CHINA SALES

B. Cnooc Ltd. (883), China's biggest offshore oil and gas explorer, is considering selling its stake in Argentina's Bridas Corp. to free up money for other projects, according to people with knowledge of the deliberations.

The Chinese state-owned producer recently reviewed its overseas projects and is weighing a sale of the Bridas holding if it can make a profit on the disposal, said the people, who asked not to be identified as the information is private. Cnooc bought 50 percent of Bridas for $3.1 billion in 2010, while the rest is owned by Argentina's billionaire Bulgheroni brothers.

Cnooc is under pressure to cut operating costs, after boosting planned capital spending for 2014 by 31 percent to 120 billion yuan ($19.3 billion) while output is only expected to rise 5.6 percent. Sinopec and PetroChina Co., the nation's top two oil producers, said last month they will cut spending, invite private investment and focus more on returns this year.

"It should be a good thing if Cnooc manages to sell the asset and redeploy the money elsewhere," said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co. "The contribution from Argentina is minimal, and the investment as a whole puts Cnooc in a passive position as a minority shareholder."

Cnooc shares rose as much as 1.8 percent at 9:47 a.m. in Hong Kong, even as the city's benchmark stock index slumped.

Bridas owns 40 percent of oil and gas producer Pan American Energy LLC, after an effort to acquire the remaining 60 percent stake from BP Plc (BP/) failed in 2010. Pan American Energy produced 211,000 barrels of oil equivalent daily last year, according to its website.

Canadian Push

Pan American Energy's Cerro Dragon oil field, located in the San Jorge Gulf basin, is the largest in Argentina. A Beijing-based spokeswoman at Cnooc declined to comment.

The $3.1 billion acquisition of Bridas marked Cnooc's entry into Latin America. The focus of the company's overseas operations shifted to Canada after it completed a deal to acquire Nexen Inc. for $15.1 billion in 2013 in China's biggest overseas acquisition.

Cnooc's South American projects, including its share of Bridas, contributed 16.1 million barrels of oil equivalent last year or 4 percent of total output, according to Cnooc's annual earnings statement. Nexen contributed 60.8 million barrels of oil equivalent, or 15 percent of total output, while production from offshore China accounted for 64 percent, it showed.

Ending Dispute

Argentine President Cristina Fernandez de Kirchner's government seized 51 percent of YPF SA, then an arm of Repsol SA, in April 2012 after saying the Spanish oil company hadn't invested enough in the operations.

Repsol's board agreed in February to accept at least $5 billion in compensation for Argentina's expropriation of the unit. Ending the two-year international dispute may help attract investors to the country to develop some of the world's largest shale fields.

Argentina's Chubut provincial prosecutor said last week he initiated a probe of alleged bribes by Pan American Energy seven years ago to extend the Cerro Dragon oil field concession. If a judge rules bribes were paid, the extension will be considered void and the company's concession will expire in 2017, Chubut prosecutor Miguel Montoya said by phone.

Montoya filed the investigation request with the province's attorney general after it became public March 30 that the U.S. Securities and Exchange Commission initiated a similar probe in 2010. Pan American denied any wrongdoing in full-page advertisements published in Argentine national newspapers last week.