CNOOC Launches 1st Deepwater Rig – Analyst Blog

CNOOC Ltd (CEO) is poised to gain further momentum with the expected delivery of its first deepwater drilling rig (Offshore Oil 981) in the fourth quarter of this year. The company spent $2.20 billion for the rig, which has a DP3 dynamic positioning system and is capable of drilling in water depths of up to 3050 meters.

 

CNOOC is the largest offshore oil company in China, purely focused on offshore upstream operation. Management said that the company will invest another $20 billion for deepwater equipment in the next five years. The company launched its first flagship deepwater pipelay vessel, the Haiyangshiyou 201, late last month with expected delivery at the end of this year.

 

Although deepwater upstream activity strengthens with new discoveries across the world, CNOOC enjoys a favorable position in offshore China where it is the only company permitted to conduct exploration and production activities with international oil and gas companies.

 

Moreover, the company’s overseas production is also gaining momentum with significant contribution from various projects. The recent joint venture with Argentina’s oil and gas producer, Bridas Energy Holdings, is a case in point. These projects are important drivers for the company’s medium- to long-term production growth.

 

Being a pure oil player, CNOOC has a direct bearing on the crude prices. With the recent weakness in crude prices, we believe that CNOOC ADRs could face near-term challenges.