Standard and Poor's Ratings Services said Monday that it had
raised its long-term corporate credit rating on China National
Offshore Oil Corp. (CNOOC Corp.) to A from A-.
It also raised its long-term corporate credit ratings on CNOOC
Ltd., the CNOOC group's 65.1-percent-owned listed exploration and
production subsidiary, and CNOOC Finance Corp. Ltd., its wholly
owned captive finance subsidiary, to A from A-.
The outlook on all three ratings is positive. All the ratings
were removed from CreditWatch, where they had been placed with
positive implications on July 26, 2007.
"The upgrades reflect the continuing robust financial
performances of CNOOC Corp. and its subsidiaries in the favorable
oil price environment and the implicit support they derive from the
Chinese government," said Standard and Poor's credit analyst
Lawrence Lu.
The government recognizes the CNOOC group's strategic important
role in securing energy to meet China's growing demand for oil and
gas.
CNOOC Group is considered to be a commercial institution under
Standard and Poor's government-related entities rating methodology
and the ratings are based on its underlying credit quality and the
government's support.
Although the long-term ratings of CNOOC Corp. and its
subsidiaries are the same as the long-term rating on the People's
Republic of China (A/Positive/A-1), they should not be construed as
being equal.
The ratings on CNOOC Corp. and its subsidiaries reflect the
companies' solid business positions and strong financial risk
profiles. Although CNOOC Corp.'s business is cyclical, factors such
as competitive costs, a healthy balance sheet, and strong cash flow
generation enable it to mitigate volatility in earnings and cash
flow. The company has been in a net cash position since 2000.
A competitive cost structure and long-life reserves give CNOOC
Ltd. considerable financial flexibility to withstand volatile oil
prices and the capability to review the potential feasibility of
new capital projects.
Standard and Poor's believes that the company has the
flexibility to pursue its growth strategy while maintaining
financial ratios that are appropriate for the revised ratings.
(Xinhua News Agency November 6, 2007)
