HONG KONG--Cnooc Ltd. ( CEO ) has set a conservative output target for this year, but it is sharply increasing its capital expenditure budget as it seeks to expand both overseas and domestically.

China's biggest offshore oil and gas producer, which said it would increase its capital spending to $12 billion-$14 billion this year from $9.2 billion last year, said in a statement Wednesday that is maintaining its ambitious 2011-2015 compound annual growth projection of 6%-10% despite slow growth in 2011 and 2012, in part due to the anticipated completion of its $15.1 billion acquisition of Canadian energy firm Nexen Inc.

The Nexen deal, which the Canadian and other interested governments have approved, is still pending the U.S. green light. Once completed, it will be the largest-ever Chinese takeover of a North American oil company, helping to ease the bad taste of the state-owned company's failed 2005 $18.5 billion bid for Unocal Corp.

Cnooc Chief Financial Officer Zhong Hua told reporters in Hong Kong that he was confident the Nexen takeover would be completed by the end of the first quarter. On Monday, Cnooc and Nexen said they had extended the Jan. 31 deadline for completing the deal by 30 days.

The acquisition of Nexen, which has a shale-gas project in northeastern British Columbia, Canada, as well as other global oil and gas assets, will boost net production by around 20%.

China's domestic oil and gas output has been slowing since 2011 due to maturing fields, spurring Cnooc to increase domestic output through enhanced recovery techniques at older wells and by drilling deeper offshore wells while also seeking to secure overseas resources to fuel the world's second-largest economy's rapid growth.

Cnooc is targeting net production of 338 million-348 million barrels of oil equivalent this year compared with 341 million-343 million BOE in 2012, it said in the statement. In 2011, the company produced 331 million-332 million BOE.

Mr. Zhong described the company's 2013 exploration program as "intensive," with more effort planned in deep-water exploration.

Cnooc plans to drill 140 exploration wells, mostly offshore China, focusing on deep-water areas of the South China Sea. The Liwan 3-1 gas field, the country's first large deep-water gas field, will come onstream by the end of this year, he said.

In December, China'sNational Development and Reform Commission, the nation's top economic planning body approved plans for Liwan, which was discovered by Canadian energy firm Husky Energy Inc . (HSE.T) in 2006. Cnooc owns 51% of Liwan 3-1 and Husky Energy owns 49%.

A third of China's oil and gas reserves are located in the South China Sea, 70% of which are located in a 1.537- million-square-kilometer deep-water area.