CNOOC Has Growth Issues, But A Low Valuation Too
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, Mar. 14, 10:27 AM
- Cnooc (CEO -4.1%) is interested in purchasing a minority stake in Brazilian petrochemical company Braskem (BAK +2.1%) from Petrobras (PBR -4.3%), according to a local newspaper.
- Reuters reported in January that PBR had been receiving interest from major international chemical companies for its 36% stake in BAK's total capital.
- BAK's controlling shareholder Odebrecht, Latin America's largest engineering conglomerate, also is seeking to exit BAK and could sell its stake in a joint transaction with PBR, Reuters reports.
Fri, Mar. 11, 5:45 PM
- Williams Partners' (NYSE:WPZ) says it is delaying the in-service date for its $925M Constitution natural gas pipeline to H2 2017 from Q4 2016 as it awaits environmental permits in New York.
- The 124-mile, 650K dkm/day pipeline will bring gas from the Marcellus shale in Pennsylvania to New England and New York, but the project has triggered opposition from landowners, public officials and environmental groups.
- WPZ, the largest stakeholder at 41%, is developing the pipeline with Cabot Oil & Gas (NYSE:COG), Piedmont Natural Gas (NYSE:PNY) and WGL Holdings (NYSE:WGL).
- Separately, WPZ reaches an agreement to provide deepwater gas gathering services for Royal Dutch Shell (RDS.A, RDS.B) and Nexen's (NYSE:CEO) Appomattox development offshore Louisiana.
Tue, Mar. 1, 5:08 PM
- Nexen Energy, the Canadian unit of China’s Cnooc (NYSE:CEO), says it has cut 120 jobs in Canada, citing the difficult conditions in the energy market.
- Last March, Nexen cut 340 staff in North America and 60 at its U.K. North Sea operations.
- Nexen is just the latest oil producer to announce cuts in Canadian jobs recently, following the likes of Husky Energy, Chevron, Statoil, Cenovus, Encana, Devon Energy and Trican Well Services.
Fri, Feb. 26, 9:19 AM
- Cnooc (NYSE:CEO) says it has tapped China's first ultra-deepwater natural gas discovery, in the northwestern part of the South China Sea.
- Cnooc says it began drilling the Lingshui 18-1-1 exploration well last October in water depths of 1,688 meters (5,538 ft.), and a test of the well in December was a success; an "ultra-deep" well is categorized as one more than 1,500 meters under the sea.
- The find is located next to another deepsea gas find, Lingshui 17-2, which has certified proven reserves exceeding 100B cm.
Wed, Feb. 24, 8:57 AM
- China National Petroleum (NYSE:PTR), the country’s biggest oil and gas producer, may spin off its oilfield services business as part of its efforts to streamline and become more efficient, Chairman Wang Yilin told the IHS CERAWeek conference in Houston yesterday.
- However, the chairman provided no details on the timing or stake size of a potential oilfield services IPO.
- "This reform follows on from Cnooc (NYSE:CEO) and Sinopec (NYSE:SNP), who have partially spun off their oil services divisions," Bernstein analyst Neil Beveridge says, but “with the severe downturn in the industry and low valuations, the timing is not good.”
Tue, Feb. 23, 8:47 AM
- Oil and gas producers in the U.K. North Sea will spend 40% less this year than in 2014 as low crude prices force them to tighten budgets, which has the potential to chop future production in half by 2025 if new investment opportunities fail to materialize, the main trade body representing the sector warns.
- Oil & Gas U.K. forecasts a drop in capex to £9B ($12.7B) this year from £11.6B last year and £14.8B in 2014, a decline that would affect the whole supply chain, and operators are expected to approve less than £1B of new projects, down from an average of £8B/year in the past five years.
- Even with extensive cost cuts, Oil & Gas U.K. says 43% of all U.K. North Sea oil fields would operate at a loss if crude prices stay at ~$30/bbl this year, and more than 100 fields would cease production during 2015-20.
- Top U.K. North Sea producers include BP, RDS.A, RDS.B, COP, CVX, TOT, E, CEO
Sat, Feb. 13, 8:25 AM
- Large energy companies will slash dividend payouts by a total of $12B this year, bringing global payouts down 9% Y/Y to $147B, according to Markit's dividend forecasting unit.
- Ten of the world's large-cap oil and gas companies are set to cut their dividend in 2016, Markit predicts, including ConocoPhillips (NYSE:COP), which already has slashed its payout for 2015 but likely will announce additional cuts by year-end.
- The other nine large-cap energy firms Markit sees cutting their dividend this year: Anadarko Petroleum (NYSE:APC), Ecopetrol (NYSE:EC), Eni (NYSE:E), Kinder Morgan (NYSE:KMI), Noble Energy (NYSE:NBL), Sinopec (NYSE:SNP), Cnooc (NYSE:CEO), PetroChina (NYSE:PTR) and Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY).
Fri, Feb. 12, 7:36 PM
- In an 8-K filing, Cablevision (NYSE:CVC) says it's settled litigation with Thomas C. Dolan -- a boardmember, and member of the owning Dolan family -- over compensation issues between 2005 and 2008.
- The company will pay Thomas Dolan $21M in the agreement, and Charles Dolan (chairman) and James Dolan (NYSE:CEO) will pay the company $6M in partial reimbursement if Cablevision's merger with Altice (OTCPK:ATCEY) isn't consummated.
- Thomas Dolan is executive VP of Strategy and Development at Cablevision, and was formerly CEO of Rainbow Media -- spun off from Cablevision to become AMC networks.
- Previously: New York City, State file objections to Altice-Cablevision deal (Feb. 05 2016)
- Previously: Union tells New York regulators to kill Altice-Cablevision deal (Jan. 27 2016)
Thu, Feb. 11, 2:08 PM
- While oil production cuts in most of the world have been minimal so far, WSJ reports that China’s output could fall by 100K-200K bbl/day this year from a record high of ~4.3M bbl/day in 2015.
- “China’s declining crude production will help narrow the supply surplus in the global market,” says CLSA analyst Nelson Wang.
- Sinopec (NYSE:SNP) recently said its crude production fell nearly 5% last year, PetroChina (NYSE:PTR) said oil output fell by 1.5% over the first three quarters of 2015 - it has not yet released Q4 data yet - and Cnooc (NYSE:CEO) has said it expects output to decline 5% this year following years of rapid growth.
- Many of China’s oil fields are old, having been discovered in the 1980s, which makes them expensive to maintain; the marginal cost of production at some of China’s more expensive fields is now ~$40/bbl, making it unprofitable for Chinese oil companies to keep producing at recent market prices.
- A drop in Chinese oil output on its own would not be enough to rebalance global oil markets, but it is likely to increase the country's demand for oil from overseas.
Wed, Jan. 27, 10:38 AM
- A second worker has died after this month's explosion at an Alberta oil sands plant owned by Cnooc's (CEO -0.5%) Canadian subsidiary.
- A man injured in the Jan. 15 explosion at Nexen's Long Lake plant died Monday in hospital, after another man was pronounced dead at the scene at the time of the accident; the two men were changing valves on a compressor at the time of the blast.
- The deadly blast was the second accident at Long Lake in the past six months following the discovery of a pipeline rupture in July that led to one of Canada's largest-ever spills; the cause of both incidents is under investigation by Alberta authorities.
Mon, Jan. 25, 6:49 PM
- Investment in Canada’s oil and gas industry is forecast to fall again this year, as the price of the heavy crude produced from Alberta's oil sands has fallen so low that some companies are losing money on every barrel they sell, and are looking at ways to cut production.
- The Canadian Association of Petroleum Producers predicts the industry will invest C$42B in 2016, 13% less than in 2015 and 48% less than in 2014 - a steeper decline than investment in oil and gas production worldwide, which is expected to drop by 40% during 2014-16, according to Wood Mackenzie.
- On top of plummeting prices, Alberta's new left-leaning government plans to cap carbon emissions from the oil sands, a move that threatens to strand billions of barrels of crude; companies including Exxon (NYSE:XOM), BP, Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), Shell (RDS.A, RDS.B), Marathon Oil (NYSE:MRO), Total (NYSE:TOT), Statoil (NYSE:STO) and Cnooc (NYSE:CEO) have invested in Alberta megaprojects to tap the world's third largest oil reserves, smaller only than Saudi Arabia and Venezuela.
Wed, Jan. 20, 6:57 PM
- The National Energy Board should suspend its review of the Trans Mountain pipeline until Prime Minister Trudeau reforms the national regulator, a lawyer for the city of Burnaby said at today's NEB hearing.
- Burnaby is the host city of the current round of NEB hearings on Kinder Morgan's (NYSE:KMI) $5.4B pipeline expansion as well as the terminal point for the existing and proposed system and the site of multiple protests in recent days.
- The city told the NEB that the board "represents the oil industry and pipelines," was not elected, and should have allowed a cross-examination of KMI’s arguments, adding that a route through the metro Vancouver area is “the worst possible location for a pipeline."
- Coincidentally, a recently retired senior executive at China’s Cnooc (NYSE:CEO) - one of Canada’s top three oil and gas companies via its Nexen subsidiary - says the country has lost credibility as an investment destination because of its inability to build export infrastructure.
- Earlier: Kinder Morgan should compensate if pipeline project approved, B.C. city says (Jan. 19)
Wed, Jan. 20, 11:28 AM
- Vietnam says China has moved an oil rig into disputed waters in the South China Sea, in a possible repeat of the 2014 standoff between the neighboring countries.
- The same Cnooc-owned (NYSE:CEO) rig, China’s first domestically built mobile-drilling platform, lingered for weeks during 2014 in disputed waters close to the disputed Paracel Islands and the central Vietnamese coast before China finally removed it.
- Vietnam says China should remove the rig from the disputed waters in accordance with international law, but it is not likely for now to take strong actions such as sending coast guard ships to the area to challenge the rig, as it did in 2014.
Wed, Jan. 20, 10:42 AM
- Saudi Aramco is in advanced talks with two of China’s Sinopec (SNP -6%) and Cnooc (CEO -6.1%) about a number of energy projects, including refineries in the city of Qingdao and in the provinces of Yunnan and Sichuan, to help increase the Saudi group’s sales in Asia, Chairman Khalid al-Falih tells WSJ.
- Imports of Saudi Arabian crude by China rose just 2% in the first 11 months last year, compared with overall Chinese import growth of ~9%, while imports from Russia - China’s No. 2 supplier after Saudi Arabia - jumped nearly 30%.
- The comments follow Tuesday's visit by Chinese Pres. Xi to Riyadh against a backdrop of evolving Chinese ties with the region.
Tue, Jan. 19, 7:49 AM
- Cnooc (NYSE:CEO) says it will cut production for 2016, extracting up to 5% less oil and gas from 2015 levels and lowering previous plans of a 3% increase.
- China’s biggest offshore oil and gas producer now expects to produce 470M-485M boe this year vs. 495M boe in 2015, the first decline since at least 1999, while cutting planned capex by 11% Y/Y to a maximum 60B yuan ($9.1B) from last year’s 67.2B yuan.
- The lower-end of Cnooc’s production target sets output this year at ~1.29M bbl/day, a drop of more than 68K bbl/day.
- Another top state-owned Asian producer, Malaysia's Petronas, says it plans to cut as much as 50B ringgit ($11.4B) in capital and operating expenditure over the next four years.
Fri, Jan. 15, 10:51 PM
- One person was killed and another was critically injured following an explosion today at Nexen Energy's Long Lake oil sands facility near Fort McMurray, Alberta.
- The unit of China's Cnooc (NYSE:CEO) says emergency response personnel are on site and regulators were notified; the cause of the explosion is not yet known.
- The 50K bbl/day Long Lake facility has suffered a number of problems since opening in 2008 amid severe cost overruns; Nexen reduced output by 9K bbl/day in July following the breach of a pipe on site that spilled 31K barrels of crude oil, wastewater and sand from an adjacent Nexen oil sands project.
CNOOC Ltd. operates as an investment holding company, which is engaged in the upstream operating activities of the conventional oil and gas, shale oil and gas, oil sands and other unconventional oil & gas business. The company through its subsidiaries engages in the exploration, development,... More
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