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CNOOC (CEO) and Smart Oil Sign PSC for Bohai 09/17 Block

Zacks Equity Research
Northern Oil and Gas (NOG) agrees to purchase the Williston Basin properties from VEN Bakken LLC in cash and stock.

CNOOC Limited’s CEO parent company — China National Offshore Oil Corporation (CNOOC) — has inked a production sharing contract (PSC) with Smart Oil Investment Ltd. for Bohai 09/17 Block (contract area).

Located in the Qikou sag, Bohai Bay Basin in China, the block is spread across a total acreage of 509.3 square kilometers and lies in a water depth of 5-10 meters.

Per the terms of the PSC, Smart Oil will act as the operator and perform exploration activities in Bohai 09/17 Block during the exploration period. All expenditures incurred will be borne by Smart Oil. Once entering the development phase, CNOOC has the right to own up to 51% of the participating interest in any commercial discoveries. After signing the above-mentioned PSC, excluding those related to CNOOC's administrative functions, the company will allot all of its rights and obligations to its subsidiary — CNOOC China Limited.

In 2019, six new projects are likely to be commissioned by CNOOC, of which the Egina oilfield in Nigeria and Huizhou 32-5 oil field comprehensive adjustment project/Huizhou 33-1 oil field joint development project in offshore China have initiated production. The other four projects —Appomattox project in the U.S. Gulf of Mexico, Bozhong 34-9 oil field, Caofeidian 11-1/11-6 comprehensive adjustment project and Wenchang 13-2 comprehensive adjustment project in offshore China — will begin production on schedule.

For 2019, CNOOC projects net production in the range of 480-490 million barrels of oil equivalent (BOE), up from 475 million barrels in 2018. Of the total production, about 63% will be produced in China and 37% will be generated from overseas. Estimated net production for 2020 and 2021 are 505-515 million BOE and 535-545 million BOE, respectively.

In 2019, the company proposes to drill 173 exploration wells and procure 3D seismic data for about 28 thousand square kilometers.

The company estimates total capital expenditures for 2019 in the range of RMB 70-RMB 80 billion. Of this, about 20%, 59% and 19% will be allocated toward exploration, development and production, respectively.

Zacks Rank & Other Key Picks

Currently, CNOOC sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked players in the energy space are Antero Resources Corporation AR, CrossAmerica Partners L.P. CAPL and SEACOR Holdings, Inc CKH. While Antero Resources and CrossAmerica Partners sport a Zacks Rank #1 (Strong Buy), SEACOR Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is an independent explorer, primarily engaged in the acquisition and development of natural gas, natural gas liquids as well as oil resources in the Appalachian Basin. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.

CrossAmerica Partners is involved in the wholesale distribution of motor fuels, comprising gasoline and diesel fuel. The partnership delivered an average positive earnings surprise of 452.2% in the last four quarters.

SEACOR Holdings is a diversified holding company, mainly focused on domestic and international transportation, logistics as well as risk management consultancy. The bottom line for 2019 is expected to inch up 1.7% year over year. The company delivered an average positive earnings surprise of 20.5% in the trailing four quarters.

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CNOOC Limited (CEO) : Free Stock Analysis Report
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