CNOOC outperforms with 7.9pc gain

CNOOC, the country's dominant offshore oil and gas producer, says investors should give Nexen more time to judge the merit of its acquisition, after the Canadian unit posted a sharp fall in interim profit, in contrast to better-than-expected gains at CNOOC, excluding the unit.

"We are not too worried about Nexen's short-term performance," chairman Wang Yilin said. "It takes a long time to strengthen Nexen's management and realise its value in technology innovation."

Nexen posted a net profit of C$33.4 million (HK$250 million) for the first half, down 88 per cent from C$280 million a year ago.

Chief executive Li Fanrong said this was due mainly to costs related to its acquisition, and no asset impairment was recorded.

Nexen's result contrasted with CNOOC's 7.9 per cent profit growth to 34.4 billion yuan (HK$43.5 billion).

Sanford C Bernstein senior analyst Neil Beveridge said Nexen's profit drop could have been caused by the booking of much of the financing costs related to the acquisition to manage tax exposure. He also noted Nexen's Canadian operation remained in the red.

A 45 per cent year-on-year rise in operating cash flow of CNOOC including Nexen suggested strong contribution from Nexen, Beveridge said.