Good reserve prospects Competitive cost structure Improving geographical diversity Strong financial profile Cyclical industry Large capital-development requirements Aggressive growth strategy, particularly in regions with a higher sovereign risk The rating on CNOOC Ltd., China's third-largest oil and gas company, reflects its good reserve prospects, improving geographical diversity, relatively low costs, and strong financial profile. These factors are offset by the volatile nature of the independent oil and gas exploration and production (E&P) sector, which requires large ongoing investment, and the company's aggressive overseas expansion strategy. Its ventures into higher-risk sovereign regions are a particular concern. The outlook is stable. As of Dec. 31, 2005, CNOOC Ltd. had proven reserves of about 2.36 billion barrels of oil equivalent (boe). It produced
