Bulletin: CNOOC's Rating Buffer Strengthens With Record High Volume And Oil Price Rebound

HONG KONG (S&P Global Ratings) Aug. 20, 2021--CNOOC Ltd.'s (A+/Stable/--) rating buffer has enlarged after the company's strong first-half performance, spurred by record high production volume and a significant rebound in oil price. The company's annualized debt-to-EBITDA ratio was 0.4x-0.5x in the first half, based on our calculation, well below our downgrade trigger of 2.0x. Although we assume lower oil prices in the next 24 months, we believe CNOOC will be able to maintain ample rating buffer on strong cost control and volume growth. We assume Brent crude oil to average US$65 per barrel for the rest of 2021, same as the average in the first half, and up from 2020's full-year average of US$42 per barrel. We assume Brent

...August 20, 2021 HONG KONG (S&P Global Ratings) Aug. 20, 2021--CNOOC Ltd.'s (A+/Stable/--) rating buffer has enlarged after the company's strong first-half performance, spurred by record high production volume and a significant rebound in oil price. The company's annualized debt-to-EBITDA ratio was 0.4x-0.5x in the first half, based on our calculation, well below our downgrade trigger of 2.0x. Although we assume lower oil prices in the next 24 months, we believe CNOOC will be able to maintain ample rating buffer on strong cost control and volume growth. We assume Brent crude oil to average US$65 per barrel for the rest of 2021, same as the average in the first half, and up from 2020's full-year average of US$42 per barrel. We assume Brent crude oil to drop to US$60 in 2022. Investments in new energy will not strain CNOOC's financial strength. Although we see energy transition as a long-term strategic initiative for oil and gas companies such as CNOOC, the impact on CNOOC's credit quality...

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