Chinese offshore giant
) reported third quarter 2012 total revenue of 48.96 billion yuan
($7.73 billion), up almost 5.3% from the year-earlier level. Out
of the total revenue, approximately 92% came from oil and liquids
sales, which amounted to 45.05 billion yuan ($7.11 billion), up
5.0%. The results were driven by strong oil price realizations.
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China's dominant producer of offshore crude oil and natural gas,
CNOOC achieved net production of 87.8 million barrels of oil
equivalent (MMBoe), up approximately 8.5% from the year-ago
level. Of the total production, more than 79% was oil and liquids
and the remaining 21% constituted natural gas. The positive
performance was mainly attributable to contribution from the
latest projects and new development wells. Overseas production
and a steady performance from the already operational oil and gas
fields also added to the upsurge.
The company's gas volume dropped 8.2% to 104.7 billion cubic feet
(Bcf) from the year-ago level of 114 Bcf, while its liquid
production surged nearly 13.4% year over year to 69.6 million
barrels in the three-month period.
The company's average realized oil price increased 2.9% year over
year to $104.74 per barrel, while its realized gas price
increased nearly 17.4% to $5.83 per thousand cubic feet (Mcf)
from the year-ago level of $5.18 per Mcf.
CNOOC spent 15.0 billion yuan as capital expenditure,
representing an increase of 46.7% from the year-ago level.
During the quarter, CNOOC was busy drilling eight successful
appraisal wells offshore China. Kenli 9-1 and Dongfang 13-2 were
For 2012, CNOOC expects to generate production volume between
335-345 MMBoe primarily driven by strong historical contribution
from the fourth quarter.
We maintain our long-term Neutral recommendation on CNOOC ADRs.
We remain optimistic on CNOOC as we believe the company's
performance reflects its premium assets portfolio, excellent
execution strategy, unique position as a pure oil play and
potential transactions in the merger and acquisition space.
Again, CNOOC's plan to acquire the Canadian energy producer
) for approximately $15.1 billion in cash would raise its proven
reserves by 30%. Should the deal go through, it will be China's
biggest foreign takeover so far.
The company currently holds a Zacks #3 Rank, equivalent to a
short-term Hold rating.