Moody's affirms CNOOC's Baa1 rating, outlook positive

Moody's Investors Service has on Friday affirmed the Baa1 rating of CNOOC Ltd and its guaranteed subsidiary CNOOC Finance (2002) Ltd. The rating outlook remain positive. The rating action follows the company's announcement that it will purchase an 8.33 percent equity stake in the North Caspian Sea project in Kazakhstan.

Total consideration for the transaction will be around US$615 million, which the company plans to fund from existing cash reserves. Completion of the transaction is subject to the waiver of pre-emption rights held by the project's existing consortium members. Moody's says the rating affirmation reflects CNOOC Ltd's fundamental financial strength, and our expectation that the company's credit quality will not be materially affected by this transaction.

This investment follows several key overseas transactions that CNOOC Ltd completed or announced over the past 12 months in Indonesia and Australia. Although these investments introduce a degree of event risk, Moody's believes that CNOOC Ltd's considerable financial flexibility and management's commitment to the maintenance of a conservative financial profile mitigate this risk.

The North Caspian Sea project has significant recoverable reserves, which are estimated at around 13 billion barrels of oil equivalent.

The project is currently owned by Shell (16.67 percent), ExxonMobil (16.67 percent), TotalFinaElf (16.67 percent), BG (16.67 percent), ENI (16.67 percent), ConocoPhillips (8.33 percent), and INPEX (8.33 percent).

CNOOC Ltd, headquartered in Hong Kong, is an oil and gas exploration and production company with operations concentrated in offshore China. It is currently owned 70.6 percent by China National Offshore Oil Corp. (CNOOC), which in turn is owned 100 percent by the State Council of the People?s Republic of China. (*)