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 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 154.8 million boe in 2005, representing 10.8% year-on-year growth. Oil accounted for about 84% of its total production. In 2005, CNOOC Ltd.'s reserve life stood at 15.3 years and
