Dominant market position in the Chinese offshore market. Increasingly diversified reserve base. Satisfactory reserve life and good record of production growth. Exposure to volatility in oil and gas prices. Strong cash flows. Adequate liquidity. Still-large capital expenditure. The stable outlook on CNOOC Ltd. reflects the outlook on the sovereign credit rating on China (AA-/Stable/A-1+; cnAAA/cnA-1+). We may upgrade CNOOC Ltd. if we raise the sovereign credit rating. We could lower the rating on CNOOC Ltd. if we downgrade China or the government reduces its support to the company because of a change in the government's strategies or priorities, a scenario we view as unlikely. We could also downgrade CNOOC Ltd. if the company's stand-alone credit profile of 'a' deteriorates. This
