Chinese energy giant
) oilfield projects - the Panyu 4-2/5-1 oilfield adjustment
project and the Panyu 4-2/5-1 oilfield project - have commenced
production. The oilfields are located in the Pearl River Mouth
Basin of South China Sea.
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Situated in an average water depth of about 100 meters, the Panyu
4-2/5-1 adjustment project was planned to help the existing
facilities in expanding the oil field. The company expects the
project, in which it holds 75.5% operational interest, to reach
peak production in 2014. CNOOC's associate partner in the Panyu
4-2/5-1 project is Burlington Resources China with a 24.5% share.
The other oilfield - Liuhua 4-1 - remains fully operated by the
company and acts as the operator. In an average water depth of
about 268 meters, the Liuhua 4-1 oilfield is scheduled to reach
its peak production by 2013. CNOOC made a new subsea production
system taking into consideration the characteristics of Liuhua
Meanwhile, CNOOC - China's biggest offshore oil and gas producer
- said that it expects its proposed $15.1 billion acquisition of
the Calgary, Alberta-based energy producer
) to close in the first quarter of 2013.
Although the deal was planned to be wrapped up by the fourth
quarter of 2012, the company's representative pointed out that it
still waits for the U.S. government consent.
As the world's second-largest economy, China has a huge energy
requirement. The Nexen acquisition bid foregrounds not only the
bold attempt by CNOOC but also by other Chinese biggies to make
deeper inroads into the international energy markets for the
specific aim of meeting domestic demand. We note that the CNOOC
bid for Nexen marks the biggest Chinese takeover attempt so far.
We believe CNOOC's growth will be augmented by significant
capital injection for upstream activities in the next five years.
The latest start-up of projects like the Panyu 4-2/5-1 and the
Liuhua 4-1 are part of its aforesaid agenda. Again, we remain
positive on the company's performance, which reflects its premium
assets portfolio, excellent execution strategy, unique position
as a pure oil player and potential transactions in the merger and
We maintain our long-term Neutral recommendation on CNOOC. The
company currently retains a Zacks #3 Rank (short-term Hold