CNOOC Ltd. (CEO) reported its first-half 2010 results. Net profit in the period increased 109.6% year over year to 25.99 billion yuan ($3.8 billion).Earnings per share were 58 yuan per ADR ($8.5).
Total revenue in the period was 83.16 billion yuan ($12.2 billion), up 104.6% from the year-earlier level. Oil and gas sales were 67.64 billionyuan ($9.9 billion), up 108%. The robust results were driven by solidproduction growth and strong oil price realizations. The realized crude oilprice in the first half was $76.59 per barrel, up 55.2% year over year.
Based on these results and a sound financial position, the company's boardhas decided to pay an interim dividend of $2.7 per ADR.
CNOOC’s results have set the stage for its domestic peers such as ChinaPetroleum & Chemical Corp. (SNP) and PetroChina Co. Ltd. (PTR), both are scheduled to report on August 23.
CNOOC achieved a total net production of 149 million barrels of oil equivalent (BOE), an increase of 40.8% from the year-ago level. Net oil production was 120.3 million barrels or approximately 81% of total production. The production growth can be credited to the projects that came online in the recent times and to the contribution from the existing fields.
In the first half, CNOOC and its partner made 9 new discoveries and 7 successful appraisal wells. In offshore China, the company has made several breakthroughs including discoveries of Penglai 9-1 and mid-sized oil fields including Kenli 6-4, Enping 24-2 and Liuhua 16-2.
Cash balance at the end of first half was 31.8 billion yuan ($4.7 billion) and long-term debt stood at 13.8 billion yuan ($2 billion), representing debt-to-capitalization ratio of 6.7%.
Based on the company's rich resource base, CNOOC has created a solid foundation for future growth. The company believes that it will be able to maintain a growth rate of 6%-10% CAGR over the next five years.
While continental shelf offshore China and deepwater South China Sea remain the company's core areas for future growth, we believe that international projects and acquisitions will also play an important role. In the first half of 2010, production of the Nigeria Akpo oil field ramped up steadily.
CNOOC has been active in balancing reserve and production growth. In addition, its strong cost-control measures will assist in maximizing shareholder value. We recommend a short-term (1-3 months) Neutral rating for CNOOC ADRs with Zacks #3 Rank (Hold).
We believe that CNOOC's attractiveness for its premium assets portfolio, its excellent execution strategy and unique position as a pure oil player have already been reflected in its valuation. Since there are only a few promising domestic exploration prospects left, we see more acquisitions going forward. However, we are concerned about the profit margins from these acquired projects due to increasing costs and a high tax regime.
Consequently, our long-term recommendation is Underperform.
About the author: Zacks.comView the Original article
Posts
No comments:
Post a Comment