CNOOC Bolstering Growth

CNOOC Ltd. (CEO - Analyst Report) is one of the three oil companies in China and one of the largest independent oil and gas exploration and production companies of the world. It is the only company permitted to conduct exploration and production activities with international oil and gas companies off China's shore.

Our continued favorable view of CNOOC Ltd. ADS reflects the company's positive production-growth profile, exclusivity in the offshore China region and lucrative LNG investments. We have, however, lowered our 2008 and 2009 earnings estimates to reflect a lower commodity-price deck and introduced our 2010 earnings per ADS estimate at $7.52.

Despite the negative macro backdrop, CNOOC plans to maintain an active exploration and development program. The company's 2009 capital budget is a 19% year-over-year increase, which is expected to drive a roughly 16% volume growth. Approximately 10 new projects are expected to come onstream this year.

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