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Chinese oil giant CNOOC Limited (CEO - Analyst Report) discovered a 55-meter gas reservoir at Lingshui 17-2-1 probe in South China Sea. The discovery marks the first breakthrough on the independent deepwater exploration in the South China Sea’s Qiongdongnan basin.

Lingshui 17-2 is located in the east Lingshui Sag in deepwater area of Qiongdongnan basin. The well was drilled in an average water depth of about 1,450 meters to touch a depth of 3,510 meters.

The new mid-sized gas discovery Lingshui 17-2 has not only establishes the exploration potential of structural and lithologic trap in the central Canyon channel of Lingshui Sag but also validates the superior exploration prospects in the deepwater area of Qiongdongnan basin.

CNOOC is one of the three leading oil companies in China and one of the largest independent oil and gas exploration and production companies of the world. 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. CNOOC Ltd. is the only company permitted to conduct exploration and production activities with international oil and gas companies off the shores of China.

We remain positive on CNOOC’s performance, which reflects its premium assets portfolio, excellent execution strategy, unique position as a pure oil player and potential transactions in the merger and acquisition space.

CNOOC’s growth profile should get a boost over the next 3 to 5 years from numerous development projects offshore China, international growth from recent acquisitions, and intensive exploration and development programs with its partners.

CNOOC carries a Zacks Rank #4 (Sell). Other stocks in the oil and gas industry worth considering include Helmerich & Payne, Inc. (HP - Analyst Report), Warren Resources Inc. (WRES - Snapshot Report) and Patterson-UTI Energy Inc. (PTEN - Analyst Report). All three stocks have a Zacks Rank #1 (Strong Buy).

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