CNOOC Has Growth Issues, But A Low Valuation Too
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Jun. 30, 3:25 PM
- Exxon Mobil (XOM +1.2%) and Hess (HES +3.5%) confirm a “world-class discovery” off the coast of Guyana that probably will yield 800M-1.4B boe of crude.
- The news confirms earlier comments by Guyana's natural resources minister, and the upper end of the new estimate is 2x larger than an earlier estimate that the field could contain 700M barrels of oil.
- The discovery is considered particularly significant for Hess; at the high end of the estimate, Hess' stake equates to 420M barrels, a 39% addition to its proved reserves; the company says more exploratory drilling is planned for the Stabroek block that hosts the Liza field.
- The companies could break even on developing the field at less than $40/bbl, Wells Fargo analysts estimate.
- XOM is operator of the Liza discovery and owns a 45% interest, while Hess holds a 30% stake and China's Cnooc (CEO +0.8%) owns the remaining 25%.
Fri, Jun. 24, 11:58 AM
- Exxon Mobil’s (XOM -2.5%) lease agreement for Nigeria's “Crown Jewels” oil reserves is under investigation by the country’s economic and financial crimes commission, according to a report from The Guardian.
- A letter to an XOM subsidiary from Nigeria’s federal ministry of petroleum resources reportedly shows acceptance of a 2009 bid of $1.5B for a 20-year lease on four oil fields that produce a combined ~580K bbl/day - nearly a third of the country’s total production of ~1.8B bbl/day - even after a group that included China's Cnooc (CEO -5.5%) bid $3.75B for the same rights.
- Gross revenue from XOM’s 40% stake in the wells would come to $4.2B annually with oil at $50/bbl, the report says.
Mon, May 9, 3:19 PM
- Crude oil prices erased all of Friday's gains and more, as June futures ended the pit session 2.7% lower to $43.55/barrel even as the massive wildfires in the heart of Canada's oil sands continue to spread, albeit more slowly.
- But positioning in the oil market is very stretched, and analysts say speculators already hold the largest number of wagers for a rise in WTI futures since last summer and near-record high bullish bets on Brent, so the scope for further gains was limited without more clarity on the extent of damage to oil facilities or supply outages.
- The sacking of Ali al-Naimi as head of Saudi Arabia’s oil ministry also may be a reason why oil prices failed to maintain early gains, as successor Khalid al-Falih, the former head of Aramco, is expected to follow the strategy of protecting the country’s market share.
- Yesterday, Cnooc’s Nexen (NYSE:CEO) operations to the south of Fort McMurray reportedly suffered minor damage, while Suncor (NYSE:SU) says its facilities have not been damaged and is beginning to implement a plan for a return to operations.
- Other relevant tickers: RDS.A, RDS.B, XOM, IMO, COP, OTCPK:HUSKF, OTCPK:ATHOF, CNQ, CVE, OTCPK:MEGEF, ENB, OTCPK:IPPLF, OTC:KEYUF, TRP, PSX, STO
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM
- Now read Fort McMurray situation getting better - oil markets daily
Thu, Apr. 28, 9:59 AM
- Cnooc (CEO -2.9%) opens lower after reporting a 31% decline in Q1 revenue while delivering an increase in production.
- Cnooc, which does not report quarterly profit, says oil and gas sales fell to 24.6B yuan ($3.8B) as realized oil prices fell 39% to $32.54/bbl.
- Q1 production rose 5.1% Y/Y to 124.3M boe, while capital spending during the period fell to 9.7B yuan.
- Now read Cnooc overtakes Sinopec as China's no. 2 oil producer; PetroChina on top
Wed, Apr. 27, 12:37 PM
- Husky Energy (OTCPK:HUSKF +2.9%) is recovering a slice of its 9% loss yesterday following its Q1 earnings report in which it said it may take legal action against Cnooc (CEO -0.1%) over delivery payments for South China Sea gas.
- Husky operates and owns 49% of the offshore Liwan gas project, while Cnooc holds the remaining interest and buys the gas from Husky through a take-or-pay contract that requires Cnooc to pay for contracted volumes whether it receives them or not; a Q1 pipeline outage affected natural gas sales from Liwan, and Husky said it received payment only for actual volumes of ~150M cf/day, ~50% of contracted volumes.
- "The sanctity of the contract has come into question,” and the potential for lower gas prices at Liwan would have a “meaningful impact” on Husky’s financial results, says an analysts at AltaCorp Capital.
- Now read Husky Energy to sell $1.7B in midstream assets to Chinese groups
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.
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.
Fri, Jan. 15, 9:55 AM
- Cnooc (CEO -5.7%) says it has signed a strategic cooperation agreement with China Guangdong Nuclear Power Corp. to develop nuclear technology for use in offshore oil fields.
- CGN, China’s biggest nuclear power operator, says it will begin construction next year on a demonstration floating nuclear reactor that could be used for offshore oil production, with the reactor powering up by 2020.
Oct. 26, 2015, 10:46 AM
- Alberta's energy regulator rescinds its suspension targeting 24 pipelines at Cnooc (CEO -2.9%) subsidiary Nexen Energy’s Long Lake oil sands facility, but keeps a shut-down order for several other pipes, including one that ruptured this summer.
- Nexen says the remaining pipelines under suspension “are discontinued and not required for operations” at its 50K bbl/day Long Lake operation, which was forced to cut production after a pipeline spill was detected in July.
- The troubled Long Lake plant was started in 2008 but has never reached its capacity of 72K bbl/day.
Aug. 27, 2015, 1:53 PM
- Cnooc (CEO +13.5%) soars to its largest one-day gain in the last decade after reporting an H1 earnings decline that beat market expectations and increasing its payout ratio, prompting Credit Suisse to upgrade shares to Outperform from Neutral.
- The firm points to CEO's 62% dividend payout vs. 27% in H1 a year ago, the company's H1 total Y/Y production increase of 13.5%, and a "spectacular" cost-cutting effort which resulted in a 19% Y/Y decline in operating expenses and 35% decline in SG&A, as top reasons for the upgrade.
- But Heard On The Street's Abheek Bhattacharya writes that such a high payout is not sustainable when Brent crude has fallen 16% in the past month and is now worth ~$45/bbl; CEO requires Brent at $46 just to break even in H2, Jefferies analysts say.
Aug. 13, 2015, 12:45 PM
- A key pipeline for delivering Canadian oil to the U.S. remains shut for a third day, leaving heavy crude stranded in Alberta and keeping its price in the cash market at ~$20 below the WTI benchmark.
- A small leak near Shelbina, Mo., coming from Enbridge’s (ENB -1.1%) Spearhead pipeline, which runs from Flanagan, Ill., to the Cushing, Okla., crude hub forced the shutdown Tuesday of the 193.3K bbl/day pipeline as well as a closing of the parallel Flanagan South pipeline, an even larger 585K bbl/day line that runs from Pontiac, Ill., to Cushing.
- ENB expects operations at Flanagan South to resume today, but does not know when Spearhead may return to service, as it continues to investigate the cause of the spill in Missouri.
- Operational problems at BP's (BP -1.5%) Whiting, Ind., refinery also keep the pressure on prices for Canada’s heavy crude as barrels continue to get backed up.
- Other related tickers: SU, IMO, TRP, CNQ, CVE, TCK, CEO, OTCPK:HUSKF, OTCQX:COSWF
- Earlier: Canadian oil sands price nears $20/bbl, cut in half since July 1
Aug. 3, 2015, 12:24 PM
- PetroChina (PTR -2.3%) has turned into a speculative bet on how much money the Chinese government is plowing into the stock market that day, resulting in a surge in volatility to the highest level among the world’s 100 biggest companies and topping 95% of the stocks in the Russell 2000 index, according to a Bloomberg analysis.
- PTR’s top weighting in the benchmark Shanghai Composite Index makes it an ideal target for funds trying to influence the broader market, the report says.
- PTR shares have shed 25% in the past three months, while Sinopec (SNP -1.5%) and Cnooc (CEO -1.2%) have lost a respective 22% and 29% during the period.
Mar. 27, 2015, 2:56 PM
- Cnooc (CEO +4.8%) says it will shelve its shale gas project in Anhui province, in the latest sign that the U.S. shale gas revolution is unlikely to replicate itself in China.
- CEO Li Fanrong says the company had drilled near Wuhu, in southern Anhui, since late 2011, but decided the block is not suitable for development on a large scale.
- Cnooc joins PetroChina (NYSE:PTR), which has already sharply cut back on a shale project in Sichuan province it was developing with Royal Dutch Shell.
- Cnooc tried but failed to interest foreign investors in the Wuhu block, but potential partners have shied away in part because of the dense population in the area; similar concerns held back the PetroChina-Shell project in Sichuan.
- Earlier: Cnooc surprises with 6.5% profit gain despite oil price plunge
Feb. 17, 2015, 3:31 PM
- China may merge its state-owned oil companies to create giants that will be more efficient and capable of taking on big overseas rivals, WSJ reports.
- One plan reportedly would combine the country’s largest oil companies, CNPC (PTR +2%) and Sinopec (SNP +4.2%), while other options include merging Cnooc (CEO +1.8%) with Sinochem.
- The firms have expanded into each others’ turf over the years, creating overlapping operations that span everything from exploration to refining to running gas pumps.
- No timetable is set for a decision on whether or when to proceed with the mergers, WSJ says.
Dec. 8, 2014, 2:57 PM
- China's Cnooc (CEO -2.9%) says its wholly-owned Canadian unit Nexen has started production of heavy crude oil at the Kinosis 1A steam-assisted gravity drainage project in Alberta, part of a larger oil sands project that has been plagued by cost overruns and delays.
- Output is beginning with a capacity of 20K bbl/day, which will be partially processed at Nexen's nearby Long Lake facility with its own production capacity of 72K bbl/day.
Sep. 2, 2014, 3:57 PM
- Cnooc's (CEO -2.1%) Nexen subsidiary says production at the North Sea Buzzard oil field may be shut for another week as it works to demobilize a drilling rig during a window of good weather.
- Industry sources had said earlier the operator of the field was hoping for a possible restart later today.
- Buzzard is closely watched by oil traders worldwide as it is the biggest contributor to the Forties oil stream, the largest of the four crudes underpinning the price of benchmark Brent crude oil futures.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM
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
Sector: Basic Materials
Industry: Independent Oil & Gas
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