Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Cnooc Sales Rise 3.7% as Oil Prices Counter Output Drop

Cnooc Ltd. CEO Li Fanrong
Li Fanrong, chief executive officer of Cnooc Ltd., said Cnooc has “made significant progress.” Photographer: Jerome Favre/Bloomberg

Cnooc Ltd., China’s biggest offshore oil and gas explorer, said successes in discovering new fields in the country will help the company achieve its goal of as much as 10 percent annual growth in production.

Exploration spending increased 58 percent to 9.64 billion yuan ($1.5 billion) in the first quarter, helping make five discoveries and drill as many appraisal wells, Beijing-based Cnooc said in a statement yesterday. Sales rose 3.7 percent as higher crude prices countered a 6.3 percent drop in production after oil spills shut China’s largest field in September.

“The exploration and appraisal success rate achieved (was) the best for some time,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said in a research note after the production report. “The most important catalyst for Cnooc remains the restart of Penglai 19-3.”

Cnooc has forecast a 2.7 percent increase in production this year as it plans to start new fields and awaits government approval to resume operations at Penglai 19-3. Overseas assets, including shale-gas acreages in North America, on which the state-controlled company has bid about $9 billion in the last two years, are supplementing output from Chinese fields.

Cnooc has “made significant progress,” Chief Executive Officer Li Fanrong said in the statement. “These achievements will strongly support our production growth target of 6 percent to 10 percent compound annual growth rate from 2011 to 2015.”

Shares Rise

The explorer’s shares rose 1.1 percent to HK$16.14 at 9:55 a.m. in Hong Kong trading. The stock has declined 19 percent in the past year, outpacing the 14 percent drop in the benchmark Hang Seng Index.

Cnooc plans to sell 10- and 30-year bonds denominated in U.S. dollars, a person familiar with the matter said today, asking not to be identified because the details are private. The company plans to issue bonds through a unit for general corporate purposes, it said in a statement earlier, without giving an amount for the proposed borrowing.

The Penglai 9-1 field, located in the eastern part of Bohai Bay, is among the biggest oil discoveries in the area in recent years, Cnooc said April 17. Tests at one appraisal well in the field produced about 700 barrels of crude oil a day, it said.

Accelerate Development

Cnooc will accelerate the development of the field and plans to start production in three to five years, Chief Financial Officer Zhong Hua said on a conference call yesterday. Bohai Bay will be the engine of future output growth, he said, declining to give an estimate how much oil Penglai 9-1 is likely to produce.

“While the Penglai 9-1 discovery was exciting, it will not move the needle on the earnings in the short term,” said Simon Powell, the Hong Kong-based head of Asian Oil and Gas Research at CLSA Ltd. “Cnooc’s production is going to be flat this year. The new discoveries will only contribute to the production in the longer term.”

Oil and gas sales rose to 48.84 billion yuan ($7.7 billion) in the three months ended March 31, Cnooc said. Output fell to 79.8 million barrels of oil equivalent in the period from 85.4 million barrels a year earlier.

Cnooc, which gets almost all its income from oil and gas production, doesn’t report first-quarter profit.

Brent oil rose 12 percent to $118.45 a barrel in the first quarter from a year earlier.

Oil Prices

Cnooc realized an average $120.79 from every barrel of oil, about 19 percent higher than a year earlier, according to the statement, while its realized gas price rose 20 percent to $5.88 per thousand cubic feet.

Overseas oil production rose 11 percent to 10.9 million barrels, Cnooc said. The company said it completed the $1.47 billion acquisition of Tullow Oil Plc’s prospects in Uganda during the quarter.

The Long Lake oil-sands project in Canada and the Missan oilfield in Iraq progressed on schedule, the company said.

The explorer lost 62,000 barrels a day after the government ordered the closure of the Penglai 19-3 oilfield. Cnooc owns 51 percent of the oilfield and operator ConocoPhillips the rest.

CEO Li said last month the field would start this year, without giving a time frame. CFO Zhong said yesterday the company is awaiting government approval to resume operations.

Penglai 19-3

Cnooc was forced to cut its 2011 production goal by as much as 9.3 percent after the field was shut and its $7.1 billion purchase of BP Plc’s Argentine unit collapsed in November. The explorer produced 331.8 million barrels of oil equivalent last year and its average realized oil price surged 41 percent to 109.75 a barrel, the company said March 28.

The unit of China National Offshore Oil Corp. targets producing the equivalent of 330 million to 340 million barrels of oil in 2012.

The energy explorer will start four blocks in the South China Sea this year, Cnooc said March 28, when it reported 2011 earnings. These are Weizhou 6-9/6-10, Yacheng 13-4, Panyu 4-2/5-1 and Liuhua 4-1 blocks. Weizhou 6-9/6-10 and Yacheng 13-4 are ready for production, the company said yesterday.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.