CNOOC seeks US$2b for development
CNOOC, the listing vehicle of mainland offshore oil giant China National Offshore Oil Corp, is to embark on a US$2.2 billion development plan to 2002, a research report issued by its sponsor, Salomon Smith Barney, revealed.
The company will start an international roadshow next week to gauge support for next month's dual listing in Hong Kong and the US to raise about $2 billion.
The Salomon report said CNOOC had an exclusive right to enter into production-sharing contracts in Chinese waters and take up to a 51 per cent interest in successful explorations at no cost.
Under these contracts, international companies are responsible for all exploration costs, giving CNOOC lower funding costs.
The report estimated the company's implied equity value at $8.2 billion to $9 billion.
It said the company had proven reserves of 1.7 billion barrels of oil. Only 26 per cent of its reserves are developed, indicating huge development potential.
The report said the $2.2 billion development plan would drive the compound annual growth in production to 16 per cent in five years and 28 per cent in earnings before interest, taxation, depreciation and amortisation.
It said the company benefited from generous tax relief provided by the government which, if changed, could have a detrimental effect on its financial performance and competitive position.
A Bank of China International report has forecast a 32 per cent annual growth in earnings until 2001.
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