CNOOC 0883

[winston]

Ray Barros: We will know whether it will breakdown over the next few days

[winston]

Not vested. From Phillips:-

VALUATION:

We reiterate our `BUY` rating with a slightly higher target price to HK$22.3, which is based on DCF with the assumption of an average of oil price at US$90/bbl in 2011 and CAGR of 9.0% in the following 5-years.

P/B is trading at a very attractive value, barely at its mean level since 2007. We expect the forward p/e to recover to approximately positive one standard deviation, because CNOOC was trading above 1std the last time we saw oil prices higher than US$100/bbl back in 2007/2008.

We believe that the management was being conservative in setting its 2011 production target (as always) in an effort to surprise the market. Short-term volatility could be seen if oil prices cannot sustain the current high level; however, CNOOC remains our preferred pick within the industry.

[winston]

Not vested. From Phillips:-


VALUATION

We reiterate our `BUY` rating with target price of HK$22.3, which is based on DCF with the assumption of an average oil price at US$90/bbl in 2011 and CAGR of 9.0% in the following 5-years.

The recent malfunction of Haiyangshiyou 102 will not materially affect CNOOC's mid-to-long term growth.

P/B is trading at a very attractive value, barely at its mean level since 2007. We expect the forward p/e to recover to approximately positive one standard deviation, because CNOOC was trading above 1std the last time we saw oil prices higher than US$100/bbl back in 2007/2008.


RISKS

Short-term volatility could be seen if oil prices cannot be sustained at the current high level. Delay in new projects would also lower the expected growth rate.

The exact impact of Malfunction of Haiyangshiyou 102 could be higher than expected, and thus deteriorate earnings.

The higher than expected strengthening of RMB could negatively affect earnings.

[winston]

CNOOC earnings gush to highest ever 39b yuan
Thursday, August 25, 2011

CNOOC Limited (0883) posted record high earnings in the first half as crude prices and domestic oil production surged.

Net profit soared 51 percent to 39.34 billion yuan (HK$48 billion) from a year back. Revenue jumped 51 percent to 124.57 billion yuan.

CNOOC said total net oil and gas output reached 168.7 million barrels of oil equivalent in the first half, rising 13 percent year on year. It sold oil at an average US$108.20 (HK843.96) per barrel to refiners - up 41 percent.

Chairman Wang Yilin said recent policies by Beijing encouraging the use of natural gas will help boost the firm's revenue. "We are planning to acquire coalbed methane - only if profitable - from the parent company or private entities."

The firm slashed its 2011 oil production target to between 331 million and 341 million barrels from 355 million to 365 million barrels after a leak in Bohai Bay hit output.

An interim dividend of 25 HK cents was declared on earnings per share at 88 fen. Shares rose 2.1 percent to HK$14.22 yesterday.

TONY LIAW

http://www.thestandard.com.hk/news_deta ... 10825&fc=7

[winston]

Not vested

DJ MARKET TALK: Cnooc De-Rating Will Continue, Underweight -JPM

1345 [Dow Jones] STOCK CALL: JPMorgan says the reason to buy Cnooc (0883.HK) used to be production growth and cost control, but while 1H11 results indicate the firm still has good control over costs, with production growth dependent on expensive M&A, "we believe the market will eventually take these results negatively and continue to de-rate the stock."

It keeps Cnooc at Underweight, although the stock is already trading below its target price of HK$15.00. JPM says Cnooc's most recent acquisitions (shale oil in the U.S., Canadian oil sands and Uganda partnership with Tullow/Total) are looking much longer-dated in terms of contributions, in addition to being somewhat more difficult than expected to close (PAE in Argentina).

"So with falling production, delayed acquisitions and an oil spill in Bohai Bay to deal with, things are looking less positive for Cnooc than what investors are used to." The stock is up 2.8% at HK$14.62.

Source: Dow Jones Newswire

[winston]

Not vested

Valuation

We maintain our `BUY` rating with a lowered target price of HK$18.2, which is based on DCF with the assumption of an average realized oil price of US$92/bbl in 2011 and a CAGR of 9.0% in the following 5-years.

Despite the recent volatility in crude oil prices, we are positive on CNOOC's ability to deliver robust earning in 2H11. We have already factored the lowered production target into our valuation model back in July; yet, the better than expected realized oil prices partially offsets the lower production volume. We keep our full year eps estimate at RMB1.63.

The stock is currently trading at an attractive valuation. Both p/b and p/e are more than 1std below their respective 5-year means. We expect the earning multiple to recover to 8.1x in 2011.


Risks:

Given the uncertainty in both China and the global economic outlook and reluctant growth in demand, CNOOC could be hurt more than expected for its cyclical nature.

Delays in new projects would also lower the expected growth rate. The incident at PL19-3 could increase CNOOC's operational risks.

The higher than expected strengthening of RMB could negatively affect earnings. Volatility of oil prices could also negatively affect the Company.

Source: Phillips

[winston]

Not vested

DJ MARKET TALK: Cnooc Off 7.0%; China Regulators Mean Business - CS

1013 [Dow Jones] Cnooc (0883.HK) tumbles 7.0% to HK$14.12 after earlier sliding to HK$13.82, hurt by news its 51:49 JV with ConocoPhillips (COP) was ordered to suspend operations at the entire PL19-3 oil field, which will further reduce production by 40,000 barrels per day.

Credit Suisse says if PL19-3 is shut for the rest of 2011, this represents 8 million barrels of net loss or a 2.3% loss versus the revised-down production forecast.

Perhaps more importantly, "China oil regulators are showing they mean business," CS says. Cnooc volume in the first 40 minutes of trade is already HK$847.9 million, more than Friday's HK$784.9 million full-day, suggesting investors are aggressively dumping the stock.


Source: Dow Jones Newswire

[winston]

Not vested

DJ UPDATE: Cnooc: Penglai Oil Field Shutdown To Hit Output; Shares Down

-- Penglai suspension will cut daily output by an extra 40,000 barrels
-- Share price plunges as oil field shutdown hurts company's output
-- May cut output target further as near-term restart is unlikely

HONG KONG (Dow Jones)--Cnooc Ltd. (CEO) said Sunday that suspension of operations at its Penglai 19-3 oil field in northeastern China's Bohai Bay will further reduce the company's oil production this year, a disclosure that sent shares in the blue-chip offshore oil producer sharply lower Monday.

Beijing-based Cnooc said in a statement that it expects net production to be reduced by a further 40,000 barrels a day from about 22,000 barrels per day forecast in August after China ordered a halt to production from the entire Penglai oil field due to unsatisfactory progress of an oil spill clean-up.

Analysts said they expect Cnooc to further reduce its 2011 output target, which it revised down by up to 6.8% to 331 million-341 million barrels of oil equivalent last month, as a restart of the oil field is unlikely in the near term.

At midday close, Cnooc's shares fell 7.6% to HK$14.04, having recovered from an intraday low of HK$13.82 but still the worst-performing blue chip. The benchmark index fell 2.2% to 19,775.

Credit Suisse said Monday that it expects Cnooc's net production will be reduced by 8 million barrels for the full year, or down 2.3% for its 2011 production forecast, assuming Penglai is shut for the rest of the year.

"Following the recent downgrade of its 2011 production growth target, a further production loss will likely be viewed negatively," Credit Suisse analyst Horace Tse said.

"A complete shutdown shows the Chinese regulators are not willing to take any chances with oil and gas production in offshore China."

Bank of America Merrill Lynch said it doesn't expect Cnooc to bear a huge liability as the company isn't the operator and the spill is a small-scale one, but said it sees the possibility of capex and costs rising when the production resumes.

China's State Oceanic Administration said Friday that it had ordered all production halted at the oil field, which is operated by ConocoPhillips's (COP) China unit and 51%-owned by Cnooc.

Source: Dow Jones Newswires

[winston]

not vested

DJ MARKET TALK: Cnooc Off 8.8%; Bigger Implication Than Output Cut

1351 [Dow Jones] Cnooc (0883.HK) remains the worst-performing blue chip, tumbling 8.8% to HK$13.86 after production at the Peng Lai oil field is shut.

JPMorgan says the shutdown brings Cnooc's production in 2011 down to 2010 levels; it adds that Cnooc has in recent years had very strong production growth from large scale fields domestically and abroad (Nigeria, Indonesia, Penglai) in addition to controlling decline rates, "so a no-growth-year will be taken negatively."

Perhaps more importantly, Bank of America - Merrill Lynch says there is "a huge difference" between the understanding of the cause of oil spill between ConocoPhillips/Cnooc and Chinese government; it says that the government has viewed the issue is a result of violation of original development plan and causing damage to the reservoir.

"The government might see the oil spill has indicated a systemic/structural risk in all platforms, compared to the operator view it as standalone case."

Source: Dow Jones Newswire

[winston]

not vested

Cnooc Target Cut To HK$13.00 From HK$14.00 By Jeffries