The China National Offshore Oil Corporation Limited (CNOOC), the country's largest offshore oil producer, said Friday that its net profits fell 9.3 percent to 63.69 billion yuan ($10.24 billion) last year.

Increased taxes and surging costs for oil and gas exploration reduced the company's profitability, CNOOC said in its 2012 report filed with the Hong Kong Stock Exchange.

Despite the fall, the oil giant remains one of the most profitable companies in the country. In 2012, its oil and gas revenues rose 2.9 percent from a year earlier to 194.77 billion yuan, the Hong Kong-listed company said.

Oil and gas output totaled 342.4 million barrels, up 3.2 percent year on year, due to remarkable output in oilfields in Bohai Bay.

The company's earnings per share also went up to reach 1.43 yuan. Its board of directors proposed a final pretax dividend of HK$0.32.

The company's average oil price stood at $110.48 per barrel, while average natural gas prices reached $5.77 every 1,000 cubic feet, with year on year increases of 0.7 percent and 12 percent, respectively.

In carrying out its merger and acquisition strategy, CNOOC announced on July 23, 2012 that the company would pay $15.1 billion for all of the common and preferred shares of Canada's Nexen Inc. The deal to acquire Nexen was finished on Feb 26, 2013.