The foreign currency rating of 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 partially 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. The rating also takes into consideration expectations of a successful initial public offering (IPO) of CNOOC, scheduled for the first quarter of 2001. CNOOC was established in October 1999 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 activities. The parent company is expected to retain
