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)
