CNOOC Starts Offshore China Fields – Analyst Blog

CNOOC Ltd (CEO) has successfully started production at two of its independent oil fields. The two oil fields are WeiZhou11-1 east (WZ11-1E) and BoZhong (BZ) 3-2. The first is located in western South China Sea, while the other is in Bohai Bay. The company has 100% interest in both the oil fields and is working as the operator.

 

Currently, three and seven wells are operating in the WZ11-1E and BZ 3-2 oil fields, respectively. The company is expecting a peak production rate of approximately 3,000 and 4,800 barrels per day, respectively, within this year.

 

Besides Bohai Bay and western South China Sea, the company’s upstream properties are also located in other two major production areas in offshore China: eastern South China Sea and the East China Sea.

 

We like CNOOC, given the company’s strong growth profile, exclusivity in the offshore China region and low-cost business model. Based on these new producing oil fields and new projects that will come online, the company expects a net production growth of 22−27% in this year.

 

In addition to the offshore China region, CNOOC has also been pursuing various international upstream projects. A recent example on this front is the company’s joint venture in Argentina with Bridas Energy.

 

While the company exploring various international development projects, we still believe that the offshore Bohai Bay and deepwater South China Sea are under-explored and remain core areas in delivering long term growth for the company. We currently recommend an Outperform rating for CNOOC Ltd.