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April 19, 2010
Share ThisCNOOC Ltd. (CEO) has successfully struck a new discovery in eastern Bohai Bay. The company has produced 540 barrels of oil per day during the testing of the Penglai 9-1 well. The well was drilled to depths of 1505 meters in water.
Bohai Bay is becoming the most important drilling location among CNOOC’s four major production areas in offshore China. The other three are western South China Sea, eastern South China Sea and the East China Sea. In the last month, CNOOC has successfully started production at another Bohai Bay oil field – BoZhong (BZ) 3-2.
While this discovery opens up a new prospect for exploration in Bohai Bay, CNOOC has been pursuing various international upstream projects. A recent example on this front is the company’s joint venture in Argentina with Bridas Energy.
The continuous successful drilling program in the offshore China, particularly in Bohai Bay, along with various international upstream projects will help CNOOC to boost production growth potential.
Following a production growth of 17.2% and 13% in 2009 and 2008, respectively, the company is now expecting 21% - 28% production growth in 2010 and a compounded annual growth rate of 6% -10% for the next five years.
We believe CNOOC’s underlying valuation will gain support on the back of its premium assets portfolio, excellent execution strategy and unique position as a pure oil player. Our Outperform rating for CNOOC ADRs remain unchanged at this stage.
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