CHINA'S OIL INVESTMENT UP
BLOOMBERG- Cnooc Ltd. plans to raise capital spending to the highest since 2014 and revised upward its oil and gas output targets as China's biggest offshore producer recovers from crude's crash.
The Beijing-based explorer sees capital expenditures at 70 billion to 80 billion yuan ($11.1 billion to $12.7 billion) for 2018, it said in a statement to the Hong Kong stock exchange Thursday. That's an increase of as much as 60 percent from the previous year, which came in under target. It also raised its production estimate to between 470 million and 480 million barrels of oil equivalent, poised for the the first increase in three years.
Cnooc's cost cuts and efficiency, as well as the quality of its overseas projects in the pipeline from Africa to the Gulf of Mexico and South America, has been contrasted by analysts with its bigger, slower state-owned rivals PetroChina Co. and Sinopec, officially known as China Petroleum & Chemical Corp.
"The new output guidance should provide investors some confidence on the growth perspective going forward," Tian Miao, a Beijing-based analyst at Everbright Sun Hung Kai Co., said by phone. "The only risk at the moment is the oil price."
Investors are now looking to a possible reserves upgrade, driven by its 25 percent share in the Exxon Mobil Corp.-operated Stabroek block offshore Guyana. Cnooc is expected to announce revised reserves in its annual results, which typically come late March.
The company said Thursday in a presentation online that reserve life is "expected to see significant increase" as it brings on Stabroek's Liza field and Libra in Brazil, as well as re-booking reserves from the Long Lake oil sands project in Canada.
Reserve life in 2017 saw strong growth and reached near or above 10 years, Chief Executive Office Yuan Guangyu said in a briefing in Hong Kong. Growth should continue this year thanks to a large amount of new projects in the pipeline, he added. Reserve life in 2016 was 8.1 years, the company said in its presentation.
Cnooc is also getting close to a final investment decision on its Lingshui 17-2 natural gas field in the South China Sea and is seeking to lock in big industrial customers, Chief Financial Officer Xie Weizhi said in Thursday's briefing.
Cnooc is most exposed among China's big three oil companies to a rebound in crude prices as its lack of refining capacity leaves almost all its revenue from exploration and production. Global benchmark crude Brent in 2017 averaged almost $55 per barrel, up 21 percent from the previous year. Prices have averaged about $69 a barrel so far this year.
Net income for 2017 will jump 50-fold to almost 32 billion yuan, according to the mean of 22 analyst estimates compiled by Bloomberg.
The 2018 output target announced Thursday is higher than its year-ago projection of 455 million to 465 million barrels of oil equivalent. Cnooc produced 469 million barrels of oil equivalent in 2017 (about 1.28 million barrels a day), the second year of declines, it said.
Higher-than-expected capex and increased production targets "may sit well with investors with the company reiterating its prudent capital allocation strategy," analysts at JPMorgan Chase & Co. including Scott Darling wrote in a research note.
Shares on Friday rose as much as 3.3 percent to HK$12.48 before paring gains to 2 percent as of 10:19 a.m. in Hong Kong. The city's benchmark Hang Seng Index was little changed. China Oilfield Services Ltd., one of Cnooc's biggest contractors and controlled by the same parent company, rose as much as 4.9 percent.
Cnooc's production may advance by almost 20 percent to 562 million barrels of oil equivalent by 2021 thanks to strong growth in overseas projects, Neil Beveridge, a senior analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in a Jan. 23 research note.
"If Cnooc can deliver on growth projects, the company will transform into a truly global Chinese E&P for the first time," Beveridge wrote.
2018, January, 26, 12:25:00
CHINA'S ARCTIC ROAD
REUTERS - “China hopes to work with all parties to build a ‘Polar Silk Road’ through developing the Arctic shipping routes,” the paper, issued by the State Council Information Office, said.
2018, January, 17, 23:40:00
CHINA'S OIL DEMAND UP 4.6%
PLATTS - China's apparent oil demand is expected to rise 4.6% year on year to hit 600 million mt (12.05 million b/d) in 2018, with net crude imports to increase 7.7% to 451 million mt, according to a report released Tuesday by state-owned China National Petroleum Corp.'s Economics and Technology Research Institute.
2018, January, 12, 12:35:00
CHINA - INDONESIA DEVELOPMENT
PLATTS - China's state-controlled oil giants are sitting on record-high cash pile of $35 billion and their free cash flow generation is close to double-digit yields, paving the way for more mergers and acquisitions along with higher oil prices over coming years,
2018, January, 5, 23:40:00
IRAQI OIL TO CHINA
PLATTS - China's crude oil imports from Iraq in November surged 47.2% on year and 58.8% on month to hit a record high of 4.21 million mt or an average 1.03 million b/d, making the Persian Gulf producer its third-largest supplier, data from China's General Administration of Customs showed.
2018, January, 3, 15:55:00
RUSSIA - CHINA OIL FRIENDSHIP
BLOOMBERG - After a glut sparked the biggest price crash in a generation and starved Russia of oil revenues, the nation sought to boost market share in the world’s top importer. It’s now supplanted Saudi Arabia as the top exporter to China, even as the two producers lead efforts to shrink the global oversupply by curbing output. A pipeline that transports crude from the East Siberia-Pacific Ocean system has helped its mission to increase volumes.
2018, January, 3, 15:50:00
CHINA'S LNG IMPORTS UP 48.4%
PLATTS - Chinese imports of LNG in 2017 totaled 37.89 million mt, up 48.4% year on year, while imports by South Korea totaled 36.51 million mt, up 10.81% year on year.
2017, December, 22, 22:30:00
RUSSIAN GAS FOR CHINA
GAZPROM - “Today, we laid the basis for another pipeline route of Russian gas supplies to China. The project will expand the range of options for satisfying the growing demand for gas in the Chinese market,” said Alexey Miller.