Continuing our exploration on where to invest in 2012 , we turn to the energy sector -- one of three sectors that should grow in the new year. Even if China's appetite for energy begun to falter, it is unlikely to hurt the prospects of China National Offshore Oil Corporation ( CEO , quote ).
This company, commonly known as Cnooc (pronounced See-nook), is on track to report 2012 earnings of $10.9 billion -- according to analysts -- with a P/E ratio of 9 with a dividend yielding 3.49% or $6.10 a share at the current price of $174.68.
CEO operates in three segments: independent operations, production sharing contracts or other joint arrangements and trading business.
It has four producing areas in offshore China, which include the Bohai Bay, Western South China Sea, Eastern South China Sea and East China Sea.
In overseas, it has oil and gas assets in Indonesia, Australia, Nigeria, Argentina, the United States and other countries.
n recent years traders have been aware of China's ravenous appetite for resources, such as steel to build bridges, oil to fuel cars that has powered the global economy. Fast forward to today, analyses now are speculating whether that hunger has begun to falter.
Whether it does or not, CEO is a global giant.
At the of the end of 2010, CEO owned net proved reserves of approximately 2.99 billion barrels-of-oil-equivalent -- roughly $300 billion in oil.
And the company is still growing. In November, CEO announced the closing of its acquisition of Opti Canada.
Cnooc enjoys a sweet deal with foreign oil companies exploring off China's shores. Cnooc has managed to share in the profits when foreign oil companies find oil but bears no financial risk when they fail to find oil.
CEO's biggest customer is Sinopec ( SNP , quote ), one of China's major integrated oil companies, which can't drill enough oil on its own to satisfy domestic demand.
Bottom Line: CEO benefits from a low cost operational basis that helps the company to generate cash even if oil prices are depressed.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
