China’s dominant producer of offshore crude oil and natural gas, CNOOC Limited (CEO) has made two exploration discoveries − Luda 6-2 and Lufeng 15-1 − in two different plays in China.
Located in the Liaodong Bay in Bohai, Luda 6-2, reaches an average water depth of about 31 meters. The drilling wells – Luda 6-2-4 and Luda 6-2-5 – came across 40 and 147.6 meter thick oil pay zones, respectively. The tests ascertained an average yield of 850 barrels per day.
Additionally, Lufeng 15-1 is situated in the Pearl River Mouth Basin and reaches an average water depth of 283 meters. The exploration well Lufeng 15-1-2 hit upon a 26.8 meter thick oil pay zone. The trial ascertained an average yield of 800 barrels per day.
CNOOC’s new discovery in the Lufeng 15-1 structure has prompted intensive oil and gas exploratory operation in the area. It has also enabled further growth of independent activities by other companies in the Pearl River Mouth Basin.
CNOOC has made significant exploration developments during the first half of 2012, mainly through a mid to large sized new oil discovery and successful appraisal of a large oilfield in Bohai. CNOOC also expects 4 new projects to come online in offshore China in 2012. Based on the company's rich resource base, CNOOC has created a solid foundation for future growth.
Management remains optimistic on the company’s performance, which is reflected through its premium assets portfolio, excellent execution strategy, unique position as a pure oil play and potential transactions in the merger and acquisition space.
Recently, CNOOC cut a deal to purchase Canadian energy producer Nexen Inc. (NXY) for approximately $15.1 billion in cash. The deal signifies the country’s biggest foreign takeover so far.
We maintain our long-term Neutral rating on CNOOC ADRs. The company currently holds a Zacks #3 Rank, equivalent to a short-term Hold rating.
CNOOC LTD ADR (CEO): Free Stock Analysis Report
NEXEN INC (NXY): Free Stock Analysis Report
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