CNOOC Signs 2 Production Sharing Contracts With Husky Energy

CNOOC Limited (NYSE:CEO) recently reported that through its parent organization, China National Offshore Oil Corporation, it inked two new production sharing contracts with Canadian integrated energy company, Husky Energy Inc., for two blocks located in South China Sea.

The blocks, 22/11 and 23/07 lie in the prolific Beibu Gulf of the sea. The first block consists of 1,663 square kilometers, having a water depth of 40-80 meters. The second block, with 1,210 square kilometers of area, has a depth of 20-40 meters.

Per the contracts, Husky will be the operator with 100% interests in the blocks and carry the costs during the exploration period. CNOOC can participate in the developing phase of the blocks, with up to 51% participating interest, if commercial discoveries are made.

Recently, Husky Energy successfully drilled a well on 15/33 block in the sea and further plans to develop another two wells at the nearby 16/25 block. The drilling will commence in the second half of this year. Through a similar production sharing deal made earlier between the two companies, a commercial discovery in the 16/25 block will provide CNOOC the opportunity to assume around 51% interest in the block.

Notably, CNOOC has several other fields in the South China Sea, three of which are coming online this year; Weizhou 6-13 oil field, Dongfang 13-2 gas fields and Wenchang 9-2/9-3/10-3 gas fields. CNOOC has 100% working interest in these projects, wherein total estimated peak production is 64,000 barrels of oil equivalent per day.

Price Performance

CNOOC, primarily engaged in the exploration, development, and production of crude oil and natural gas offshore China, and globally, has gained 54.5% in the past year compared with 13.2% growth of its industry.

Zacks Rank and Other Stocks to Consider

CNOOC sports a Zacks Rank #1 (Strong Buy).

Investors interested in the Energy sector can opt for other top-ranked stocks in the same space like Nine Energy Service, Inc. (NYSE:NINE) , Delek US Holdings, Inc. (NYSE:DK) and BP (LON:BP) p.l.c. (NYSE:BP) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, its bottom line is likely to be up 168.1%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 35.6% year over year, while its bottom line is expected to increase 159.5%.

London-based BP is an integrated oil major. For 2018, its bottom line is likely to be up 66.5%. In the last four reported quarters, the company delivered a positive average earnings surprise of 29.6%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>