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CNOOC (CEO) Foresees 2021 Production to Jump on Higher Capex

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CNOOC Limited (CEO - Free Report) recently announced the 2021 business strategy, wherein it has plans to boost hydrocarbon production. It intends to ramp up expenditures in both domestic and overseas projects to enhance output.

Production

The company intends to produce oil and gas in the range of 545-555 million barrels of oil equivalent (Boe) in 2021. Of the total amount, 68% will likely be produced in China, while the rest will come from overseas. Notably, 2020 net production was recorded at 528 million Boe. It expects net production to further increase to 590-600 million Boe in 2022 and 640-650 million Boe in 2023.

Projects

It expects 19 new projects to come online in 2021 compared with eight last year. These projects incorporate Lufeng oil fields and Lingshui 17-2 gas fields’ development. From offshore China, the company’s Caofeidian 6-4 oil field project is set to commence this year.

Additionally, the Buzzard oil field phase II in the United Kingdom North Sea and Brazil’s Mero I oil field in the pre-salt Santos Basin are scheduled to kick-start in 2021. The company intends to drill 217 exploration wells this year. It will collect 3D seismic data of around 17 thousand square kilometers.

Capex

The increase in production will be supported by higher expenditure. It estimates 2021 capital expenditure to be RMB90-RMB100 billion. Of the total estimated expenditure, 61% will be used for development activities, while 20% and 17% will be made use in production and exploration, respectively. In comparison, its estimated 2020 expenditure budget was RMB79.5 billion, of which 58% was allotted for development activities.

Price Performance

The stock has gained 16.8% in the past three months.

Zacks Rank and Other Stocks to Consider

The company currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Cactus, Inc. (WHD - Free Report) , Imperial Oil Limited (IMO - Free Report) and Ameresco, Inc. (AMRC - Free Report) , each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cactus’ bottom-line estimates for 2021 have witnessed two upward revisions and no downward movement in the past 60 days.

Imperial Oil’s bottom line for 2021 is expected to increase more than 230% year over year.

Ameresco’s bottom line for 2021 is expected to rise 2020% year over year.

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