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CNOOC Sets $12-$14B as '13 Budget

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China's biggest offshore oil driller CNOOC Ltd (CEO - Free Report) has proposed to invest around $12 billion to $14 billion in 2013 to attain an average annual output growth of 6% to 10% from 2011 to 2015.

CNOOC’s estimated net production for 2013 is 338–348 million barrels of oil equivalent (Boe), which is almost flat with the forecasted 2012 production of 341–343 million Boe.

The company intends to ramp up deepwater exploration during the year, despite continuous island clashes between China and its neighboring countries. The Chinese major has allocated 70% of its spending on development and expects to bring ten new oil and gas fields online offshore China. Another 19% and 11% of the capital is assigned for exploration and production respectively.

Of the new projects, the Liwan 3-1 is likely to be the first large-sized deepwater gas field offshore China. But the commencement of Suizhong 36-1 phase II adjustment will establish the huge prospect of CNOOC’s producing fields in this region. The company is expected to reach its construction peak in 2013, with 24 ongoing projects.

In 2013, the company expects to drill 140 exploration wells and maintain a reserve replacement ratio of more than 100%. CNOOC will also purchase 2-Dimensional (2D) and 3-Dimensional (3D) seismic data, which will boost deepwater exploration activities. Management expects 2013 to be a year of exploration, development and construction for future growth.

Recently, CNOOC and energy producer Nexen Inc. jointly agreed to extend the deadline for the closing of the proposed $15.1 billion deal relating to the acquisition of the latter, by 30 days. The group took this decision as it awaits approval from the U.S. government.

CNOOC holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector like Total SA (TOT - Free Report) with a Zacks Rank #1 (Strong Buy) and Sunoco Logistics Partners LP with a Zacks Rank #2 (Buy) that are expected to perform better.

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