To expand the company’s global footprints, CNOOC Ltd (CEO) expects to form a joint venture with Argentina’s oil and gas producer Bridas Energy Holdings.
CNOOC has proposed a 50/50 joint venture with Bridas Energy Holdings Ltd in Bridas Corporation for a consideration of approximately $3.1 billion in cash, which will be funded by the internal resources of the company.
This transaction coincides with CNOOC’s strategy of expanding its reach into Latin America and other countries. Apart from an interest in Argentine oil and gas blocks, the joint venture will also pursue upstream activity in Bolivia and Chile. The transaction is expected to be completed in the first half of 2010, subject to regulatory approvals.
Upon completion, CNOOC anticipates an increase of 318 MMBOE (million barrels of oil equivalent) and 46 MBOE (thousand barrels of oil equivalent) in its proved reserves and average daily production, respectively. 

In addition to organic upstream growth, CNOOC has been pursuing inorganic growth options, which could further accelerate growth. After delivering a 13% production growth in 2008, the company is now expecting 18% and 21%−28% production growth in 2009 and 2010, respectively. 

While we believe that the company has the ability to deliver a double digit production growth in the long run, management believes that this investment will bring value to its shareholders both in short term and the long run. We are currently Neutral on CNOOC, whose ADSs rose 0.21% to $165.54 at Monday’s closing.
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