UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F
(Mark One)
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2012
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________________ to _______________
OR
¨
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 ________________

Commission File Number 1-14966

CNOOC LIMITED
(Exact name of Registrant as specified in its charter)
 
N/A
(Translation of Registrant’s name into English)

Hong Kong
(Jurisdiction of incorporation or organization)

65th Floor, Bank of China Tower
One Garden Road, Central
Hong Kong
(Address of principal executive offices)

Hua Zhong
65th Floor, Bank of China Tower
One Garden Road, Central
Hong Kong
Tel +852 2213 2500
Fax +852 2525 9322
(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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.(1)
 
Securities registered or to be registered pursuant to Section 12(g) of the Act.  None
(Title of Class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.  None
(Title of Class)
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
 
Shares, par value HK$0.02 per share  44,646,305,984
 
 
 

 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes   ý    No    ¨
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes   ¨    No    ý
 
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant is required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   ý    No    ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes   ¨    No    ý
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer    ý   Accelerated filer    ¨   Non-accelerated filer    ¨
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP    ¨
 
International Financial Reporting Standards as issued by the International Accounting Standards Board    ý
Other    ¨
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.
 
Item 17    ¨   Item 18    ¨
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes    ¨   No    ý

(1)       Not for trading, but only in connection with the registration of American depositary shares.

 
 

 
 
Table of Contents
Page
PART I 11
 
 
2

 
 


TERMS AND CONVENTIONS
 
Definitions
 
Unless the context otherwise requires, references in this annual report to:
 
 
·  
“CNOOC” are to our controlling shareholder, China National Offshore Oil Corporation, a PRC state-owned enterprise, and its affiliates, excluding us and our subsidiaries;
 
 
·  
“CNOOC Limited” are to CNOOC Limited, a Hong Kong limited liability company and the registrant of this annual report;
 
 
·  
“Our company”, “Company”, “we”, “our” or “us” are to CNOOC Limited and its subsidiaries;
 
 
·  
“ADRs” are to the American depositary receipts that evidence our ADSs;
 
 
·  
“ADSs” are to our American depositary shares, each of which represents 100 shares of par value HK$0.02 per share;
 
 
·  
“China” or “PRC” are to the People’s Republic of China, excluding for purposes of geographical reference in this annual report, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan;
 
 
·  
“Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China;
 
 
·  
“Hong Kong Stock Exchange” or “HKSE” are to The Stock Exchange of Hong Kong Limited;
 
 
·  
“HK$” are to Hong Kong dollar, the legal currency of the Hong Kong Special Administrative Region;
 
 
·  
“HKICPA” are to the Hong Kong Institute of Certified Public Accountants;
 
 
·  
“HKFRS” are to all Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards and Interpretations approved by the Council of the HKICPA;
 
 
·  
“IASB” are to the International Accounting Standards Board;
 
 
·  
“IFRS” are to all International Financial Reporting Standards, including International Accounting Standards and Interpretations, as issued by the International Accounting Standards Board;
 
 
·  
“NYSE” are to the New York Stock Exchange;
 
 
·  
“Rmb” are to Renminbi, the legal currency of the PRC; and
 
 
·  
“US$” are to U.S. dollar, the legal currency of the United States of America.
 
Conventions
 
We publish our financial statements in Renminbi.  Unless otherwise indicated, we have translated amounts from Renminbi into U.S. dollars solely for the convenience of the reader at the noon buying rate for cable transfers of Renminbi per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of the Federal Reserve Board on December 31, 2012 of US$1.00=Rmb 6.2301.  We have also translated amounts in Hong Kong dollars
 
 
4

 
solely for the convenience of the reader at the noon buying rate for cable transfers of Hong Kong dollars per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of the Federal Reserve Board on December 31, 2012 of US$1.00=HK$7.7507.  We make no representation that the Renminbi amounts or Hong Kong dollar amounts could have been, or could be, converted into U.S. dollars at those rates on December 31, 2012, or at all.  For further information on exchange rates, see “Item 3—Key Information—Selected Financial Data.”
 
Totals presented in this annual report may not add correctly due to rounding of numbers.
 
For the years 2010, 2011 and 2012, approximately 11%, 23% and 36%, respectively, of our reserves were evaluated by us independently, and the remaining were based upon estimates prepared by independent petroleum engineering consulting companies and reviewed by us. Our reserve data for 2010, 2011 and 2012 were prepared in accordance with the SEC’s final rules on “Modernization of Oil and Gas Reporting”, which became effective for accounting periods ended on or after December 31, 2009. Except as otherwise stated, all amounts of reserve and production in this report include our interests in equity method investees.
 
In calculating barrels-of-oil equivalent amounts, we have assumed that 6,000 cubic feet of natural gas equals one BOE, with the exception of natural gas from South America, Oceania and Indonesia in Asia, which we have used actual thermal unit for such conversion purpose.
 
Glossary of Technical Terms
 
Unless otherwise indicated in the context, references to:
 
 
·  
“API gravity” means the American Petroleum Institute’s scale for specific gravity for liquid hydrocarbons, measured in degrees.
 
 
·  
“appraisal well” means an exploratory well drilled after a successful wildcat well to gain more information on a newly discovered oil or gas reserve.
 
 
·  
“condensate” means a mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure and exists in the liquid phase at surface pressure and temperature when produced.
 
 
·  
“crude oil” means crude oil and liquids, including condensate, natural gas liquids and liquefied petroleum gas.
 
 
·  
“developed oil and gas reserves” are reserves of any category that can be expected to be recovered:
 
(i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and
 
(ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving any well.
 
 
·  
“exploratory well” means a well drilled to find either a new field or a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well, or a stratigraphic test well.
 
 
·  
“LNG” means liquefied natural gas.
 
 
·  
“natural gas liquids” means light hydrocarbons that can be extracted in liquid form from natural gas through special separation plants.
 
 
5

 
 
·  
“net wells” means a party’s working interest in wells.
 
 
·  
“proved oil and gas reserves” means those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations— prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
 
(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geosciences and engineering data.
 
(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geosciences, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
 
(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geosciences, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
 
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.
 
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
 
 
·  
“PSC” means production sharing contract. For more information about PSC, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”
 
 
·  
“share oil” means the portion of production that must be allocated to the relevant government entity under our PSCs in the PRC.
 
 
·  
“undeveloped oil and gas reserves” means reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.
 
(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using
 
 
6

 
reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.
 
(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.
 
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
 
For further definitions relating to reserves:
 
 
·  
“reserve replacement ratio” means, for a given year, total additions to proved reserves, which consist of additions from purchases, discoveries and extensions and revisions of prior reserve estimates, divided by production during the year.  Reserve additions used in this calculation are proved developed and proved undeveloped reserves; unproved reserve additions are not used.  Data used in the calculation of reserve replacement ratio is derived directly from the reserve quantity reconciliation prepared in accordance with U.S. Accounting Standards Codification 932-235-50, which reconciliation is included in “Supplementary Information on Oil and Gas Producing Activities” beginning on page F-77 of this annual report.
 
 
Our reserve replacement ratio reflects our ability to replace proved reserves.  A rate higher than 100% indicates that more reserves were added than produced in the period.  However, this measure has limitations, including its predictive and comparative value.  Reserve replacement ratio measures past performance only and fluctuates from year to year due to differences in the extent and timing of new discoveries and acquisitions.  It is also not an indicator of profitability because it does not reflect the cost or timing of future production of reserve additions.  It does not distinguish between reserve additions that are developed and those that will require additional time and funding to develop.  As such, reserve replacement ratio is only one of the indices used by our management in formulating its acquisition, exploration and development plans.
 
 
·  
“reserve life” means the ratio of proved reserves to annual production of crude oil or, with respect to natural gas, to wellhead production excluding flared gas, also known as reserve-to-production ratio.
 
 
·  
“seismic data” means data recorded in either two-dimensional (2D) or three-dimensional (3D) form from sound wave reflections off of subsurface geology.
 
 
·  
“success” means a discovery of oil or gas by an exploratory well.  Such an exploratory well is a successful well and is also known as a discovery.  A successful well is commercial, which means there are enough hydrocarbon deposits discovered for economical recovery.
 
 
·  
“wildcat well” means an exploratory well drilled on any rock formation for the purpose of searching for petroleum accumulations in an area or rock formation that has no known reserves or previous discoveries.
 
References to:
 
 
·  
bbls means barrels, which is equivalent to approximately 0.134 tons of oil (33 degrees API);
 
 
·  
mmbbls means million barrels;
 
 
7

 
 
·  
BOE means barrels-of-oil equivalent;
 
 
·  
mcf means thousand cubic feet;
 
 
·  
mmcf means million cubic feet;
 
 
·  
bcf means billion cubic feet, which is equivalent to approximately 28.32 million cubic meters; and
 
 
·
BTU means British Thermal Unit, a universal measurement of energy.
 
 
8

 
FORWARD-LOOKING STATEMENTS
 
This annual report includes “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, including statements regarding expected future events, business prospectus or financial results. The words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify such forward-looking statements.
 
These forward-looking statements address, among others, such issues as:
 
 
·
the amount and nature of future exploration, development and other capital expenditures,
 
 
·
wells to be drilled or reworked,
 
 
·
development projects,
 
 
·
exploration prospects,
 
 
·
estimates of proved oil and gas reserves,
 
 
·
development and drilling potential,
 
 
·
expansion and other development trends of the oil and gas industry,
 
 
·
business strategy,
 
 
·
production of oil and gas,
 
 
·
development of undeveloped reserves,
 
 
·
expansion and growth of our business and operations,
 
 
·
oil and gas prices and demand,
 
 
·
future earnings and cash flow, and
 
 
·
our estimated financial information.
 
These statements are based on assumptions and analysis made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances.  However, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance and financial condition to differ materially from our expectations, including those associated with fluctuations in crude oil and natural gas prices, our exploration or development activities, our capital expenditure requirements, our business strategy, whether the transactions entered into by us can complete on schedule pursuant to the timetable or at all, the highly competitive nature of the oil and natural gas industry, our foreign operations, environmental liabilities and compliance requirements, and economic and political conditions in the PRC and overseas.  For a description of these and other risks and uncertainties, see “Item 3—Key Information—Risk Factors.”
 
Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements.  We cannot assure that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us, our business or our operations.
 
 
9

 
SPECIAL NOTE ON THE FINANCIAL INFORMATION AND CERTAIN STATISTICAL INFORMATION PRESENTED IN THIS ANNUAL REPORT
 
Our consolidated financial statements for the years ended December 31, 2010, 2011 and 2012 included in this annual report on Form 20-F have been prepared in accordance with International Financial Reporting Standards, or IFRSs, as issued by the International Accounting Standards Board.

In accordance with rule amendments adopted by the U.S. Securities and Exchange Commission, or the SEC, which became effective on March 4, 2008, we are not required to provide reconciliation to Generally Accepted Accounting Principles in the United States.

The statistical information set forth in this annual report on Form 20-F relating to China is taken or derived from various publicly available government publications that have not been prepared or independently verified by us. This statistical information may not be consistent with other statistical information from other sources within or outside China.

 
10

 
PART I
 
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
Not applicable, but see “Item 6—Directors, Senior Management and Employees—Directors and Senior Management.”
 
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 
Not applicable.
 
ITEM 3. KEY INFORMATION
 
A.
 
The following tables present selected historical financial data of our company as of and for the years ended December 31, 2008, 2009, 2010, 2011 and 2012. Except for amounts presented in U.S. dollars, the selected historical consolidated statement of financial position data and consolidated statement of comprehensive income data as of and for the years ended December 31, 2008, 2009, 2010, 2011 and 2012 set forth below are derived from, should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and their notes under “Item 18—Financial Statements” and “Item 5—Operating and Financial Review and Prospects” in this annual report. As disclosed above under  “Special Note on the Financial Information and Certain Statistical Information Presented in This Annual Report”, our consolidated financial statements as of and for the years ended December 31, 2008, 2009, 2010, 2011 and 2012 have been prepared and presented in accordance with IFRS.
 
      Year ended December 31,
   
2008
   
2009
   
2010(1)
   
2011
   
2012
   
2012
 
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
US$
 
Statement of Comprehensive Income Data:
   (in millions, except per share and per ADS data)  
                                   
Operating revenues:
                                   
Oil and gas sales
    100,831       83,914       146,134       189,279       194,774       31,263  
Marketing revenues
    22,967       20,752       32,446       50,469       50,771       8,149  
Other income
    2,179       529       1,456       1,196       2,082       334  
Total operating revenues
    125,977       105,195       180,036       240,944       247,627       39,746  
                                                 
Expenses:
                                               
Operating expenses
    (9,990 )     (12,490 )     (15,647 )     (18,264 )     (21,445 )     (3,442 )
Taxes other than income tax
    (5,150 )     (3,888 )     (7,109 )     (10,332 )     (15,632 )     (2,509 )
Exploration expenses
    (3,410 )     (3,234 )     (5,483 )     (5,220 )     (9,043 )     (1,452 )
Depreciation, depletion and amortization
    (10,058 )     (15,943 )     (26,756 )     (30,521 )     (32,903 )     (5,281 )
Special oil gain levy
    (16,238 )     (6,357 )     (17,706 )     (31,982 )     (26,293 )     (4,220 )
Impairment and provision
    (1,541 )     (7 )     (27 )     (22 )     (31 )     (5 )
Crude oil and product purchases
    (22,675 )     (20,455 )     (32,236 )     (50,307 )     (50,532 )     (8,111 )
Selling and administrative expenses
    (1,743 )     (2,264 )     (3,039 )     (2,854 )     (3,377 )     (542 )
Others
    (1,307 )     (232 )     (888 )     (835 )     (1,230 )     (197 )
Total expenses
    (72,112 )     (64,870 )     (108,891 )     (150,337 )     (160,486 )     (25,759 )
                                                 
Profit from operating activities
    53,865       40,325       71,145       90,607       87,141       13,987  
Interest income
    1,091       638       618       1,196       1,002       161  
Finance costs
    (415 )     (535 )     (1,122 )     (1,707 )     (1,603 )     (257 )
Exchange gains, net
    2,551       54       995       637       359       58  
Investment income
    476       200       427       1,828       2,392       384  
Share of profits of associates
    374       173       199       320       284       46  
Share of profits/(losses) of a joint venture
    -       -       199       247       (311     (50
Non-operating income/(expenses), net
    (62     (34     142       (563     908       146  
Profit before tax 
    57,880       40,821       72,603       92,565       90,172       14,475  
 
 
   
Year ended December 31,
 
   
2008
   
2009
   
2010(1)
   
2011
   
2012
   
2012
 
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
US$
 
      (in millions, except per share and per ADS data)      
Income tax expense
    (13,505 )     (11,335 )     (18,193 )     (22,310 )     (26,481 )     (4,250 )
Profit for the year
    44,375       29,486       54,410       70,255       63,691       10,225  
                                                 
Earningspershare(basic)(2)
    0.99       0.66       1.22       1.57       1.43       0.23  
Earnings per share (diluted) (3)
    0.99       0.66       1.21       1.57       1.42       0.23  
Earnings per ADS (basic) (2)
    99.44       66.01       121.81       157.28       142.66       22.90  
Earnings per ADS (diluted) (3)
    99.08       65.86       121.39       156.63       142.14       22.82  
                                                 
Dividend per share
                                               
Interim
    0.175       0.176       0.181       0.204       0.122       0.02  
Proposed final
    0.176       0.176       0.211       0.227       0.259       0.04  
 
    As of December 31,  
   
2008
   
2009
   
2010(1)
   
2011
   
2012
   
2012
 
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
US$
 
    (in millions)  
Statement of Financial Position Data:                                    
Cash and cash equivalents
    19,762       22,615       27,287       23,678       55,024       8,832  
Available-for sale financial assets
    11,661       8,582       18,940       27,576       61,795       9,919  
Held-to-maturity financial assets
    -       -       3,040       23,467       -       -  
Current assets
    63,770       70,871       99,384       131,923       170,894       27,430  
Property, plant and equipment, net
    138,358       165,320       186,678       220,567       252,132       40,470  
Investments in associates
    1,785       1,727       1,781       2,822       3,857       619  
Investments in a joint venture
    -       -       20,823       20,175       20,160       3,236  
Intangible assets
    1,206       1,230       1,148       1,033       973       156  
Long term available-for-sale financial assets
    1,550       3,120       8,616       7,365       7,051       1,132  
Total assets
    206,669       242,268       318,430       384,264       456,070       73,204  
Current loans and borrowings
    17       122       21,194       19,919       28,830       4,628  
Current liabilities
    18,799       31,042       68,423       70,216       82,437       13,232  
Long term loans and borrowings, net of current portion
    13,864       18,570       9,859       18,076       29,056       4,664  
Total non-current liabilities
    27,632       37,291       34,241       51,192       63,853       10,249  
Total liabilities
    46,431       68,333       102,664       121,408       146,290       23,481  
Capital stock
    43,078       43,078       43,078       43,078       43,078       6,914  
Shareholders’ equity
    160,238       173,936       215,766       262,856       309,780       49,723  
 

(1)  
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
 
(2)
Earnings per share (basic) and earnings per ADS (basic) for each year from 2008 to 2012 have been computed, without considering the dilutive effect of the shares underlying our share option schemes and, as applicable, convertible bonds, by dividing profit by the weighted average number of shares and the weighted average number of ADSs of 44,623,856,311 and 446,238,563, respectively, for 2008, 44,669,199,984 and 446,692,000, respectively, for 2009, 44,669,199,984 and 446,692,000, respectively, for 2010, 44,668,570,359 and 446,685,704, respectively, for 2011 and 44,646,305,984  and  446,463,060, respectively, for 2012, in each case based on a ratio of 100 shares to one ADS.
 
(3)
Earnings per share (diluted) and earnings per ADS (diluted) for each year from 2008 to 2012 have been computed, after considering the dilutive effect of the shares underlying our share option schemes and, as applicable, convertible bonds, by using  44,786,097,516 shares and 447,860,975 ADSs for 2008, 44,771,714,329 shares and 447,717,143 ADSs for 2009, 44,821,187,466 shares and 448,211,875 ADSs for 2010 , 44,853,615,010 shares and 448,536,150 ADSs for 2011 and 44,808,042,330 shares and 448,080,423 ADSs for 2012.

   
Year ended December 31,
 
   
2008
   
2009
   
2010(1)
   
2011
   
2012
   
2012
 
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
Rmb
   
US$
 
   
(in millions, except percentages and ratios)
       
Other Financial Data:
                                   
Capital expenditures paid(2) 
    33,161       39,376       28,332       36,823       54,331       8,721  
Cash provided by/(used for):
                                               
Operating activities
    52,489       49,624       70,883       116,171       92,574       14,858  
Investing activities
    (45,735 )     (37,307 )     (64,203 )     (99,036 )     (63,797 )     (10,240 )
Financing activities
    (10,129 )     (9,403 )     (1,610 )     (20,246 )     2,584       413  
Gearing ratio(3) 
    8.0%       9.7%       12.6%       12.6%       15.7%       15.7%  
 
 
(1)
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
(2) 
Capital expenditures paid exclude those relating to acquisition of oil and gas properties.
(3) 
Interest bearing debt divided by the sum of interest bearing debt and equity.
 
The following table sets forth the noon buying rates between U.S. dollars and Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board for the periods indicated:
 
   
Noon Buying Rate
 
Period
 
End
   
Average(1)
   
High
   
Low
 
   
(Rmb per US$1.00)
 
2008 
    6.8225       6.9193       7.2946       6.7800  
2009
    6.8259       6.8295       6.8470       6.8176  
2010  
    6.6000       6.7603       6.8330       6.6000  
2011
    6.2939       6.4475       6.6364       6.2939  
2012
    6.2301       6.2990       6.3879       6.2221  
October 2012 
    6.2372             6.2877       6.2372  
November 2012
    6.2265             6.2454       6.2221  
December 2012  
    6.2301             6.2502       6.2251  
January 2013  
    6.2186             6.2303       6.2134  
February 2013 
    6.2213             6.2438       6.2213  
March 2013
    6.2108             6.2246       6.2105  

(1)
Determined by averaging the noon buying rates on the last business day of each month during the relevant period.
 
On March 29, 2013, the noon buying rate between U.S. dollars and Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board was Rmb 6.2108 to US$1.00.
 
The following table sets forth the noon buying rates between U.S. dollars and Hong Kong dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board for the periods indicated.
 
   
Noon Buying Rate
 
Period
 
End
   
Average(1)
   
High
   
Low
 
   
(HK$ per US$1.00)
 
2008
    7.7499       7.7814       7.8159       7.7497  
2009
    7.7536       7.7513       7.7618       7.7495  
2010
    7.7810       7.7692       7.8040       7.7501  
2011
    7.7663       7.7793       7.8087       7.7634  
2012
    7.7507       7.7556       7.7699       7.7493  
October 2012
    7.7494             7.7549       7.7494  
November 2012
    7.7501             7.7518       7.7493  
December 2012
    7.7507             7.7518       7.7493  
January 2013
    7.7560             7.7585       7.7503  
February 2013
    7.7546             7.7580       7.7531  
March 2013
    7.7629             7.7640       7.7551  

(1)
Determined by averaging the noon buying rates on the last business day of each month during the relevant period.
 
On March 29, 2013, the noon buying rate between U.S. dollars and Hong Kong dollars as set forth in the H.10 weekly statistical release of the Federal Reserve Board was HK$7.7629 to US$1.00.
 
B.
 
Not applicable.
 
C.
 
Not applicable.
 
 
13

 
D.
 
We urge you to consider carefully the risks described below. Although we have established the Enterprise Risk Management system to identify, evaluate and manage risks, our business activities are subject to the following risks, each of which could have a material adverse effect on our operations and financial condition.
 
Risks Relating to Our Operations
 
Our business, revenues and profits fluctuate with changes in oil and gas prices
 
Prices for crude oil may fluctuate widely in response to relatively minor changes in the supply and demand for oil, market uncertainty and various other factors that are beyond our control, including, but not limited to overall economic conditions, consumer demand for oil, political developments, the ability of petroleum producing nations to set and maintain production levels and prices, the price and availability of other energy sources, domestic and foreign government regulations, and weather conditions.
 
In addition, our typical contracts with gas buyers include provisions for periodic resets and adjustment formulas that depend on a basket of crude oil prices and inflation as well as various other factors.  These resets and adjustment formulas can result in natural gas price fluctuations.
 
Even relatively modest declines in crude oil and/or natural gas prices may adversely affect our business, revenues and profits.  Lower oil and gas prices may result in the write-off of higher cost reserves and other assets and may lower our earnings or cause losses.  Lower oil and gas prices may also reduce the amount of oil and natural gas we can produce economically and render existing contracts that we have entered into uneconomical.
 
The oil and gas reserve estimates in this annual report may require substantial revision as a result of future drilling, testing, production and oil and gas price changes
 
The reliability of reserve estimates depends on a number of factors, including the quality and quantity of technical and economic data, the prevailing oil and gas prices for our production, the production performance of reservoirs, extensive engineering judgments, and the fiscal regime in the PRC and overseas where we have operations or assets.
 
Many of the factors, assumptions and variables involved in estimating reserves are beyond our control and may prove to be incorrect over time.  In addition, many of the factors involved in estimating reserves over which we do have control, such as the recovery factor estimates and the projected production decline rates, may also prove to be incorrect over time. Consequently, the results of drilling, testing and production and oil and gas price changes may require substantial upward or downward revisions in our initial reserve data.
 
Any failure to replace reserves and develop our proved undeveloped reserves could adversely affect our business and our financial position
 
Exploring for, developing and acquiring reserves is highly risky and capital intensive. Our exploration and development activities involve inherent risks, including the risk that we will not encounter commercially productive oil or gas reservoirs. In addition, approximately 58.5% of our proved reserves were undeveloped as of December 31, 2012.  Our future success will depend on our ability to develop these reserves in a timely and cost-effective manner.  There are various risks in developing reserves, including construction, operational, geophysical, geological and regulatory risks.
 
Our future prospects largely depend on our capital expenditures, which are subject to various risks
 
Our ability to maintain and increase our revenues, profit and cash flows depends upon continuous capital spending, which is subject to a number of contingencies, some of which are beyond our control.  These variables include: cash flows from operations, the availability and terms of external financing, our
 
 
14

 
ability to execute our project plans and commence production on time, weather conditions, the availability of services and facilities, approvals required from the PRC and foreign governments for certain capital expenditures and investments, and economic, political and other conditions in the PRC and overseas where we have operations or assets.
 
Therefore, our actual capital expenditures and investments in the future may differ significantly from our current planned amounts. If we are unable to obtain sufficient funding for our operations or development plans, our business, revenues, profit and cash flows could be adversely affected.
 
Any failure to implement our natural gas business strategy may adversely affect our business and financial position
 
As part of our business strategy and to meet increasing market demand in China, we continue to expand our natural gas business.  In addition to the risks that affect our business generally, this strategy involves certain risks and uncertainties, including our limited market share compared to PetroChina Company Limited, or PetroChina, and China Petroleum & Chemical Corporation, or Sinopec, and the underdeveloped natural gas transportation and supply infrastructure and market in China. We are evaluating the options to invest in CNOOC’s LNG projects in China.  However, we have not decided whether to exercise these options.  The options are subject to various conditions including certain governmental approvals, the prospects of such projects and, if applicable, independent shareholders’ approval.
 
Mergers and acquisitions may expose us to additional risks and uncertainties
 
In the past few years, we expanded our operations into Argentina, the U.S., Canada, Uganda, United Kingdom and certain other countries through mergers and acquisitions. For example, we completed our acquisition of Nexen Inc. (“Nexen”), a Canada-based energy company then-listed on the Toronto Stock Exchange and the New York Stock Exchange, in February 2013. We may continue to pursue opportunities for mergers and acquisitions to expand our business in the future.
 
In light of political instability, unexpected changes to fiscal regime and various other factors, there may be uncertainties with respect to the operations of those merged and acquired overseas assets. In particular, we may face increasing exploration and environmental risks arising from Nexen’s unconventional resources development, including oil sands operations. The relatively high production cost of Nexen’s oil sands and deep water operations may negatively affect our overall profitability. Further, we may face other risks and uncertainties as we become subject to additional regulatory requirements as a result of the acquisition of Nexen. Therefore, we may not be able to achieve the anticipated economic return. Also, the increase in the scale of our operations may increase our operational risks.
 
We may not be able to realize the anticipated benefits from the Nexen acquisition
 
Achieving the advantages of the Nexen acquisition will depend partly on the efficient combination of the activities of the Company and Nexen, two companies that functioned independently and were incorporated in different countries, with geographically dispersed operations and with different business cultures.
 
The integration process involves inherent costs and uncertainties. Our purchase price paid for the Nexen acquisition represents a premium of 61% to the closing price of Nexen’s common shares on the NYSE on July 20, 2012, and a premium of 66% to Nexen’s 20 trading-day volume-weighted average share price. We expect the acquisition of Nexen will expand our existing business and assets and create sustainable growth opportunities, synergies and other benefits. However, our anticipated benefits may not develop. In addition, implementation of the acquisition and the successful integration of Nexen will also require management time and attention, as well as those employees with the appropriate skill sets for the tasks associated with such integration. Any failures, material delays or unexpected costs of the integration process could therefore have a material adverse effect on our business, results of operations and financial condition.
 
CNOOC largely controls us and we regularly enter into related party transactions with CNOOC and its affiliates
 
CNOOC indirectly owned or controlled 64.45% of our shares as of March 28, 2013.  As a result, CNOOC is able to control the composition of the board of directors of our company, or our Board, determine the timing and amount of our dividend payments and otherwise control us. If CNOOC takes actions that favor its interests over ours, our results of operations and financial position may be adversely affected.
 
In addition, we regularly enter into transactions with CNOOC and its affiliates, such as China Oilfield Services Limited, or COSL, Offshore Oil Engineering Co., Ltd., or COOEC, and China BlueChemical Ltd. Some of our transactions with CNOOC and its affiliates constitute connected transactions under The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, or the Hong Kong Stock Exchange Listing Rules.  Furthermore, these connected transactions are subject to review by the Hong Kong Stock Exchange and may also be subject to the prior approval of our independent shareholders.  For example, we have obtained the independent shareholders’ approval in respect of certain continuing connected transactions under a comprehensive framework agreement with
 
 
15

 
CNOOC and its affiliates on November 24, 2010.  If we do not obtain these approvals, we will not be allowed to effect these transactions and our business operations and financial condition could be adversely affected.
 
Under current PRC law, CNOOC has the exclusive right to enter into PSCs with foreign oil and gas companies for the petroleum resources exploitation in offshore China. Although CNOOC has undertaken to us that it will transfer all of its rights and obligations under any new PSCs to us, except those relating to its administrative functions, the interests of CNOOC in entering into PSCs with international oil and gas companies may differ from our interests, especially with respect to the criteria for determining whether, and on what terms, to enter into PSCs.  Our future business development may be adversely affected if CNOOC does not enter into new PSCs on terms that are acceptable to us.
 
Our business performance relies heavily on our sales to large domestic customers and a substantial drop in such sales could have a material adverse effect on our results of operations
 
We sell a significant proportion of our production to Sinopec, PetroChina and CNOOC-affiliated companies. However, we currently do not have long-term crude oil sales contracts with these customers. Our business, results of operations and financial condition could be adversely affected if any of them significantly reduced their crude oil purchases from us.
 
We may have limited control over our investments in joint ventures and our operations with partners
 
Quite a few of our operations are conducted with partners or in joint ventures in which we may have limited ability to influence or control their operation or future development.  Our limited ability to influence or control the operation or future development of such joint ventures could materially and adversely affect the realization of our target returns on capital and lead to unexpected future costs.
 
Blowout or other incidents may result in platform explosions, fire accidents and oil spills
 
Our operations are mainly conducted in challenging or environmentally sensitive locations, in which the consequences of a blowout, spill, explosion, fire or other incidents could be more severe than in other locations. Although we have adopted standard workflow procedures and various measures to control the risks of blowout or other incidents, we cannot assure you that we could avoid the potential losses caused by blowout or other incidents.  If one or more blowout or other incidents occur, platform explosions and fire accidents caused by such incidents may result in casualties, property losses and environmental damages, which may have a material adverse effect on our business, financial condition and results of operation.
 
We maintain various insurance coverage for our operations against certain types of potential losses. For detailed information on our insurance coverage, see “Item 4—Information on the Company—Business Overview—Operating Hazards and Uninsured Risks.” However, our ability to insure against our risks is limited by the availability of relevant insurance products in the market. In addition, we cannot assure you that our insurance coverage is sufficient to cover any losses that we may incur, or that we will be able to successfully claim our losses under our existing insurance policies timely or at all. If any of our losses is not covered by our insurance policies, or if the insurance compensation is less than our losses or not paid timely, our business, financial condition and results of operations could be materially and adversely affected.
 
We conduct exploration and development in deepwater areas in both offshore China and overseas by cooperating with our partners and by ourselves. Operations in deepwater are more difficult, risky and costly than those in shallower water. Operations in deepwater may require a significant amount of time between the discovery and the initial production, thus increasing the risks involved in these operations.
 
Extreme weather conditions may have a material adverse impact on us and could result in losses that are not covered by insurance
 
 
16

 
Our exploration, development and production activities can be adversely affected by extreme weather conditions, which could result in loss of hydrocarbons, environmental pollution, damage to our properties, cessation of activities, delay of project plans, shareholders lawsuits, government penalty, and increases in costs of drilling, completing and operating wells.
 
We maintain insurance coverage against some, but not all, potential losses. We do not maintain business interruption insurance for all of our oil and gas fields. We may suffer material losses resulting from uninsurable or uninsured risks or insufficient insurance coverage.
 
The current or future activities of our controlling shareholder, CNOOC, or its affiliates in certain countries that are the subject of U.S. sanctions could result in negative media and investor attention to us and possible imposition of sanctions on CNOOC, which could materially and adversely affect our shareholders
 
We cannot predict the interpretation or implementation of government policy at the U.S. federal, state or local levels with respect to any current or future activities by CNOOC or its affiliates in countries or with individuals or entities that are the subject of U.S. sanctions.  Similarly, we cannot predict whether U.S. sanctions will be further tightened, or the impact that such actions may have on CNOOC.  It is possible that the United States could subject CNOOC to sanctions due to these activities.  Certain U.S. state and local governments and colleges have restrictions on the investment of public funds or endowment funds, respectively, in companies that are members of corporate groups with activities in certain countries that are the subject of U.S. sanctions, such as Iran and Sudan.  It is possible that the activities of CNOOC or its affiliates may affect the investment in our shares by such U.S. state and local governments and colleges.
 
It is possible that, as a result of activities by CNOOC or its affiliates in countries that are the subject of U.S. sanctions, we may be subject to negative media or investor attention, which may distract management, consume internal resources and affect investors’ perception of our company. 
 
The Iran Sanctions Act, as amended, or ISA, the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, or CISADA, the National Defense Authorization Act for Fiscal Year 2012, or NDAA, the Iran Threat Reduction and Syria Human Rights Act of 2012, or TRA, and the Iran Freedom and Counter-Proliferation Act of 2012, or IFCA, authorize the imposition of sanctions on companies that engage in, among other things, certain activities related to Iran’s energy, petrochemical, shipping or shipbuilding sectors, and in certain instances, on their parent companies.  It is possible that the U.S. Government could determine that CNOOC or its affiliates engage in activities targeted by U.S. sanctions. If the U.S. President determined that CNOOC or one of its affiliates engaged in targeted activities, CNOOC and/or its affiliate could be subject to U.S. sanctions, which range from restrictions on U.S. exports or bank financing to outright blocking of CNOOC or its affiliate’s property within U.S. jurisdiction. If the most extreme sanction, blocking, were applied to CNOOC’s property, including controlled subsidiaries, CNOOC Limited could be prohibited from engaging in business activities in the United States or with U.S. individuals or entities, and U.S. transactions in our securities and distributions to U.S. individuals and entities with respect to our securities could also be prohibited.
 
As required by the Iran Threat Reduction and Syria Human Rights Act of 2012, which added a disclosure requirement to the Securities Exchange Act of 1934, we are providing certain information regarding our non-controlled affiliates’ activities. In 2012, to our knowledge, one of our non-controlled affiliates, COSL, was engaged in certain drilling and other related services in Iran in relation to subcontracting agreements entered into in 2009 and another non-controlled affiliate of ours was engaged in installation services in Iran. We cannot predict at this time whether  U.S. sanctions will be imposed on any of our affiliates.
 
Our business and financial condition may be adversely affected by a severe and prolonged global economic downturn and deteriorating economic conditions
 
Recent global market and economic conditions have been unprecedented with recession in most major economies. Continued concerns about the systemic impact of a potentially long-term and
 
 
17

 
widespread recession and the sovereign debt crisis in Europe, energy costs, geopolitical issues and the availability and cost of credit have contributed to increased market volatility and diminished expectations for economic growth around the world. The difficult economic outlook has negatively affected business and consumer confidence and contributed to unprecedented volatility levels. We cannot predict the short- and long-term impacts of these events on our business and financial condition, which could be materially and adversely affected.
 
Risks Relating to the Petroleum Industry
 
The oil and natural gas industries are very competitive
 
We compete in the PRC and international markets with integrated and independent oil and gas companies for oil and gas properties or leases, customers, capital financing and business opportunities, including desirable oil and gas prospects. We also compete for the equipment and personnel required to explore, develop and operate oil and gas properties.
 
Changes in laws and regulations could have an adverse effect on our operation in overseas
 
We currently have operations and assets in various foreign countries and regions, including Indonesia, Myanmar, Iraq, Australia, Nigeria, Uganda, Argentina, the United States, Canada, United Kingdom and certain other countries, and may expand our operations into other countries to further enhance our reserve base and diversify our geographic risk profile.
 
Our interests may be adversely affected by changes in governmental policies or social instability or other political, economic or diplomatic developments in or affecting these foreign nations which are not within our control, including, among other things, a change in crude oil or natural gas pricing policy, expropriation, nationalization, renegotiation or nullification of existing concessions and contracts, taxation policies, foreign exchange and repatriation restrictions, changing political conditions and currency controls.
 
Our operations are subject to laws and regulations in countries in which we operate. Changes in such laws and regulations could change environmental protection requirements and increase taxes, royalties and other amounts payable to governments or governmental agencies. Such changes may increase our cost of compliance or tax burden, which could materially and adversely affect our net income and result of operations.
 
In addition, the operations and assets that we currently have or in the future may have in foreign countries and regions may be materially and adversely affected by trade or economic sanctions that may be imposed by other countries due to their deteriorated relations with each other.
 
War and acts of terrorism could materially and adversely affect us
 
We have operations and assets in various countries and regions, including Indonesia, Myanmar, Iraq, Australia, Nigeria, Uganda, Argentina, the United States, Canada, United Kingdom and certain other countries, some of which are deemed to be with a high degree of political risk.  We face the risks of kidnapping, damage to property and business interruption caused by terrorism activities and strikes.  Acts of terrorism and strikes could materially and adversely affect our business, financial condition and results of operations.
 
We may be penalized if we fail to comply with existing or future environmental laws and regulations
 
Our business is subject to environmental protection laws and regulations in the PRC, as well as other jurisdictions where we operate. The environmental laws and regulations to which we are subject may become increasingly strict and have an increasing impact on our operations. Our compliance with such laws or regulations may require us to incur significant capital expenditures or other obligations or liabilities, which could create a substantial financial burden on us. Furthermore, these jurisdictions may impose fees and fines for the discharge of waste substances or serious environmental pollution, and
 
 
18

 
authorize a government, at its discretion, to close or suspend any facility which fails to comply with orders requiring it to cease or cure operations causing environmental damage.
 
We have established an enterprise risk management system to identify, evaluate and manage the risks that we face. In addition, to help address various health, safety, security, environmental and operational risks, we have established a comprehensive management system to improve our employees’ awareness of our health, safety and environmental policies in our business operations and strengthen their skills of risk identification and risk management. We also continuously focus on workplace safety and prevention of oil spills or other adverse environmental events. However, there can be no assurance that our management systems and controls will function as intended at all times. Substantial liabilities and other adverse impacts could result if our management systems and controls cannot adequately identify all process safety, personal safety and environmental risks or provide effective mitigations, or that our operations will be able to conform with our management systems and controls at all times.
 
Risks Relating to the PRC
 
Changes in PRC laws and regulations could have an adverse effect on our operation
 
Our operations are mainly in the People’s Republic of China.  The PRC government exercises control over the PRC petroleum industry, including licensing, exploring, producing, distributing, pricing, taxing, importing, exporting and allocating of various resources.  We have benefited from various favorable PRC government policies, laws and regulations that have been enacted to encourage the development of the offshore petroleum industry. We cannot guarantee that the legal and fiscal regimes affecting our businesses will remain substantially unchanged or that we will continue to benefit from favorable PRC government policies.

For instance, in 2011, the State Council of the PRC amended the Provisional Regulation of PRC Resource Tax and as a result, since November 1, 2011, the royalties payable to the PRC government have been replaced by resource tax, currently at 5% of the sales revenues from crude oil and natural gas. For detailed information on the resource tax, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”

In 2011 and 2012, the Ministry of Finance and the State Administration of Taxation of the PRC promulgated the Circular on Printing and Issuing the Pilot Proposals for the Conversion from Business Tax to Value-Added Tax (Cai Shui [2011] No.110) and various supporting Circulars (including Cai Shui [2011] No.111, Cai Shui [2012] No.71) . As a result, since January 1, 2012, the business tax in certain industries and regions have been replaced by value-added tax. This tax reform is very complex and may have some financial impact on the Company.

In addition, existing PRC regulations require us to obtain various PRC government licenses and other approvals, including in some cases approvals for amendments and extensions of existing licenses and approvals to conduct exploration and development activities off the shores of China.  If we are unable to obtain any necessary approvals, our reserves and production would be adversely affected.
 
Government control of currency conversion and future movements in exchange rates may adversely affect our operations and financial condition
 
A portion of our Renminbi revenue may need to be converted into other currencies by our wholly owned subsidiary in the PRC, CNOOC China Limited, to meet our substantial requirements for foreign currencies, including: debt service on foreign currency denominated debt, overseas acquisitions of oil and gas properties, purchases of imported equipment, and payment of dividends declared in respect of shares held by international investors.
 
Foreign exchange transactions under the capital account, including principal payments with respect to foreign currency denominated obligations, are subject to the approval requirements of the State Administration for Foreign Exchange.
 
 
19

 
The value of Renminbi against U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The appreciation of Renminbi against U.S. dollar may cause a decrease in our oil sales, since the benchmark oil prices are usually in U.S. dollars.
 
Certain legal restrictions on dividend distribution may have a material adverse effect on our cash flows
 
We are a holding company. Our businesses are owned and conducted through various wholly owned subsidiaries, including CNOOC China Limited, our wholly owned subsidiary in the PRC. Accordingly, our future cash flows will consist principally of dividends and other distributions from our subsidiaries. Our PRC subsidiary’s ability to pay dividends and other distributions to us is subject to PRC laws and regulations.  For example, legal restrictions in the PRC permit payment of dividends only out of profits determined in accordance with PRC accounting standards and regulations.  Substantially all our dividend payments result from dividends paid to us as a holding company by CNOOC China Limited. CNOOC China Limited must follow the laws and regulations of the PRC and its articles of association in determining its dividends. As a wholly foreign owned enterprise in China, CNOOC China Limited has to provide for a reserve fund and staff and workers’ bonus and welfare fund, each of which is appropriated from net profit after taxation but before dividend distributions according to the prevailing accounting rules and regulations in the PRC.  Therefore, there is a risk that we may not be able to maintain sufficient cash flows due to these restrictions on dividend distribution.
 
Our auditor, like other independent registered public accounting firms operating in China, is not permitted to be subject to inspection by Public Company Accounting Oversight Board, and as such, investors may be deprived of the benefits of such inspection
 
Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or PCAOB, is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor, like other independent registered public accounting firms operating in China, is currently not inspected by PCAOB.
 
Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections in China may prevent PCAOB from regularly evaluating our auditor’s audits and quality control procedures. The inability of PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.
 
Recent action being taken by the SEC against the PRC affiliates of the Big Four accounting firms, including our auditor, could create additional uncertainty about the status of audits of U.S.-listed PRC-based companies and may materially and adversely affect the liquidity and value of our ADSs.
 
On December 3, 2012, the SEC announced that it had begun administrative proceedings against the PRC affiliates of each of the Big Four accounting firms (namely Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers), including our auditor, and another large U.S. accounting firm for refusing to produce audit work papers and other documents related to China-based companies under investigation by the SEC for potential accounting fraud against U.S. investors.  The SEC charged the firms with violating the Securities Exchange Act and the Sarbanes-Oxley Act, which requires foreign public accounting firms to provide the SEC upon request with audit work papers involving any company trading on the U.S. markets.  If this proceeding by the SEC ultimately results in actions or sanctions that affect the ability or right of these accounting firms, including the PRC affiliate of our auditor, to engage in audits of U.S.-listed PRC-based companies, it may make it difficult or
 
 
20

 
impossible for us to engage an auditor qualified to audit accounts for U.S.-listed PRC-based companies and make us unable to comply with SEC rules and regulations and the listing standards of securities exchanges in the United States, which would materially and adversely affect the liquidity and value of our ADSs and force us to de-list our ADSs from the NYSE. As the administrative proceedings being taken against these accounting firms is in a preliminary stage, we cannot predict the eventual possible impact on our company.
 
ITEM 4. INFORMATION ON THE COMPANY
 
A.
 
Our legal and commercial name is CNOOC Limited.  We were incorporated with limited liability on August 20, 1999 in Hong Kong under the Hong Kong Companies Ordinance.  Our business registration number in Hong Kong is 685974.  Under our memorandum of association, we may do anything which we are permitted to do by any enactment or rule of law.  Our registered office is located at 65th Floor, Bank of China Tower, One Garden Road, Central, Hong Kong, and our telephone number is 852-2213-2500.
 
The PRC government established CNOOC, our controlling shareholder, as a state-owned offshore petroleum company in 1982 under the Regulation of the PRC on the Exploitation of Offshore Petroleum Resources in Cooperation with Foreign Enterprises. CNOOC assumed certain responsibility for the administration and development of PRC offshore petroleum operations with foreign oil and gas companies.
 
Prior to CNOOC’s reorganization in 1999, CNOOC and its various affiliates performed both commercial and administrative functions relating to oil and natural gas exploration and development in offshore China.
 
In 1999, CNOOC transferred all of its then current operational and commercial interests in its offshore petroleum business, including the related assets and liabilities, to us. As a result, we and our subsidiaries are the only vehicles through which CNOOC engages in oil and gas exploration, development, production and sales activities both in and outside the PRC.
 
CNOOC retained its commercial interests in operations and projects not related to oil and gas exploration and production, as well as all of the administrative functions it performed prior to the reorganization.
 
CNOOC has undertaken to us that:
 
 
·  
we will enjoy the exclusive right to exercise all of CNOOC’s commercial and operational rights under PRC laws and regulations relating to the exploration, development, production and sales of oil and natural gas in offshore China;
 
 
·  
it will transfer to us all of its rights and obligations under any new PSCs and geophysical exploration operations, except those relating to its administrative functions;
 
 
·  
it will not engage or be interested, directly or indirectly, in oil and natural gas exploration, development, production and sales in or outside the PRC;
 
 
·  
we will be able to participate jointly with CNOOC in negotiating new PSCs and to set out our views to CNOOC on the proposed terms of new PSCs;
 
 
·  
we will have unlimited and unrestricted access to all data, records, samples and other original data owned by CNOOC relating to oil and natural gas resources;
 
 
21

 
 
·  
we will have an option to invest in LNG projects in which CNOOC invested or proposed to invest, and CNOOC will at its own expense help us to procure all necessary government approvals needed for our participation in these projects; and
 
 
·  
we will have an option to participate in other businesses related to natural gas in which CNOOC invested or proposed to invest, and CNOOC will procure all necessary government approvals needed for our participation in such business.
 
The undertakings from CNOOC will cease to have any effect:
 
 
·  
if we become a wholly owned subsidiary of CNOOC;
 
 
·  
if our securities cease to be listed on any stock exchange or automated trading system; or
 
 
·  
12 months after CNOOC or any other PRC government-controlled entity ceases to be our controlling shareholder.
 
For information on our capital expenditures, see “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Cash Used in Investing Activities.”
 
B.
 
Overview
 
We are an upstream company specializing in the exploration, development and production of oil and natural gas. We are the dominant oil and natural gas producer in offshore China and, in terms of reserves and production, we are also one of the largest independent oil and natural gas exploration and production companies in the world. As of the end of 2012, we had net proved reserves of approximately 3.49 billion BOE (including approximately 0.29 billion BOE under our equity method investees). In 2012, we had a total net oil and gas production of 935,615 BOE per day (including 46,767 BOE per day under our equity method investees).
 
Competitive Strengths
 
We believe that our historical success and future prospects are directly related to a combination of our strengths, including the following:
 
 
·  
large and diversified asset base with significant exploitation opportunities;
 
 
·  
sizable operating areas in offshore China with demonstrated exploration potential;
 
 
·  
successful independent exploration and development track record;
 
 
·  
access to capital and technology and reduced risks through PSCs in offshore China; and
 
 
·  
experienced management team and a high level of corporate governance standard.
 
Large and diversified asset base with significant exploitation opportunities
 
We have a large net proved reserve base spread across offshore China and globally. As of December 31, 2012, we had approximately 3.49 billion BOE of net proved reserves. Our core operating area, offshore China, contributed to approximately 69.0% of our net proved reserves, while overseas contributed to the balance of 31.0%.
 
In addition to offshore China, we have a diversified global portfolio which provides us with further exploration and exploitation potential. We have a strong track record of successfully acquiring and
 
 
22

 
operating many quality overseas upstream assets worldwide. Currently, we have assets in resource rich countries such as Indonesia, Australia, Nigeria, Uganda, the United States, Canada, and United Kingdom.
 
As of December 31, 2012, approximately 58.5% of our net proved reserves were classified as net proved undeveloped. Our large proved reserve base gives us the opportunity to achieve substantial production growth.
 
Sizable operating areas in offshore China with demonstrated exploration potential
 
We are the dominant oil and gas producer in offshore China, a region that we believe has substantial exploration upside. As of December 31, 2012, our total major exploration areas acreage in offshore China was approximately 257 thousand km2. We believe that offshore China is relatively underexplored, compared to other prolific offshore exploration areas such as the shallow water of the U.S. Gulf of Mexico, providing us with substantial exploration upside.
 
We have maintained an active drilling exploration program, which continues to demonstrate the exploration potential of offshore China. During 2012, we and our foreign partners have together drilled a total of 99 exploratory wells in offshore China, of which 41 were wildcat wells. During the same year, we and our foreign partners made 12 new discoveries in offshore China.
 
Successful independent exploration and development track record
 
We have a strong record of growing our reserves base for oil and natural gas, both independently and with our foreign partners through PSCs. In recent years, we have been adding reserves and production mainly through independent exploration and development. As of the end of 2012, in offshore China, approximately 79.6% of our net proved reserves were independent and approximately 75.3% of our production came from independent projects.
 
In 2012, in offshore China, our independent exploration resulted in 11 new discoveries. We also successfully appraised 14 oil and gas structures. On the development front, in 2012, our major new development projects progressed smoothly with 5 new projects on stream.
 
Access to capital and technology and reduced risks through PSCs in offshore China
 
Our parent, CNOOC, holds exclusive right from the PRC government to enter into PSCs with foreign partners relating to the petroleum resources exploitation in offshore China. CNOOC assigned us all of its rights and obligations under then-existing PSCs in 1999 and has undertaken to assign to us its future PSCs except for those relating to its administrative functions. PSCs help us minimize our offshore China finding costs, exploration risks and capital requirements because our foreign partners are responsible for all costs associated with exploration under the usual case. Our foreign partners recover their exploration costs only when a commercially viable discovery is made and production begins.
 
For more information about PSC, see “Item 4—Information on the Company—Business Overview—Regulatory Framework in the PRC.”
 
Experienced management team and a high level of corporate governance standard
 
Our senior management team has extensive experience in the oil and gas industry. Most of our executives have been with CNOOC, our controlling shareholder, since its inception in 1982. Many of our management team and staff members have worked closely with international partners both within and outside China through numerous joint operations.
 
We have a proven track record of complying with a high level of corporate governance standard, which was recognized by the industry. For example, we were awarded the “Best Managed Asian Company in the Oil/Gas Sector” for the third year in a row by Euromoney and the “Corporate Governance Asia Recognition Awards 2012” by Corporate Governance Asia in 2012.
 
 
23

 
Business Strategy
 
We intend to continue expanding our oil and gas exploration and production activities.  The principal components of our strategy are as follows:
 
 
·  
focus on reserve and production growth;
 
 
·  
develop natural gas business; and
 
 
·  
maintain prudent financial policy.
 
Focus on reserve and production growth
 
As an upstream company specializing in the exploration, development, production and sales of oil and natural gas, we consider reserve and production growth as top priority. We plan to increase our reserves and production through drill bits and value-driven acquisitions. We will continue to concentrate independent exploration efforts on major operating areas, especially in offshore China. In the meantime, we will continue to enter into PSCs with foreign partners to lower capital requirements and exploration risks. In 2012, we achieved a reserve replacement ratio of 188%. After acquisition of Nexen, Nexen will add approximately 20% net production and 24% proved reserves to the Company based on reserves and production as at the end of 2012.
 
 
We increase production primarily through the development of proved undeveloped reserves. As of December 31, 2012, approximately 58.5% of our proved reserves were classified as proved undeveloped, which gives us the opportunity to achieve future production growth, as long as these proved undeveloped reserves are developed faster than the depletion rate of our currently producing reserves.
 
Develop natural gas business
 
We plan to capitalize on the growth potential of the PRC natural gas market, and continue to explore and develop natural gas fields. To the extent we invest in businesses and geographic areas where we have limited experience and expertise, we plan to structure our investments as alliances or partnerships with partners possessing the relevant experience and expertise.
 
In 2013, the large-size gas field Liwan 3-1 in deepwater South China Sea will commence production. We expect that our natural gas production would continue to increase accordingly.
 
Maintain prudent financial policy
 
We will continue to maintain our prudent financial policy. As an essential part of our corporate culture, we continue to promote the cost consciousness among both our management team and other employees. Also, in our performance evaluation system, cost control is always one of the most important key performance indicators.
 
Aiming to reduce production cost, we plan to actively promote the regional development of oil and gas field groups and to apply up-to-date offshore engineering, drilling and production technologies to our operations.
 
Currently, we have a strong financial profile with a low gearing ratio. We intend to maintain our financial strength by managing key measures such as capital expenditures, cash flows and costs per BOE. We also intend to actively manage our account receivables and inventories to enhance liquidity and improve profitability. We will continue to monitor our foreign currency denominated assets and debts and to manage exposure to foreign exchange rate fluctuations.
 
Nexen Acquisition
 
On February 25, 2013, Canada local time, we completed the acquisition of Nexen. Incorporated in Canada in 1971, Nexen is an independent global energy company, whose securities were previously listed on the Toronto Stock Exchange (the “TSX”) and the NYSE under the symbol “NXY”. Upon completion of the acquisition, Nexen’s securities were delisted from the TSX and the NYSE, and were deregistered with the SEC. Nexen focuses on three core businesses: conventional oil and gas, oil sands and shale gas, and has operations in the U.K. North Sea, Canada, U.S. Gulf of Mexico, Nigeria, Yemen and Colombia. Based on information included in Nexen’s Form 40-F filed with the SEC on February 25, 2013, Nexen’s total revenue and other income, cash flow from operations and net income for the fiscal year ended December 31, 2012 were Cnd$6,711 million, Cnd$2,651 million and Cnd$333 million, respectively, and Nexen had 3,228 employees as of December 31, 2012.
 
As disclosed in the Circular included in the Company’s Form 6-K furnished to the SEC on December 21, 2012, an arrangement agreement was entered into on July 23, 2012 among the Company, CNOOC Canada Holding Ltd., our wholly owned subsidiary, and Nexen (the “Arrangement Agreement”) for acquisition of all outstanding common shares and preferred shares of Nexen pursuant to a Plan of Arrangement under the Canada Business Corporations Act for an aggregate consideration of approximately US$15.1 billion in cash (the “Nexen Acquisition”). The indebtedness of Nexen of approximately US$4.3 billion would remain outstanding following the acquisition. Based on information included in Nexen’s Form 6-K furnished to the SEC on March 28, 2013, Nexen completed the redemption of its 7.35% subordinated debentures due 2043 for a total outstanding principal amount of US$460 million on March 28, 2013, which have been cancelled and delisted from the TSX and the NYSE.
 
Based on information included in Nexen’s Form 40-F filed with the SEC on February 25, 2013, as of December 31, 2012, Nexen’s proved plus probable reserves estimates were approximately 2.2 billion BOE, of which 0.9 billion BOE are proved and 1.3 billion BOE are probable. About 70% of Nexen’s proved plus probable reserves relate to its Canadian oil sands properties. The remainder of reserves are widely distributed throughout its oil and gas properties around the world. Nexen’s production before royalties averaged 197,900 BOE/day in 2012.
 
 
24

 
Selected Operating and Reserves Data
 
The following table sets forth our operating data and our net proved reserves as of the date and for the periods indicated.
 
Our reserve data for 2010, 2011 and 2012 were prepared in accordance with the SEC’s final rules on “Modernization of Oil and Gas Reporting”, which became effective for accounting periods ended on or after December 31, 2009.
 
   
Year ended December 31,
 
   
2010(1)
   
2011
   
2012
 
Net Production(3):
                 
Oil (daily average bbls/day)
    722,086       708,286       742,765  
Gas (daily average mmcf/day)
    1,050.1       1,171.7       1,109.7  
Oil equivalent (BOE/day)
    902,932       909,000       935,615  
                         
Net Proved Reserves (end of period):
                       
Oil (mmbbls)
    1,719.1       1,873.3       2,031.1  
Gas (bcf)
    5,944.9       5,627.4       6,005.3  
Synthetic Oil (mmbbls)
          87.4       137.0  
Bitumen (mmbbls)
          8.6       12.6  
Total (million BOE)
    2,710.0       2,921.1       3,202.6  
Total with equity method investees (million BOE) (3)
    2,998.3       3,190.1       3,491.9  
Annual reserve replacement ratio(2) 
    116%       167%       187%  
Annual reserve replacement ratio(3) 
    202%       158%       188%  
Estimated reserve life (years)
    8.5       9.3       9.8  
Estimated reserve life (years) (3) 
    9.1       9.6       10.2  
Standardized measure of discounted future net cash
  flow (million Rmb)
    293,768       339,234       356,998  

(1)  
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
(2)  
For information on the calculation of this ratio, see “Terms and Conventions—Glossary of Technical Terms—reserve replacement ratio.”
(3)  
Including our interest in equity method investees.
 
For the years 2010, 2011 and 2012, approximately 11%, 23% and 36%, respectively,  of our reserves were evaluated by us independently and the remaining were based upon estimates prepared by independent petroleum engineering consulting companies and reviewed by us.  For further information regarding our reserves, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Operations—The oil and gas reserve estimates in this annual report may require substantial revision as a result of future drilling, testing, production and oil and gas price changes” and “Item 4—Information on the Company—Business Overview—Exploration, Development and Production.”
 
 
25

 
Summary of Oil and Gas Reserves

The following table sets forth summary information with respect to our estimated net proved reserves of crude oil and natural gas as of the dates indicated.
 
   
Net proved reserves
at December 31,
   
Net proved reserves
at December 31, 2012
 
   
2010(1)
   
2011
   
Oil
   
Natural Gas
   
Synthetic Oil
   
Bitumen
   
Total
 
   
(mmboe)
   
(mmboe)
   
(mmbbls)
   
(bcf)
   
(mmbbls)
   
(mmbbls)
   
(mmboe) (2)
 
Developed
                                         
Offshore China
                                         
Bohai
    650.9       632.9       523.2       338.3                   579.6  
Western South China Sea
    289.0       230.4       87.9       719.7                   207.8  
Eastern South China Sea
    215.0       213.4       142.6       401.4                   209.5  
East China Sea
    1.5       8.4       0.4       40.2                   7.1  
Subtotal
    1,156.4       1,085.1       754.1       1,499.6                   1,004.0  
Overseas
                                                       
Asia
    110.6       68.0       22.3       460.4                   105.3  
Oceania
    37.4       34.9       5.9       124.0                   30.2  
Africa
    57.1       46.4       44.2                         44.2  
North America
    8.3       47.0       51.0       129.1       32.1       0.8       105.4  
Subtotal
    213.4       196.3       123.4       713.5       32.1       0.8       285.1  
Total Developed
    1,369.8       1,281.4       877.5       2,213.1       32.1       0.8       1,289.1  
                                                         
Undeveloped
                                                       
Offshore China
                                                       
Bohai
    468.2       466.9       544.0       254.2                   586.3  
Western South China Sea
    310.0       356.3       136.9       1,665.2                   414.4  
Eastern South China Sea
    219.1       306.5       211.5       774.3                   340.5  
East China Sea
    79.2       60.0       19.3       265.7                   63.6  
Subtotal
    1,076.5       1,189.7       911.7       2,959.4                   1,404.9  
Overseas
                                                       
Asia
    108.8       155.3       42.8       340.0                   102.2  
Oceania
    66.3       75.8       10.7       285.5                   66.6  
Africa
    88.6       87.3       91.5                         91.5  
North America
          131.7       96.9       207.3       104.9       11.9       248.3  
Subtotal
    263.7       450.1       241.9       832.8       104.9       11.9       508.6  
Total Undeveloped
    1,340.2       1,639.8       1,153.6       3,792.2       104.9       11.9       1,913.5  
                                                         
TOTAL PROVED
    2,710.0       2,921.1       2,031.1       6,005.3       137.0       12.6       3,202.6  
Equity method  investees
    288.3       269.0       200.7       513.7                   289.3  
Total with equity method investees
    2,998.3       3,190.1       2,231.8       6,519.0       137.0       12.6       3,491.9  

(1)
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
(2)
In calculating barrels-of-oil equivalent amounts, we have assumed that 6,000 cubic feet of natural gas equals one BOE, with the exception of natural gas from South America, Oceania and Indonesia in Asia, which we have used actual thermal unit for such conversion purpose.
 
 
26

 
The following tables set forth net proved crude oil reserves, net proved natural gas reserves and total net proved reserves, as of the dates indicated, for our independent and non-independent operations in each of our operating areas.
 
Total Net Proved Crude Oil Reserves
(mmbbls)
 
   
As of December 31,
   
As of December 31, 2012
 
   
2010(1)
   
2011
   
Developed
   
Undeveloped
   
Total
 
Offshore China
                             
Bohai
    997.7       1,000.4       523.2       544.0       1,067.2  
Western South China Sea
    260.0       250.5       87.9       136.9       224.8  
Eastern South China Sea
    225.0       316.1       142.6       211.5       354.0  
East China Sea
    18.9       17.7       0.4       19.3       19.8  
Subtotal
    1,501.6       1,584.7       754.1       911.7       1,665.7  
Overseas
                                       
Asia
    49.9       81.8       22.3       42.8       65.0  
Oceania
    20.7       19.0       5.9       10.7       16.7  
Africa
    145.7       133.7       44.2       91.5       135.7  
North America
    1.2       54.1       83.9       213.7       297.6  
Subtotal
    217.5       288.6       156.3       358.7       515.0  
Total
    1,719.1       1,873.3       910.4       1,270.4       2,180.7  
Equity method entities
    197.4       196.3       104.5       96.2       200.7  
Total with equity method investees
    1,916.5       2,069.6       1,014.9       1,366.6       2,381.5  

(1)
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.

 
Total Net Proved Natural Gas Reserves
(bcf)
 
   
As of December 31,
   
As of December 31, 2012
 
   
2010(1)
   
2011
   
Developed
   
Undeveloped
   
Total
 
Offshore China
                             
Bohai   
    728.3       596.2       338.3       254.2       592.5  
Western South China Sea
    2,034.1       2,017.2       719.7       1,665.2       2,384.9  
Eastern South China Sea
    1,254.3       1,222.4       401.4       774.3       1,175.7  
East China Sea
    370.6       303.7       40.2       265.7       305.9  
Subtotal
    4,387.3       4,139.5       1,499.6       2,959.4       4,459.0  
Overseas
                                       
Asia
    1,016.7       848.7       460.4       340.0       800.4  
Oceania
    498.0       467.8       124.0       285.5       409.5  
North America
    42.9       171.4       129.1       207.3       336.4  
Subtotal
    1,557.6       1,487.9       713.5       832.8       1,546.3  
Total
    5,944.9       5,627.4       2,213.1       3,792.2       6,005.3  
Equity method investees
    527.8       422.0       329.5       184.2       513.7  
Total with equity method investees
    6,472.7       6,049.4       2,542.6       3,976.4       6,519.0  

(1)
From January 1, 2011, the Company adopted IFRS 10-Consolidated Financial Statements, IFRS 11-Joint Arrangements, IFRS 12-Disclosure of Interest in Other Entities, IAS 27 (Revised)-Separated Financial Statements and IAS 28 (Revised)-Investments in Associates and Joint Ventures before their mandatory effective date on January 1, 2013. Certain comparative figures have been adjusted.
 
 
27

 
Total Net Proved Reserves
(million BOE)
 
   
As of December 31,
   
As of December 31, 2012
 
   
2010(1)
   
2011
   
Developed
   
Undeveloped
   
Total
 
Offshore China
                             
Bohai
    1,119.1       1,099.8</