China's primary offshore oil company China National Offshore Oil Corp.’s (CEO), or CNOOC, recently announced its business strategy and development plan for the year 2015. Share price, however, has been trending downward post-announcement and has shown a 2.2% fall.
For 2015, the company targets net production in the range of 475–495 million barrels of oil equivalent (BOE). Of the total, production from China will account for 67% while the remaining 33% will be contributed by overseas productions.
CNOOC estimates net production of around 509 million BOE for 2016 and approximately 513 million BOE for 2017. For 2014, the net production is estimated at about 432 million BOE.
During 2015, 7 new projects are likely to be commissioned. These comprise the Jinzhou 9-3 comprehensive adjustment project which has already started production. Located in Bohai, both Kenli 10-1 and Bozhong 28/34 comprehensive adjustment projects are expected to reach the maximum production level of about 36 thousand BOE and 30 thousand BOE per day, respectively.
Moreover, the company plans to drill about 162 exploration wells within this year. It also proposes to acquire about 36 thousand kilometers of 2-Dimensional (2D) seismic data and about 14 thousand square kilometers of 3D seismic data. The company aims a reserve replacement ratio (RRR) of above 100%.
For 2015, CNOOC has budgeted total capital expenditure at RMB 70–80 billion, down 26–35% from the estimated realized capital expenditure for 2014. Of the total, 21% is allocated for exploration, 67% has been set aside for development and 10% has been assigned to production. Despite the lower capital expenditure, the company expects to realize all of its annual targets by controlling costs and efficiency enhancement.
CNOOC currently carries a Zacks Rank #4 (Sell).
Better-ranked players from the energy sector such as InterOil Corp. (IOC), Golar Energy Partners LP (GMLP) and World Fuel Services Corp. (INT) sport a Zacks Rank #1 (Strong Buy).
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