CNOOC Ltd., China's largest offshore oil and gas producer, said its third-quarter net profit rose only 2.7% from a year earlier to 33.30 billion yuan, even though the average price it received for crude jumped 32.1% to $88.03 a barrel.

The gap matters for investors in Hong Kong, where CNOOC trades under stock codes 00883 and 80883 and its parent holds 60.54% of the shares. A barrel of oil sold for a third more did not translate into a third more profit. Weaker gas volumes, heavier taxes and a higher cost base absorbed most of the gain, according to the company's quarterly report filed with the Hong Kong stock exchange on Friday.

Revenue for the July-to-September quarter rose 7.6% to 112.91 billion yuan, the filing showed. Oil and gas sales climbed 18.5% to 99.27 billion yuan, with crude and liquids sales up 23.6% and natural gas sales down 7%. Earnings per share were 0.70 yuan. The figures are unaudited and were prepared under Chinese Accounting Standards, the company said.

CNOOC Gas Output Falls as Oil Volumes Rise

Total net production in the quarter edged up 0.6% to 194.9 million barrels of oil equivalent, a much slower pace than earlier in the year.

The mix shifted. Crude and liquids output rose 3.4% to 154.0 million barrels, while natural gas production fell 9% to 237.9 billion cubic feet, according to the report's production table. Domestic output slipped to 133.4 million barrels of oil equivalent from 134.4 million a year earlier. Overseas fields, led by projects in Guyana and Brazil, lifted their contribution to 61.5 million from 59.3 million.

Gas prices offered little cushion. CNOOC's realized gas price rose 7.8% to $8.41 per thousand cubic feet in the quarter, far short of the gain in oil.

For the first nine months, net production reached a record 593.7 million barrels of oil equivalent, up 2.7%, the company said in a press release. Nine-month net profit rose 16.8% to 119.12 billion yuan, and oil and gas sales rose 19.5% to 305.35 billion yuan, which CNOOC attributed mainly to higher oil prices. Brent crude futures averaged $88.86 a barrel over the period, up 27.1%, the company said.

The quarter's modest gain contrasts with China's refiners. PetroChina and Sinopec both reported sharp profit increases for the third quarter on better refining and chemical margins, as Capital Times reported.

Taxes, Impairments and the All-In Cost

Several lines in the nine-month income statement explain why higher prices did not flow straight to the bottom line. Taxes and surcharges rose to 19.32 billion yuan from 13.58 billion a year earlier, an increase of about 42%. Asset impairment losses reached 7.24 billion yuan, compared with 65 million yuan in the same period of 2025. The filing did not break out which assets were written down.

CNOOC's all-in cost for the nine months was $30.57 per barrel of oil equivalent. The company's results presentation showed that figure against $27.35 a year earlier.

The company's own framing was upbeat. Huang Yongzhang, vice chairman, chief executive and president, said CNOOC had kept its cost competitiveness and would push cost cuts and leaner management in the fourth quarter to meet its annual targets. He described the aim as "a good start to the 15th Five-Year Plan period," which runs from 2026 to 2030.

Spending was flat to lower. Third-quarter capital expenditure fell 1.9% to 27.91 billion yuan, with exploration spending down 10.6% and development spending down 5.3%. For the nine months, capex rose 4.5% to about 89.9 billion yuan, which the company tied to more work on adjustment wells.

Cash Pile and What to Watch

The balance sheet strengthened. Cash at bank and on hand stood at 329.51 billion yuan at the end of September, up from 214.70 billion at the end of 2025, according to the filing. Operating cash flow for the nine months rose 16.2% to 199.59 billion yuan. Dividends payable of 38.56 billion yuan sat on the balance sheet at quarter end.

On exploration, CNOOC made five discoveries and appraised 23 oil and gas structures in the first nine months, including one discovery and seven appraisals in the third quarter. It said appraisal work at Bozhong 8-3 South and Huizhou 21-8 showed both could become large or medium-sized fields. Nine new projects started production during the period, four of them in the third quarter, including the second phase of the Bozhong 26-6 oil field and Panyu 10-4.

MarketScreener data on the company's page showed 16 analysts rating the Shanghai-listed shares a buy on average, with a mean target of 26.76 yuan against a last close of 20.96 yuan.

The next test for CNOOC's earnings is the oil price itself. Brent has recently pulled back from a near six-month high, as Capital Times reported, and OPEC+ meets on Nov. 29 to set output for 2027. With costs now above $30 a barrel and gas volumes falling, investors will watch whether fourth-quarter production recovers enough to offset any softening in crude.