The foreign currency rating on CNOOC Ltd., China's third-largest oil and gas company, reflects its large reserve base, good growth opportunities, low cost position, and above-average financial profile. These factors are offset by the volatile nature of oil and gas prices, the risks associated with bringing on stream a large undeveloped reserve base, and high capital expenditure requirements. CNOOC was established through the reorganization of state-owned China National Offshore Oil Corp. (CNOOC's parent) to assume all of the group's oil and gas exploration and production (E&P) activities. CNOOC, the predominant subsidiary of the group, has a close relationship with its parent and actively participates in contract negotiations between its parent and its foreign partners. The company's proved reserve base, totaling
