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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (6592)	1/19/2002 6:02:03 PM
From: t4texas	Respond to of 36161

for russwinter on cnooc cnooc buys part of the oil field in indonesia for $600M cash biz.scmp.com Saturday, January 19, 2002 CNOOC secures US$585m top-up Acquisition of Indonesian fields expected to boost reserves 10pc and output up to 21pc ERIC NG CNOOC - the mainland's largest offshore oil and gas producer - has agreed to acquire five properties in Indonesia that are expected to raise the company's reserves by about 10.5 per cent. The US$585 million acquisition is expected to increase the company's daily production by between 15.8 per cent and 21 per cent this year, according to its output targets. Chairman Wei Liucheng said the company had set a target to produce oil and gas equivalent to 125 million to 130 million barrels of oil. The target for last year was 95 million barrels of oil equivalent (boe), which Mr Wei said would be exceeded. He would not reveal last year's actual production figure, but analysts expected it to be 3 per cent to 4 per cent higher than the target. Of this year's target of 125 million to 130 million boe, the company expects to produce 110 million boe excluding production from the Indonesian properties to be acquired. This implies 15 million to 20 million boe of additional production is expected to come from these properties this year. CNOOC yesterday announced it would buy stakes ranging from 16.7 per cent to 65.3 per cent in five Indonesian oil and gas fields from Spanish-Argentinian giant Repsol-YPF, which was disposing of non-core assets to lower its debt burden. The US$585 million acquisition price - to be paid in cash - compared favourably with previous transactions, CNOOC said. Of the five properties' 360 million boe of total proven oil and gas reserves, CNOOC's net entitlement is 185 million boe. The per boe acquisition cost for CNOOC's entitlement is US$3.16. At the end of 2000, CNOOC's oil and gas reserve stood at 1.75 billion boe. CNOOC has planned capital expenditure of US$1.5 billion to US$1.65 billion this year, of which US$585 million has been earmarked for acquisition - the same amount of the Indonesian buy. Expenditure excluding the Indonesian acquisition is estimated to represent a 30 per cent to 50 per cent growth from last year. Mr Wei said the increase reflected the company's financial strength and its strategy to lift development of reserves during periods of depressed oil prices so production could increase when prices recover. About US$900 million to US$1.05 billion is expected to be used for exploration and development of offshore China projects. Mr Wei said the Indonesian properties' production cost was lower than that of CNOOC's overall total, as the former's depreciation costs were lower due to their relative maturity compared with CNOOC's oil fields. The firm expected total costs to fall from 2000's US$8.84 per boe to 2001's US$8.57 per boe. He said CNOOC had no plan to acquire additional overseas oil and gas fields, and the company would maintain its focus on China offshore oil exploration and production. The Indonesian oil and gas properties posted US$80.16 million net profit in the first 11 months of last year. Net profits in 2000 and 1999 were US$71.68 million and US$57.02 million respectively.

To: russwinter who wrote (6592)	1/19/2002 7:00:18 PM
From: nspolar	Read Replies (2) \| Respond to of 36161

Russ, I sure appreciate your recent posts here. Your investment style is impressive, one of planning ahead, patience, and execution. Can't go wrong with that. I'm watching NG here as well, but exercising patience. Maybe I'm being too patient. The demand side of the equation still looks 'not good' to say the least. I personally don't put that much stake in 'maintenance' issues. I've never worked in a nuclear plant. Except for the reactor however I'm quite familiar with all the other equipment. All the other equipment except for the main turbine/gen train should be adequately spared. So this leaves the reactor and possibly the turbine/gen train. Wouldn't think the reactor would have to come down very often. Turbine/gen trains can likewise go a long time, between shutdowns. It is usual today to extend the times between outages, due to recent changes in operating and maintenance philosophy. These extensions can be impressive. Last year we heard all over the boards about the gas fired only turbines, and that this was going to save NG. Didn't happen. I don't work the power industry, directly. But I do know a little about gas turbines. They can be switched easily enough, if there are good reasons. I'm fairly certain some probably did, and now they've switched back. There are some enviro issues involved as well. The reasons for all the new gas fired turbine power are various. The new turbine fired cogen plants are quite efficient. So a part of what has been going on is merely replacement (or displacement) of older plant power, with more efficient new plant power. A lot of these older plants - nuclear, coal fired boiler, gas fired boiler, distillate fired boiler, etc. can operate a long time yet, if desired and/or necessary. Just a matter of economics. I guess the bottom line in my opinion is that one has to try and look at supply and demand. Gas, coal, oil, and nuclear power all compete in a finite market place. To my knowledge there is still a lot of power plant construction going on, and most of it is probably gas fired turbine cogen. Capital investment is generally less and efficiency is tops. At the same time we're in a recession and overall demand has fallen off. Over building will probably be the result. I remember last summer I thought about shorting GE, and then didn't follow through. I should have. I think the power side of GE's business is going to face some tougher going. At some point things will go the other way, as always. What really makes NG smoke is when power is in short supply, because NG fired turbine power can be put on line very quickly. This is due to lower build times for industrial turbine cogen plants, and to recent advances in large aero-industrial gas turbines. Just a few years the options that are now available, weren't. But, in general any of these turbines can be fired on liquid fuels, if absolutely necessary. The changes required to convert are not that extensive. In some cases I would suspect the turbines are installed with dual fuel capability. This infers that NG will always have to compete with liquid and other fuels. Maybe all this infers continued volatility and shorter up/down cycles in the investment end of things. IMHO.