CNOOC 0883

[winston]

DJ MARKET TALK: Citi Tips Cnooc 2008 Net Profit +43% At CNY44.61B

1043 [Dow Jones] STOCK CALL: Citigroup tips Cnooc (0883.HK) 2008 net profit +43% to CNY44.61 billion, on higher oil, gas output from new fields, with soaring oil prices in 1H to cushion oil price slump in 2H. Results due March 31. House says price of Duri (an Asian heavy oil benchmark to which Cnooc refers when pricing its oil) at discount to Brent averaging US$15/bbl in 4Q08, widened from discount of US$9/bbl in 1H08, to weight on 2H08 earnings.

Adds, expects 2H08 cost growth should be similar to 1H08, but tips costs to soar this year on depreciation of startup of large projects. Tips Nigeria OML-130 to start producing first barrels of oil this month. Keeps Buy, target stays at HK$7.80; stock down 2.2% at HK$6.21; HSI down 2.6%.

[winston]

DJ MARKET TALK: Cnooc Retreats 1.6%; US$40/bbl Trough For Oil-DBS

1125 [Dow Jones] Cnooc (0883.HK) down 1.6% at HK$6.74, succumbing to profit-taking after 12.7% rally Monday through Wednesday, with oil prices' pullback overnight acting as catalyst. Still, volume light at HK$110.6 billion vs average of HK$980.2 million past 3 days, suggesting this more of modest pullback rather than start of fresh downtrend.

Key to share price movement is oil price outlook; DBS Vickers believes crude oil close to cycle bottom at US$40/bbl, "is pending a U-shape recovery at the end of this year." House deems US$40 cycle-trough price vs average production cost at US$27; will motivate sizable cut in oil output, stimulate government incentives to build strategic oil inventory, induce market speculation on gold/oil arbitrage

[winston]

Cnooc Profitable With Oil at $40, Chairman Fu Says (Update2) By William Bi and Wang Ying

March 13 (Bloomberg) -- Cnooc Ltd., China’s biggest offshore oil producer, is profitable with oil prices at $40 a barrel, said Chairman Fu Chengyu.

“We are certainly making profit at $40 oil, only much less than with oil at $147,” Fu told reporters in Beijing today.

Benchmark oil prices in New York are down $100 from the record reached in July as a global recession damps energy demand. Oil for April delivery traded at $46.66 a barrel at 12:36 p.m. in Beijing. Fields off China account for almost 90 percent of Cnooc’s oil and gas assets. The company is due to report 2008 earnings on March 31.

State-controlled Cnooc is building its commercial oil stockpiles based on “its own development requirements,” Fu said, without elaborating.

Cnooc said in January it plans to produce the equivalent of as much as 231 million barrels of oil and gas in 2009 as new projects in China, Nigeria and Indonesia come on stream. The Beijing-based company produced the equivalent of more than 92 million barrels of oil and gas in the first half of 2008.

[winston]

CNOOC targets 80b yuan to fund expansion plan

China National Offshore Oil Corp (CNOOC) aims to raise as much as 80 billion yuan (HK$90.87 billion) to fund aggressive expansion plans this year, a senior executive said.

The move comes as the company faces niggling cash flow problems and plummeting revenues following the collapse in world crude prices. "We are preparing to issue mid- term notes. We have submitted the application and we will make an announcement once we hear the result," said chief financial officer Wu Mengfei, in Beijing yesterday.

The debt financing will be carried out over several stages, he said, without providing further detail. He said the move would help the company - the state-owned parent of CNOOC Ltd (0883) - take advantage of falling steel and raw material costs and raise the pace of construction on a number of exploration projects along the Chinese coast.

Fu Chengyu, CNOOC's chairman, revealed recently that the firm would invest a total of US$16.5 billion (HK$128.7 billion) this year, 26 percent higher than in 2008.

Wu said the company was currently looking into the possibility of expanding its 12 million-tonne refining joint venture with Shell in Huizhou, Guangdong province. The first phase is due become operational this year. REUTERS

[winston]

CNOOC's 2008 profits jump 42%

HONG KONG - CNOOC, China's biggest offshore oil and gas producer, said on Tuesday its net profit soared 42 per cent last year on increased output and high oil prices in the first half.

But chairman and chief executive officer Fu Chengyu said the company faced a 'severe winter' in 2009, as oil prices remained weak.

Net profit for the 12 months ending December 31 was 44.38 billion yuan (US$6.49 billion), up from 31.26 billion yuan a year earlier, the firm said in a statement to the Hong Kong Stock Exchange.

'In 2009, we continue to feel the pinch of a severe winter,' said Mr Fu.

'The global economy is still in the dark night. Oil prices continue to wane. For the oil industry, the cold winter still prevails.'

He said that despite the downturn, the firm would continue to increase capital expenditure and expand the company's exploration operations.

CNOOC's revenue rose 39 per cent to 125.98 billion yuan from 90.72 billion yuan in 2008, the statement added.

The firm's strong figures were boosted by extra output at new fields and the record global oil prices in the first half of the year. -- AFP

[winston]

On my Watchlist. They will be profitable as long as Oil is > US$40.

Cnooc declined 5.5 percent to HK$7.76 after UBS cut its rating on the stock to “sell” from “neutral,” citing a weaker oil-price outlook.

[winston]

DJ MARKET TALK: UBS Downgrades Cnooc To Sell, Cuts Target 14.9%

1445 [Dow Jones] STOCK CALL: UBS downgrades Cnooc (0883.HK) to Sell from Neutral after stock more than doubled vs 4Q08 trough. Cuts target price to HK$7.40 from HK$8.70 after lowering 2009-12 EPS estimates by 25%, 26%, 12%, 14%, respectively on downward revision to global oil price forecasts.

Says stock trading near 16X 2009 pre-exceptional P/E after recent rally, on new oil price forecasts; level high vs historic levels, suggests market already pricing in substantial recovery in oil prices. Shares down 5.6% at HK$7.75; HSI down 4.2%.

[winston]

DJ MARKET TALK: Macq Downgrades Cnooc To Neutral From Outperform

0951 [Dow Jones] STOCK CALL: Macquarie downgrades Cnooc (0883.HK) to Neutral from Outperform after reducing earning forecasts on lower oil price forecasts. House cuts long-term oil price forecast to US$73/bbl in 2009; previous not provided. Lowers target price to HK$9.25 from HK$10.50 after cutting 2009-2010 forecast earnings by 6%-16%.

Says lower earnings also have impact on cashflow forecasts with capex remaining at relatively high level. Tips new target price gives limited upside from current price given stock has performed strongly over last six months. Stock +1.9% at HK$9.24 at pre-open.

[winston]

Cheaper oil dents CNOOC by Kathy Wang, The Standard HK

CNOOC Ltd (0883), the mainland's biggest offshore oil producer, said first- quarter revenue fell 42 percent from a year earlier on a lower realized oil price.

For the quarter ended March 31, the oil price slipped 53.2 percent to US$41.56 (HK$324.17) per barrel. Gas was at US$3.89 per thousand cubic feet on average, up 6.6 percent year on year. The company did not disclose its net profit for the first quarter.

CNOOC produced 566,860 barrels of oil equivalent daily in the first quarter, an increase of 15 percent from the same period in 2008.

Net production overseas increased by 30.9 percent year on year, mainly from Indonesia due to lower oil prices and volume growth from Australia and Nigeria.

CNOOC president Yang Hua told a teleconference its Tanguh project in Indonesia will start production in the second quarter.

The OML130 project in Nigeria started operations in March, he said. For the first quarter of 2009, CNOOC's capital expenditure increased 23 percent to 7.51 billion yuan (HK$8.53 billion). CNOOC shares climbed 2.4 percent yesterday to close at HK$8.51.

Separately, Asia's biggest refiner Sinopec (0386) yesterday said its profit for the first half may grow more than 50 percent, after reporting on Tuesday that first-quarter net income jumped 85 percent to 11.2 billion yuan from a year earlier .

The firm is benefiting from Beijing's move to adjust fuel prices in line with international crude prices, guaranteeing stable high profit margins for Sinopec under a relatively low crude price environment. Sinopec shares surged 3.6 percent to HK$5.80 yesterday.

[greenhoney]

LONDON (MarketWatch) -- Natural gas producer BG Group (UK:BG. 1,097, 0.00, 0.00%) said Wednesday that it has signed a liquefied natural gas project development agreement with China National Offshore Oil Corporation, focused on BG Group's Queensland Curtis LNG project. CNOOC will purchase 3.6 million tonnes per annum of LNG for 20 years. CNOOC will also purchase 5% of BG Group's interest in the reserves and resources of certain tenements in the Walloons Fairway of the Surat Basin in Queensland. CNOOC will become a 10% equity investor in one of the two liquefaction trains. Additionally, BG Group and CNOOC will jointly participate in a consortium formed to construct two LNG ships in China that would be owned by the consortium