Chinese state oil firm CNOOC Limited’s (CEO) parent company China National Offshore Oil Corporation (CNOOC) has inked a production sharing contract with Hong Kong-based China-focused independent upstream outfit Primeline Energy.
The contract – the fourth between the two parties – is for operations to be conducted in Block 33/07 in the East China Sea. Located about 242 miles off Shanghai in the East China, Block 33/07 spans 2,269 square miles in a water depth of 295 feet.
Per the deal terms, Primeline will carry out 3D seismic data survey as well as drill exploration wells in Block 33/07 in course of the exploration. The agreement enables the country’s largest offshore oil producer − CNOOC − to own up to 51% working interest in any commercial discovery in the block, while Primeline is to bear all expenditures for the exploration.
CNOOC Ltd. is one of the three leading oil companies in China and one of the largest global independent oil and gas exploration and production companies. It is China’s dominant producer of offshore crude oil and natural gas and engages in the exploration, development, production and sale of crude oil, natural gas and other petroleum products.
The company’s oil and gas properties are located in four major production areas in offshore China: Bohai Bay, western South China Sea, eastern South China Sea and the East China Sea.
Recent successful oil discoveries – like Luda (LD) 21-2 in the country’s south Liaodong Bay in Bohai – are evidence to CNOOC’s constant efforts to upgrade its portfolio and enhance shareholders value. In this endeavor, the Chinese energy behemoth is also helped by its parent company, which inked a production-sharing contract with an affiliate of Australia’s Roc Oil Co. on an oilfield area in the Bohai Sea.
We maintain our long-term Neutral rating on CNOOC ADRs. The company, which competes with China Petroleum & Chemical Corp. (SNP) currently, holds a Zacks #4 Rank, equivalent to a short-term Sell rating.
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