling Ling Road,
Shanghai, the PRC, incorporated by reference to Exhibit 10.21 to
our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.22
|
Property
Leasing Agreement dated September 9, 1999 between China Offshore
Oil
Eastern South China Sea Corporation and Offshore Oil Company Limited
in
respect of the office premises at 3rd Floor and 6th to 11th Floors,
1
Second Industrial Road, Shekou, Shenzhen, the PRC, incorporated by
reference to Exhibit 10.22 to our Registration Statement on Form
F-1 filed
with the Securities and Exchange Commission (File Number:
333-10862).
|
|
4.23
|
Property
Leasing Agreement dated September 9, 1999 between China Offshore
Oil Bohai
Corporation and Offshore Oil Company Limited in respect of the Chengbei
Warehouse, Chengbei Road, Tanggu District, Tianjin City, the PRC,
incorporated by reference to Exhibit 10.23 to our Registration Statement
on Form F-1 filed with the Securities and Exchange Commission (File
Number: 333-10862).
|
|
4.24
|
Property
Leasing Agreement dated September 9, 1999 between Overseas Oil & Gas
Corporation Ltd. and China Offshore Oil (Singapore) International
Pte.
Ltd. in respect of the residential premises at 10-01 and 17-002 Aquamarine
Tower, 50 Bayshore Road, 13-05 Jade Tower, 60 Bayshore Road, Singapore,
incorporated by reference to Exhibit 10.24 to our Registration Statement
on Form F-1 filed with the Securities and Exchange Commission (File
Number: 333-10862).
|
|
4.25
|
Suizhong
Pier Agreement dated September 9, 1999 between Offshore Oil Company
Limited and China Offshore Bohai Corporation, incorporated by reference
to
Exhibit 10.25 to our Registration Statement on Form F-1 filed with
the
Securities and Exchange Commission (File Number: 333-10862).
|
|
4.26
|
Form
of Novation Agreement among CNOOC, CNOOC China Limited, the Banks
and
other financial institution and the Fuji Bank Limited Hong Kong Branch,
as
agent, in respect of the transfer of the US$110 million syndicated
loan,
incorporated by reference to Exhibit 10.26 to our Registration Statement
on Form F-1 filed with the Securities and Exchange Commission (File
Number: 333-10862).
|
|
4.27
|
Form
of the Undertaking Agreement between CNOOC and CNOOC Limited, incorporated
by reference to Exhibit 10.27 to our Registration Statement on Form
F-1
filed with the Securities and Exchange Commission (File Number:
333-10862).
|
|
4.28
|
Service
Agreement between CNOOC Limited and Chengyu Fu.*
|
|
4.29
|
Service
Agreement between CNOOC Limited and Han Luo.*
|
|
4.30
|
Service
Agreement between CNOOC Limited and Shouwei Zhou.*
|
|
4.31
|
Service
Agreement between CNOOC Limited and Xinghe Cao.*
|
|
4.32
|
Service
Agreement between CNOOC Limited and Zhenfang Wu.*
|
|
4.33
|
Service
Agreement between CNOOC Limited and Guangqi Wu.*
|
|
4.34
|
Service
Agreement between CNOOC Limited and Hua Yang.*
|
|
4.35
|
Form
of Pre-Global Offering Share Option Scheme for the Senior Management
of
CNOOC Limited, incorporated by reference to Exhibit 10.31 to our
Registration Statement on Form F-1 filed with the Securities and
Exchange
Commission (File Number: 333-10862).
|
|
4.36
|
Form
of Share Option Scheme for the Senior Management of CNOOC Limited,
incorporated by reference to Exhibit 10.32 to our Registration Statement
on Form F-1 filed with the Securities and Exchange Commission (File
Number: 333-10862).
|
|
4.37
|
CNOOC
Limited Share Option Scheme adopted on December 31, 2005.*
|
|
4.38
|
Subscription
Agreement dated March 17, 2000 among CNOOC Limited, CNOOC (BVI) Limited,
Overseas Oil & Gas Corporation, Ltd., et al., incorporated by
reference to Exhibit 10.33 to our Registration Statement on Form
F-1 filed
with the Securities and Exchange Commission (File Number:
333-10862).
|
|
4.39
|
Subscription
Agreement dated May 31, 2000 among CNOOC Limited, CNOOC (BVI) Limited,
Overseas Oil & Gas Corporation, Ltd. and Hutchison International
Limited, incorporated by reference to Exhibit 10.34 to our Registration
Statement on Form F-1 filed with the Securities and Exchange
Commission (File Number: 333-10862).
|
|
4.40
|
Subscription
Agreement dated May 31, 2000 among CNOOC Limited, CNOOC (BVI) Limited,
Overseas Oil & Gas Corporation, Ltd. and Hong Kong Electric Holdings
Limited, incorporated by reference to Exhibit 10.35 to our Registration
Statement on Form F-1 filed with the Securities and Exchange Commission
(File Number: 333-10862).
|
|
4.41
|
Subscription
Agreement dated June 28, 2000 among CNOOC Limited, CNOOC (BVI) Limited,
Overseas Oil & Gas Corporation, Ltd., et al., incorporated by
reference to Exhibit 10.36 to our Registration Statement on Form
F-1 filed
with the Securities and Exchange Commission (File Number:
333-10862).
|
|
4.42
|
Corporation
Placing Agreement dated February 6, 2001 among CNOOC Limited, China
National Offshore Oil Corporation, Shell Eastern Petroleum (Pte)
Limited
and Merrill Lynch Far East Limited, incorporated by reference to
Exhibit
10.37 to our Registration Statement on Form F-1 filed with the Securities
and Exchange Commission (File Number: 333-10862).
|
|
4.43
|
Equity
Transfer Agreement dated September 5, 2003 between CNOOC China Limited
and
CNOOC (Summary Translation), incorporated by reference to Exhibit
4.38 to
our annual report on Form 20-F for fiscal year 2003 filed with the
Securities and Exchange Commission (File Number: 1-14966).
|
|
4.44
|
Framework
Agreement dated April 8, 2004 with CNOOC Finance Corporation Limited
(Summary Translation), incorporated by reference to Exhibit 4.39
to our
annual report on Form 20-F for fiscal year 2003 filed with the Securities
and Exchange Commission (File Number: 1-14966).
|
|
4.45
|
Framework
Agreement dated December 8, 2005 with CNOOC (Summary
Translation).*
|
|
4.46
|
Framework
Agreement dated December 8, 2005 with China Oilfield Services Limited
(Summary Translation).*
|
|
4.47
|
Framework
Agreement dated December 8, 2005 with Offshore Oil Engineering Co.,
Ltd
(Summary Translation).*
|
|
4.48
|
Supplemental
Agreement to the Undertaking agreement with CNOOC, dated December
8,
2005.*
|
|
4.49
|
Sale
and Purchase Agreement, dated January 8, 2006 between CNOOC Exploration
& Production Limited and South Atlantic Petroleum Limited (certain
statements, marked with an asterisk in brackets [*], have been omitted
from this agreement pursuant to a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as
amended, and the omitted materials have been filed separately in
paper
form with the Securities and Exchange Commission).*
|
|
8.1
|
List
of Subsidiaries.*
|
|
10.1
|
Letter
from CNOOC Limited dated May 23, 2002 regarding receipt of certain
representations from Arthur Andersen & Co pursuant to the requirements
of the Securities and Exchange Commission, incorporated by reference
to
Exhibit 10 to our annual report on Form 20-F for fiscal year 2001
filed
with the Securities and Exchange Commission (File Number:
1-14966).
|
|
11.1
|
Code
of Ethics for Directors and Senior Officers, as amended in
2005.*
|
|
12.1
|
Certification
by the Chief Executive Officer in accordance with Section 302 of
the
Sarbanes-Oxley Act of 2002.
|
|
12.2
|
Certification
by the Chief Financial Officer in accordance with Section 302 of
the
Sarbanes-Oxley Act of 2002.
|
|
13.1
|
Sarbanes-Oxley
Act of 2002 Section 906 Certification furnished to (not filed with)
the
Securities and Exchange Commission.
|
|
CNOOC
Limited
|
||
|
By:
|
/s/
Kang
Xin
|
|
|
Name:
|
Kang
Xin
|
|
|
Title:
|
Company
Secretary
|
|
|
Page
|
|
|
CNOOC
LIMITED AND ITS SUBSIDIARIES
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
|
Consolidated
income statements for the years ended December 31, 2005, 2004,
and
2003
|
F-4
|
|
Consolidated
balance sheets as of December 31, 2005 and 2004
|
F-6
|
|
Consolidated
statements of changes in equity for the years ended December 31,
2005,
2004, and 2003
|
F-7
|
|
Consolidated
cash flow statements for the years ended December 31, 2005, 2004,
and 2003
|
F-9
|
|
Notes
to the consolidated financial statements
|
F-10
|
|
Notes
|
2003
|
2004
|
2005
|
2005
|
||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
US$’000
|
|||||||||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||||||||||
|
REVENUE
|
||||||||||||||||||||
|
Oil
and gas sales
|
7,27
|
28,116,831
|
36,886,019
|
53,417,669
|
6,619,126
|
|||||||||||||||
|
Marketing
revenues
|
8
|
12,398,661
|
18,191,353
|
15,901,325
|
1,970,376
|
|||||||||||||||
|
Other
income
|
434,781
|
144,691
|
136,749
|
16,944
|
||||||||||||||||
|
40,950,273
|
55,222,063
|
69,455,743
|
8,606,446
|
|||||||||||||||||
|
EXPENSES
|
||||||||||||||||||||
|
Operating
expenses
|
(4,512,809 | ) | (5,070,344 | ) | (5,934,598 | ) | (735,372 | ) | ||||||||||||
|
Production
taxes
|
(1,238,598 | ) | (1,725,674 | ) | (2,596,543 | ) | (321,745 | ) | ||||||||||||
|
Exploration
expenses
|
(848,072 | ) | (1,316,160 | ) | (1,293,687 | ) | (160,304 | ) | ||||||||||||
|
Depreciation,
depletion and amortisation
|
(4,642,753 | ) | (5,455,062 | ) | (5,964,740 | ) | (739,107 | ) | ||||||||||||
|
Dismantlement
|
28
|
(167,326 | ) | (201,637 | ) | (252,857 | ) | (31,332 | ) | |||||||||||
|
Impairment
losses related to property, plant and equipment
|
-
|
-
|
(90,190 | ) | (11,176 | ) | ||||||||||||||
|
Crude
oil and product purchases
|
8
|
(12,295,238 | ) | (17,963,461 | ) | (15,704,100 | ) | (1,945,937 | ) | |||||||||||
|
Selling
and administrative expenses
|
9
|
(1,250,270 | ) | (1,104,348 | ) | (1,370,368 | ) | (169,806 | ) | |||||||||||
|
Others
|
(350,232 | ) | (45,844 | ) | (77,062 | ) | (9,548 | ) | ||||||||||||
| (25,305,298 | ) | (32,882,530 | ) | (33,284,145 | ) | (4,124,327 | ) | |||||||||||||
|
PROFIT
FROM OPERATING ACTIVITIES
|
15,644,975
|
22,339,533
|
36,171,598
|
4,482,119
|
||||||||||||||||
|
Interest
income
|
183,576
|
206,872
|
359,294
|
44,521
|
||||||||||||||||
|
Financial
costs
|
10
|
(354,940 | ) | (441,825 | ) | (1,100,532 | ) | (136,370 | ) | |||||||||||
|
Exchange
gains/(losses), net
|
(6,746 | ) |
29,269
|
287,027
|
35,566
|
|||||||||||||||
|
Investment
income
|
123,483
|
72,438
|
247,893
|
30,717
|
||||||||||||||||
|
Share
of profit of associates
|
220,263
|
344,469
|
307,075
|
38,050
|
||||||||||||||||
|
Non-operating
income/(expenses), net
|
314,968
|
519,206
|
28,579
|
3,543
|
||||||||||||||||
|
PROFIT
BEFORE TAX
|
16,125,579
|
23,069,962
|
36,300,934
|
4,498,146
|
||||||||||||||||
|
Tax
|
13
|
(4,627,836 | ) | (6,930,826 | ) | (10,977,812 | ) | (1,360,290 | ) | |||||||||||
|
NET
PROFIT
|
11,497,743
|
16,139,136
|
25,323,122
|
3,137,856
|
||||||||||||||||
|
Notes
|
2003
|
2004
|
2005
|
2005
|
||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
US$’000
|
|||||||||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||||||||||
|
DIVIDENDS
|
||||||||||||||||||||
|
Special
interim dividend declared in place of 2003 final dividend
*
|
—
|
2,617,526
|
—
|
—
|
||||||||||||||||
|
Interim
|
14
|
1,220,132
|
1,306,451
|
2,138,128
|
264,941
|
|||||||||||||||
|
Special
interim
|
14
|
1,568,741
|
2,177,418
|
2,138,128
|
264,941
|
|||||||||||||||
|
Proposed
final*
|
14
|
1,050,460
|
1,310,022
|
4,250,391
|
526,678
|
|||||||||||||||
|
Proposed
special final*
|
14
|
1,575,691
|
2,183,371
|
—
|
—
|
|||||||||||||||
|
5,415,024
|
9,594,788
|
8,526,647
|
1,056,560
|
|||||||||||||||||
|
DIVIDENDS
PER SHARE
|
||||||||||||||||||||
|
Special
interim dividend declared in place of 2003 final
dividend*
|
—
|
RMB0.060
|
—
|
—
|
||||||||||||||||
|
Interim
|
14
|
RMB0.030
|
RMB0.030
|
RMB0.052
|
US$
0.006
|
|||||||||||||||
|
Special
interim
|
14
|
RMB0.038
|
RMB0.050
|
RMB0.052
|
US$
0.006
|
|||||||||||||||
|
Proposed
final*
|
14
|
RMB0.026
|
RMB0.030
|
RMB0.103
|
US$
0.013
|
|||||||||||||||
|
Proposed
special final*
|
14
|
RMB0.038
|
RMB0.050
|
—
|
—
|
|||||||||||||||
|
EARNINGS
PER SHARE
|
||||||||||||||||||||
|
Basic
|
15
|
RMB0.28
|
RMB0.39
|
RMB0.62
|
US$
0.08
|
|||||||||||||||
|
Diluted
|
15
|
RMB0.28
|
RMB0.39
|
RMB0.61
|
US$
0.08
|
|||||||||||||||
|
EARNINGS
PER ADS
|
||||||||||||||||||||
|
Basic
|
15
|
RMB27.99
|
RMB39.31
|
RMB61.68
|
US$
7.64
|
|||||||||||||||
|
Diluted
|
15
|
RMB27.97
|
RMB39.19
|
RMB61.01
|
US$
7.56
|
|||||||||||||||
|
Notes
|
2004
|
2005
|
2005
|
|||||||||||||
|
RMB’000
|
RMB’000
|
US$’000
|
||||||||||||||
|
(Restated)
|
||||||||||||||||
|
NON-CURRENT
ASSETS
|
||||||||||||||||
|
Property,
plant and equipment, net
|
16
|
57,182,026
|
66,625,167
|
8,255,702
|
||||||||||||
|
Intangible
assets
|
17
|
—
|
1,299,643
|
161,042
|
||||||||||||
|
Investments
in associates
|
18
|
1,327,109
|
1,401,839
|
173,706
|
||||||||||||
|
Available-for-sale
financial assets
|
—
|
1,017,000
|
126,019
|
|||||||||||||
|
58,509,135
|
70,343,649
|
8,716,469
|
||||||||||||||
|
CURRENT
ASSETS
|
||||||||||||||||
|
Accounts
receivable, net
|
19
|
4,276,489
|
5,277,784
|
653,984
|
||||||||||||
|
Inventories
and supplies
|
20
|
1,147,294
|
1,199,626
|
148,649
|
||||||||||||
|
Due
from related companies
|
27
|
1,173,374
|
2,099,197
|
260,117
|
||||||||||||
|
Other
current assets
|
556,931
|
806,115
|
99,887
|
|||||||||||||
|
Available-for-sale
financial assets /Short term investments
|
21
|
5,444,113
|
13,846,935
|
1,715,811
|
||||||||||||
|
Time
deposits with maturities over three months
|
8,603,000
|
12,200,000
|
1,511,735
|
|||||||||||||
|
Cash
and cash equivalents
|
27
|
14,091,524
|
8,991,758
|
1,114,193
|
||||||||||||
|
35,292,725
|
44,421,415
|
5,504,376
|
||||||||||||||
|
TOTAL
ASSETS
|
93,801,860
|
114,765,064
|
14,220,845
|
|||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||||||
|
Accounts
payable
|
22
|
3,102,024
|
2,867,678
|
355,342
|
||||||||||||
|
Other
payables and accrued liabilities
|
23
|
4,191,024
|
5,206,943
|
645,206
|
||||||||||||
|
Current
portion of long term bank loans
|
24
|
24,364
|
825,674
|
102,311
|
||||||||||||
|
Due
to the parent company
|
26,27
|
370,060
|
488,482
|
60,529
|
||||||||||||
|
Due
to related companies
|
27
|
211,425
|
759,934
|
94,166
|
||||||||||||
|
Tax
payable
|
13
|
2,503,466
|
3,467,505
|
429,668
|
||||||||||||
|
10,402,363
|
13,616,216
|
1,687,222
|
||||||||||||||
|
NON-CURRENT
LIABILITIES
|
||||||||||||||||
|
Long
term bank loans
|
24
|
865,211
|
24,392
|
3,022
|
||||||||||||
|
Long
term guaranteed notes
|
25
|
16,313,550
|
16,531,780
|
2,048,497
|
||||||||||||
|
Provision
for dismantlement
|
28
|
3,089,448
|
4,161,663
|
515,683
|
||||||||||||
|
Deferred
tax liabilities
|
13
|
6,688,498
|
6,827,916
|
846,065
|
||||||||||||
|
26,956,707
|
27,545,751
|
3,413,267
|
||||||||||||||
|
CAPITAL
AND RESERVES
|
||||||||||||||||
|
Issued
capital
|
29
|
876,586
|
876,635
|
108,626
|
||||||||||||
|
Reserves
|
30
|
55,566,204
|
72,726,462
|
9,011,730
|
||||||||||||
|
56,442,790
|
73,603,097
|
9,120,356
|
||||||||||||||
|
TOTAL
EQUITY AND LIABILITIES
|
93,801,860
|
114,765,064
|
14,220,845
|
|||||||||||||
|
Share
|
||||||||||||||||||||||||||||||||
|
premium
|
Statutory
|
|||||||||||||||||||||||||||||||
|
Issued
|
and
capital
|
Asset
|
Cumulative
|
and
non-
|
||||||||||||||||||||||||||||
|
share
|
redemption
|
revaluation
|
translation
|
distributive
|
Other
|
Retained
|
||||||||||||||||||||||||||
|
capital
|
reserve
|
reserve
|
reserve
|
reserve
|
reserve
|
earnings
|
Total
|
|||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||||||||||
|
Balances
at January 1, 2003 as previously reported
|
876,978
|
20,761,205
|
274,671
|
(13,596 | ) |
2,232,410
|
─
|
16,436,820
|
40,568,488
|
|||||||||||||||||||||||
|
Cumulative
adjustment for the adoption
of HKFRS 2 (note 2.2)
|
─
|
─
|
─
|
─
|
─
|
25,755
|
(25,755 | ) |
─
|
|||||||||||||||||||||||
|
Cumulative
adjustment for the adoption
of HKAS 16 (note 2.2)
|
─
|
─
|
(274,671 | ) |
—
|
─
|
—
|
─
|
(274,671 | ) | ||||||||||||||||||||||
|
Balances
at January 1 2003 as
restated
|
876,978
|
20,761,205
|
—
|
(13,596 | ) |
2,232,410
|
25,755
|
16,411,065
|
40,293,817
|
|||||||||||||||||||||||
|
Exchange
realignment
|
─
|
─
|
─
|
36,243
|
─
|
─
|
─
|
36,243
|
||||||||||||||||||||||||
|
Total
income and expenses for the year
recognised directly in equity
|
─
|
─
|
─
|
36,243
|
─
|
─
|
─
|
36,243
|
||||||||||||||||||||||||
|
Net
profit for the year as restated
|
─
|
─
|
─
|
─
|
─
|
─
|
11,497,743
|
11,497,743
|
||||||||||||||||||||||||
|
Total
income and expenses for the year
|
─
|
─
|
─
|
36,243
|
─
|
─
|
11,497,743
|
11,533,986
|
||||||||||||||||||||||||
|
Appropriation
to statutory reserve
|
─
|
─
|
─
|
─
|
818,079
|
─
|
(818,079 | ) |
─
|
|||||||||||||||||||||||
|
2002
final dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,307,408 | ) | (1,307,408 | ) | ||||||||||||||||||||||
|
2002
special final dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,307,408 | ) | (1,307,408 | ) | ||||||||||||||||||||||
|
2003
interim dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,220,132 | ) | (1,220,132 | ) | ||||||||||||||||||||||
|
2003
special interim dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,568,741 | ) | (1,568,741 | ) | ||||||||||||||||||||||
|
Transfer
to/(from) reserve
|
─
|
─
|
─
|
─
|
5,000,000
|
─
|
(5,000,000 | ) |
─
|
|||||||||||||||||||||||
|
Equity-settled
share option expense
|
─
|
─
|
─
|
—
|
─
|
37,747
|
─
|
37,747
|
||||||||||||||||||||||||
|
Balances
at December 31, 2003 as restated
|
876,978
|
20,761,205
|
─
|
22,647
|
8,050,489
|
63,502
|
16,687,040
|
46,461,861
|
||||||||||||||||||||||||
|
Balances
at January 1, 2004 as previously reported
|
876,978
|
20,761,205
|
274,671
|
22,647
|
8,050,489
|
─
|
16,750,542
|
46,736,532
|
||||||||||||||||||||||||
|
Cumulative
adjustment for the adoption of HKFRS 2 (note 2.2)
|
─
|
─
|
─
|
─
|
─
|
63,502
|
(63,502 | ) |
─
|
|||||||||||||||||||||||
|
Cumulative
adjustment for the adoption
of HKAS 16 (note 2.2)
|
─
|
─
|
(274,671 | ) |
—
|
─
|
—
|
─
|
(274,671 | ) | ||||||||||||||||||||||
|
Balances
at January 1, 2004 as
restated
|
876,978
|
20,761,205
|
─
|
22,647
|
8,050,489
|
63,502
|
16,687,040
|
46,461,861
|
||||||||||||||||||||||||
|
Exchange
realignment
|
─
|
─
|
─
|
(42,301 | ) |
─
|
─
|
─
|
(42,301 | ) | ||||||||||||||||||||||
|
Total
income and expenses for the year
recognised directly in equity
|
─
|
─
|
─
|
(42,301 | ) |
─
|
─
|
─
|
(42,301 | ) | ||||||||||||||||||||||
|
Net
profit for the year as restated
|
─
|
─
|
─
|
─
|
─
|
─
|
16,139,136
|
16,139,136
|
||||||||||||||||||||||||
|
Total
income and expenses for the year
|
─
|
─
|
─
|
(42,301 | ) |
─
|
─
|
16,139,136
|
16,096,835
|
|||||||||||||||||||||||
|
Repurchases
of shares
|
(392 | ) |
─
|
─
|
─
|
─
|
—
|
(60,761 | ) | (61,153 | ) | |||||||||||||||||||||
|
Transfer
of reserve upon share
repurchases
|
─
|
392
|
─
|
─
|
─
|
─
|
(392 | ) |
─
|
|||||||||||||||||||||||
|
2004
special interim dividend declared in place of 2003 final
dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(2,617,526 | ) | (2,617,526 | ) | ||||||||||||||||||||||
|
2004
interim dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,306,451 | ) | (1,306,451 | ) | ||||||||||||||||||||||
|
2004
special interim dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(2,177,418 | ) | (2,177,418 | ) | ||||||||||||||||||||||
|
Appropriation
to statutory reserve
|
─
|
─
|
─
|
─
|
1,363,121
|
—
|
(1,363,121 | ) |
─
|
|||||||||||||||||||||||
|
Equity-settled
share option expenses
|
─
|
─
|
─
|
─
|
─
|
46,642
|
─
|
46,642
|
||||||||||||||||||||||||
|
Balances
at 31 December 2004 as
restated
|
876,586
|
20,761,597
|
—
|
(19,654 | ) |
9,413,610
|
110,144
|
25,300,507
|
56,442,790
|
|||||||||||||||||||||||
|
Share
|
||||||||||||||||||||||||||||||||
|
premium
|
Statutory
|
|||||||||||||||||||||||||||||||
|
Issued
|
and
capital
|
Asset
|
Cumulative
|
and
non-
|
||||||||||||||||||||||||||||
|
share
|
redemption
|
revaluation
|
translation
|
distributive
|
Other
|
Retained
|
||||||||||||||||||||||||||
|
capital
|
reserve
|
reserve
|
reserve
|
reserve
|
reserve
|
earnings
|
Total
|
|||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||||||||||
|
Balances
at January 1 2005 as
previously reported
|
876,586
|
20,761,597
|
274,671
|
(19,654 | ) |
9,413,610
|
—
|
25,410,651
|
56,717,461
|
|||||||||||||||||||||||
|
Cumulative
adjustment for the adoption
of HKFRS 2 (note 2.2)
|
─
|
─
|
─
|
─
|
─
|
110,144
|
(110,144 | ) |
─
|
|||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Cumulative
adjustment for the adoption
of HKAS 16 (note 2.2)
|
─
|
─
|
(274,671 | ) |
—
|
─
|
—
|
─
|
(274,671 | ) | ||||||||||||||||||||||
|
Balances
at January 1, 2005 as
restated
|
876,586
|
20,761,597
|
—
|
(19,654 | ) |
9,413,610
|
110,144
|
25,300,507
|
56,442,790
|
|||||||||||||||||||||||
|
Changes
in fair value of available-for-sale investments
|
—
|
─
|
─
|
─
|
─
|
69,069
|
—
|
69,069
|
||||||||||||||||||||||||
|
Exchange
realignment
|
─
|
─
|
─
|
(493,289 | ) |
─
|
─
|
─
|
(493,289 | ) | ||||||||||||||||||||||
|
Total
income and expenses for the year recognised directly in
equity
|
─
|
─
|
─
|
(493,289 | ) |
─
|
69,069
|
─
|
(424,220 | ) | ||||||||||||||||||||||
|
Net
profit for the year
|
─
|
─
|
─
|
─
|
─
|
─
|
25,323,122
|
25,323,122
|
||||||||||||||||||||||||
|
Total
income and expenses for the year
|
─
|
─
|
─
|
(493,289 | ) |
─
|
69,069
|
25,323,122
|
24,898,902
|
|||||||||||||||||||||||
|
2004
final dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(3,495,962 | ) | (3,495,962 | ) | ||||||||||||||||||||||
|
2005
interim dividends
|
─
|
─
|
─
|
─
|
─
|
─
|
(4,276,256 | ) | (4,276,256 | ) | ||||||||||||||||||||||
|
Exercise
of share options
|
49
|
4,451
|
—
|
—
|
—
|
—
|
—
|
4,500
|
||||||||||||||||||||||||
|
Appropriation
to statutory reserve
|
—
|
—
|
—
|
—
|
2,268,364
|
—
|
(2,268,364 | ) |
—
|
|||||||||||||||||||||||
|
Equity-settled
share option expenses
|
─
|
─
|
─
|
─
|
─
|
29,123
|
─
|
29,123
|
||||||||||||||||||||||||
|
Balances
at 31 December 2005
|
876,635
|
20,766,048
|
—
|
(512,943 | ) |
11,681,974
|
208,336
|
40,583,047
|
73,603,097
|
|||||||||||||||||||||||
|
|
* These
reserve accounts comprise the consolidated reserves of RMB72,726,462,000
(2004: RMB55,566,204,000 (restated), 2003: RMB45,584,883,000 (restated))
in the consolidated balance sheet.
|
|
Notes
|
2003
|
2004
|
2005
|
2005
|
|||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
US$’000
|
||||||||||||||||
|
OPERATING
ACTIVITIES
|
|||||||||||||||||||
|
Cash
generated from operations
|
32(a)
|
21,142,911
|
29,705,761
|
41,695,648
|
5,166,619
|
||||||||||||||
|
Income
taxes paid
|
(3,514,807 | ) | (7,402,280 | ) | (9,849,454 | ) | (1,220,472 | ) | |||||||||||
|
Income
tax refund
|
─
|
─
|
─
|
─
|
|||||||||||||||
|
Interest
received
|
183,576
|
206,871
|
359,294
|
44,521
|
|||||||||||||||
|
Dividends
received
|
90,000
|
135,000
|
232,346
|
28,791
|
|||||||||||||||
|
Short
term investments income received
|
55,840
|
4,626
|
45,785
|
5,673
|
|||||||||||||||
|
Interest
paid
|
(138,801 | ) | (322,118 | ) | (329,797 | ) | (40,866 | ) | |||||||||||
|
Net
cash inflow from operating activities
|
17,818,719
|
22,327,860
|
32,153,822
|
3,984,266
|
|||||||||||||||
|
INVESTING
ACTIVITIES
|
|||||||||||||||||||
|
Acquisition
of and prepayment for oil and gas properties
|
32(b)
|
(4,100,900 | ) | (5,779,140 | ) | (864,007 | ) | (107,061 | ) | ||||||||||
|
Additions
of property, plant and equipment
|
(8,271,564 | ) | (12,842,905 | ) | (16,605,548 | ) | (2,057,638 | ) | |||||||||||
|
Proceeds
from disposals of property, plant and equipment
|
─
|
─
|
─
|
─
|
|||||||||||||||
|
Investment
in an associate
|
(450,000 | ) |
─
|
─
|
─
|
||||||||||||||
|
(Increase)/decrease
in time deposits with maturities over three months
|
2,367,000
|
(6,280,000 | ) | (3,597,000 | ) | (445,714 | ) | ||||||||||||
|
Purchase
of available-for-sale financial assets/ short term
investments
|
(8,144,702 | ) | (5,735,093 | ) | (21,487,478 | ) | (2,662,571 | ) | |||||||||||
|
Disposals
of available-for-sale financial assets/ short term
investments
|
9,087,581
|
6,029,946
|
13,204,817
|
1,636,244
|
|||||||||||||||
|
Net
cash outflow from investing activities
|
(9,512,585 | ) | (24,607,192 | ) | (29,349,216 | ) | (3,636,740 | ) | |||||||||||
|
FINANCING
ACTIVITIES
|
|||||||||||||||||||
|
Proceeds
from issuance of long term guaranteed notes
|
3,995,773
|
8,154,085
|
─
|
─
|
|||||||||||||||
|
Repayment
of bank loans
|
(336,938 | ) | (21,075 | ) | (18,654 | ) | (2,312 | ) | |||||||||||
|
Dividends
paid
|
(5,403,689 | ) | (6,101,395 | ) | (7,772,218 | ) | (963,076 | ) | |||||||||||
|
Share
repurchases
|
─
|
(61,153 | ) |
─
|
─
|
||||||||||||||
|
Proceeds
from exercise of share options
|
─
|
─
|
4,500
|
558
|
|||||||||||||||
|
Net
cash (outflow) /inflow from financing activities
|
(1,744,854 | ) |
1,970,462
|
(7,786,372 | ) | (964,830 | ) | ||||||||||||
|
NET
INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
|
6,561,280
|
(308,870 | ) | (4,981,766 | ) | (617,304 | ) | ||||||||||||
|
Cash
and cash equivalents at beginning of year
|
7,839,114
|
14,400,394
|
14,091,524
|
1,746,118
|
|||||||||||||||
|
Effect
of foreign exchange rate changes, net
|
─
|
─
|
(118,000 | ) | (14,621 | ) | |||||||||||||
|
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
14,400,394
|
14,091,524
|
8,991,758
|
1,114,193
|
|||||||||||||||
|
ANALYSIS
OF BALANCES OF CASH AND CASH EQUIVALENTS
|
|||||||||||||||||||
|
Cash
and cash equivalents balances
|
14,400,394
|
14,091,524
|
8,991,758
|
1,114,193
|
|||||||||||||||
|
1.
|
CORPORATE
INFORMATION
|
|
Name
|
Place and date of incorporation/ establishment |
Nominal
value of issued and paid /registered ordinary share
capital
|
Percentage
of equity attributable to the Group
|
Principal
activities
|
|||||
|
Directly
held subsidiaries:
|
|||||||||
|
CNOOC
China Limited
|
Tianjin,
the PRC
September
15, 1999
|
RMB15
billion
|
100%
|
Offshore
petroleum exploration, development, production and sale in the
PRC
|
|||||
|
CNOOC
International Limited
|
British
Virgin Islands
August
23, 1999
|
US$2
|
100%
|
Investment
holding
|
|||||
|
China
Offshore Oil (Singapore) International Pte., Ltd.
|
Singapore
May
14, 1993
|
S$3
million
|
100%
|
Sale
and marketing of petroleum outside of the PRC
|
|||||
|
CNOOC
Finance (2002) Limited
|
British
Virgin Islands
January
24, 2002
|
US$1,000
|
100%
|
Bond
issuance
|
|||||
|
CNOOC
Finance (2003) Limited
|
British
Virgin Islands
April
2, 2003
|
US$1,000
|
100%
|
Bond
issuance
|
|||||
|
CNOOC
Finance (2004) Limited
|
British
Virgin Islands
December
9, 2004
|
US$1,000
|
100%
|
Bond
issuance
|
|||||
|
Indirectly
held subsidiaries*:
|
|||||||||
|
Malacca
Petroleum Limited
|
Bermuda
November
2, 1995
|
US$12,000
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
1.
|
CORPORATE
INFORMATION (CONT’D)
|
|
Name
|
Place
and date of incorporation/ establishment
|
Nominal
value of issued and paid /registered ordinary share
capital
|
Percentage
of equity attributable to the Group
|
Principal
activities
|
|||||
|
Indirectly
held subsidiaries* (cont’d):
|
|||||||||
|
OOGC
America, Inc.
|
State
of Delaware,
United
States of America
September
2, 1997
|
US$1,000
|
100%
|
Investment
holding
|
|||||
|
OOGC
Malacca Limited
|
Bermuda
November
2, 1995
|
US$12,000
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
Southeast Asia Limited
|
Bermuda
May
16, 1997
|
US$12,000
|
100%
|
Investment
holding
|
|||||
|
CNOOC
ONWJ Ltd.
|
Labuan,
F.T.,
Malaysia
March
27, 2002
|
US$1
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
SES Ltd.
|
Labuan,
F.T.,
Malaysia
March
27, 2002
|
US$1
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
Poleng Ltd.
|
Labuan,
F.T.,
Malaysia
March
27, 2002
|
US$1
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
Madura Ltd.
|
Labuan,
F.T.,
Malaysia
March
27, 2002
|
US$1
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
Blora Ltd.
|
Labuan,
F.T.,
Malaysia
March
27, 2002
|
US$1
|
100%
|
Onshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
1.
|
CORPORATE
INFORMATION (CONT’D)
|
|
Name
|
Place
and date of incorporation/ establishment
|
Nominal
value of issued and paid /registered ordinary share
capital
|
Percentage
of equity attributable to the Group
|
Principal
activities
|
|||||
|
Indirectly
held subsidiaries* (cont’d):
|
|||||||||
|
CNOOC
NWS Private Ltd.
|
Singapore
October
8, 2002
|
S$1
|
100%
|
Offshore
petroleum exploration, development and production in
Australia
|
|||||
|
CNOOC
Wiriagar Overseas Ltd.
|
British
Virgin Islands
January
15, 2003
|
US$1
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
CNOOC
Muturi Ltd.
|
The
Isle of Man
February
8, 1996
|
US$7,780,700
|
100%
|
Offshore
petroleum exploration, development and production in
Indonesia
|
|||||
|
*
|
Indirectly
held through CNOOC International Limited.
|
|
|
The
above table lists the subsidiaries of the Company which, in the opinion
of
the directors, principally affected the results for the year or formed
a
substantial portion of the net assets of the Group. To give details
of
other subsidiaries would, in the opinion of the directors, result
in
particulars of excessive length.
|
|
2.1
|
BASIS
OF PREPARATION
|
|
2.2
|
IMPACT
OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS
(“HKFRSs”)
|
|
HKAS
1
|
Presentation
of Financial Statements
|
|
HKAS
2
|
Inventories
|
|
HKAS
7
|
Cash
Flow Statements
|
|
HKAS
8
|
Accounting
Policies, Changes in Accounting Estimates and Errors
|
|
HKAS
10
|
Events
after the Balance Sheet Date
|
|
HKAS
12
|
Income
Taxes
|
|
HKAS
14
|
Segment
Reporting
|
|
HKAS
16
|
Property,
Plant and Equipment
|
|
HKAS
17
|
Leases
|
|
HKAS
18
|
Revenue
|
|
HKAS
19
|
Employee
Benefits
|
|
HKAS
21
|
The
Effects of Changes in Foreign Exchange Rates
|
|
HKAS
23
|
Borrowing
Costs
|
|
HKAS
24
|
Related
Party Disclosures
|
|
HKAS
27
|
Consolidated
and Separate Financial Statements
|
|
HKAS
28
|
Investments
in Associates
|
|
HKAS
31
|
Interests
in Joint Ventures
|
|
HKAS
32
|
Financial
Instruments: Disclosure and Presentation
|
|
HKAS
33
|
Earnings
per Share
|
|
HKAS
36
|
Impairment
of Assets
|
|
HKAS
37
|
Provisions,
Contingent Liabilities and Contingent Assets
|
|
HKAS
38
|
Intangible
Assets
|
|
HKAS
39
|
Financial
Instruments: Recognition and Measurement
|
|
HKAS
39 Amendment
|
Transition
and Initial Recognition of Financial Assets and
Financial Liabilities
|
|
HKFRS
2
|
Share-based
Payment
|
|
HKFRS
3
|
Business
Combinations
|
|
(a)
|
HKAS
16 – Property, Plant and Equipment
|
|
2.2
|
IMPACT
OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS
(“HKFRSs”)(CONT’D)
|
|
(a)
|
HKAS
16 – Property, Plant and Equipment
(continued)
|
| Upon the adoption of HKAS 16, the Group has classified its property, plant and equipment into two categories: oil and gas properties and vehicles and office equipment. The Group has reclassified the onshore terminals previously classified as land and buildings to oil and gas properties as they will be used in similar operations and are expected to have similar economic useful lives. |
| The Group has also decided to change its accounting policy to state the onshore terminals at cost instead of valuation and to amortise those terminals by the unit-of-production method on a property-by-property basis computed based on the total estimated units of proved developed reserves instead of the straight line method. Management believes the new policy will provide more relevant information and consistent accounting approach for oil and gas related assets. |
| The effect of this change in accounting policy is to decrease both property, plant and equipment and the revaluation reserve as at January 1, 2005 and 2004 by RMB 274,671,000. No adjustment was made to the prior years’ amounts as the impact on the prior years’ consolidated income statements was not material. The effects of the above changes are summarized in note 2.4 to the financial statements. |
| (b) | HKASs 32 and 39 – Financial Instruments |
|
(i)
|
Investments
in equity and debt
securities
|
|
|
In
prior periods, the Group classified its investments in short
term debt and
equity securities as short term investments which were not
intended to be
held on a continuing basis and those investments were stated
at fair value
at the balance sheet date, on an individual investment basis.
The gains or
losses arising from changes in the fair value of such securities
were
credited or charged to the income statement in the period in
which they
arose.
Upon
the adoption of HKAS 39, these securities held by the Group
at January 1, 2005 in the amount of RMB 5,444,113,000 were
designated as available-for-sale investments under the transitional
provisions of HKAS 39 and accordingly are stated at fair value
with gains
or losses being recognised as a separate component of equity
until
subsequent derecognition or
impairment.
|
|
(ii)
|
Convertible
bonds
|
|
|
In
prior periods, convertible bonds were stated at amortised
cost.
Upon
the adoption of HKAS 32 and HKAS 39, the Group’s convertible bonds issued
with a cash settlement option and other derivative features
are split into
liability and derivative components based on their fair
values for
measurement purposes. The effects of the above changes
are summarised in
note 2.4 to the financial statements. In accordance with
HKAS 32,
comparative amounts have been
restated.
|
|
2.2
|
IMPACT
OF NEW AND REVISED HONG KONG FINANCIAL REPORTING
STANDARDS (“HKFRSs”)(CONT’D)
|
|
(c)
|
HKFRS
2 - Share-based Payment
|
|
In
prior periods, no recognition and measurement of
share-based transactions
in which employees (including directors) were granted
share options over
shares in the Company were required until such options
were exercised by
employees, at which time the share capital and share
premium were credited
with the proceeds received.
Upon
the adoption of HKFRS 2, when employees (including
directors) render
services as consideration for equity instruments
(“equity-settled
transactions”), the cost of equity-settled transactions with employees
is
measured by reference to the fair value at the date
at which the
instruments are granted.
The
main impact of HKFRS 2 on the Group is the recognition
of the cost of
these transactions and a corresponding entry to equity
for employee share
options. The revised accounting policy for share-based
payment
transactions is described in more detail in note
3 “Summary of significant
Accounting Policies” below.
The
Group has adopted the provisions of HKFRS 2 retrospectively
to all stock
options granted from the date of its incorporation.
The effects of
adopting HKFRS 2 are summarized in note 2.4 to the
financial
statements.
|
|
2.3
|
IMPACT
OF ISSUED BUT NOT YET
EFFECTIVE HONG
KONG
FINANCIAL
REPORTING STANDARDS
|
|
The
HKICPA has issued a number of new and revised
HKFRSs that are not
mandatory for these financial statements. The
Group has not early applied
these HKFRSs in these financial statements. The
following new and revised
HKFRSs, although not early adopted by the Group,
will have impact on the
Group’s financial statements in the period of initial
application. Unless
otherwise stated, the following HKFRSs are effective
for accounting
periods beginning on or after January 1,
2006:
|
|
HKAS 1 Amendment
|
Capital
Disclosures
|
|
|
HKAS 21 Amendment
|
The
effects of Changes in Foreign Exchange Rate - Net Investment in
a Foreign
Operation
|
|
|
HKAS 39 Amendment
|
Cash
Flow Hedge Accounting of Forecast Intragroup Transactions
|
|
|
HKAS 39 Amendment
|
The
Fair Value Option
|
|
|
HKFRSs 1 & 6 Amendments
|
First-time
Adoption of Hong Kong Financial Reporting Standards
and Exploration for and Evaluation of Mineral
Resources
|
|
|
HKFRS 6
|
Exploration
for and Evaluation of Mineral Resources
|
|
|
HKFRS 7
|
Financial
Instruments: Disclosures
|
|
|
HK(IFRIC)-Int 4
|
Determining
whether an Arrangement contains a Lease
|
|
|
HK(IFRIC)-Int 5
|
Rights
to Interests arising from Decommissioning,
|
|
|
Restoration
and Environmental Rehabilitation
Funds
|
|
|
The
HKAS 1 Amendment shall be applied for accounting periods beginning
on or
after January 1, 2007. The revised standard will affect the
disclosures about qualitative information about the Group’s objective,
policies and processes for managing capital; quantitative data
about what
the Company regards as capital; and compliance with any capital
requirements and the consequences of any
non-compliance.
|
|
2.3
|
IMPACT
OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING
STANDARDS
(CONT’D)
|
|
HKFRS
6 deals with the accounting for exploration for and evaluation
of mineral
resources, including oil and gas. This HKFRS should be applied
for
accounting periods beginning on or after January 1, 2006. The
Group expects that the adoption of HKFRS 6 will not have any
significant
impact on its results of operations and financial position.
HKFRS
7 will replace HKAS 32 and has modified the disclosure requirements
of
HKAS 32 relating to financial instruments. This HKFRS shall be
applied for
accounting periods beginning on or after January 1,
2007.
Except
as stated above, the Group expects that the adoption of the other
pronouncements listed above will not have any significant impact
on the
Group’s financial statements in the period of initial
application.
|
|
2.4
|
SUMMARY
OF THE IMPACT OF CHANGES
IN ACCOUNTING
POLICIES
|
|
(a)
|
Effect
on the consolidated balance
sheet
|
|
Effect
of
adopting
|
||||||||||||
|
At January
1,
2005
|
HKAS
16#
|
HKFRS
2#
|
||||||||||
|
Effect
of new
policies
|
Property,
plant
|
|
Recognition
of
|
|||||||||
|
Increase/(decrease)
|
and
equipment
|
share-based
payment
|
Total
|
|||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Assets
|
||||||||||||
|
Property,
plant and equipment,
net
|
(274,671 | ) |
—
|
(274,671 | ) | |||||||
|
Liabilities/equity
|
||||||||||||
|
Asset
revaluation
reserve
|
(274,671 | ) |
—
|
(274,671 | ) | |||||||
|
Other
reserves
|
—
|
110,144
|
110,144
|
|||||||||
|
Retained
earnings
|
—
|
(110,144 | ) | (110,144 | ) | |||||||
| (274,671 | ) | |||||||||||
|
Effect
of adopting
|
||||||||||||||||||
|
|
HKAS
16#
|
HKASs
32
|
HKAS
39*
|
HKFRS
2#
|
||||||||||||||
|
At December
31, 2005
|
and
39*
|
|
Change
in
|
Recognition
of
|
||||||||||||||
|
Effect
of new
policies
|
Property,
plant
|
|
Convertible
|
classification
of
|
share-based
|
|||||||||||||
|
Increase/(decrease)
|
and
equipment
|
bonds
|
equity
investments
|
payment
|
Total
|
|||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||||||
|
Assets
|
||||||||||||||||||
|
Property,
plant and equipment,
net
|
(274,671 | ) |
—
|
—
|
—
|
(274,671 | ) | |||||||||||
|
Liabilities/equity
|
||||||||||||||||||
|
Long
term guaranteed
notes
|
—
|
373,060
|
—
|
—
|
373,060
|
|||||||||||||
|
Asset
revaluation
reserve
|
(274,671 | ) |
—
|
—
|
—
|
(274,671 | ) | |||||||||||
|
Other
reserves
|
—
|
—
|
69,069
|
139,267
|
208,336
|
|||||||||||||
|
Retained
earnings
|
—
|
(373,060
|
)
|
(69,069
|
)
|
(139,267 | ) | (581,396 | ) | |||||||||
| (274,671 | ) | |||||||||||||||||
|
2.4
|
SUMMARY
OF THE IMPACT OF CHANGES
IN ACCOUNTING POLICIES
(CONT’D)
|
|
(b)
|
Effects
on the balances of equity
at January 1,
2003,
2004 and
2005
|
|
Effect
of
adopting
|
||||||||||||
|
HKAS
16#
|
HKFRS
2#
|
|||||||||||
|
Effect
of new
policies
|
Property,
plant
|
Recognition
of
|
||||||||||
|
Increase/(decrease)
|
and
equipment
|
share-based
payment
|
Total
|
|||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
January
1,
2003
|
||||||||||||
|
Asset
revaluation
reserve
|
(274,671 | ) |
—
|
(274,671 | ) | |||||||
|
Other
reserves
|
—
|
25,755
|
25,755
|
|||||||||
|
Retained
earnings
|
—
|
(25,755 | ) | (25,755 | ) | |||||||
| (274,671 | ) | |||||||||||
|
January
1,
2004
|
||||||||||||
|
Asset
revaluation
reserve
|
(274,671 | ) |
—
|
(274,671 | ) | |||||||
|
Other
reserves
|
—
|
63,502
|
63,502
|
|||||||||
|
Retained
earnings
|
—
|
(63,502 | ) | (63,502 | ) | |||||||
| (274,671 | ) | |||||||||||
|
January
1,
2005
|
||||||||||||
|
|
||||||||||||
|
Asset
revaluation
reserve
|
(274,671 | ) |
—
|
(274,671 | ) | |||||||
|
Other
reserves
|
—
|
110,144
|
110,144
|
|||||||||
|
Retained
earnings
|
—
|
(110,144 | ) | (110,144 | ) | |||||||
| (274,671 | ) | |||||||||||
|
2.4
|
SUMMARY
OF THE IMPACT OF CHANGES
IN ACCOUNTING POLICIES
(CONT’D)
|
|
(c)
|
Effects
on the consolidated income
statement for the years ended December 31, 2005, 2004
and
2003
|
|
|
Effect
of
adopting
|
|||||||||||||||
|
HKAS
16
|
|
HKAS
39
|
HKFRS
2
|
|||||||||||||
|
Effect
of new
policies
|
Property,
plant
and
equipment
RMB’000
|
Convertible
bonds
RMB’000
|
Recognition
of
share-based payment
RMB’000
|
Total
RMB’000
|
||||||||||||
|
Year
ended December 31, 2005
|
||||||||||||||||
|
Increase
in depreciation, depletion and amortisation
|
19,269
|
—
|
—
|
19,269
|
||||||||||||
|
Increase
in a loss on embedded derivatives in convertible
bonds
|
—
|
373,060
|
—
|
373,060
|
||||||||||||
|
Increase
in selling and administrative expenses
|
—
|
—
|
29,123
|
29,123
|
||||||||||||
|
Total
decrease in profit
|
19,269
|
373,060
|
29,123
|
421,452
|
||||||||||||
|
Year
ended December 31, 2004
|
||||||||||||||||
|
Increase
in selling and administrative expenses
|
—
|
—
|
46,642
|
46,642
|
||||||||||||
|
Total
decrease in profit
|
—
|
—
|
46,642
|
46,642
|
||||||||||||
|
Year
ended December 31, 2003
|
||||||||||||||||
|
Increase
in selling and administrative expenses
|
—
|
—
|
37,747
|
37,747
|
||||||||||||
|
Total
decrease in profit
|
—
|
—
|
37,747
|
37,747
|
||||||||||||
|
3.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
| Subsidiaries |
|
A
subsidiary is a company in which the Company, directly
or indirectly,
controls more than half of its voting power or issued
share capital or
controls the composition of its Board of Directors.
The
results of subsidiaries are included in the Company’s income statement to
the extent of dividends received and receivable. The
Company’s interests
in subsidiaries are stated at cost less any impairment
losses.
|
|
Associates
|
|
An
associate is an entity, not being a subsidiary or a
jointly-controlled
entity, in which the Group has a long term interest
of generally not less
than 20% of the equity voting rights and over which
it is in a position to
exercise significant influence.
The
Group’s share of the post-acquisition results and reserves
of the
associates are included in the consolidated income
statement and
consolidated reserves, respectively. The Group’s proportionate interests
in the associates are stated in the consolidated balance
sheet at the
Group’s share of net assets under the equity method of accounting,
less
any impairment losses.
|
| Joint Ventures |
| Certain of the group’s activities are conducted through joint arrangements, including the production sharing arrangements detailed in note 5 below. These arrangements are a form of joint venture whereby a contractual arrangement exists between two or more parties to undertake an economic activity that is subject to joint control. These joint arrangements are included in the consolidated financial statements in proportion to the group’s interests in the income, expenses, assets and liabilities of these arrangements. |
| Related parties |
|
A
party is considered to be related to the Group
if:
|
|
(a)
|
the
party directly or indirectly
through one or more intermediaries, (i) controls, is controlled
by, or
is under
common control with, the Group ; (ii) has an interest in the
Group that
gives it significant influence over the Group; or (iii) has
joint control
over the
Group;
|
|
(b)
|
the
party is an associate;
|
|
(c)
|
the
party is a jointly controlled
entity;
|
|
(d)
|
the
party is a member of the key management personnel of the Group
or its
parent;
|
|
(e)
|
the
party is a close member of the
family of any individual referred to in (a) or (d);
or
|
|
(f)
|
the
party is an entity that is controlled, jointly controlled or
significantly influenced by
or for which significant voting power in such entity resides
with,
directly or indirectly, any individual referred to in (d) or
(e).
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
| Impairment of assets |
|
Where
an indication of
impairment
exists, or
when annual impairment testing for an asset (other than
inventories and
financial assets) is required, the asset’s
recoverable amount is estimated.
An asset’s
recoverable amount is calculated
as the higher of the asset’s
or cash-generating
unit’s
value in use and its fair value
less costs to sell, and is determined for an individual
asset, unless the
asset does not generate cash inflows that are largely independent
of those
from other assets or groups of assets, in which case, the
recoverable
amount is determined for the
cash-generating unit to which the asset belongs.
An
impairment loss is recognised
only if the carrying amount of an asset exceeds its recoverable
amount. In
assessing value in use, the estimated future cash flows
are
discounted
to their
present value using a pre-tax discount rate that reflects
current market
assessments of the time value of money and the risks specific
to the
asset. An impairment loss is charged to the income statement
in the period
in which it arises.
An
assessment is made at each
reporting date as to whether there is any indication that
previously
recognised impairment losses may no longer exist or may
have decreased. If
such indication exists, the recoverable amount is
estimated.
A
previously recognised
impairment loss is reversed
only if there has been a change in the estimates used to
determine the
recoverable amount of an asset, however not to an amount
higher than the
carrying amount that would have been determined (net of
any
depreciation/amortisation),
had no impairment loss
been recognised for the asset in prior years.
A
reversal of an impairment loss
is credited to the income statement in the period in which
it arises,
unless the asset is carried at a revalued amount, in which
case the
reversal
of the
impairment loss is accounted for in accordance with the
relevant
accounting policy for that revalued
asset.
|
| 3. |
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES (CONT’D)
|
|
| Property,
plant and equipment Property, plant and equipment comprise oil and gas properties, and vehicles and office equipment. |
||
| (i) | Oil and gas properties | |
|
For
oil and gas properties, the
successful efforts method of accounting is adopted. The Group capitalises
initial acquisition costs of oil and gas properties. Impairment
of
initial acquisition
costs is recognised based on exploratory experience and management
judgment. Upon discovery of commercial reserves, acquisition costs
are
transferred to proved properties. The costs of drilling and equipping
successful exploratory wells, all
development expenditures on
construction, installation or completion of infrastructure facilities
such
as platforms, pipelines, processing plants and the drilling of
development
wells, including those renewals and betterments which extend the
economic
lives
of the assets, and the
related borrowing costs are capitalised. The costs of unsuccessful
exploratory wells and all other exploration costs are expensed
as
incurred.
Exploratory
wells
are evaluated for economic viability within one year of
completion.
Exploratory
wells that discover potentially economic reserves in areas where
major
capital expenditure will be required before production would begin
and
when the major capital expenditure depends upon successful completion
of
further exploratory work remain
capitalised
and are reviewed periodically for impairment.
Productive
oil and
gas properties and other tangible and intangible costs of producing
properties are amortised using the unit-of-production method on
a
property-by-property basis under which the ratio of produced oil
and gas
to the estimated remaining proved developed reserves is used to
determine
the depreciation, depletion and amortisation provision. Common
facilities
that are built specifically to service production directly attributed
to
designated oil and gas properties are amortised based on the proved
developed reserves of respective oil and gas properties on a pro-rata
basis. Common facilities that are not built specifically to
service identified oil and gas properties are depreciated using
the
straight-line method over their estimated useful lives. Costs associated
with significant development projects are not depleted until commercial
production commences and the reserves related to those costs are
excluded
from the calculation of depletion.
Capitalised
acquisition costs of
proved properties are amortised by the unit-of-production method
on a
property-by-property basis computed according to the total estimated
units
of proved reserves.
The
Group estimates future
dismantlement costs
for oil and gas properties with reference to the estimates provided
from
either internal or external engineers after taking into consideration
the
anticipated method of dismantlement required in accordance with
current
legislation and industry practices.
The associated cost is
capitalised and the liability is discounted and an accretion expense
is
recognised using the credit-adjusted risk-free interest rate in
effect
when the liability is initially recognised. No market-risk
premium has been included in the
Company’s
calculation of asset retirement
obligations
balances since no reliable
estimate can be made by the
Company.
|
||
|
3.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES (CONT’D)
|
| Property, plant and equipment (cont’d) |
|
(ii)
|
Vehicles
and office equipment
|
| Vehicles and office equipment are stated at cost less accumulated depreciation and impairment losses. The straight-line method is adopted to depreciate the cost less any estimated residual value of these assets over their expected useful lives. The Group estimates the useful lives of vehicles and office equipment to be five years. |
|
Where
parts of an item of
property, plant and equipment have different useful lives, the
cost of
that item is allocated on a recoverable basis among the parts
and each
part is depreciated
separately.
Residual
values, useful lives and
the depreciation method are reviewed and, adjusted if appropriate,
at each
balance sheet date.
An
item of property, plant and
equipment is derecognised upon disposal or where no future
economic
benefits
are expected
from its use or disposal. Any gain or loss on disposal or
retirement
recognised in the income statement in the year that the asset
is
derecognised is the difference between the net sales proceeds
and the
carrying value of the relevant
asset.
|
| Intangible assets |
| The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. |
| The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed as least at each balance sheet date. |
| Research and development costs |
|
All
research costs are
charged
to the income
statement as incurred.
Expenditure
(other than relating to oil
and gas properties discussed above) incurred on projects to develop
new products is capitalised and deferred only when the Group
can
demonstrate the technical feasibility of completing the intangible
asset
so that it will be available for use or sale, its intention
to complete
and its ability to use or sell the asset, how the asset will
generate
future economic benefits, the availability of resources to
complete the
project and the ability to measure reliably the expenditure
during the
development. Product development expenditure which does not
meet these
criteria is expensed when incurred. No development costs were
capitalised
during the year.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
| Investments and other financial assets |
| Applicable to the year ended December 31, 2004: |
| Short term investment |
|
Short
term
investments are investments in debt and equity securities not
intended to
be held on a continuing
basis and are
stated at their fair values on the basis of their quoted market
prices at
the balance sheet date, on an individual investment basis.
The gains or
losses arising from changes in the fair value of a security
are credited
or charged to the income
statement in
the period in which they arise.
|
| Applicable to the year ended December 31, 2005: |
|
Financial
assets in the scope of
HKAS 39 are classified as financial assets at fair value through
profit or
loss, loans and receivables, held-to-maturity investments,
and available-for-sale
financial assets, as appropriate. When financial assets are
recognised
initially, they are measured at fair value, plus, in the case
of
investments not at fair value through profit or loss, directly
attributable transaction
costs. The Group determines the
classification of its financial assets after initial recognition
and,
where allowed and appropriate, re-evaluates this designation
at the
balance sheet date.
All
regular way
purchases and sales of financial assets are recognised
on the
trade date i.e., the date that the Group commits to purchase
the asset.
Regular way purchases or sales are purchases or sales of
financial assets
that require delivery of assets within the period generally
established by
regulation or convention
in the
marketplace.
|
|
(a)
|
Financial assets at fair value through profit or loss |
|
Financial
assets classified as
held for trading are included in the category “financial
assets at fair value
through profit or loss”.
Financial assets are classified
as held
for trading
if they are acquired for the purpose of selling in the
near term.
Derivatives are also classified as held for trading unless
they are
designated and effective hedging instruments. Gains or
losses on
investments held for trading are recognised
in the income
statement.
|
|
(b)
|
Loans
and
receivables
|
|
Loans
and receivables are
non-derivative financial assets with fixed or determinable
payments that
are not quoted in an active market. They arise when the
Group provides
money, goods or services directly
to a debtor with no intention
of trading the receivable. They are included in current
assets, except for
those with maturities greater than 12 months after the
balance sheet date,
which are included in non-current assets. Loans and receivables
are
included
in trade and other
receivables in the balance
sheet.
|
|
(c)
|
Held-to-maturity
investments
|
| During this year, the Group did not hold any investments assets in this category. |
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
|
Investments
and
other
financial assets (continued)
|
|
(d)
|
Available-for-sale
financial assets
|
|
Available-for-sale
financial assets are those non-derivative financial assets
in listed and
unlisted equity securities that are designated as available-for-sale
or
are not classified
in any of the
other categories. After initial recognition available-for-sale
financial
assets are measured at fair value with gains or losses being
recognised as
a separate component of equity until the investment is derecognised
or
until the investment is
determined to be
impaired at which time the cumulative gain or loss previously
reported in
equity is included in the income statement.
When
the fair value of unlisted
equity securities can not be reliably measured because (a)
the variability
in the range of
reasonable fair value estimates is significant or that investment
or (b)
the probabilities of the various estimates within the range
cannot be
reasonably assessed and used in estimating fair value, such
securities are
stated at cost less any impairment
losses.
|
|
|
Fair
Value
|
|
The
fair value of investments that are actively traded in organised
financial
markets is determined by reference to quoted market bid
price at the close
of business at the balance sheet date. For investments
where there is no
active market, fair value is determined using valuation
techniques. Such
techniques include using recent arm’s length market transactions;
reference to the current market value of another instrument
which is
substantially the same; a discounted cash flow analysis;
and option
pricing models.
|
| Impairment of financial assets (Applicable to the year ended December 31, 2005) |
|
The
Group assesses at each balance
sheet date whether there is any objective evidence that
a financial asset
or group of financial assets is impaired.
|
| Assets carried at amortised cost |
|
If
there is objective evidence
that an impairment loss on loans and receivables carried
at amortised cost
has been incurred, the amount of the loss is measured as
the difference
between the asset’s
carrying amount
and the present value of
estimated future cash flows (excluding future credit losses
that have not
been incurred) discounted at the financial asset’s
original effective interest rate
(i.e., the effective interest rate computed at initial
recognition). The
carrying amount of the asset
is reduced either directly or through the use of an allowance
account. The
amount of the impairment loss is recognised in profit or
loss.
The
Group first assesses whether
objective evidence of impairment exists individually
for financial assets that are
individually significant, and individually or collectively
for financial
assets that are not individually significant. If it is
determined that no
objective evidence of impairment exists for an individually
assessed
financial
asset, whether significant or
not, the asset is included in a group of financial assets
with similar
credit risk characteristics and that group is collectively
assessed for
impairment. Assets that are individually assessed for impairment
and for
which an
impairment loss is or continues
to be recognised are not included in a collective assessment
of
impairment.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
|
Impairment
of financial assets (Applicable to the year ended December
31,
2005) (continued)
|
| If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. |
|
Available-for-sale
financial
assets
|
| If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the income statement. Impairment losses on equity instruments classified as available-for-sale are not reversed through profit or loss. |
| Derecognition of financial assets (applicable to the year ended December 31, 2005) |
| A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where: |
|
•
|
the
rights to receive cash flows from the asset have
expired;
|
|
•
|
the
Group retains the rights to
receive cash flows from the asset, but has assumed
an obligation to pay in
full
without material
delay to a third party under a “pass-through”
arrangement;
or
|
|
|
|
|
•
|
the
Group has transferred its
rights to receive cash flows from the asset and either
(a) has transferred
substantially all the risks and rewards of the asset,
or (b) has
neither
transferred
nor retained substantially all the risks and rewards
of the asset, but has
transferred control of the asset.
|
|
|
Where
the Group has transferred
its rights to receive cash flows from an asset
and has neither transferred
nor retained substantially
all the risks and rewards of
the asset nor transferred control of the asset,
the asset is recognised to
the extent of the Group’s
continuing involvement in the
asset. Continuing involvement that takes the
form of a guarantee over the
transferred asset
is measured at the lower of the
original carrying amount of the asset and the
maximum amount of
consideration that the Group could be required
to
repay.
Where
continuing involvement takes
the form of a written and/or purchased option
(including a cash
settled
option or
similar provision) on the transferred asset,
the extent of the
Group’s
continuing involvement is the
amount of the transferred asset that the Group
may repurchase, except that
in the case of a written put option (including
a cash-settled
option
or similar provision) on an
asset measured at fair value, where the extent
of the Group’s
continuing involvement is
limited to the lower of the fair value of the
transferred asset and the
option exercise
price.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
|
Interest-bearing
loans and borrowings
|
|
All
loans and borrowings are
initially recognised at the fair value of the consideration
received less
directly attributable transaction costs.
After
initial recognition,
interest-bearing loans and
borrowings are subsequently
measured at amortised cost using the effective interest
method.
Gains
and losses are recognised in
net profit or loss when the liabilities are derecognised
as well as
through the amortisation process.
|
|
Convertible
bonds
|
|
The
Group’s
convertible bonds issued with a
cash settlement option and other embedded derivative features
are split
into liability and derivative components according to their
fair values
for measurement purposes.
The
fair value of the liability
component is
determined using the market rate for an equivalent non-convertible
bond on
the issuance of convertible bonds and this amount is carried
as a long
term liability on the amortised cost basis until extinguished
on
conversion or redemption. The derivative component
is remeasured at each
balance sheet date and any gains or losses arising from change
in the fair
value are recognised in the income statement. Both the liability
and the
related embedded derivative components are presented together
for
financial statements
reporting
purposes.
|
| Derecognition of financial liabilities (applicable to the year ended December 31, 2005) |
|
A
financial liability is
derecognised when the obligation under the liability is discharged
or
cancelled or expires.
When
an existing financial
liability is replaced by
another from the same lender on substantially different terms,
or the
terms of an existing liability are substantially modified,
such an
exchange or modification is treated as a derecognition of
the original
liability and a
recognition of a new liability,
and the difference between the respective carrying amounts
is recognised
in profit or loss.
|
| Derivative financial instruments (applicable to the year ended December 31, 2005) |
| The
Group uses currency swaps to
hedge its risks
associated with currency exchange fluctuations. Such derivative
financial
instruments are initially recognised at fair value on the date
on which a
derivative contract is entered into and are subsequently remeasured
at
fair value. Derivatives are carried
as assets when the fair value is
positive and as liabilities when the fair value is
negative.
Any
gains or losses arising from
changes in fair value on derivatives that do not qualify
for hedge
accounting are taken directly to net profit or loss for the year.
The
fair value of currency swap
contracts is determined by reference to market values for
similar
instruments.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES
(CONT’D)
|
|
Inventories
and supplies
|
|
Inventories
consist primarily of
oil and supplies consist
mainly of items for repairs and maintenance of oil and gas
properties.
Inventories are stated at the lower of cost and net realisable
value.
Costs of inventories and supplies represent purchase or production
cost of
goods and are determined on a weighted
average basis. Net
realisable value is based on estimated selling prices less
any estimated
costs to be incurred to completion and disposal. Supplies
are capitalised
to property, plant and equipment when used for renewals and
betterments of
oil and gas
properties and have resulted in
an increase in the future economic values of oil and gas
properties or are
recognised as expenses when
used.
|
|
Cash
and cash equivalents
|
|
For
the purpose of the
consolidated cash flow statement, cash and cash equivalents
comprise
cash on hand and demand
deposits, and short term highly liquid investments which
are readily
convertible into known amounts of cash and which are subject
to an
insignificant risk of changes in value, and have a short
maturity of
generally within three
months when acquired, less
bank overdrafts which are payable on demand and form an integral
part of
the Group’s
cash
management.
For
the purpose of the balance
sheet, cash and cash equivalents comprise cash on hand and
at banks, and
term deposits with
maturities of three months or less which are not restricted
to
use.
|
| Provisions |
|
A
provision is recognised when a
present obligation (legal or constructive) has arisen as
a result of a
past event and it is probable that a future outflow of
resources
will
be required to
settle the obligation, provided that a reliable estimate
can be made of
the amount of the obligation.
When
the effect of discounting is
material, the amount recognised for a provision is the
present value at
the balance sheet date of the future
expenditures expected to be
required to settle the obligation. The increase in the
discounted present
value amount arising from the passage of time is included
in finance costs
in the income statement.
Provisions
for dismantlement are
made based on
the
present value of the future costs expected to be incurred,
on a
property-by-property basis, in respect of the Group’s
expected dismantlement and
abandonment costs at the end of the related oil exploration
and recovery
activities.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
|
Income
tax
|
|
Income
tax comprises current and
deferred tax. Income tax is recognised in the income statement
or in
equity if it relates to items that are recognised in the
same or a
different period directly in equity.
Current
tax assets and liabilities
for the current and prior periods are measured at the amount
expected to
be recovered from or paid to the taxation authorities.
Deferred
tax is provided, using
the liability method, on all temporary differences at the
balance sheet date between the
tax bases of assets and liabilities and their carrying
amounts for
financial reporting purposes.
Deferred
tax liabilities are
recognised for all taxable temporary
differences:
|
|
•
|
Except
where the deferred tax
liability arises from
the initial recognition of an asset or liability in a transaction
that is
not a business combination and, at the time of the transaction,
affects
neither the accounting profit nor taxable profit or loss;
and
|
|
•
|
in
respect of taxable temporary
differences
associated with investments in subsidiaries and associates,
except where
the timing of the reversal of the temporary differences can
be controlled
and it is probable that the temporary differences will not
reverse in the
foreseeable future.
|
|
|
|
|
•
|
Deferred
tax assets are recognised for
all deductible temporary differences, carry forward of unused
tax credits
and unused tax losses, to the extent that it is probable that
taxable
profit will be available against which the deductible temporary
differences, and
the carry forward of unused tax
credits and unused tax losses can be utilised, except where
the deferred
tax asset relating to the deductible temporary differences
arises from the
initial recognition of an asset or liability in a transaction
that is
not
a business combination and, at
the time of the transaction, affects neither the accounting
profit nor
taxable profit or loss; and
|
|
•
|
in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. |
|
|
The
carrying amount of deferred
tax
assets is
reviewed at each balance sheet date and reduced to the
extent that it is
no longer probable that sufficient taxable profit will
be available to
allow all or part of the deferred tax asset to be utilised.
Conversely,
previously unrecognised deferred
tax assets are reassessed
at each balance sheet date and are recognised to the
extent that it is
probable that sufficient taxable profit will be available
to allow all or
part of the deferred tax asset to be utilised.
Deferred
tax assets and
liabilities
are
measured at the tax rates that are expected to apply
to the period when
the asset is realised or the liability is settled, based
on tax rates (and
tax laws) that have been enacted or substantially enacted
at the balance
sheet date.
Deferred
tax assets
and deferred tax
liabilities are offset, if a legally enforceable right
exists to set off
current tax assets against current tax liabilities and
the deferred taxes
relate to the same taxable entity and the same taxation
authority.
|
| 3. |
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES (CONT’D)
|
|
| Revenue recognition | ||
| Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases: | ||
|
(i)
|
Oil and gas sales | |
|
Oil
and
gas sales represent the
invoiced value of sales of oil and gas attributable
to the interests of
the Group, net of royalties and PRC government
share oil that are lifted
and sold on behalf of the PRC government. Sales
are recognised when the
significant
risks and rewards of ownership of
oil and gas have been transferred to customers.
Oil
and gas lifted and sold by the
Group above or below the Group’s
participating interests in the
production sharing contracts result in overlifts
and underlifts. The
Group
records these
transactions in accordance with the entitlement
method under which
overlifts are recorded as liabilities and underlifts
are recorded as
assets at year end oil prices. Settlement will
be in kind when the
liftings are equalised or in cash when
production
ceases.
The
Group has entered into gas
sales contracts with customers which contain take-or-pay
clauses. The
clauses require those customers to take a specified
minimum volume of gas
each year. If the minimum volume of gas is not
taken, those
customers must pay for the
deficiency gas, even though the gas is not taken.
Those customers can
offset the deficiency payment against any future
purchases in excess of
the specified volume. The Group records any deficiency
payments as
deferred revenue which
is included in other
payables until any make-up gas is taken by those
customers or the expiry
of the contracts.
|
||
|
(ii)
|
Marketing revenues | |
|
Marketing
revenues represent sales of oil purchased from the
foreign partner under
the production sharing contracts and revenues from
the trading of oil
through the Company’s subsidiary in Singapore. The title, together with
the risks and rewards of the ownership of such oil
purchased from the
foreign partners, is transferred to the Group from
the foreign partners
and other unrelated oil and gas companies before
the Group sells such oil
to its customers. The cost of the oil sold is included
in crude oil and
product purchases.
|
||
|
(iii)
|
Other
income
|
|
|
Other
income mainly represents project management fees
charged to the foreign
partners and handling fees charged to customers and
is recognised when the
services are rendered.
|
||
|
(iv)
|
Dividend
income
|
|
|
Dividend
income is recognised when
the shareholders’
right to receive payment has been
established.
|
||
|
(v)
|
Interest
income
|
|
|
Interest
income from deposits placed
with banks and other financial instruments is recognised
on a time
proportion basis taking into account the effective
yield on the
assets.
|
||
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
| Employee benefits |
|
Share-based
payment transactions
|
|
The
Company has adopted share
option schemes for the purpose of providing
incentives and rewards to
eligible participants who contribute to the
success of the
Group’s
operations. Employees (including
directors) of the Group will
from time to time receive
remuneration in the form of share-based payment
transactions, whereby
employees render services as consideration
for equity instruments
(“equity-settled
transactions”).
The
cost of equity-settled
transactions with employees is
measured by reference to the fair
value at the date at which they are granted.
The fair value is determined
by using a Black-Scholes model, further details
of which are given in note
31.
In valuing equity-settled
transactions, no account is taken of any performance
conditions, other than
conditions linked to the price of the shares
of the Company, if
applicable.
The
cost of equity-settled
transactions is recognised, together with a
corresponding increase in
equity, over the period in which the performance
and/or service conditions are
fulfilled, ending on the date on which the
relevant employees become fully
entitled to the award (the “vesting
date”).
The cumulative expenses
recognised for equity-settled transactions
at each balance sheet date
until the vesting
date reflects the extent to
which the vesting period has expired and the
Group’s
best estimate of the number of
equity instruments that will ultimately vest.
The charge or credit to the
income statement for a period represents the
movement in cumulative
expense recognised as at the
beginning and end of that period.
No
expense is recognised for
awards that do not ultimately vest, except
for awards where vesting is
conditional upon a market condition, which
are treated as vesting
irrespective of whether
or not the market condition is
satisfied, provided that all other performance
conditions are
satisfied.
Where
the terms of an
equity-settled award are modified, as a minimum,
an expense is recognised
as if the terms had not been modified. In addition,
an expense is recognised for any
modification, which increases the total fair
value of the share-based
payment arrangement, or is otherwise beneficial
to the employee as
measured at the date of modification.
Where
an equity-settled award is
cancelled, it
is
treated as if it had vested on the date of
cancellation, and any expenses
not yet recognised for the award is recognised
immediately. However, if a
new award is substituted for the cancelled
award, and is designated as a
replacement award on the date
that it is granted, the cancelled
and new awards are treated as if they were
a modification of the original
award, as described in the previous paragraph.
The Group has adopted the
provisions of HKFRS 2 retrospectively to all
stock options granted from
the
date of its
incorporation.
The
dilutive effect of outstanding
options is reflected as additional share dilution
in the computation of
earnings per share.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
| Retirement and termination benefits |
|
The
Group participates in defined contribution plans in accordance
with local
laws and regulations for full-time employees in the PRC and
other
countries in which it operates. The plans provide for contributions
ranging from 5% to 22% of the employees’ basic salaries. The Group’s
contributions to these defined contribution plans are charged
to expense
in the year to which they relate.
|
| Dividends |
|
Final
and special final dividends
proposed by the directors are classified as a separate allocation
of
retained
earnings
within the equity section of the balance sheet, until they
have been
approved by the shareholders in a general meeting. When these
dividends
have been approved by the shareholders and declared, they
are recognised
as a liability.
Interim
and special
interim dividends are
simultaneously proposed and declared, because the Company’s
memorandum and articles of
association grant the directors the authority to declare
interim
dividends. Consequently, interim dividends are recognised
immediately
as a
liability when they are proposed
and declared.
|
| Borrowing costs |
|
Borrowing
costs directly
attributable to the acquisition, construction or production
of qualifying
assets, i.e. assets that necessarily take a substantial period
of time to
get ready for their
intended use or sale, are capitalised as part of the cost of
those assets.
The capitalisation of such borrowing costs ceases when the
assets are
substantially ready for their intended use or sale.
To
the extent that funds are
borrowed specifically for the
purpose of obtaining a
qualifying asset, the amount of borrowing costs eligible for
capitalisation on that asset is determined as the actual borrowing
costs
incurred on that borrowing during the period less any investment
income on
the temporary investment
of those
borrowings.
To
the extent that funds are
borrowed generally and used for the purpose of obtaining a
qualifying
asset, the amount of borrowing costs eligible for capitalisation
is
determined by applying a capitalisation rate to the expenditures
on that asset. The
capitalisation rate is the weighted average of the borrowing
costs
applicable to the borrowings of the group that are outstanding
during the
period, other than borrowings made specifically for the purpose
of
obtaining a qualifying
asset. The amount of borrowing
costs capitalised incurred during a period should not exceed
the amount of
borrowing cost incurred during that period.
Borrowing
costs include interest
charges and other costs incurred in connection with the borrowing
of
funds,
including
amortisation of discounts or premiums relating to the borrowing,
and
amortisation of ancillary costs incurred in connection with
arranging the
borrowing.
|
| 3. |
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
|
Foreign
currencies
These
financial statements are presented in RMB. Each
entity in the Group
maintains its books and records in its own functional
currency. Foreign
currency transactions are initially recorded using
the functional currency
rates ruling at the date of transaction. Monetary
assets and liabilities
denominated in foreign currencies are retranslated
at the functional
currency rates of exchange ruling at the balance
sheet date. Exchange
differences are dealt with in the income statement.
Non-monetary items
that are measured in terms of historical cost in
a foreign currency are
translated using the exchange rates at the dates
of the initial
transactions. Non-monetary items measured at fair
value in a foreign
currency are translated using the exchange rates
at the date when the fair
value was determined.
On
consolidation, the balance sheet of the Company and
the overseas
subsidiaries, other than the subsidiaries in the
PRC, are translated into
RMB at the exchange rates ruling at the balance sheet
date and, their
income statements are translated into RMB at the
weighted average exchange
rates for the year. The resulting translation differences
are included in
the cumulative translation reserve.
For
the purpose of the consolidated cash flow statement,
the cash flows of
overseas subsidiaries are translated into RMB at
the exchange rates ruling
at the dates of the cash flows. Frequently recurring
cash flows of
overseas subsidiaries which arise throughout the
year are translated into
RMB at the weighted average exchange rates for
the
year.
Repairs, maintenance and overhaul costs Repairs, maintenance and overhaul costs are normally charged to the income statement as operating expenses in the period in which they are incurred. Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Company is the lessee, rentals payable under the operating leases are charged to the income statement on the straight-line basis over the lease terms. Contingencies Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A
contingent asset is not recognized in the financial
statements, but are
disclosed when an inflow of economic benefits is
probable.
|
|
3.
|
SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
|
| Subsequent events |
|
Post-year-end
events that provide
additional information about the Company’s
position
at the balance sheet date or
those that indicate the going concern assumption is not
appropriate
(adjusting events) are reflected in the financial statements.
Post-year-end events that are not adjusting events are
disclosed in the
notes when material.
|
| Use of estimates |
|
The
preparation of financial
statements in conformity with Hong Kong GAAP requires management
to make
estimates and assumptions that affect the reported amounts
of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial
statements, and the reported amounts of revenues and expenses
during the
reporting period. The most significant estimates pertain
to proved oil and
gas reserve volumes and the future development, purchase
price
allocation, provision
for dismantlement and
impairment as well as estimates relating to certain oil
and gas revenues
and expenses. Actual amounts could differ from those estimates
and
assumptions. More details are given in notes 3, 16
and 28.
|
| 4. | ACQUISITIONS |
|
|
During
the year, the Group completed the acquisition of the North West Shelf
Project (“NWS Project”), including an interest of approximately 5.3% in
the NWS Project and a 25% interest in the China LNG Joint Venture,
a new
joint venture established within the NWS Project. The Group acquired
the
NWS Project to expand its upstream oil and gas reserves and production.
The Group’s participation in the NWS Project has not started commercial
operations.
|
|
|
Details
of the net assets acquired
are as follows:
|
| Purchase consideration: |
RMB’000
|
|||
| Consideration paid |
4,341,783
|
|||
| Direct costs relating to the acquisition |
87,522
|
|||
| Total purchase consideration |
4,429,305
|
|||
|
The
assets and liabilities arising from the acquisition are as
follows:
|
RMB’000
|
|||
| Oil and gas properties |
3,129,662
|
|||
| Intangible assets - gas processing rights |
1,299,643
|
|||
| Net assets acquired |
4,429,305
|
|||
| Purchase consideration settled in cash |
4,429,305
|
|||
|
|
The
purchase price allocation set
out above is still preliminary, pending the confirmation of the tax
basis of the
underlying assets.
|
|
|
CNOOC
NWS Private Limited is a
wholly owned subsidiary, and together with the other joint venture
partners and the operator of the NWS Project, signed a Deed of Cross
Charge and an Extended Deed of Cross Charge whereby certain liabilities
incurred or to be
incurred, if any, by the Company in respect of the NWS Project are
secured
by its interests in the NWS
Project.
|
|
|
In
addition, the Company, through
its wholly-owned subsidiary, has signed an agreement with a Canadian
based
company, MEG
Energy
Corporation (“MEG”),
to acquire a 16.69% equity
interest in MEG. The Company completed the transaction and paid C$150
million (equivalent of RMB1,017 million) for the acquisition of 13,636,364
common shares of MEG in March 2005. MEG is principally
engaged in the
exploitation and production of oil sands. The investment in the unlisted
shares of this company is accounted for as a non-current
available-for-sales asset and is stated at cost less any
impairment.
|
|
5.
|
PRODUCTION
SHARING
CONTRACTS
|
|
PRC
|
|
|
For
production sharing contracts
in the PRC, the foreign parties to the contracts (“foreign partners”)
are normally required to bear
all exploration costs during the exploration period and such exploration
costs can be recovered according to the production sharing
formula after
commercial discoveries are made and production
begins.
|
|
|
After
the initial exploration
stage, the development and operating costs are funded by the Group
and the
foreign partners according to their respective participating interests.
|
|
|
In
general, the Group has the
option to take up to 51% participating interest in a production sharing
contract and may exercise such option after the foreign partners
have
independently undertaken all the exploration risks and costs and
made
viable commercial
discoveries.
|
|
|
After
the Group exercises its
option to take a participating interest in a production sharing contract,
the Group accounts for the oil and gas properties using the proportional
method under which the Group recognises its share of development
costs, revenues
and expenses from such operations according to its participating
interest
in the production sharing contract. The Group does not account for
either
the exploration costs incurred by its foreign partners or the foreign
partners’
share of development costs and
revenues and expenses from such
operations.
|
|
|
Part
of the annual gross
production of oil and gas in the PRC is distributed to the PRC government
as settlement of royalties which are payable pursuant to a sliding
scale.
The Group and
the
foreign partners also pay the value-added tax to the tax bureau at
a
pre-determined rate. In addition, there is a pre-agreed portion of
oil and
gas designated to recover all exploration costs, development costs,
operating costs incurred and
related interest according to
the participating interests between the Group and the foreign partners.
Any remaining oil after the foregoing priority allocations is first
distributed to the PRC government as government share oil on a
pre-determined ratio
pursuant to a sliding scale, and
then distributed to the Group and the foreign partners according
to their
respective participating interests. As the government share is not
included in the Group’s
interest in the annual
production, the net sales of the Group
do not include the sales
revenue of the government share
oil.
|
|
|
The
foreign partners have the
right either to take possession of their allocable remainder oil
for sale
in the international market, or to negotiate with the Group to sell
their
allocable remainder
oil to the Group for sale in the PRC
market.
|
|
|
The
Group and the other partners
to the overseas production sharing contracts are required to bear
all
exploration, development and operating costs according to their respective
participating
interests. Exploration, development and operating costs which qualify
for
recovery can be recovered according to the production sharing formula
after commercial discoveries are made and production
begins.
|
|
|
| 6. |
SEGMENT
INFORMATION
|
|
|
Segment
information is presented
by way of two segment formats: (i) on a primary segment reporting
basis,
by business segment; and (ii) on a secondary segment reporting basis,
by
geographical segment.
|
|
|
Intersegment
transactions: segment
revenue, segment
expenses and segment performance include transfers between business
segments and between geographical segments. Such transfers are accounted
for at cost. Those transfers are eliminated on
consolidation.
|
| (a) |
Business
segments
|
|
|
The
Group is organised on
a worldwide
basis
into three major operating segments. The Group is involved in the
upstream
operating activities of the petroleum industry that comprise independent
operations, production sharing contracts with foreign partners and
trading
business. These
segments are determined primarily
because the senior management makes key operating decisions and assesses
performance of the segments separately. The Group evaluates the
performance of each segment based on profit or loss from operations
before
income taxes.
|
||
| 6. | SEGMENT INFORMATION (CONT’D) |
|
(a)
|
Business
segments (cont’d)
|
|
|
|
The
following table presents
revenue, profit and certain assets, liabilities and expenditures
information for the Group’s
business segments for the years
ended December 31, 2005
and 2004.
|
|
Independent operations
|
Production
sharing contracts
|
Trading
business
|
Unallocated
|
Eliminations
|
Consolidated
|
||||||||||||||
|
Segment
revenue
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
|
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
||
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
（Restated）
|
||||||||
|
Sales
to external customers:
|
|||||||||||||||||||
|
Oil
and gas sales
|
12,040,587
|
15,177,621
|
22,808,733
|
16,076,244
|
21,708,398
|
30,608,936
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
28,116,831
|
36,886,019
|
53,417,669
|
|
|
Marketing
revenues
|
─
|
─
|
─
|
─
|
─
|
─
|
12,398,661
|
18,191,353
|
15,901,325
|
─
|
─
|
─
|
─
|
─
|
─
|
12,398,661
|
18,191,353
|
15,901,325
|
|
|
Intersegment
revenues
|
─
|
920,669
|
1,598,171
|
3,730,797
|
2,551,181
|
7,467,429
|
─
|
─
|
─
|
─
|
─
|
─
|
(3,730,797)
|
(3,471,850)
|
(9,065,600)
|
─
|
─
|
─
|
|
|
Other
income
|
8,468
|
6,139
|
13,093
|
424,493
|
136,942
|
103,047
|
─
|
─
|
─
|
1,820
|
1,610
|
20,609
|
─
|
─
|
─
|
434,781
|
144,691
|
136,749
|
|
|
Total
|
12,049,055
|
16,104,429
|
24,419,997
|
20,231,534
|
24,396,521
|
38,179,412
|
12,398,661
|
18,191,353
|
15,901,325
|
1,820
|
1,610
|
20,609
|
(3,730,797)
|
(3,471,850)
|
(9,065,600)
|
40,950,273
|
55,222,063
|
69,455,743
|
|
|
Segment
results
|
|||||||||||||||||||
|
Operating
expenses
|
(1,579,004)
|
(1,828,614)
|
(2,095,273)
|
(2,933,805)
|
(3,241,730)
|
(3,839,325)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(4,512,809)
|
(5,070,344)
|
(5,934,598)
|
|
|
Production
taxes
|
(626,897)
|
(775,210)
|
(1,154,771)
|
(611,701)
|
(950,464)
|
(1,441,772)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(1,238,598)
|
(1,725,674)
|
(2,596,543)
|
|
|
Exploration
costs
|
(590,541)
|
(1,136,055)
|
(1,025,993)
|
(257,531)
|
(180,105)
|
(267,694)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(848,072)
|
(1,316,160)
|
(1,293,687)
|
|
|
Depreciation,
depletion and amortisation
|
(1,855,983)
|
(2,235,064)
|
(2,554,896)
|
(2,786,770)
|
(3,219,998)
|
(3,409,844)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(4,642,753)
|
(5,455,062)
|
(5,964,740)
|
|
|
Dismantlement
|
(96,206)
|
(117,310)
|
(152,796)
|
(71,120)
|
(84,327)
|
(100,061)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(167,326)
|
(201,637)
|
(252,857)
|
|
|
Impairment
loss related to property, plant and epuipment
|
─
|
─
|
(39,494)
|
─
|
─
|
(50,696)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(90,190)
|
|
|
Crude
oil and product purchases
|
─
|
(920,669)
|
(1,598,171)
|
(3,730,797)
|
(2,551,181)
|
(7,467,429)
|
(12,295,238)
|
(17,963,461)
|
(15,704,100)
|
─
|
─
|
─
|
3,730,797
|
3,471,850
|
9,065,600
|
(12,295,238)
|
(17,963,461)
|
(15,704,100)
|
|
|
Selling
and administrative expenses
|
(62,247)
|
(50,721)
|
(39,486)
|
(666,369)
|
(557,521)
|
(676,062)
|
─
|
─
|
─
|
(521,654)
|
(496,106)
|
(654,820)
|
─
|
─
|
─
|
(1,250,270)
|
(1,104,348)
|
(1,370,368)
|
|
|
Others
|
(36,406)
|
─
|
─
|
(313,826)
|
(45,844)
|
(77,062)
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(350,232)
|
(45,844)
|
(77,062)
|
|
|
Interest
income
|
─
|
─
|
─
|
14,302
|
2,077
|
7,328
|
─
|
─
|
─
|
169,274
|
204,795
|
351,966
|
─
|
─
|
─
|
183,576
|
206,872
|
359,294
|
|
|
Finance
costs
|
(60,358)
|
(135,119)
|
(183,325)
|
(20,817)
|
(64,956)
|
(94,885)
|
─
|
─
|
─
|
(273,765)
|
(241,750)
|
(822,322)
|
─
|
─
|
─
|
(354,940)
|
(441,825)
|
(1,100,532)
|
|
|
Exchange
gains/(losses), net
|
─
|
─
|
─
|
124
|
(15,308)
|
(5,119)
|
─
|
─
|
─
|
(6,870)
|
44,577
|
292,146
|
─
|
─
|
─
|
(6,746)
|
29,269
|
287,027
|
|
|
Investments
income
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
123,483
|
72,438
|
247,893
|
─
|
─
|
─
|
123,483
|
72,438
|
247,893
|
|
|
Share
of profit of associates
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
220,263
|
344,469
|
307,075
|
─
|
─
|
─
|
220,263
|
344,469
|
307,075
|
|
|
Non-operating
income/(expenses), net
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
314,968
|
519,206
|
28,579
|
─
|
─
|
─
|
314,968
|
519,206
|
28,579
|
|
|
Tax
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
(4,627,836)
|
(6,930,826)
|
(10,977,812)
|
─
|
─
|
─
|
(4,627,836)
|
(6,930,826)
|
(10,977,812)
|
|
|
Net
profit
|
7,141,413
|
8,905,667
|
15,575,792
|
8,853,224
|
13,487,164
|
20,756,791
|
103,423
|
227,892
|
197,225
|
(4,600,317)
|
(6,481,587)
|
(11,206,686)
|
─
|
─
|
─
|
11,497,743
|
16,139,136
|
25,323,122
|
|
|
Other
segment information
|
|||||||||||||||||||
|
Segment
assets
|
36,087,581
|
21,120,584
|
25,054,275
|
26,821,223
|
37,851,716
|
51,125,491
|
2,629,009
|
1,712,212
|
2,413,195
|
6,848,849
|
31,790,239
|
34,770,264
|
─
|
─
|
─
|
72,386,662
|
92,474,751
|
113,363,225
|
|
|
Investment
in associates
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
─
|
1,117,640
|
1,327,109
|
1,
401,839
|
─
|
─
|
─
|
1,117,640
|
1,327,109
|
1,401,839
|
|
|
Total
assets
|
36,087,581
|
21,120,584
|
25,054,275
|
26,821,223
|
37,851,716
|
51,125,491
|
2,629,009
|
1,712,212
|
2,413,195
|
7,966,489
|
33,117,348
|
36,172,103
|
─
|
─
|
─
|
73,504,302
|
93,801,860
|
114,765,064
|
|
|
Segment
liabilities
|
(3,554,720)
|
(3,913,905)
|
(5,187,124)
|
(12,620,113)
|
(11,453,307)
|
(12,876,516)
|
(2,173,828)
|
(809,663)
|
(667,336)
|
(8,419,109)
|
(21,182,195)
|
(22,430,991)
|
─
|
─
|
─
|
(26,767,770)
|
(37,359,070)
|
(41,161,967)
|
|
|
Capital
expenditure
|
5,960,071
|
6,309,397
|
7,806,927
|
2,264,625
|
13,145,839
|
8,914,306
|
─
|
─
|
─
|
46,868
|
164,775
|
144,442
|
─
|
─
|
─
|
8,271,564
|
19,620,011
|
16,865,675
|
|
|
6.
|
SEGMENT
INFORMATION (CONT’D)
|
| (b) |
Geographical
segments
|
|
|
In
determining the
Group’s
geographical segments, revenues
and results are
attributed to the segments based on the location of the Group’s
customers, and assets are
attributed to the segments based on the location of the Group’s
assets.
|
||
|
The
Group mainly engaged in the
exploration, development and production of crude oil and natural
gas in offshore
China.
Any activities outside the PRC
are mainly conducted in Indonesia,
Australia,
Canada
and Singapore.
The following table presents
revenue and certain asset and expenditure information for the
Group’s
geographical segments
for the years ended December
31,
2005 and
2004.
|
|
PRC
|
Outside
PRC
|
Total
|
||||||||||||||||||||||||||||||||||
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
2003
|
2004
|
2005
|
||||||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||||||||||||||||||||
|
(Restated)
|
(Restated)
|
(Restated)
|
(Restated)
|
|||||||||||||||||||||||||||||||||
|
External
sales
|
25,416,466
|
30,453,453
|
38,992,740
|
15,533,807
|
24,768,610
|
30,463,003
|
40,950,273
|
55,222,063
|
69,455,743
|
|||||||||||||||||||||||||||
|
Segment
assets
|
61,357,931
|
75,023,500
|
92,845,974
|
12,146,371
|
18,778,360
|
21,919,090
|
73,504,302
|
93,801,860
|
114,765,064
|
|||||||||||||||||||||||||||
|
Capital
expenditures
|
7,727,171
|
12,014,894
|
14,496,690
|
544,393
|
7,605,117
|
2,368,985
|
8,271,564
|
19,620,011
|
16,865,675
|
|||||||||||||||||||||||||||
| (c) |
An
analysis of sales to major
customers by business segment is as
follows:
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Production
sharing contracts
|
||||||||||||
|
China
Petroleum & Chemical Corporation
|
3,848,361
|
6,932,008
|
9,996,768
|
|||||||||
|
PetroChina
Company Limited
|
1,446,169
|
1,944,709
|
1,410,369
|
|||||||||
|
Castle
Peak Power Company Limited
|
841,285
|
1,070,436
|
1,107,314
|
|||||||||
|
6,135,815
|
9,947,153
|
12,514,451
|
||||||||||
|
Independent
operations
|
||||||||||||
|
China
Petroleum & Chemical Corporation
|
3,126,708
|
3,702,058
|
5,628,968
|
|||||||||
|
PetroChina
Company Limited
|
—
|
—
|
365,830
|
|||||||||
|
3,126,708
|
3,702,058
|
5,994,798
|
||||||||||
|
9,262,523
|
13,649,211
|
18,509,249
|
||||||||||
|
7.
|
OIL
AND GAS
SALES
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Gross
sales
|
30,556,967
|
39,955,702
|
57,988,465
|
|||||||||
|
Royalties
|
(478,454 | ) | (610,055 | ) | (708,537 | ) | ||||||
|
PRC
government share oil
|
(1,961,682 | ) | (2,459,628 | ) | (3,862,259 | ) | ||||||
| 28,116,831 |
36,886,019
|
53,417,669
|
||||||||||
|
8.
|
MARKETING
PROFIT
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Marketing
revenues
|
12,398,661
|
18,191,353
|
15,901,325
|
|||||||||
|
Crude
oil and product purchases
|
(12,295,238 | ) | (17,963,461 | ) | (15,704,100 | ) | ||||||
|
103,423
|
227,892
|
197,225
|
||||||||||
|
9.
|
SELLING
AND ADMINISTRATIVE
EXPENSES
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Salary
and staff benefits
|
393,165
|
311,649
|
392,791
|
|||||||||
|
Utility
and office expenses
|
90,801
|
115,817
|
143,204
|
|||||||||
|
Transportation
and entertainment
|
74,218
|
75,675
|
94,590
|
|||||||||
|
Rentals
and maintenance
|
107,310
|
128,579
|
111,426
|
|||||||||
|
Management
fee
|
219,771
|
218,087
|
243,730
|
|||||||||
|
Selling
expenses
|
30,686
|
36,015
|
32,983
|
|||||||||
|
(Reversal)
of/Provision for inventory obsolescence
|
8,745
|
(2,710 | ) |
33,088
|
||||||||
|
Other
|
325,574
|
221,236
|
318,556
|
|||||||||
|
1,250,270
|
1,104,348
|
1,370,368
|
||||||||||
|
10.
|
FINANCE COSTS
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Interest on
bank loans which are:
|
||||||||||||
|
-
wholly repayable within five years
|
81,539
|
80,829
|
98,892
|
|||||||||
|
Interest
on long term guaranteed notes
|
391,005
|
485,812
|
671,849
|
|||||||||
|
Other
borrowing costs
|
34,933
|
163
|
3,773
|
|||||||||
|
Total
interest
|
507,477
|
566,804
|
774,514
|
|||||||||
|
Less:
Amount capitalised in property, plant
and
equipment (note 16)
|
(245,783 | ) | (244,686 | ) | (245,987 | ) | ||||||
|
261,694
|
322,118
|
528,527
|
||||||||||
|
Other
finance costs:
|
||||||||||||
|
Increase
in discounted amount of provisions arising from the passage of time
(note
28)
|
93,246
|
119,707
|
198,945
|
|||||||||
|
Loss
on embedded derivative component in convertible bonds
|
—
|
—
|
373,060
|
|||||||||
|
354,940
|
441,825
|
1,100,532
|
||||||||||
|
11.
|
DIRECTORS’
REMUNERATION AND SHARE
OPTION
BENEFITS
|
|
|
Directors’
remuneration and share option
benefits for the year, disclosed
pursuant to the
Listing Rules and Section 161 of the Companies Ordinance, are as
follows:
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Fees
for executive directors
|
─
|
─
|
─
|
|||||||||
|
Fees
for non-executive directors**
|
1,000
|
851
|
2,360
|
|||||||||
|
Other
emoluments for executive directors
|
||||||||||||
|
-
Basic salaries and allowances and benefit in kind**
|
7,752
|
7,756
|
12,988
|
|||||||||
|
-
Bonus
|
2,100
|
─
|
─
|
|||||||||
|
-
Pension scheme contribution
|
207
|
62
|
104
|
|||||||||
|
Amount
paid/payable during the year
|
11,059
|
8,669
|
15,452
|
|||||||||
|
Share
option benefits*
|
7,295
|
9,208
|
8,561
|
|||||||||
|
18,354
|
17,877
|
24,013
|
||||||||||
|
(a)
|
Independent
non-executive
directors
|
|
The
fees paid/payable to independent non-executive directors during
the year
were as follows:
|
||||||||
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
| So Chak Kwong |
—
|
—
|
||||||
| Chiu Sung Hong |
213
|
619
|
||||||
| Evert Henks |
213
|
619
|
||||||
| Kenneth S Courtis |
213
|
619
|
||||||
| Erwin Schurtenberger |
213
|
350
|
||||||
| Tse Hau Yin, Aloysius |
—
|
153
|
||||||
| Lawrence J. Lau |
—
|
—
|
||||||
|
Professor
Lawrence J. Lau, appointed as the independent non-executive director
of
the Company on August 31, 2005, waived his remuneration in
2005.
|
||||||||
|
11.
|
DIRECTORS’
REMUNERATION AND SHARE OPTION BENEFITS
(CONT’D)
|
|
| (b) | Executive directors and independent non-executive directors | |
|
Fees**
RMB’000 |
Salaries,
allowances and benefits In kind** RMB’000 |
Performance
related
bonuses
RMB’000
|
Pension
scheme
contributions RMB’000
|
Amount
paid/payable
during
the
year
RMB’000
|
Share
option
benefits*
RMB’000
|
Total
RMB’000
|
||||||||||||||||||||||
|
2005
Executive
directors:
|
||||||||||||||||||||||||||||
| Chengyu Fu |
—
|
4,411
|
—
|
—
|
4,411
|
2,236
|
6,647
|
|||||||||||||||||||||
| Shouwei Zhou |
—
|
3,519
|
—
|
82
|
3,601
|
1,653
|
5,254
|
|||||||||||||||||||||
| Han Luo |
—
|
1,291
|
—
|
—
|
1,291
|
1,086
|
2,377
|
|||||||||||||||||||||
| Xinghe Cao |
—
|
430
|
—
|
—
|
430
|
269
|
699
|
|||||||||||||||||||||
| Zhenfang Wu |
—
|
430
|
—
|
—
|
430
|
269
|
699
|
|||||||||||||||||||||
| Guangqi Wu |
—
|
1,377
|
—
|
—
|
1,377
|
542
|
1,919
|
|||||||||||||||||||||
| Hua Yang |
—
|
967
|
—
|
22
|
989
|
1,086
|
2,075
|
|||||||||||||||||||||
| Longsheng Jiang |
—
|
563
|
—
|
—
|
563
|
55
|
618
|
|||||||||||||||||||||
|
Independent
non-executive
directors:
|
||||||||||||||||||||||||||||
| Chiu Sunghong |
619
|
—
|
—
|
—
|
619
|
437
|
1,056
|
|||||||||||||||||||||
| Evert Henks |
619
|
—
|
—
|
—
|
619
|
437
|
1,056
|
|||||||||||||||||||||
| Kenneth S Courtis |
619
|
—
|
—
|
—
|
619
|
437
|
1,056
|
|||||||||||||||||||||
| Tse Hau Yin, Aloysius |
350
|
—
|
—
|
—
|
350
|
—
|
350
|
|||||||||||||||||||||
| Erwin Schurtenberger*** |
153
|
—
|
—
|
—
|
153
|
54
|
207
|
|||||||||||||||||||||
| Lawrence J. Lau |
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
|
11.
|
DIRECTORS’
REMUNERATION AND SHARE OPTION BENEFITS
(CONT’D)
|
|
| (b) | Executive directors and independent non-executive directors (cont’d) | |
|
Fees**
RMB’000 |
Salaries,
allowances and benefits In kind** RMB’000 |
Performance
related
bonuses
MB’000
|
Pension
scheme
contributions RMB’000
|
Amount
paid/payable
during
the
year
RMB’000
|
Share
option
benefits*
RMB’000
|
Total
RMB’000
|
||||||||||||||||||||||
|
2004
Executive
directors:
|
||||||||||||||||||||||||||||
| Chengyu Fu |
—
|
3,934
|
—
|
—
|
3,934
|
2,077
|
6,011
|
|||||||||||||||||||||
| Han Luo |
—
|
561
|
—
|
—
|
561
|
1,107
|
1,668
|
|||||||||||||||||||||
| Shouwei Zhou |
—
|
2,710
|
—
|
62
|
2,772
|
1,685
|
4,457
|
|||||||||||||||||||||
| Longsheng Jiang |
—
|
551
|
—
|
—
|
551
|
1,107
|
1,658
|
|||||||||||||||||||||
|
Independent
non-executive
directors:
|
||||||||||||||||||||||||||||
| Chiu Sunghong |
213
|
—
|
—
|
—
|
213
|
808
|
1,021
|
|||||||||||||||||||||
| Evert Henks |
213
|
—
|
—
|
—
|
213
|
808
|
1,021
|
|||||||||||||||||||||
| Kenneth S Courtis |
213
|
—
|
—
|
—
|
213
|
808
|
1,021
|
|||||||||||||||||||||
| Erwin Schurtenberger |
213
|
—
|
—
|
—
|
213
|
808
|
1,021
|
|||||||||||||||||||||
|
|
|
12.
|
FIVE
HIGHEST PAID
EMPLOYEES
|
|
|
The
five highest paid employees
during the year included three (2004: Nil, 2003: Nil) directors and two
(2004: five, 2003:
five) non-directors are as
follows:
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Basic
salaries, allowances and benefits in kind*
|
18,600
|
20,509
|
15,843
|
|||||||||
|
Bonus
|
2,550
|
4,589
|
471
|
|||||||||
|
Pension
scheme contributions
|
1,332
|
1,509
|
542
|
|||||||||
|
Amount
paid/payable during the year
|
22,482
|
26,607
|
16,856
|
|||||||||
|
Share
option benefits**
|
─
|
1,107
|
4,975
|
|||||||||
|
22,482
|
27,714
|
21,831
|
||||||||||
|
Number
of directors
|
─
|
─
|
3
|
|||||||||
|
Number
of employees
|
5
|
5
|
2
|
|||||||||
|
|
*Salaries,
allowances and benefits
in kind represent the gross amount (before Hong Kong
individual salary tax)
paid/payable to individual
employees.
|
|
|
**Share
option benefits represent
fair value at grant
date of share options issued under the share option schemes of the
Company
amortised to the income statement during the year disregarding whether
the
options have been exercised or not, and have
been disclosed in
accordance with HKFRS2. No
share options were
exercised
by the relevant
employees during the
year.
|
|
|
The
number of highest paid
employees whose remuneration fell within the following bands is as
follows:
|
|
Number
of employees
|
|||
|
2004
|
2005
|
||
|
Nil
to HK$3,000,000
|
-
|
1
|
|
|
HK$3,000,001-
HK$3,500,000
|
1
|
1
|
|
|
HK$3,500,001-
HK$4,000,000
|
1
|
-
|
|
|
HK$4,000,001-
HK$4,500,000
|
1
|
1
|
|
|
HK$4,500,001-
HK$5,000,000
|
-
|
-
|
|
|
HK$5,000,001-
HK$5,500,000
|
-
|
1
|
|
|
HK$5,500,001-
HK$6,000,000
|
1
|
-
|
|
|
HK$6,000,001-
HK$8,000,000
|
-
|
1
|
|
|
HK$8,000,001-
HK$8,500,000
|
1
|
-
|
|
|
5
|
5
|
||
|
|
During
the year, share options
were granted to
certain of the five highest paid employees in respect of their services
to
the Group, further details of which are included in the disclosures
in
note 29
to the financial
statements.
|
|
13.
|
TAX
|
|
(i)
|
Income
tax
|
|
|
The
Company and its subsidiaries
are subject
to income taxes on an entity basis on profit arising in or derived
from
the tax jurisdictions in which they are domiciled and operated. The
Company is not liable for profits tax in Hong Kong as it does not
have any
assessable
income currently sourced from
Hong Kong.
|
||
|
The
Company’s
subsidiary in the PRC, CNOOC
China Limited, is a wholly foreign-owned enterprise. It is exempt
from the
3% local surcharge and is subject to an enterprise income tax of
30% under
the prevailing tax
rules and regulations.
|
||
|
The
Company’s
subsidiary in Singapore,
China Offshore Oil (Singapore)
International Pte Ltd., is
subject to income tax at rates of 10% and 20%, for its oil trading
activities and other income generating activities,
respectively. The
Company’s
subsidiaries owning interests in
oil and gas properties in Indonesia
along the Malacca Strait
are subject to corporate and
dividend tax at the rate of 44%. The Company’s
subsidiaries owning interests in
oil and gas properties in Indonesia
acquired
from Repsol YPF,
S.A.
are subject to corporate and
dividend tax at the rate of 43.125% to 51.875%. All of the
Company’s
other subsidiaries are not
subject to any income taxes in their respective jurisdictions for
the year
presented.
|
||
|
An
analysis of the provision
for tax in the
consolidated income statement was as
follows:
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Overseas
income taxes
|
||||||||||||
|
-
Current
|
654,988
|
755,568
|
845,390
|
|||||||||
|
-
Deferred
|
(179,134 | ) | (170,118 | ) |
14,907
|
|||||||
|
PRC
enterprise income tax
|
||||||||||||
|
-
Current
|
3,623,157
|
6,411,417
|
9,912,426
|
|||||||||
|
-
Deferred
|
528,825
|
(66,041 | ) |
205,089
|
||||||||
|
Tax
charge for the year
|
4,627,836
|
6,930,826
|
10,977,812
|
|||||||||
|
2003
|
2004
|
2005
|
||||||||||
|
%
|
%
|
%
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Statutory
PRC enterprise income tax rate
|
33.0
|
33.0
|
33.0
|
|||||||||
|
Effect
of tax exemption granted
|
(3.0 | ) | (3.0 | ) | (3.0 | ) | ||||||
|
Effect
of different tax rates for overseas subsidiaries
|
(0.1 | ) |
0.3
|
0.5
|
||||||||
|
Tax
credit from government
|
(1.4 | ) | (0.6 | ) | (0.3 | ) | ||||||
|
Tax
effect on other permanent differences
|
0.2
|
0.3
|
0.0
|
|||||||||
|
Effective
income tax rate
|
28.7
|
30.0
|
30.2
|
|||||||||
|
13.
|
TAX (CONT’D)
|
|
(i)
|
Income
tax (cont’d)
|
|
|
The
tax effect of significant
temporary differences of the Group was as
follows:
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Deferred
tax assets
|
||||||||||||
|
-
Provision for retirement and termination benefits
|
114,758
|
112,150
|
98,696
|
|||||||||
|
-
Provision
for dismantlement
|
775,725
|
926,834
|
1,248,498
|
|||||||||
|
-
Provision
for impairment of property, plant and equipment and write-off of
unsuccessful exploratory drillings
|
759,454
|
869,286
|
886,402
|
|||||||||
|
1,649,937
|
1,908,270
|
2,233,596
|
||||||||||
|
Deferred
tax liabilities
|
||||||||||||
|
-
Accelerated amortisation allowance for oil and gas
properties
|
(7,433,133 | ) | (8,596,768 | ) | (9,061,512 | ) | ||||||
|
Net
deferred tax liabilities
|
(5,783,196 | ) | (6,688,498 | ) | (6,827,916 | ) | ||||||
|
|
As
at December 31, 2005,
there was no significant
unrecognised deferred
tax liability (2004:
Nil) for taxes that would be
payable on the unremitted earnings of certain of the Group’s
subsidiaries and associates as
the Group had no liability to additional tax should such amounts
be
remitted.
|
|
|
There
are no income
tax consequences
attaching to the payment of dividends by the Company to its
shareholders.
|
|
(ii)
|
Other
taxes
|
|
|
The
Company’s
PRC subsidiary pays the
following other taxes:
|
|
|
—
|
Production
taxes equal to 5% of
independent production and production under production sharing
contracts;
and
|
|
|
—
|
Business
tax of 3% to 5% on other
income.
|
|
14.
|
DIVIDENDS
|
|
|
On
August 30, 2005,
the Board of Directors
declared an interim dividend of HK$0.05 per share (2004: HK$0.03
per
share), totaling HK$2,052,733,769 (equivalent to approximately RMB2,138,128,000)
(2004:
RMB1,306,451,000); and a special interim dividend of HK$0.05 per
share
(2004: HK$0.05 per share), totaling HK$2,052,733,769 (equivalent
to
approximately RMB2,138,128,000) (2004: RMB2,177,418,000). In addition,
the
Company paid
a special interim dividend in
2004 of HK$0.06 per share, totaling HK$2,464,249,697 (equivalent
to
approximately RMB2,617,526,000) in place of its 2003 final
dividend.
|
|
14.
|
DIVIDENDS (CONT’D)
|
|
|
The
Board of Directors have
recommended a final dividend of HK$0.10 per
ordinary share,
totaling HK$4,105,467,538 (approximately equivalent to RMB4,250,391,000)
for the year ended December 31, 2005.
|
|
|
The
payment of future dividends
will be determined by the Company’s
Board
of Directors.
The payment of dividends
will depend
upon,
among other things, future earnings, capital requirements, financial
conditions and general business conditions of the Company. The
Company’s
ability to pay dividends will
also depend on the cash flows determined by the dividends, if
any, received
by the Company from its
subsidiaries and associates. As the controlling shareholder, CNOOC
will be
able to influence the Company’s
dividend
policy.
|
|
|
Cash
dividends to the shareholders
in Hong Kong will be paid in Hong Kong
dollars.
Cash dividends to the American
Depositary
Receipts (“ADR”)
holders will be paid to the
depositary in Hong Kong dollars and will be converted by the depositary
into United
States dollars and
paid to the holders of ADRs.
|
|
15.
|
EARNINGS
PER
SHARE
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Earnings
|
||||||||||||
|
Net
profit from ordinary activities attributable to
shareholders for the year for the purpose
of basic earnings per share
|
11,497,743
|
16,139,136
|
25,323,122
|
|||||||||
|
Interest
expense and losses recognised on the derivative component of
convertible bonds
|
—
|
—
|
537,469
|
|||||||||
|
Net
profit from ordinary activities attributable to shareholders for the
year for the purpose of diluted earnings per share
|
11,497,743
|
16,139,136
|
25,860,591
|
|||||||||
|
Shares
(after Stock Split)
|
||||||||||||
|
Number
of shares
|
||||||||||||
|
Weighted
average number of ordinary shares
for the purpose or basic earnings per
share before effects of shares repurchased
and share options exercised
|
41,070,828,275
|
41,070,828,275
|
41,052,375,275
|
|||||||||
|
Effects
of shares repurchased
|
—
|
(10,587,616 | ) |
—
|
||||||||
|
Effects
of shares options exercised
|
—
|
—
|
2,124,707
|
|||||||||
|
Weighted
average number of ordinary shares for the purpose of basic earnings
per
share
|
41,070,828,275
|
41,060,240,659
|
41,054,499,982
|
|||||||||
|
Effect
of dilutive potential ordinary shares under
the shares option scheme
|
39,510,820
|
66,720,503
|
38,861,432
|
|||||||||
|
Effect
of dilutive potential ordinary shares for convertible bonds based
on the
“if converted method”
|
—
|
52,552,274
|
1,292,694,352
|
|||||||||
|
Weighted
average number of ordinary shares for the purpose of diluted earnings
per
share
|
41,110,339,095
|
41,179,513,436
|
42,386,055,766
|
|||||||||
| 15. | EARNINGS PER SHARE (CONT’D) |
|
Net
income per ADS for the three years ended December 31, 2005 has been
computed by dividing net income by the number of ADS
outstanding. Each ADS represented 100
shares.
|
|
The
calculation of basic earnings
per share amounts is based on the net profit for
the year and the
weighted average number of ordinary shares in issue during the
year.
|
|
|
The
calculation of diluted
earnings per share amounts is based on the net profit for the year,
adjusted to reflect the interest expense and losses recognised on the derivative
component of
the convertible bonds. The weighted average number of ordinary shares
used
in the calculation is the ordinary shares in issue during the year,
as
used in the basic earnings per share calculation, and the weighted
average
number
of ordinary shares assumed
to have been issued at no consideration on the deemed exercise or
conversion of all the dilutive potential ordinary shares into ordinary
shares.
|
|
16.
|
PROPERTY,
PLANT AND EQUIPMENT,
NET
|
|
|
Movements
in the property, plant
and equipment
of the
Group are as follows:
|
|
2005
|
||||||||||||||||
|
Vehicles
and
|
||||||||||||||||
|
Oil
and gas
|
Land
and
|
office
|
||||||||||||||
|
properties
|
buildings
|
equipment
|
Total
|
|||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||
|
Cost:
|
||||||||||||||||
|
At
beginning of the year as
previously reported
|
89,917,894
|
941,578
|
187,705
|
91,047,177
|
||||||||||||
|
Cumulative
adjustment for
the adoption of HKAS 16
|
666,907
|
(941,578 | ) |
─
|
(274,671 | ) | ||||||||||
|
At
beginning of the year as
restated
|
90,584,801
|
─
|
187,705
|
90,772,506
|
||||||||||||
|
Additions
|
17,500,195
|
─
|
146,226
|
17,646,421
|
||||||||||||
|
Acquisition
(including prepayments)
|
─
|
─
|
─
|
─
|
||||||||||||
|
Transfer
from prepayment to
intangible assets upon completion of
acquisition
|
(1,299,643 | ) |
─
|
─
|
(1,299,643 | ) | ||||||||||
|
Purchase
price
adjustment
|
(152,993 | ) |
─
|
─
|
(152,993 | ) | ||||||||||
|
Disposals
and write-off
|
─
|
─
|
(14,511 | ) | (14,511 | ) | ||||||||||
|
Exchange
realignment
|
(504,132 | ) |
─
|
(6 | ) | (504,138 | ) | |||||||||
|
End
of year
|
106,128,228
|
─
|
319,414
|
106,447,642
|
||||||||||||
|
Accumulated
depreciation, depletion and amortisation:
|
||||||||||||||||
|
At
beginning of the year as
previously reported
|
(33,414,136 | ) | (132,455 | ) | (43,889 | ) | (33,590,480 | ) | ||||||||
|
Cumulative
adjustment for
the adoption of HKAS 16
|
(132,455 | ) |
132,455
|
─
|
─
|
|||||||||||
|
At
beginning of the year as
restated
|
(33,546,591 | ) |
─
|
(43,889 | ) | (33,590,480 | ) | |||||||||
|
Depreciation
provided during the year
|
(6,176,784 | ) |
─
|
(57,248 | ) | (6,234,032 | ) | |||||||||
|
Impairment
recognised in
the income statement during the year
|
(90,190 | ) |
─
|
—
|
(90,190 | ) | ||||||||||
|
Disposals
|
─
|
─
|
4,881
|
4,881
|
||||||||||||
|
Exchange
realignment
|
87,346
|
─
|
─
|
87,346
|
||||||||||||
|
End
of year
|
(39,726,219 | ) |
─
|
(96,256 | ) | (39,822,475 | ) | |||||||||
|
Net
book value:
|
||||||||||||||||
|
Beginning
of year as previously
reported
|
56,503,758
|
809,123
|
143,816
|
57,456,697
|
||||||||||||
|
Beginning
of the year as
restated
|
57,038,210
|
─
|
143,816
|
57,182,026
|
||||||||||||
|
End
of year
|
66,402,009
|
—
|
223,158
|
66,625,167
|
||||||||||||
|
2004
|
||||||||||||||||
|
Vehicles
and
|
||||||||||||||||
|
Oil
and gas
|
Land
and
|
office
|
||||||||||||||
|
properties
|
buildings
|
equipment
|
Total
|
|||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||
|
Cost:
|
||||||||||||||||
|
At
beginning of the year as previously reported
|
70,137,828
|
824,781
|
139,902
|
71,102,511
|
||||||||||||
|
Cumulative
adjustment for the adoption of HKAS 16
|
550,110
|
(824,781 | ) |
─
|
(274,671 | ) | ||||||||||
|
At
beginning of the year as restated
|
70,687,938
|
─
|
139,902
|
70,827,840
|
||||||||||||
|
Additions
|
12,962,164
|
─
|
47,977
|
13,010,141
|
||||||||||||
|
Acquisition
(including prepayments)
|
6,934,951
|
─
|
─
|
6,934,951
|
||||||||||||
|
Disposals
and write-off
|
(3 | ) |
─
|
(174 | ) | (177 | ) | |||||||||
|
Exchange
realignment
|
(249 | ) |
─
|
─
|
(249 | ) | ||||||||||
|
End
of year
|
90,584,801
|
─
|
187,705
|
90,772,506
|
||||||||||||
|
Accumulated
depreciation, depletion and amortisation:
|
||||||||||||||||
|
At
beginning of year as previously reported
|
(27,839,105 | ) | (106,401 | ) | (33,204 | ) | (27,978,710 | ) | ||||||||
|
Cumulative
adjustment for the adoption of HKAS 16
|
(106,401 | ) |
106,401
|
─
|
─
|
|||||||||||
|
At
beginning of the year as restated
|
(27,945,506 | ) |
─
|
(33,204 | ) | (27,978,710 | ) | |||||||||
|
Depreciation
provided during the year
|
(5,601,168 | ) |
─
|
(10,882 | ) | (5,612,050 | ) | |||||||||
|
Disposals
|
─
|
─
|
5
|
5
|
||||||||||||
|
Exchange
realignment
|
83
|
─
|
192
|
275
|
||||||||||||
|
End
of year
|
(33,546,591 | ) |
─
|
(43,889 | ) | (33,590,480 | ) | |||||||||
|
Net
book value:
|
||||||||||||||||
|
Beginning
of the year as previously reported
|
42,298,723
|
718,380
|
106,698
|
43,123,801
|
||||||||||||
|
Beginning
of the year as restated
|
42,742,432
|
─
|
106,698
|
42,849,130
|
||||||||||||
|
End
of year
|
57,038,210
|
─
|
143,816
|
57,182,026
|
||||||||||||
|
|
Included
in the current year
additions was an amount of approximately RMB245,987,000 (2004:
RMB244,686,000)
in respect of interest
capitalised in property, plant and
equipment.
|
|
17.
|
INTANGIBLE
ASSETS
|
|
During
the year, the Company
completed the acquisition of the NWS Project. Accordingly, the
consideration allocated to the gas processing rights is recorded as
an intangible asset
and will be amortised upon the commercial production of the liquefied
natural gas using the unit of production
method.
|
|
18.
|
INVESTMENTS
IN
ASSOCIATES
|
|
|
Investments
in associates
represent (1) a 30% equity interest of CNOOC China Limited
in Shanghai Petroleum
and Natural Gas Company Limited (“SPC”).
SPC was incorporated on
September 7, 1992 in the PRC with limited liability and is principally
engaged in offshore petroleum exploration, development, production
and
sale in the South
Yellow Sea and East China
Sea areas. The
issued and paid-up
capital of SPC is RMB900 million; and (2) a 31.8% equity interest
of CNOOC
China Limited in CNOOC Finance Corporation Limited. CNOOC Finance
Corporation Limited was incorporated on June
14,
2002 in the PRC
with limited
liability and is principally engaged in deposit-taking, transfer,
settlement, loan, discounting and other financing services to CNOOC
and
its member entities. The issued and paid-up capital of CNOOC Finance
Corporation Limited is
RMB1,415
million.
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’
000
|
|||||||
|
Share
of net assets
|
1,327,109
|
1,401,839
|
||||||
|
19.
|
ACCOUNTS
RECEIVABLE,
NET
|
|
|
The
Group’s
trading terms with its customers
are mainly on credit, except for new customers, where payment in
advance is normally
required. The customers are required to make payment within 30 days
after
the delivery of oil and gas. Trade receivables are
non-interest-bearing.
|
|
|
As
at December 31, 2005
and 2004,
substantially all the accounts
receivable were aged within six
months.
|
|
20.
|
INVENTORIES
AND
SUPPLIES
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
Materials
and supplies
|
879,300
|
969,915
|
||||||
|
Oil
in tanks
|
274,029
|
268,834
|
||||||
|
Less:
Provision for inventories obsolescence
|
(6,035 | ) | (39,123 | ) | ||||
|
1,147,294
|
1,199,626
|
|||||||
|
21.
|
AVAILABLE-FOR-SALE
FINANCIAL
ASSETS (CURRENT) /SHORT TERM
INVESTMENTS
|
|
|
As
at December 31, 2005
and 2004,
available-for-sale financial
asset mainly represented investments in liquidity funds and were
stated at
fair value at the
balance sheet date. Details of the available-for-sale financial asset
were
as follows:
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
Unlisted
investments, at fair value
|
||||||||
|
Liquidity
funds
|
3,763,959
|
13,185,139
|
||||||
|
Corporate
bonds
|
1,639,956
|
199,877
|
||||||
|
Common
stock
|
40,198
|
─
|
||||||
|
Listed
investments, at fair value
|
||||||||
|
Common
stock
|
─
|
461,919
|
||||||
|
5,444,113
|
13,846,935
|
|||||||
|
|
During
the year, the gross gain of
the Group’s
and the Company’s
available-for-sale investments
recognised directly in equity amounted to RMB69,069,142 and
RMB64,900,590.
|
|
22.
|
ACCOUNTS
PAYABLE
|
|
|
As
at December 31, 2005
and 2004,
substantially all the accounts
payable were aged within six months. The
accounts payable are
non-interest-bearing and are normally settled within six
months.
|
|
23.
|
OTHER
PAYABLES AND ACCRUED
LIABILITIES
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
Accrued
payroll and welfare payable
|
156,706
|
178,872
|
||||||
|
Provision for retirement and termination benefits
|
292,128
|
239,591
|
||||||
|
Accrued
expenses
|
2,818,785
|
3,411,784
|
||||||
|
Advances
from customers
|
12,588
|
22,238
|
||||||
|
Royalties
payable
|
142,638
|
297,139
|
||||||
|
Other
payables
|
768,179
|
1,057,319
|
||||||
|
4,191,024
|
5,206,943
|
|||||||
|
|
Other
payables are
non-interest-bearing and have an average term within six months.
The fair
value of the currency swaps of RMB4,725,000 (2004: RMB2,581,000)
are
included in the other
payables of the Group.
|
|
24.
|
LONG
TERM BANK
LOANS
|
|
|
As
at December 31, 2005,
the long term bank loans of the
Group were used primarily to finance the development of oil and gas
properties and to meet working capital
requirements.
|
|
Effective
interest
rate and final maturity
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
||||||||
|
U US$
denominated bank loans
|
Effective
interest rate of 9.2% per annum with maturities through to
2006
|
827,650
|
812,759
|
||||||
|
Japanese
Yen denominated bank loans
|
Effective
interest rate of 4.1% per annum with maturities through to
2007
|
61,925
|
37,307
|
||||||
|
889,575
|
850,066
|
||||||||
|
Less:
Current portion of long term bank loans
|
(24,364 | ) | (825,674 | ) | |||||
|
865,221
|
24,392
|
||||||||
|
|
As
at December 31, 2005
and 2004,
all the bank loans of the Group
were unsecured and none of the outstanding borrowings were guaranteed
by
CNOOC.
|
|
24.
|
LONG
TERM BANK
LOANS (CONT’D)
|
|
|
The
maturities of the long term
bank loans are as follows:
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
Balances
due:
|
||||||||
|
-
Within one year
|
24,364
|
825,674
|
||||||
|
-
After one year but within two years
|
846,471
|
24,392
|
||||||
|
-
After two years but within three years
|
18,740
|
-
|
||||||
|
-
After three years but within four years
|
-
|
-
|
||||||
|
-
After four years but within five years
|
-
|
-
|
||||||
|
889,575
|
850,066
|
|||||||
|
Amount
due within one year shown under current liabilities
|
(24,364 | ) | (825,674 | ) | ||||
|
865,211
|
24,392
|
|||||||
|
|
Supplemental
information with
respect to long term bank
loans:
|
|
Maximum
|
Average
|
Weighted
|
||||||||||||||||||
|
Weighted
|
amount
|
amount
|
average
|
|||||||||||||||||
|
average
|
outstanding
|
outstanding
|
interest
rate
|
|||||||||||||||||
|
Balance
|
interest
rate
|
during
the
|
during
the
|
during
the
|
||||||||||||||||
|
FoFor
the year ended
|
at
year end
|
at
year end
|
year
|
year*
|
year**
|
|||||||||||||||
|
D December
31
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||
|
2005
|
850,066
|
8.98% |
889,575
|
869,821
|
8.89% | |||||||||||||||
|
2004
|
889,575
|
8.81% |
910,193
|
899,884
|
8.37% | |||||||||||||||
|
|
*
|
The
average amount outstanding is
computed by dividing the total of outstanding principal balances
as at
January 1 and December 31 by
two.
|
|
**
|
The
weighted average
interest rate is
computed by dividing the total of weighted average interest rates
as at
January 1 and December 31 by
two.
|
|
25.
|
LONG
TERM GUARANTEED NOTES
|
|
Long
term guaranteed notes
comprised the following:
|
|
(i)
|
The
principal amount of US$500 million of 6.375% guaranteed
notes due in 2012
issued by CNOOC Finance (2002) Limited, a wholly-owned
subsidiary of the
Company. The obligations of CNOOC Finance (2002) Limited
in respect of the
notes are unconditionally and irrevocably guaranteed
by the
Company.
|
|
(ii)
|
The
principal amount of US$200 million of 4.125% guaranteed
notes due in 2013
and the principal amount of US$300 million of 5.500% guaranteed
notes due
in 2033 issued by CNOOC Finance (2003) Limited, a wholly-owned
subsidiary
of the Company. The obligations of CNOOC Finance (2003) Limited in
respect of the notes are unconditionally and irrevocably
guaranteed by the
Company.
|
|
(iii)
|
The
principal amount of US$1 billion zero coupon guaranteed
convertible bonds
due in 2009, unconditionally and irrevocably guaranteed
by, and
convertible into shares of the Company issued by CNOOC
Finance (2004)
Limited, a wholly-owned subsidiary of the Company, on December
15, 2004. The bonds are convertible from January 15, 2005
onwards at a
price of HK$6.075 per share, subject to adjustment for,
among other
things, the subdivision or consolidation of shares, bond
issues, rights
issues, capital distribution and other dilutive events.
The conversion
price was adjusted to HK$5.97 per share on June 7, 2005 as a
result of the declaration of the final and special final
dividends for
2004 by the Company. Unless previously redeemed, converted
or purchased
and cancelled, the bonds will be redeemed on the maturity
date at 105.114%
of the principal amount. CNOOC Finance (2004) Limited has
an early
redemption option at any time after December 15, 2007 (subject
to certain criteria) and a cash settlement option when
the holders
exercise their conversion right. The bondholders also have
an early
redemption option to require CNOOC Finance (2004) to redeem
all or part of
the bonds on December 15, 2007 at an early redemption amount of
103.038% of the principal amount.
|
|
26.
|
BALANCES
WITH THE PARENT
COMPANY
|
|
As
at December 31, 2005 and 2004, the balances with
CNOOC were unsecured,
interest-free and were repayable on
demand.
|
| 27. |
RELATED
PARTY TRANSACTIONS
|
|
The
Group has entered into several agreements with CNOOC
and its affiliates,
which govern the provision of materials, utilities
and ancillary services,
the provision of technical services, the provision
of research and
development services, and various other commercial
arrangements.
|
|
In
addition to the transactions and balances detailed
elsewhere in these
financial statements, the Group had the following
material transactions
with related parties during the
year:
|
|
27.
|
RELATED
PARTY
TRANSACTIONS (CONT’D)
|
|
Notes
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||
|
Materials,
utilities and ancillary services
|
(i)
|
1,018,066
|
1,295,598
|
2,995,772
|
|||||||||
|
Technical
services
|
(ii)
|
3,828,282
|
6,362,206
|
6,651,240
|
|||||||||
|
Research
and development services
|
(iii)
|
83,280
|
7,800
|
8,110
|
|||||||||
|
Lease
and property management services
|
(iv)
|
56,867
|
76,721
|
77,273
|
|||||||||
|
Included
in:
|
|||||||||||||
|
Exploration
expenses
|
487,293
|
960,031
|
753,534
|
||||||||||
|
Operating
expenses
|
1,176,601
|
1,405,877
|
1,972,431
|
||||||||||
|
Selling
and administrative expenses
|
191,349
|
326,004
|
337,816
|
||||||||||
|
Capitalised
under property, plant and equipment
|
3,131,252
|
5,050,413
|
6,668,614
|
||||||||||
|
(i)
|
Materials, utilities and ancillary services | ||
| CNOOC
China Limited has entered into materials, utilities and ancillary
services
supply agreements with the affiliates of CNOOC. Under these agreements,
the affiliates of CNOOC provide to CNOOC China Limited various materials,
utilities and ancillary services. The materials, utilities and ancillary services are provided at: |
|||
|
—
|
state-prescribed
prices; or
|
||
|
—
|
where
there is no state-prescribed price, at market prices, including
the local
or national market prices or the prices at which CNOOC’s affiliates
previously provided the relevant materials, utilities and ancillary
services to independent third parties; or
|
||
|
—
|
where
neither of the prices mentioned above is applicable, at the cost
to
CNOOC’s affiliates of providing the relevant materials, utilities and
services, including the cost of sourcing or purchasing from third
parties,
plus a margin of not more than 5% before any applicable
taxes.
|
||
|
(ii)
|
Technical
services
|
||
| Various affiliates of CNOOC, including China Oilfield Services Limited and Offshore Oil Engineering Company Limited, provide the Group with technical services for the Group’s offshore oil and gas production activities, including: | |||
|
—
|
offshore
drilling;
|
||
|
—
|
ship
tugging, oil tanker transportation and security
services;
|
||
|
—
|
well
survey, well logging, well cementation and other related technical
services;
|
||
|
—
|
collection
of geophysical data, ocean geological prospecting, and data
processing;
|
||
|
—
|
platform
fabrication service and maintenance; and
|
||
|
—
|
design,
construction, installation and test of offshore and onshore production
facilities.
|
||
|
|
The
price for technical services was determined based on local market
prices.
|
|
27.
|
RELATED
PARTY
TRANSACTIONS (CONT’D)
|
|
(iii)
|
Research
and development services
|
|
(iv)
|
Lease
and property management
services
|
|
(v)
|
Sale
of crude oil, condensated oil and liquefied petroleum
gas
|
|
|
The
Group sells crude oil, condensated oil and liquefied petroleum gas
to
CNOOC’s affiliates which engage in the downstream petroleum business at
the international market price. For the year ended December 31, 2005,
the
total sales amounted to approximately RMB26,576,247,000 (2004:
RMB13,945,565,000).
|
|
|
In
the prior year, the Company, through its wholly-owned subsidiary,
China
Offshore Oil (Singapore) International Pte., Ltd. imported oil into
the
PRC for trading, using CNOOC’s import license. The total sales to its
customers through such arrangements amounted to approximately RMB447
million while the commission paid by the third party customers to
CNOOC amounted to approximately RMB2.7 million for the year
ended December 31, 2004. No such trading by using CNOOC’s
import license occurred during the
year.
|
|
(vi)
|
Transactions
with CNOOC Finance Corporation
Limited
|
|
28.
|
PROVISION
FOR DISMANTLEMENT
|
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
At
beginning of year:
|
2,646,800
|
3,089,448
|
||||||
|
Additions
during the year and capitalised in oil and gas properties
|
322,941
|
873,270
|
||||||
|
Increase
in discounted amount of provisions arising from the passage of
time
|
119,707
|
198,945
|
||||||
|
At
the end of year
|
3,089,448
|
4,161,663
|
||||||
|
29.
|
SHARE
CAPITAL
|
|
Number
of Shares
|
Share
capital
HK$’000
|
Issued
share
capital equivalent of RMB’000
|
||||||||||
|
Authorised:
|
||||||||||||
|
Ordinary
shares of HK$0.02 each at
December 31, 2005 and 2004
|
75,000,000,000
|
1,500,000
|
||||||||||
|
Issued
and fully paid:
|
||||||||||||
|
Ordinary
shares of HK$0.02 each
|
||||||||||||
|
As
at January 1, 2004
|
41,070,828,275
|
821,417
|
876,978
|
|||||||||
|
Repurchased
and cancelled
|
(18,453,000 | ) | (369 | ) | (392 | ) | ||||||
|
As
at December 31, 2004
|
41,052,375,275
|
821,048
|
876,586
|
|||||||||
|
Exercise
of options
|
2,300,100
|
46
|
49
|
|||||||||
|
As
at December 31, 2005
|
41,054,675,375
|
821,094
|
876,635
|
|||||||||
|
*
|
Adjustment
has been made to take account of the subdivision of issued
and unissued
shares of HK$0.10 each into five shares of HK$0.02 each
effective March 17,
2004.
|
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
1
|
Pre-Global
Offering Share Option
Scheme (as defined below);
|
|
2.
|
2001
Share Option Scheme (as defined below);
|
|
3.
|
2002
Share Option Scheme (as defined below);
and
|
|
4.
|
2005
Share Option Scheme (as defined
below).
|
|
1.
|
options
for an aggregate of 23,100,000 shares have been
granted;
|
| 2. |
the
subscription price per share is HK$1.19;
and
|
| 3. |
the
period during which an option may be exercised is as
follows:
|
|
(a)
50%
of
the rights to exercise the options shall vest 18 months after
the date of
the grant; and
|
|
(b)
50% of the rights to exercise the options shall vest 30 months
after the
date of the grant.
|
|
1.
|
options
for an aggregate of 44,100,000 shares have been
granted;
|
| 2. |
the
subscription price per share is HK$1.232;
and
|
| 3. |
the
period during which an option may be exercised is as
follows:
|
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
|
(a)
|
one-third
of the rights to exercise the options shall vest on the first anniversary
of the date of the grant;
|
|
|
(b)
|
one-third
of the rights to exercise the options shall vest on the second anniversary
of the date of the grant; and
|
|
|
(c)
|
one-third
of the rights to exercise the options shall vest on the third anniversary
of the date of the grant.
|
|
1.
|
the
nominal value of the share of the Company on the
date of the grant of the
option;
|
| 2. |
the
average closing price of the shares on The Stock
Exchange of Hong Kong
Limited (“HKSE”) as stated in the HKSE’s quotations sheets for the five
trading days immediately preceding the date of
grant of the option;
and
|
| 3. |
the
closing price of the shares on the HKSE as stated in
the HKSE’s quotations
sheets on the date of grant of the
option.
|
|
|
|
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
2.
|
one-third
of the rights to exercise the options shall vest on the second
anniversary
of the date of the grant; and
|
|
3.
|
one-third
of the rights to exercise the options shall vest on the
third anniversary
of the date of the grant.
|
|
1.
|
one-third
of the rights to exercise the options shall vest on the first
anniversary
of the date of the grant;
|
|
2.
|
one-third
of the rights to exercise the options shall vest on
the second anniversary
of the date of the grant; and
|
|
3.
|
one-third
of the rights to exercise the options shall
vest on the third anniversary
of the date of the grant.
|
|
1.
|
one-third
of the rights to exercise the options shall vest on the first
anniversary
of the date of the grant;
|
|
2.
|
one-third
of the rights to exercise the options shall vest
on the second anniversary
of the date of the grant; and
|
|
3.
|
one-third
of the rights to exercise the options shall
vest on the third anniversary
of the date of the grant.
|
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
1.
|
the
nominal value of the share of the Company on the date of
the grant of the
option;
|
|
2.
|
the
average closing price of the shares on the HKSE
as stated in the HKSE’s
quotations sheets for the five trading days immediately
preceding the date
of the grant of the option; and
|
|
3.
|
the
closing price of the shares on the HKSE
as stated in the HKSE’s quotations
sheet on the date of the grant of the
option.
|
|
29.
|
SHARE
CAPITAL
(CONT’D)
|
|
Number
of share options
|
Price
of Company's shares
|
Weighted
average price of the Company's shares
|
|||||||||||||||||||||||||||||||||||||||||
| Name of category of participant |
At January
1, 2005
|
Granted
during the year
|
Exercised
during the year
|
Forfeited
during the year
|
Expired
during the year
|
At
31 December 2005
|
Date
of grant of share options
|
Exercise
period of share options**
|
Exercise
price of share options
HK$
|
Immediately
before the grant date of options
HK$
|
Immediately
before the exercise date
HK$
|
At
exercise date
HK$
|
|||||||||||||||||||||||||||||||
|
Executive
Directors
|
|||||||||||||||||||||||||||||||||||||||||||
|
Chengyu
Fu
|
1,750,000
|
—
|
—
|
—
|
—
|
1,750,000
|
March12,
2001
|
March
12, 2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
1,750,000
|
—
|
—
|
—
|
—
|
1,750,000
|
August27,
2001
|
August
27, 2001 to August 27, 2011
|
1.232
|
1.46
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February
24, 2003
|
February
24, 2003 to February 24, 2013
|
2.108
|
2.09
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
2,500,000
|
—
|
—
|
—
|
—
|
2,500,000
|
February5,
2004
|
February
5, 2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
—
|
3,500,000
|
—
|
—
|
—
|
3,500,000
|
August
31, 2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
Han
Luo
|
1,400,000
|
—
|
—
|
—
|
—
|
1,400,000
|
March12,
2001
|
March
12, 2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
August
27, 2001
|
August
27, 2001 to August 27, 2011
|
1.232
|
1.46
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February
24, 2003
|
February
24, 2003 to February 24, 2013
|
2.108
|
2.09
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February
5, 2004
|
February
5, 2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
—
|
1,610,000
|
—
|
—
|
—
|
1,610,000
|
August
31, 2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
Shouwei
Zhou
|
1,400,000
|
—
|
—
|
—
|
—
|
1,400,000
|
March12,
2001
|
March
12, 2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
1,750,000
|
—
|
—
|
—
|
—
|
1,750,000
|
August
27, 2001
|
August
27, 2001 to August 27, 2011
|
1.232
|
1.46
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,750,000
|
—
|
—
|
—
|
—
|
1,750,000
|
February
24, 2003
|
February
24, 2003 to February 24, 2013
|
2.108
|
2.09
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,750,000
|
—
|
—
|
—
|
—
|
1,750,000
|
February
5, 2004
|
February
5, 2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
—
|
2,450,000
|
—
|
—
|
—
|
2,450,000
|
August
31, 2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
Longsheng
Jiang *
|
1,400,000
|
—
|
—
|
—
|
—
|
1,400,000
|
March
12, 2001
|
March
12, 2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
August
27, 2001
|
August
27, 2001 to August 27, 2011
|
1.232
|
1.46
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
383,300
|
—
|
766,700
|
February
24, 2003
|
February
24, 2003 to February 24, 2013
|
2.108
|
2.09
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
766,700
|
—
|
383,300
|
February
5, 2004
|
February
5, 2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
—
|
1,610,000
|
—
|
1,610,000
|
—
|
—
|
August
31, 2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
|
Share
option schemes (cont’d)
|
|
Price
of Company's shares
|
Weighted
average price of the Company's shares
|
||||||||||||||||||||||||||||||||||||||||||
| Name of category of participant |
At January
1, 2005
|
Granted
during the year
|
Exercised
during the year
|
Forfeited
during the year
|
Expired
during the year
|
At
31 December 2005
|
Date
of grant of share options
|
Exercise
period of share options**
|
Exercise
price of share options
HK$
|
Immediately
before the grant date of options
HK$
|
Immediately
before the exercise date
HK$
|
At
exercise date
HK$
|
|||||||||||||||||||||||||||||||
|
Xinghe Cao
|
—
|
800,000
|
—
|
—
|
—
|
800,000
|
August 31,
2005
|
August 31,
2005 to August 31, 2015
|
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||
|
Zhenfang Wu
|
—
|
800,000
|
—
|
—
|
—
|
800,000
|
August 31,
2005
|
August 31,
2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
Guangqi Wu
|
—
|
1,610,000
|
—
|
—
|
—
|
1,610,000
|
August 31,
2005
|
August 31,
2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
Hua Yang
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
March 12,
2001
|
March 12,
2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
August 27,
2001
|
August 27,
2001 to August 27, 2011
|
1.232
|
1.46
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February 24,
2003
|
February 24
2003 to February 24, 2013
|
2.108
|
2.09
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February 5,
2004
|
February 5
2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
—
|
1,610,000
|
—
|
—
|
—
|
1,610,000
|
August31,
2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
Non-executive
Directors
|
|||||||||||||||||||||||||||||||||||||||||||
|
Chiu
Sung Hong
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February 5,
2004
|
February 5,
2004 to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
Evert
Henkes
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February 5,
2004
|
February 5,
2004 to February 5, 2014
|
|
3.152
|
3.13
|
—
|
—
|
||||||||||||||||||||||||||||||
|
Kenneth
S Courtis
|
1,150,000
|
—
|
—
|
—
|
—
|
1,150,000
|
February 5,
2004
|
February 5, 2004
to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
Erwin
Schurtenberger*
|
1,150,000
|
—
|
—
|
1,150,000
|
—
|
—
|
February 5,2004
|
February 5, 2004
to February 5, 2014
|
3.152
|
3.13
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
Other
Employees
|
|||||||||||||||||||||||||||||||||||||||||||
|
In
aggregate
|
6,550,000
|
—
|
—
|
1,700,000
|
—
|
4,850,000
|
March
12, 2001
|
March
12, 2001 to March 12, 2011
|
1.19
|
1.23
|
—
|
—
|
|||||||||||||||||||||||||||||||
|
22,650,000
|
—
|
1,150,000
|
2,350,000
|
—
|
19,150,000
|
August
27, 2001
|
August
27, 2001 to August 27, 2011
|
1.232
|
1.46
|
4.03
|
4.05
|
||||||||||||||||||||||||||||||||
|
26,500,000
|
—
|
766,700
|
3,733,400
|
—
|
21,999,900
|
February 24,2003
|
February 24,
2003 to February 24, 2013
|
2.108
|
2.09
|
4.16
|
4.19
|
||||||||||||||||||||||||||||||||
|
35,850,000
|
—
|
383,400
|
4,683,200
|
—
|
30,783,400
|
February 5,2004
|
February 5,
2004 to February 5, 2014
|
3.152
|
3.13
|
3.85
|
3.93
|
||||||||||||||||||||||||||||||||
|
—
|
51,880,000
|
—
|
2,380,000
|
—
|
49,500,000
|
August
31, 2005
|
August
31, 2005 to August 31, 2015
|
5.62
|
5.75
|
—
|
—
|
||||||||||||||||||||||||||||||||
|
Total
|
124,250,000
|
65,870,000
|
2,300,100
|
18,756,600
|
—
|
169,063,300
|
|||||||||||||||||||||||||||||||||||||
|
*
|
Mr.
Erwin Schurtenberger resigned as an Independent Non-executive Director
of
the Company on April 1, 2005 and Mr. Jiang Longsheng retired as an
Executive Director of the Company on June 1,
2005.
|
|
**
|
The
share options are only exercisable by the relevant grantees upon
the
vesting of such share options. The vesting of the Company’s share options
is by stage and the details are disclosed
above.
|
|
29.
|
SHARE
CAPITAL (CONT’D)
|
|
The
fair value of the share options granted during the year was
HK$103,811,616.
|
|
The
fair value of equity-settled share options granted during the year
was
estimated as at the date of grant, using the Black-Scholes model,
taking
into account the terms and conditions upon which the options were
granted.
|
|
The
following table lists the assumptions to the model used for the year
ended
December 31, 2005:
|
|
Dividend
yield
|
2%
|
|
|
Expected
volatility
|
31%
|
|
|
Risk-free
interest rate
|
4.57%
|
|
|
Expected
life of option
|
5
years
|
|
|
Weighted
average share price
|
HK$5.62
|
|
The
expected life of the options is based on the historical data and
is not
necessarily indicative of the exercise patterns that may occur. The
expected volatility reflects the assumption that the historical volatility
is indicative of future trends, which may also not necessarily be
the
actual outcome. No other feature of the options granted was incorporated
into the measurement of fair value. Any changes to the above assumptions
may affect the estimation of the fair value of the
option.
|
|
2,300,100
share options granted under the 2002 Share Option Scheme and the
2001
Share Option Scheme have been exercised since the respective dates
of
grant and up to the date when the Board of Directors approved the
financial statements. On April 1, 2005, Mr. Erwin Schurtengberger
surrendered 1,150,000 share options following his resignation as
an
independent non-executive director of the Company. The weighted average
closing price of the shares immediately on the day before the exercise
of
the options was HK$4.04.
|
|
The
share options exercised during the year resulted in the issue of
2,300,100
ordinary shares of the Company and new share capital of RMB49,000
and
share premium of RMB4,451,000.
|
|
The
total number of options exercisable as of December 31, 2005 was
70,416,522. No share options had been cancelled during the year ended
December 31, 2005.
|
|
At
the balance sheet date, the Company had 169,063,300 share options
outstanding under these share options schemes which represented
approximately 0.4% of the Company’s shares in issues as at that date. The
exercise in full of the remaining share options would, under the
present
capital structure of the Company, result in the issue of 169,063,300
additional ordinary shares of the Company and additional share
capital of RMB3,517,531 and share premium of
RMB602,823,748.
|
|
30.
|
RESERVES
|
|
31.
|
RETIREMENT
AND TERMINATION
BENEFITS
|
|
31.
|
RETIREMENT
AND TERMINATION BENEFITS
(CONT’D)
|
|
32.
|
NOTES
TO THE CONSOLIDATED CASH FLOW
STATEMENT
|
|
(a)
|
Reconciliation
of profit before tax to cash generated from
operations
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
(Restated)
|
(Restated)
|
|||||||||||
|
Profit
before tax
|
16,125,579
|
23,069,962
|
36,300,934
|
|||||||||
|
Adjustments
for:
|
||||||||||||
|
Interest
income
|
(183,576 | ) | (206,872 | ) | (359,294 | ) | ||||||
|
Finance
costs
|
354,940
|
441,825
|
1,100,532
|
|||||||||
|
Exchange
losses/(gains), net
|
6,746
|
(29,269 | ) | (287,027 | ) | |||||||
|
Share
of profit of associates
|
(220,263 | ) | (344,469 | ) | (307,075 | ) | ||||||
|
Investments
income
|
(123,483 | ) | (72,438 | ) | (247,893 | ) | ||||||
|
(Reversal)
of/provision for inventory obsolescence
|
8,745
|
(2,710 | ) |
33,088
|
||||||||
|
Depreciation,
depletion and amortisation
|
4,642,753
|
5,455,062
|
5,964,740
|
|||||||||
|
Loss
on disposals and write-off of property, plant and
equipment
|
39,818
|
155,876
|
141,574
|
|||||||||
|
Dismantlement
|
167,326
|
201,637
|
252,857
|
|||||||||
|
Amortisation
of discount of long term guaranteed notes
|
11,276
|
15,634
|
41,959
|
|||||||||
|
Impairment
losses related to property, plant and equipment
|
—
|
—
|
90,190
|
|||||||||
|
Equity-settled
share option expenses
|
37,747
|
46,642
|
29,123
|
|||||||||
|
Operating
cash flows before movements in working capital
|
20,867,608
|
28,730,880
|
42,753,708
|
|||||||||
|
Increase
in accounts receivable
|
(1,185,304 | ) | (27,466 | ) | (1,001,296 | ) | ||||||
|
Increase
in inventories and supplies
|
(129,678 | ) | (96,307 | ) | (108,405 | ) | ||||||
|
Decrease
/ (increase) in other current assets
|
312,559
|
267,168
|
(342,087 | ) | ||||||||
|
Increase
in amounts due from related companies
|
(302,993 | ) | (417,091 | ) | (925,824 | ) | ||||||
|
Increase/(decrease)in
an amount due to the parent company
|
(105,785 | ) |
205,407
|
118,422
|
||||||||
|
Increase
in accounts payable, other payables and accrued
liabilities
|
1,448,645
|
1,318,415
|
677,522
|
|||||||||
|
Decrease in other taxes payable
|
(4,772 | ) | (12,447 | ) | (24,900 | ) | ||||||
|
(Decrease)/increase in amounts due to related companies
|
242,631
|
(262,798 | ) |
548,508
|
||||||||
|
Cash
generated from operations
|
21,142,911
|
29,705,761
|
41,695,648
|
|||||||||
|
32.
|
NOTES
TO THE CONSOLIDATED CASH FLOW
STATEMENT (CONT’D)
|
|
(b)
|
Acquisitions
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Acquisitions
|
||||||||||||
|
Net
assets acquired:
|
||||||||||||
|
Property,
plant and equipment, net
|
1,579,726
|
4,686,857
|
3,129,662
|
|||||||||
|
Intangible
assets
|
—
|
—
|
1,299,643
|
|||||||||
|
Accounts
receivable
|
—
|
453
|
—
|
|||||||||
|
Other
current assets
|
8,959
|
66,744
|
—
|
|||||||||
|
Inventories
and supplies
|
122,777
|
—
|
—
|
|||||||||
|
Cash
and bank balances
|
17,580
|
—
|
—
|
|||||||||
|
Accounts
payable
|
(8,294 | ) | (81,547 | ) |
—
|
|||||||
|
Other
payables and accrued liabilities
|
(47,983 | ) |
—
|
—
|
||||||||
|
Tax
payable
|
—
|
—
|
—
|
|||||||||
|
Deferred
tax liabilities
|
—
|
(1,141,461 | ) |
—
|
||||||||
|
1,672,765
|
3,531,046
|
4,429,305
|
||||||||||
|
Prepayment
for NWS Project
|
—
|
4,693,809
|
—
|
|||||||||
|
Prepayment
for Tangguh Project
|
2,445,715
|
—
|
—
|
|||||||||
|
Acquisition
of interests of MEG
|
—
|
—
|
1,017,000
|
|||||||||
|
4,118,480
|
8,224,855
|
5,446,305
|
||||||||||
|
Satisfied
by:
|
||||||||||||
|
Prepayment
made in 2004
|
—
|
2,445,715
|
4,582,298
|
|||||||||
|
Cash
paid (including cash calls for Tangguh Project)
|
4,118,480
|
5,779,140
|
—
|
|||||||||
|
Cash
paid for the interests of MEG
|
—
|
—
|
1,017,000
|
|||||||||
|
Tax
refund from the NWS Project
|
—
|
—
|
(152,993 | ) | ||||||||
|
4,118,480
|
8,224,855
|
5,446,305
|
||||||||||
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
|
||||||||||||
|
Cash
consideration
|
4,118,480
|
5,779,140
|
1,017,000
|
|||||||||
|
Cash
and bank balances acquired
|
(17,580 | ) |
—
|
—
|
||||||||
|
Cash
received for tax refund of the NWS project
|
—
|
—
|
(152,993 | ) | ||||||||
|
Net
outflow of cash and cash equivalents
|
4,100,900
|
5,779,140
|
864,007
|
|||||||||
|
33.
|
CONTINGENT
LIABILITIES
|
| 34. | COMMITMENTS | |
|
(i)
|
Capital
commitments
|
|
|
As
at December 31, 2005, the Group and the Company had the
following capital
commitments, principally for the construction and purchase
of property,
plant and equipment:
|
||
|
2004
|
2005
|
|||||||
|
RMB’000
|
RMB’000
|
|||||||
|
Contracted
for
|
9,568,971
|
7,511,100
|
||||||
|
Authorised,
but not contracted for
|
20,331,504
|
23,736,582
|
||||||
|
As
at December 31, 2005, the Group had unutilised banking facilities
amounting, to approximately RMB33,450,791,000 (2004:
RMB20,662,120,000).
|
|||
|
(ii)
|
Operating lease commitments | ||
|
(a)
|
Office
properties
|
||
|
The
Group leases certain of its office properties under operating lease
arrangements, leases properties are negotiated for terms ranging
from 10
months to 3 years.
|
|||
|
As
at December 31, 2005, the Group had total minimum lease payments
under
non-cancelable operating leases falling due as
follows:
|
|||
|
2004
|
2005
|
|||||||
|
Commitments
due:
|
RMB’000
|
RMB’000
|
||||||
|
-
Within one year
|
24,824
|
157,181
|
||||||
|
-
After one year but within two years
|
549
|
22,351
|
||||||
|
- After two year but within five years
|
—
|
23,972
|
||||||
|
25,373
|
203,504
|
|||||||
|
(b)
|
Plant
and equipment
|
||
|
The
Group leases certain of its plant and equipment under operating lease
arrangements for a term of 10 years.
|
|||
|
As
at December 31, 2005, the Group had total minimum lease payments
under
non-cancelable operating lease falling due as
follows:
|
|
2004
|
2005
|
|||||||
|
Commitments
due:
|
RMB’000
|
RMB’000
|
||||||
|
-
Within one year
|
149,360
|
183,137
|
||||||
|
-
After one year but within two years
|
597,442
|
183,137
|
||||||
|
- After two year but within five years
|
1,834,023
|
1,006,289
|
||||||
|
2,580,825
|
1,372,563
|
|||||||
|
34.
|
COMMITMENTS (CONT’D)
|
|
(iii)
|
Financial
instruments
|
|
|
(a)
|
Currency
swap contracts
|
|
|
As
at December 31, 2005, the Group had a currency swap contract with
a
financial institution to sell United States dollars in exchange for
Japanese Yen in order to hedge against future repayments of certain
Japanese Yen denominated loans. The hedged Japanese Yen loans bore
interest at a fixed rate of 4.5% per annum. The interest stipulated
in the
swap contract for the United States dollars was the floating LIBOR
rate.
|
|
|
The
details are as follows:
|
|
2004
|
2005
|
|||||||||||||||
|
Weighted
|
Weighted
|
|||||||||||||||
|
Notional
|
average
|
Notional
|
average
|
|||||||||||||
|
contract
|
contractual
|
contract
|
contractual
|
|||||||||||||
|
amount
|
exchange
rate
|
amount
|
exchange
rate
|
|||||||||||||
|
(JPY’000)
|
(JPY/US$)
|
(JPY’000)
|
(JPY/US$)
|
|||||||||||||
|
Year
|
||||||||||||||||
|
2005
|
271,470
|
95.00
|
—
|
—
|
||||||||||||
|
2006
|
271,470
|
95.00
|
271,470
|
95.00
|
||||||||||||
|
2007
|
271,470
|
95.00
|
271,470
|
95.00
|
||||||||||||
|
|
(b)
|
Fair
value of financial instruments
|
|
|
The
carrying value of cash and cash equivalents, time deposits,
available-for-sale investments, accounts receivables, other current
assets, accounts payable and other payables approximated to fair
value due
to the short maturity of these
instruments.
|
|
|
The
estimated fair value of long term bank loans based on current market
interest rates was approximately RMB868,886,000 as at December 31,
2005
(2004: RMB967,770,000).
|
|
|
The
estimated fair value of long term guaranteed notes based on current
market
interest rates was approximately RMB 16,592,412,000 as at December
31,
2005 (2004: RMB16,428,934,000).
|
|
35.
|
CONCENTRATION
OF
RISKS
|
|
(a)
|
Credit
risk
|
|
|
The
carrying amount of cash and cash equivalents, time deposits, liquidity
funds and bond investments, accounts receivable and other receivables,
and
due from related parties and other current assets except for prepayments
represents our maximum exposure to credit risk in relation to financial
assets.
|
|
|
The
majority of the Group’s accounts receivable is related to sales of oil and
natural gas to third party customers. The Group performs ongoing
credit
evaluations of the customers’ financial condition and generally do not
require collateral on accounts receivable. The Group maintains a
provision
for doubtful accounts and actual losses have been within management’s
expectation.
|
|
|
No
other financial assets carry a significant exposure to credit
risk.
|
|
(b)
|
Currency
risk
|
|
(c)
|
Interest
rate risk
|
|
(d)
|
Business
risk
|
|
35.
|
CONCENTRATION
OF RISKS
(CONT’D)
|
|
(e)
|
Concentration
of customers
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
China
Petroleum & Chemical Corporation
|
6,975,069
|
10,634,066
|
15,625,736
|
|||||||||
|
PetroChina
Company Limited
|
1,446,169
|
1,944,709
|
1,776,199
|
|||||||||
|
Castle
Peak Power Company Limited
|
841,285
|
1,070,436
|
1,107,314
|
|||||||||
|
36.
|
ADDITIONAL
FINANCIAL
INFORMATION
|
|
37.
|
SUBSEQUENT
EVENT
|
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US
GAAP
|
|
(a)
|
Net
profit and net equity
|
|
(i)
|
Short term investments |
|
|
In
2003, according to Hong Kong GAAP, available-for-sale
investments in
marketable securities were measured at fair value
and related unrealised
holding gains and losses are included in the current
period’s earnings.
According to US GAAP, such investments are also measured
at fair value and
classified in accordance with Statement of Financial
Accounting Standards
(“SFAS”) No.115. Under US GAAP, related unrealised gains
and losses on
available-for-sale securities were excluded from
the current period’s
earnings and included in other comprehensive
income.
|
|
(ii)
|
Impairment of long-lived assets |
|
Under
Hong Kong GAAP, impairment charges
are recognised when a long-lived
asset’s carrying amount exceeds the higher
of an asset’s fair value less
costs to sell and value in use,
which incorporates discounting
the asset’s
estimated future cash flows.
|
|
|
Under
US GAAP, long-lived assets are
assessed for possible impairment
in
accordance with SFAS No.144, “Accounting for the impairment or
disposal of
long-lived assets”. SFAS No. 144 requires the Group
to (a) recognise an
impairment loss only if the carrying
amount of a long-lived asset is
not
recoverable from its undiscounted
cash flows and (b) measure an impairment
loss as the difference between
the carrying amount and fair value
of the
asset. SFAS No. 144 requires that
a long-lived asset to be abandoned,
exchanged for a similar productive
asset, or distributed to owners
in a
spin-off be considered as held
and used until it is disposed
of.
|
|
|
SFAS
No. 144 also requires the Group to assess the need
for an impairment of
capitalised costs of proved oil and gas properties
and the costs of wells
and related equipment and facilities on a property-by-property
basis. If
an impairment is indicated based on undiscounted
expected future cash
flows, then an impairment is recognised to the extent
that net capitalised
costs exceed the estimated fair value of the property.
Fair value of the
property is estimated by the Group using the present
value of future cash
flows. The impairment was determined based on the
difference between the
carrying value of the assets and the present value
of future cash flows.
It is reasonably possible that a change in reserve
or price estimates
could occur in the near term and adversely impact
management’s estimate of
future cash flows and consequently the carrying value
of
properties.
|
|
|
In
addition, under Hong Kong GAAP, a subsequent
increase in the recoverable
amount of an asset (other than goodwill and
available-for-sale equity
investments) is reversed to the income statement
to the extent that an
impairment loss on the same asset was previously
recognised as an expense
when the circumstances and events that led
to the write-down or write-off
cease to exist. The reversal is reduced by
the amount that would have been
recognised as depreciation had the write-down
or write-off not occurred.
Under US GAAP, an impairment loss establishes
a new cost basis for the
impaired asset and the new cost basis should
not be adjusted subsequently
other than for further impairment losses.
For the year ended December 31, 2005, an impairment of approximately RMB90,190,000 was recognized under Hong Kong GAAP and US GAAP. |
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US GAAP
(CONT'D)
|
|
(a)
|
Net
profit and net equity (continued)
|
|
(iii)
|
Acquisition of CNOOC Finance |
|
|
Under
HK GAAP, the Company adopted the purchase method
to account for the
acquisition of 31.8% equity interest in CNOOC
Finance in December 2003.
Under the purchase method, the acquired results
are included in the
consolidated results of operations of the Company
from the date of the
acquisition.
As
the Company and CNOOC Finance are under common
control of CNOOC, under US
GAAP, the acquisition is considered to be a
transfer of businesses under
common control and the acquired assets and
liabilities are accounted at
historical cost in a manner similar to the
pooling of interests method.
Accordingly, the consolidated financial statements
for all periods
presented have been retroactively restated
as if the current structure and
operations had been in existence since inception.
The cash consideration
paid by the Company is treated as an equity
transaction in the year of the
acquisition for US GAAP purpose.
|
|
(iv)
|
Accounting for convertible bonds |
|
|
With
effect from January 1, 2005,
under HKAS 32 Financial Instruments:
Disclosure and Presentation,
financial instruments with
cash settlement
options and other derivative
components will need to be
bifurcated into a
debt component and a derivative
component. The derivative
component is
marked to market at each
balance sheet date and the
differences will be
charged/credited to the income
statement. The debt component
is stated at
amortised cost. The requirements
of HKAS 32 have been applied
retrospectively with comparative
amounts
restated.
|
|
|
Under
US GAAP, convertible
bonds are subject
to different rules
on the
bifurcation of the
debt and derivative
components. However,
there is no
significant difference
on the accounting
treatment adopted
under HK GAAP
and US GAAP for the
Group’s convertible
bonds.
|
|
|
The
Company considered
whether the
convertible
bonds contain
embedded
derivative
features
which warrant
separate
accounting
under the
guidance
provided
in SFAS No.
133. To the extent
the embedded
derivatives
are determined
to exist,
the embedded
derivatives
are
bifurcated
as a single,
compound
derivative
and accounted
for in
accordance
with SFAS
No. 133. The Company
bifurcated
the
embedded
derivate
at fair value
and determined
the initial
carrying
value
assigned
to the host
contract
as the difference
between the
basis of
the
hybrid instrument
and the fair
value of
the embedded
derivative,
resulting
in a discount
attributed
to the host
bond contract. The host
bond contract
is then accreted
from the
initial amount
to the maturity
amount over
the period
from the
date of issuance
to the maturity
date
using the
effective
interest
method.
|
|
|
The
embedded
derivative
features
within
the
convertible
bonds
that
would
individually
warrant
separate
accounting
as
a
derivative
instrument
under
SFAS
133
are
bundled
together
as
single,
compound
embedded
derivative
instrument
that
is
bifurcated
and
accounted
for
separately
from
the
host
contract
under
Statement
133. The
Company
used
the
binominal
tree
valuation
model
to
value
the
compound
embedded
derivative
features
both
initially
and
at
each
reporting
period
to
record
the
changes
in
fair
value
of
the
derivative
instruments.
|
| 38. |
SIGNIFICANT
DIFFERENCES
BETWEEN
HONG
KONG
GAAP
AND US
GAAP
(CONT'D)
|
|||
|
(a)
|
Net profit and net equity (continued) | |||
|
(iv)
|
Accounting for convertible bonds (continued) | |||
|
Instruments
with
potential
embedded
derivative
features
are evaluated
at inception
to
determine
whether
such
features
meet
the definition
of a
derivative. The embedded
derivative
feature
would
be separated
from
the host
contract
and accounted
for as
a derivative instrument
only
if all
of the
following
conditions
are met:
(i) the
economic
characteristics
and risks
of the
embedded
derivative
instrument
are not
clearly
and closely
related
to the
economic
characteristics
and risks
of
the host
contract;
(ii)
the hybrid
instrument
that
embodies
both
the
embedded
derivative
instrument
and the
host
contract
is not
re-measured
at
fair
value;
and (iii)
a separate
instrument
with
the same
terms
as the
embedded
derivative
instrument
would
meet
the definition
of a
derivative
as described
in SFAS
133.
The
Group’s convertible
bonds
include
the
following
embedded
derivative
features
that
warrant
separate
accounting
as
a single,
compound
embedded
derivative
instrument
under
SFAS
133:
|
||||
|
(i)
|
Holder’s
option
to convert
into
CNOOC
shares
at a
specified
price. Upon
the exercise
of the
conversion
option
by the
holders
of the
convertible
debt,
the Company
has the
option
to settle
the exercise
of the
conversion
option
in cash;
and
|
|||
|
(ii)
|
The
convertible
bonds
are denominated
in US
dollars
and are
convertible
into
the Company’s shares
denominated
into
HK dollars
using
a fixed
exchange
rate
of US$1
to HK$7.77.
|
|||
|
(v)
|
Provision
for dismantlement
|
|||
|
|
HK
GAAP
requires
the provision
for dismantlement
to be
recorded
for a
present
obligation
whether
that
obligation
is legal
or
constructive. The associated
cost
is capitalised
and the
liability
is discounted
and accretion
expense
is recognised
using
the
credit-adjusted
risk-free
interest
rate
in effect
when
the liability
is
initially
recognised.
|
|||
|
Prior
to 2003,
the Company
accrued
for dismantlement
costs
on a
unit-of-production
basis
under
SFAS
No.19,
“Financial
accounting
and
reporting
by oil
and gas
producing
companies”
under
US
GAAP. The Company
adopted
SFAS
No.143
“Accounting
for asset
retirement
obligations”
on January
1, 2003. SFAS
No.143
requires
that
the fair
value
of a
liability
for an
asset
retirement
obligation
be recognised
in the
period
in which
it is
incurred
if a
reasonable
estimate
of fair
value
can be
made. The associated
asset
retirement
costs
are capitalised
as part
of the
carrying
amount
of
long-lived
asset. The liability
is discounted
and accretion
expense
is recognised
using
the credit-adjusted
risk-free
interest
rate
in
effect
when
the liability
is initially
recognised. The impact
of the
adoption
of SFAS
No.143
is included
in the
cumulative
effect
of
change
in accounting
policy
for dismantlement
liabilities
below.
|
||||
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US GAAP
(CONT'D)
|
|
(a)
|
Net
profit and net equity (continued)
|
|
Net
Profit
|
|||||||||||||
|
2003
|
2004
|
2005
|
|||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
As
reported under Hong Kong GAAP
|
11,497,743
|
16,139,136
|
25,323,122
|
||||||||||
|
Impact
of U.S GAAP adjustments:
|
|||||||||||||
|
-
Equity accounting for the results of CNOOC Finance
|
30,913
|
-
|
-
|
||||||||||
|
-
Unrealised holding gains from available-for-sale investments
in marketable
securities
|
(21,503 | ) |
25,228
|
-
|
|||||||||
|
-
Realised holding gains from available-for-sale marketable
securities
|
27,088
|
2,972
|
-
|
||||||||||
|
-
Other
|
9,156
|
9,156
|
20,036
|
||||||||||
|
Income
before cumulative effect of change in accounting policy
|
11,543,397
|
16,176,492
|
25,343,158
|
||||||||||
|
Cumulative
effect of change in accounting policy for dismantlement
liabilities
|
436,112
|
-
|
-
|
||||||||||
|
Net
profit under US GAAP
|
11,979,509
|
16,176,492
|
25,343,158
|
||||||||||
|
Net
profit per share under US GAAP
|
|||||||||||||
|
-
Basic
Before
cumulative effect of change in accounting policy for dismantlement
liabilities
|
RMB0.28
|
RMB0.39
|
RMB0.62
|
||||||||||
|
Cumulative
effect of change in accounting policy for dismantlement
liabilities
|
RMB0.01
|
-
|
-
|
||||||||||
|
RMB0.29
|
RMB0.39
|
RMB0.62
|
|||||||||||
|
-
Diluted
|
|||||||||||||
|
Before
cumulative effect of change in accounting policy for dismantlement
liabilities
|
RMB0.28
|
RMB0.39
|
RMB0.61
|
||||||||||
|
Cumulative
effect of change in accounting policy for dismantlement
liabilities
|
RMB0.01
|
-
|
-
|
||||||||||
|
RMB0.29
|
RMB0.39
|
RMB0.61
|
|||||||||||
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US GAAP
(CONT'D)
|
|
(b)
|
Comprehensive
income
|
|
|
According
to SFAS No. 130, “Reporting comprehensive income”, the Group is required
to include a statement of other comprehensive income
for revenues and
expenses, gains and losses which under US GAAP are
included in
comprehensive income and excluded from net
income.
|
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Net
income under US GAAP
|
11,979,509
|
16,176,492
|
25,343,158
|
|||||||||
|
Other
comprehensive income:
|
||||||||||||
|
Foreign
currency translation adjustments
|
36,243
|
(42,301 | ) | (493,289 | ) | |||||||
|
Unrealised
gains /(losses) on available-for-sale
|
||||||||||||
|
investments/Short term investments
|
21,503
|
(25,228 | ) |
69,069
|
||||||||
|
Less:
Reclassification adjustment for gains
|
||||||||||||
|
included in net income
|
(27,088 | ) | (2,972 | ) | (20,036 | ) | ||||||
|
Comprehensive
income under US GAAP
|
12,010,167
|
16,105,991
|
24,898,902
|
|||||||||
|
Unrealised
|
||||||||||||
|
Foreign
|
gains
on
|
Accumulated
|
||||||||||
|
currency
|
available
|
other
|
||||||||||
|
translation
|
-for-sale
|
comprehensive
|
||||||||||
|
adjustments
|
investments
|
income
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Balance
at January 1, 2003
|
(13,596 | ) |
53,821
|
40,225
|
||||||||
|
Reversal
of current year’s realised gains
|
—
|
(27,088 | ) | (27,088 | ) | |||||||
|
Current
year’s change
|
36,243
|
21,503
|
57,746
|
|||||||||
|
Balance
at January 1, 2004
|
22,647
|
48,236
|
70,883
|
|||||||||
|
Reversal
of current year’s realised gains
|
—
|
(2,972 | ) | (2,972 | ) | |||||||
|
Current
year’s change
|
(42,301 | ) | (25,228 | ) | (67,529 | ) | ||||||
|
Balance
at December 31, 2004
|
(19,654 | ) |
20,036
|
382
|
||||||||
|
Reversal
of current year realised gains
|
—
|
(20,036 | ) | (20,036 | ) | |||||||
|
Current
year’s change
|
(493,289 | ) |
69,069
|
(424,220 | ) | |||||||
|
Balance
at December 31, 2005
|
(512,943 | ) |
69,069
|
(443,874 | ) | |||||||
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US GAAP
(CONT’D)
|
|
(c)
|
Use
of estimates in the
preparation of financial
statements
|
| The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates pertain to proved oil and gas reserve volumes and the future development, provision for dismantlement as well as estimates relating to certain oil and gas revenues and expenses. Actual amounts could differ from those estimates and assumptions. |
| (d) | Segment reporting |
| The Group’s segment information is based on the segmental operating results regularly reviewed by the Group’s chief operating decision maker. The accounting policies used are the same as those used in the preparation of the Group’s consolidated Hong Kong GAAP financial statements. |
| (e) | Impact of Recently Issued Accounting Standards |
|
In
December 2004, the Financial
Accounting
Standards Board (“FASB”)
issued SFAS No.153, “Exchange
of Non-monetary Asset an
amendment of APB
Opinion No.29”.
This Statement, which address
the measurement of exchange of non-monetary assets, is
effective
prospectively for non-monetary asset exchanges occurring
in fiscal periods
beginning after June 15, 2005. The adoption of this Statement
is
not
expected to
impact the Company’s
consolidated financial position or results of
operations.
In
December 2004, the FASB issued
Statement No. 123 (revised 2004), “Share
Based
Payment”
(FAS No.123R), which replaces FAS
No.123 and superseded
APB Opinion No.25,
“Accounting
For Stock Issued to
Employees”.
FAS No.123R requires all
share-based payments to employees, including grants of
employee stock
options, to be recognised in the financial statement
based on their fair values
beginning with the first interim period
after June 15, 2005, with
early adoption
encouraged. Under the
SEC’s
rule, FAS No.123R is now
effective for the Company beginning January
1, 2006, The proforma disclosures
previously permitted under FAS No 123 no longer will
be an alternative to
financial
statement
recognition. The Company believes the adoption of the
FAS No. 123R will
have no material impact on its consolidated financial
statement as the
Company currently accounts for the stock options under
the fair value
recognition provision of FAS
No. 123.
In
2005, the FASB has
finalized an amendment
to statement No.19,
“Financial
Accounting and Reporting
by Oil and Gas Producing Companies” (“FAS
No. 19”)
that change the way oil and gas
producers
account for deferred exploratory
drilling costs. The
new standard would relax the
one-year limitation, so long as oil and gas reserves
have been discovered
and an enterprise “is
making sufficient progress
assessing the reserves and the economic and operating
viability
of
the
project.” We
believe
the adoption
of amendment to FAS No. 19
will have no material impact on its consolidated financial
position or
results of operations.
|
|
38.
|
SIGNIFICANT
DIFFERENCES BETWEEN HONG KONG GAAP AND US GAAP
(CONT’D)
|
|
(e)
|
Impact
of Recently Issued
Accounting Standards (continued)
|
|
In
March 2005, the FASB issued FASB
Interpretation Number 47 (“FIN
No.47”),
“Accounting
for conditional asset
retirement obligations”.
The
interpretation clarifies the
requirement to record abandonment liabilities stemming
from legal
obligations when
the
retirement depends on a conditional future event. FIN
No.47 requires that
the uncertainty about the timing or method of settlement
of a conditional retirement
obligation be factored into the measurement of the liability
when
sufficient information exists.
FIN No.47 is effective for
fiscal years ending after December 15, 2005 and application
of the
interpretation did not change how abandonment obligations
are currently
calculated by the Company.
In
May 2005, the FASB issued FAS
No. 154, “Accounting
Changes
and Error
Corrections,”
a
replacement of APB Opinion No. 20, “Accounting
Changes”
and FAS No. 3, “Reporting
Accounting Changes in
Interim Financial Statements”
(“FAS
No. 154”).
FAS No.154 changes the
requirements for the accounting for, and reporting
of, a change in accounting
principle. Previously, voluntary changes in accounting
principles were
generally required to be recognised by way of a cumulative
effect
adjustment within net income during the period of the
change. FAS No. 154
requires retrospective
application to prior
periods’
financial statements, unless it
is impracticable to determine either the period-specific
effects or the
cumulative effect of the change. FAS No. 154 is effective
for accounting
changes made in fiscal years beginning after
December 15, 2005; however, the
statement does not change the transition provisions of
any existing
accounting pronouncements. The Company does not believe
adoption of FAS
No. 154 will have a material effect on its financial
position, cash flows
or results
of
operations.
In
February 2006, the FASB issued
FAS No. 155 “Accounting for Certain Hybrid Financial Instruments,
an amendment of FASB Statements No. 133 and 140” (“FAS No.155”). FAS
No. 155 clarifies certain issues relating to embedded
derivatives
and
beneficial interests in securitized financial assets,
including permitting
fair value measurement for any hybrid financial instrument
that contains
an embedded derivative, eliminating the prohibition on
a qualifying
special-purpose entity from holding
certain derivative instruments,
and providing clarification that concentrations of credit
risk in the form
of subordination are not embedded derivatives. The provisions
of FAS No. 155 are
effective for all financial instruments acquired or issued
after
fiscal
years
beginning after September 15, 2006. The Company does
not believe adoption
of FAS No. 155 will have a material effect on its financial
position, cash
flows or results of
operations.
|
|
(a)
|
Reserve
quantity
information
|
|
Crude
oil and natural gas reserve
estimates are determined through analysis of geological
and engineering
data which appear, with reasonable certainty, to be
recoverable at commercial rates
in the future from known oil and natural gas reservoirs
under existing
economic and operating conditions.
Estimates
of crude oil and natural
gas reserves have been made by independent engineers.
The
Group’s
net proved reserves
consist of its percentage
interest in reserves, comprised of a 100% interest
in its independent oil
and gas properties and its participating interest in
the properties
covered under the production sharing contracts in PRC,
less (a) an
adjustment for
the Group’s
share of royalties payable by
the Group to the PRC government and the Group’s
participating interest in share
oil payable to the PRC government under the production
sharing contracts,
and less (b) an adjustment for production allocable
to foreign
partners under the PRC
production sharing contracts as reimbursement for exploration
expenses
attributable to the Group’s
participating interest, and plus
(a) its participating interest in the properties in
Australia, and (b) the
participating interest
in the properties covered under
the production sharing contracts in Indonesia less
an adjustment of share
oil attributable to the Indonesian government and the
domestic market
obligation.
The
Company determines its net
entitlement oil and gas reserves under
production sharing contracts
using the economic interest method.
The
following information has been
revised to separately present the oil and gas producing
activities
information of an equity investee and to provide additional
information on
costs
incurred. There is no change in the total reserve
quantity.
|
|
(a)
|
Reserve
quantity information
(continued)
|
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
|||||||||||||||||||||||||
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
|||||||||||||||||||||||||
|
December
31,
2002
|
1,283
|
3,281
|
138
|
215
|
—
|
—
|
1,421
|
3,496
|
||||||||||||||||||||||||
|
Purchase
of reserves
|
53
|
142
|
—
|
—
|
—
|
—
|
53
|
142
|
||||||||||||||||||||||||
|
Discoveries
and extensions
|
114
|
506
|
1
|
2
|
—
|
—
|
115
|
508
|
||||||||||||||||||||||||
|
Production
|
(96 | ) | (64 | ) | (15 | ) | (37 | ) |
—
|
—
|
(111 | ) | (101 | ) | ||||||||||||||||||
|
Revisions
of prior estimates
|
(26 | ) |
40
|
(21 | ) |
20
|
—
|
—
|
(47 | ) |
60
|
|||||||||||||||||||||
|
December
31, 2003
|
1,328
|
3,905
|
103
|
200
|
—
|
—
|
1,431
|
4,105
|
||||||||||||||||||||||||
|
Purchase
of reserves
|
6
|
161
|
—
|
—
|
—
|
—
|
6
|
161
|
||||||||||||||||||||||||
|
Discoveries
and extensions
|
129
|
414
|
4
|
157
|
—
|
—
|
133
|
571
|
||||||||||||||||||||||||
|
Production
|
(105 | ) | (97 | ) | (11 | ) | (31 | ) |
—
|
—
|
(116 | ) | (128 | ) | ||||||||||||||||||
|
Revisions
of prior estimates
|
(8 | ) | (101 | ) |
5
|
(5 | ) |
—
|
—
|
(3 | ) | (106 | ) | |||||||||||||||||||
|
December
31, 2004
|
1,350
|
4,282
|
101
|
321
|
—
|
—
|
1,451
|
4,603
|
||||||||||||||||||||||||
|
Purchase
of reserves
|
—
|
—
|
—
|
—
|
25
|
603
|
25
|
603
|
||||||||||||||||||||||||
|
Discoveries
and extensions
|
133
|
314
|
—
|
17
|
—
|
—
|
133
|
331
|
||||||||||||||||||||||||
|
Production
|
(121 | ) | (101 | ) | (9 | ) | (34 | ) |
—
|
—
|
(130 | ) | (135 | ) | ||||||||||||||||||
|
Revisions
of prior estimates
|
(7 | ) |
—
|
(19 | ) | (7 | ) |
—
|
—
|
(26 | ) | (7 | ) | |||||||||||||||||||
|
December
31, 2005
|
1,355
|
4,495
|
73
|
297
|
25
|
603
|
1,453
|
5,395
|
||||||||||||||||||||||||
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
|||||||||||||||||||||||||
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
|||||||||||||||||||||||||
|
December
31, 2003
|
455 | 2,016 |
91
|
135
|
—
|
—
|
546 | 2,151 | ||||||||||||||||||||||||
|
December
31, 2004
|
614 | 2,101 |
85
|
138
|
—
|
—
|
699 | 2,239 | ||||||||||||||||||||||||
|
December
31, 2005
|
642 | 2,072 |
63
|
155
|
14
|
378
|
719 | 2,605 | ||||||||||||||||||||||||
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
Oil
|
Natural
gas
|
|||||||||||||||||||||||||
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
(mmbls)
|
(bcf)
|
|||||||||||||||||||||||||
|
December
31, 2003
|
5
|
49
|
—
|
—
|
—
|
—
|
5
|
49
|
||||||||||||||||||||||||
|
December
31, 2004
|
4
|
43
|
—
|
—
|
—
|
—
|
4
|
43
|
||||||||||||||||||||||||
|
December
31, 2005
|
3
|
36
|
—
|
—
|
—
|
—
|
3
|
36
|
||||||||||||||||||||||||
|
(b)
|
Results
of operations
|
|
2003
|
2004
|
2005
|
||||||||||||||||||||||||||||||||||||||||||||||
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||||||||||||||||||||||
|
Net
sales to customers
|
23,644,659
|
4,472,172
|
—
|
28,116,831
|
32,723,277
|
4,162,742
|
—
|
36,886,019
|
48,778,934
|
4,638,735
|
—
|
53,417,669
|
||||||||||||||||||||||||||||||||||||
|
Operating
expenses
|
(2,903,094 | ) | (1,609,715 | ) |
—
|
(4,512,809 | ) | (3,643,182 | ) | (1,427,162 | ) |
—
|
(5,070,344 | ) | (4,507,915 | ) | (1,426,683 | ) |
—
|
(5,934,598 | ) | |||||||||||||||||||||||||||
|
Production
taxes
|
(1,238,598 | ) |
—
|
—
|
(1,238,598 | ) | (1,725,674 | ) |
—
|
—
|
(1,725,674 | ) | (2,596,543 | ) |
—
|
—
|
(2,596,543 | ) | ||||||||||||||||||||||||||||||
|
Exploration
|
(764,165 | ) | (83,907 | ) |
—
|
(848,072 | ) | (1,202,203 | ) | (113,957 | ) |
—
|
(1,316,160 | ) | (1,169,067 | ) | (77,842 | ) | (46,779 | ) | (1,293,688 | ) | ||||||||||||||||||||||||||
|
Accretion
expense
|
(93,246 | ) |
—
|
—
|
(93,246 | ) | (119,707 | ) |
—
|
—
|
(119,707 | ) | (198,945 | ) |
—
|
—
|
(198,945 | ) | ||||||||||||||||||||||||||||||
|
Depreciation,
depletion and
amortisation (including dismantlement) |
(3,700,349 | ) | (1,109,730 | ) |
—
|
(4,810,079 | ) | (4,670,988 | ) | (985,711 | ) |
—
|
(5,656,699 | ) | (5,360,745 | ) | (856,775 | ) |
—
|
(6,217,520 | ) | |||||||||||||||||||||||||||
|
14,945,207
|
1,668,820
|
—
|
16,614,027
|
21,361,523
|
1,635,912
|
—
|
22,997,435
|
34,945,719
|
2,277,435
|
(46,779 | ) |
37,176,375
|
||||||||||||||||||||||||||||||||||||
|
Income
tax expenses
|
(4,483,562 | ) | (719,695 | ) |
—
|
(5,203,257 | ) | (6,408,457 | ) | (705,487 | ) |
—
|
(7,113,944 | ) | (10,483,716 | ) | (995,885 | ) |
—
|
(11,479,601 | ) | |||||||||||||||||||||||||||
|
Result
of operations
|
10,461,645
|
949,125
|
—
|
11,410,770
|
14,953,066
|
930,425
|
—
|
15,883,491
|
24,462,003
|
1,281,550
|
(46,779 | ) |
25,696,774
|
|||||||||||||||||||||||||||||||||||
|
Enterprise’s
share of equity method investee’s results of operations for producing
activities
|
252,623 |
—
|
—
|
252,623 | 309,987 |
—
|
—
|
309,987 | 260,496 |
—
|
—
|
260,496 | ||||||||||||||||||||||||||||||||||||
|
(c)
|
Capitalised
costs
|
|
2003
|
2004
|
2005
|
||||||||||||||||||||||||||||||||||||||||||||||
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||||||||||||||||||||||
|
Proved
oil and gas Properties
|
57,537,676
|
9,440,843
|
—
|
66,978,519
|
70,931,798
|
10,100,116
|
—
|
81,031,914
|
85,960,339
|
11,241,345
|
3,129,662
|
100,331,346
|
||||||||||||||||||||||||||||||||||||
|
Unproved
oil and gas Properties
|
713,594
|
—
|
—
|
713,594
|
437,513
|
4,696,237
|
—
|
5,133,750
|
267,432
|
5,529,450
|
—
|
5,796,882
|
||||||||||||||||||||||||||||||||||||
|
Accumulated
depreciation,
depletion
and amortization
|
(25,740,836 | ) | (2,098,269 | ) |
—
|
(27,839,105 | ) | (30,462,658 | ) | (3,083,933 | ) |
—
|
(33,546,591 | ) | (35,875,926 | ) | (3,850,293 | ) |
—
|
(39,726,219 | ) | |||||||||||||||||||||||||||
|
Net
capitalised costs
|
32,510,434
|
7,342,574
|
—
|
39,853,008
|
40,906,653
|
11,712,420
|
—
|
52,619,073
|
50,351,845
|
12,920,502
|
3,129,662
|
66,402,009
|
||||||||||||||||||||||||||||||||||||
|
Enterprise’s
share of equity method investee’s net capitalised costs
|
626,864
|
—
|
—
|
626,864
|
518,045
|
—
|
—
|
518,045
|
412,109
|
—
|
—
|
412,109
|
||||||||||||||||||||||||||||||||||||
|
(d)
|
Costs
incurred
|
|
2003
|
2004
|
2005
|
||||||||||||||||||||||||||||||||||||||||||||||
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others**
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
|||||||||||||||||||||||||||||||||||||
|
Acquisition
costs
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
-
Proved
|
1,579,726
|
—
|
—
|
1,579,726
|
—
|
—
|
—
|
—
|
—
|
—
|
3,864,342
|
3,864,342
|
||||||||||||||||||||||||||||||||||||
|
-
Unproved
|
—
|
—
|
—
|
—
|
—
|
3,531,046
|
—
|
3,531,046
|
—
|
—
|
681,943
|
681,943
|
||||||||||||||||||||||||||||||||||||
|
Exploration
costs
|
1,225,926
|
102,067
|
—
|
1,327,993
|
1,806,556
|
137,361
|
—
|
1,943,917
|
1,878,931
|
111,219
|
46,779
|
2,036,929
|
||||||||||||||||||||||||||||||||||||
|
Development
costs*
|
7,489,472
|
512,064
|
—
|
8,001,536
|
11,693,183
|
645,501
|
—
|
12,338,684
|
14,423,266
|
2,328,200
|
—
|
16,751,466
|
||||||||||||||||||||||||||||||||||||
|
Total
costs incurred
|
10,295,124
|
614,131
|
—
|
10,909,255
|
13,499,739
|
4,313,908
|
—
|
17,813,647
|
16,302,197
|
2,439,419
|
4,593,064
|
23,334,680
|
||||||||||||||||||||||||||||||||||||
|
Enterprise’s
share of equity method investee’s costs of property acquisition,
exploration, and development
|
124,188
|
—
|
—
|
124,188
|
44,513
|
—
|
—
|
44,513
|
20,854
|
—
|
—
|
20,854
|
||||||||||||||||||||||||||||||||||||
|
*
|
The
development costs include estimated future dismantlement costs
of
dismantling offshore oil platforms and gas properties.
|
|
**
|
The amounts include prepayments made in 2004 for the NWS Project of RMB 4,693,809,000 and a tax refund of RMB152,993,000 related to the acquisition of the NWS Project received in 2005. |
|
(e)
|
Standardised
measure of discounted
future net cash flows and changes therein
|
|
In
calculating the standardised measure of discounted future net
cash flows,
year-end constant price and cost assumptions were applied to
the Group’s
estimated annual future production from proven reserves to
determine
future cash inflows. Year end average realised oil prices used
in the
estimation of proved reserves and calculation of the standardised
measure
were US$48 as at December 31, 2005 (2004: US$32; 2003: US$30).
Future
development costs are estimated based upon constant price assumptions
and
assume the continuation of existing economic, operating and
regulatory
conditions. Future income taxes are calculated by applying
the year-end
statutory rate to estimate future pre-tax cash flows after
provision for
the tax cost of the oil and natural gas properties based upon
existing
laws and regulations. The discount was computed by application
of a 10%
discount factor to the estimated future net cash flows.
Management
believes that this information does not represent the fair
market value of
the oil and natural gas reserves or the present value of estimated
cash
flows since no economic value is attributed to potential reserves,
the use
of a 10% discount rate is arbitrary, and prices change constantly
from
year-end levels.
|
|
(e)
|
Standardised
measure of
discounted future net cash
flows and changes therein (cont’d)
|
|
Present
value of estimated future net cash
flows:
|
|
2003
|
2004
|
2005
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Notes
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
PRC
|
Indonesia
|
Others
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||||||||||||||||||||||||||||||
|
Future
cash inflows
|
（1）
|
419,288,634
|
30,135,721
|
—
|
449,424,355
|
464,405,099
|
37,198,784
|
—
|
501,603,883
|
658,890,903
|
40,919,470
|
21,855,452
|
721,665,825
|
||||||||||||||||||||||||||||||||||||
|
Future
production costs
|
(106,101,939 | ) | (17,532,095 | ) |
—
|
(123,634,034 | ) | (114,563,284 | ) | (20,472,914 | ) |
—
|
(135,036,198 | ) | (155,478,507 | ) | (19,370,535 | ) | (3,742,250 | ) | (178,591,292 | ) | |||||||||||||||||||||||||||
|
Future
development costs
|
（2）
|
(52,615,661 | ) | (4,114,091 | ) |
—
|
(56,729,752 | ) | (59,876,454 | ) | (6,709,341 | ) |
—
|
(66,585,795 | ) | (69,631,972 | ) | (7,481,211 | ) | (4,497,517 | ) | (81,610,700 | ) | ||||||||||||||||||||||||||
|
Future
income taxes
|
(71,528,592 | ) | (3,346,547 | ) |
—
|
(74,875,139 | ) | (78,181,837 | ) | (4,001,019 | ) |
—
|
(82,182,856 | ) | (118,764,845 | ) | (5,678,110 | ) | (2,759,755 | ) | (127,202,710 | ) | |||||||||||||||||||||||||||
|
Future
net cash flows
|
（3）
|
189,042,442
|
5,142,988
|
—
|
194,185,430
|
211,783,524
|
6,015,510
|
—
|
217,799,034
|
315,015,579
|
8,389,614
|
10,855,930
|
334,261,123
|
||||||||||||||||||||||||||||||||||||
|
10%
discount factor
|
(84,222,928 | ) | (1,226,300 | ) |
—
|
(85,449,228 | ) | (91,481,754 | ) | (1,905,679 | ) |
—
|
(93,387,433 | ) | (127,977,962 | ) | (2,494,083 | ) | (5,472,748 | ) | (135,944,793 | ) | |||||||||||||||||||||||||||
|
Standardised
measure
|
104,819,514
|
3,916,688
|
—
|
108,736,202
|
120,301,770
|
4,109,831
|
—
|
124,411,601
|
187,037,617
|
5,895,531
|
5,383,182
|
198,316,330
|
|||||||||||||||||||||||||||||||||||||
|
Enterprise’s
share equity method investee’s standardised measure of discounted future
net cash flows
|
1,163,720 |
—
|
—
|
1,163,720 | 1,052,755 |
—
|
—
|
1,052,755 | 1,605,386 |
—
|
—
|
1,605,386 | |||||||||||||||||||||||||||||||||||||
|
(1)
|
Future
cash flows consist of the
Group’s
100% interest in the independent
oil and gas properties and the Group’s
participating interest in the
properties under
production sharing contracts in PRC less (a) an adjustment for
the
royalties payable to the PRC government and share oil payable to
the PRC
government under production sharing contracts and (b) an adjustment
for
production allocable
to foreign partners under the
PRC production sharing contracts for exploration costs attributable
to the
Group’s
participating interest, plus (a)
its participating interest in the properties in Australia, and
(b) the
participating interest in the properties
covered under the
production sharing contracts in Indonesia, less an adjustment of
share oil
attributable to Indonesian government and the domestic market
obligation.
|
|
(2)
|
Future development costs include the estimated costs of drilling future development wells and building the production platforms. |
|
(3)
|
Future net cash flows have been prepared taking into consideration estimated future dismantlement costs of dismantling offshore oil platforms and gas properties. |
|
(e)
|
Standardised
measure of
discounted future
net
cash flows and changes therein (cont’d)
|
| Changes in the standardised measure of discounted future net cash flows: |
|
2003
|
2004
|
2005
|
||||||||||
|
RMB’000
|
RMB’000
|
RMB’000
|
||||||||||
|
Standardised
measure, beginning of year
|
99,254,777
|
108,736,202
|
124,411,601
|
|||||||||
|
Sales
of production, net of royalties and production costs
|
(22,345,781 | ) | (30,090,001 | ) | (44,886,528 | ) | ||||||
|
Net
change in prices, net of royalties and production costs
|
22,367,091
|
17,891,394
|
99,253,723
|
|||||||||
|
Extensions
discoveries and improved recovery,
net
of related future costs
|
13,824,347
|
20,752,897
|
26,648,779
|
|||||||||
|
Change
in estimated future development costs
|
(14,640,965 | ) | (21,624,959 | ) | (18,559,873 | ) | ||||||
|
Development
costs incurred during the year
|
7,718,863
|
11,768,916
|
15,592,789
|
|||||||||
|
Revisions
in quantity estimates
|
(3,126,563 | ) | (1,956,069 | ) | (3,061,393 | ) | ||||||
|
Accretion
of discount
|
13,327,118
|
14,079,125
|
16,996,168
|
|||||||||
|
Net
change in income taxes
|
(6,067,720 | ) | (5,138,318 | ) | (29,168,139 | ) | ||||||
|
Purchase
of properties
|
5,376,135
|
2,356,102
|
8,981,882
|
|||||||||
|
Changes
in timing and other
|
(6,951,100 | ) |
7,636,312
|
2,107,321
|
||||||||
|
Standardised
measure, end of year
|
108,736,202
|
124,411,601
|
198,316,330
|
|||||||||