CNOOC Ltd (中國海洋石油), China’s biggest offshore energy producer, said it has hired six banks to help arrange a sale of 10-year and 30-year US dollar bonds. The company suspended trading of its shares in Hong Kong.
The oil and gas producer has hired Barclays PLC, BOC International (中銀國際), Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc and JPMorgan Chase & Co, CNOOC said in a statement to the Hong Kong stock exchange yesterday. No details were given of how much the Chinese company aims to raise in the sale.
CNOOC spent at least US$8.4 billion on oil and gas assets in Latin America and the US in the past 12 months as it ramped up production to help meet demand in the world’s fastest-growing major economy. The proceeds of the bond sales would go toward “general corporate purposes,” the unit of China National Offshore Oil Corp said, without elaborating.
“Despite high oil prices boosting cash flow, a strong balance sheet and existing net cash of about US$5 billion, CNOOC’s fund-raising plan could imply more aggressive spending and acquisitions planned ahead,” said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd in Hong Kong.
Meetings with debt investors will take place in Hong Kong, Singapore, London, Boston and New York from today to Thursday next week, a person familiar with the matter said. Standard & Poor’s has assigned the proposed notes an AA- rating.
CNOOC shares rose 51 percent in Hong Kong trading last year, beating the 5.3 percent gain on the benchmark Hang Seng Index. The stock closed 0.5 percent lower at HK$19.24 (US$2.47) yesterday.
Jiang Yongzhi (蔣永智), a Beijing based-spokesman for CNOOC, declined to comment on the bond sales and the suspension of the company’s shares. The company will release more financial information to investors related to the bonds, CNOOC said in the statement.
CNOOC’s main source of money since 2007 has been cash flow from operations, according to the statement. In the first half of last year, cash flow from operations reached 37.9 billion yuan (US$5.6 billion), the company said.
“Our future cash flows from operations, borrowing capacity and funds raised from our debt offerings will be sufficient to fund planned capital expenditures and investments, debt maturities and working capital requirements through at least 2011,” CNOOC said. “Our financial condition and results of operations and the liquidity of international and domestic financial markets” may limit the firm’s ability to get enough funding.
CNOOC more than doubled first-half profit to 25.99 billion yuan as the oil and gas producer increased output by 41 percent. Overseas acquisitions last year included the US$1.08 billion purchase of a one-third stake in Chesapeake Energy Corp’s Eagle Ford shale project in Texas.
“We continue to seek to expand our global footprint as part of our regular business strategies,” CNOOC said yesterday.
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