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.
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.
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