The foreign currency rating on CNOOC Ltd. reflects the company's extensive low-cost reserve base, its opportunities for growth, its strong liquidity, and significant cash flow generating capabilities. These factors are partially offset by the volatility of oil and gas prices; the risks associated with bringing its undeveloped reserve base on stream; high capital expenditure requirements; and increasing uncertainties associated with its overseas expansion. The rating on CNOOC Ltd. is constrained by Standard & Poor's foreign currency sovereign rating on the People's Republic of China (BBB/Positive/A-3). CNOOC Ltd. has proved reserves of about two billion barrels of oil equivalent (boe), located primarily off the coast of mainland China. The company has been actively expanding its overseas oil and natural gas reserves.
