CNOOC's (CEO) Offshore Panyu Gas Fields Begin Production
China's primary offshore oil company China National Offshore Oil Corp. (CEO), also known as CNOOC, announced three of its Panyu gas fields in South China Sea has commenced production. The project, located in Pearl River Mouth Basin, consists of three gas fields, namely Panyu 34-1, Panyu 35-1 and Panyu 35-2.
The project is expected to reach a targeted production of around 150 million cubic feet per day in 2015. Panyu 34-1/35-1/35-2 is an independent project in which the company holds 100% interest.
The main production facilities include one comprehensive platform, two sets of underwater production system and 13 producing wells. There are currently two wells producing approximately 21 million cubic feet of natural gas per day.
During the third quarter, CNOOC made one discovery and drilled nine appraisal wells off the coast of China. The company also made a deepwater gas discovery offshore Gabon. Management remains optimistic about its performance, which is reflected in its premium assets portfolio, excellent execution strategy, unique position as a pure oil play and potential transactions in the merger and acquisition space.
Performance in the recently reported third quarter was muted for the company. This was evident from the quarter’s total revenue of 55.06 billion yuan (US$8.9 billion), which was down almost 4% from the year-earlier level. Out of the total revenue, approximately 90% came from oil and liquids sales, which declined 6% to 49.3 billion yuan (US$8 billion). The top line was hurt by lower oil price realizations.
CNOOC currently has a Zacks Rank #4 (Sell), implying that the stock will underperform the broader U.S. equity market over the next one to three months. Better-ranked players in the energy sector include Cheniere Energy Partners LP. (CQP), Murphy USA Inc. (MUSA) and Sandridge Mississippian Trust II (SDR). All these stocks sport a Zacks Rank #1 (Strong Buy).
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