Bulletin: Profit Warnings Of CNOOC Ltd. And China Oilfield Services Ltd. Are Credit Negative; No Immediate Rating Impact

HONG KONG (S&P Global Ratings) Aug. 4, 2016--S&P Global Ratings today said the corporate credit ratings on two CNOOC Group companies, CNOOC Ltd. (CNOOC: A+/Negative/--; cnAAA/--) and China Oilfield Services Ltd. (COSL: BBB+/Stable/--; cnA+/--), are not immediately affected by the profit warnings for their first-half 2016 results that the companies issued recently. In our view, the weak results even after excluding impairments indicate a difficult industry environment, and are negative for the companies' credit quality. Oil prices are outside of their control, so it is critical how they control operating expenses and capital expenditure. CNOOC and COSL have exceeded our expectation in their cost controls in 2015. However, we believe the easier cost cuts have been done and room for

...HONG KONG (S&P Global Ratings) Aug. 4, 2016--S&P Global Ratings today said the corporate credit ratings on two CNOOC Group companies, CNOOC Ltd. (CNOOC: A+/Negative/--; cnAAA/--) and China Oilfield Services Ltd. (COSL: ###+/Stable/--; cnA+/--), are not immediately affected by the profit warnings for their first-half 2016 results that the companies issued recently. In our view, the weak results even after excluding impairments indicate a difficult industry environment, and are negative for the companies' credit quality. Oil prices are outside of their control, so it is critical how they control operating expenses and capital expenditure. CNOOC and COSL have exceeded our expectation in their cost controls in 2015. However, we believe the easier cost cuts have been done and room for further significant cuts will be limited. CNOOC expects a net loss in the first six months of approximately Chinese renminbi (RMB) 8 billion, attributable to both low oil price and impairment of oil and gas assets....

Bulletin