CNOOC lifts annual output target

CNOOC Ltd, the largest offshore oil and gas producer in China, raised its annual output target to between 335 and 345 million barrels of oil equivalent for 2012 from the 330 to 340 million BOE target set earlier, as the company is betting on strong growth in the fourth quarter of the year.

The group, which produced 87.8 million BOE in the three months through September 30 this year - up 8.3 percent from the previous quarter - is driven by "contribution from new projects and new development wells", as well as "the continuous improvement of overseas production and the stable performance of producing oil and gas fields", the company told Hong Kong's stock exchange on Wednesday.

Revenue generated from oil and gas sales amounted to 48.44 billion yuan ($7.74 billion) in the third quarter, up 4.7 percent from the same period last year. CNOOC has drilled eight offshore appraisal wells off the mainland during the past quarter, it said in the statement.

The growth momentum in the third quarter is likely to continue through the rest of the year, leading the company to lift the output target for the year, Zhong Hua, chief financial officer of the company, said during a conference call on Wednesday.

The output volume in the last quarter, which was also CNOOC's highest since 2011, was supported by the contribution of several new projects, said a Hong Kong-based analyst who declined to disclose her name.

However, as long as the production is not resumed at the Penglai 19-3 field, CNOOC's output in the fourth quarter is unlikely to significantly outstrip that in the previous quarter, she told China Daily.

The Penglai 19-3 field - 51 percent owned by the company - has been shut down after a serious oil leak occurred in June 2011. Zhong said the company has delivered all required reports to the Chinese government and is waiting for an order to resume production.

CNOOC has also handed over requested documents to Canadian regulators for the approval of its proposed Nexen Inc acquisition, Zhong added during the teleconference.

In July, CNOOC agreed to pay $15.1 billion in cash to take over the Canadian energy company Nexen. The deal, which was expected to be completed by the end of the year and could become the biggest overseas takeover by a Chinese company, is still waiting for the nod from the Canadian government.

"It may be hard to predict the results, but it is safe to say that CNOOC is unlikely to close the deal by the end of the year," said Wu Fei, an analyst at BOCOM International Holdings Co Ltd in Hong Kong.

Although political factors are entangled in the deal, it is at a particularly sensitive moment, Wu said, adding that there are still chances for CNOOC to win the deal given that some of Nexen's assets are far away from America, where the political resistance is likely to be smaller.

Canada's Ministry of Industry last Friday vetoed the $5.9 billion buyout plan proposed by the Malaysian state oil company Petronas for the Calgary-based Progress Energy Resources Corp, which is casting doubts on the outlook of Nexen deals as the Canadian government is seemingly cautious with energy-related acquisitions from overseas.