UPDATE 1-CNOOC says CEO to resign, H1 net 2nd best ever

* H1 profit at 25.99 bln yuan versus 21.46 bln yuan estimate

* Fu Chengyu to resign as CEO, stay as non-executive chairman

* Yang Hua to be new chief executive
(Adds details, quotes)

By Sui-Lee Wee

HONG KONG, Aug 19 (BestGrowthStock) – China’s top offshore oil and
gas producer CNOOC Ltd (0883.HK: ) said its long-time chief
executive will step down and be replaced by its president, as it
posted its second-best interim profit ever, fuelled by higher
crude oil prices and a rise in production.

Fu Chengyu, who was instrumental in CNOOC’s failed $18.5
billion bid for U.S. oil company Unocal in 2005, would relinquish
his chief executive position but remain as non-executive chairman
of the company, effective Sept. 16, CNOOC said on Thursday.

He will be replaced by President and CFO Yang Hua, an
MIT-educated executive who joined the company in 1982.

“I’m glad we were able to locate an ideal successor, Mr. Yang
Hua, who has devoted himself to CNOOC Ltd for more than 20 years
and has proven himself a robust operator in the toughest
circumstances,” Fu said in a statement.

Despite posting earnings that soundly beat analyst forecasts,
CNOOC warned of rising costs.

Some analysts say CNOOC may not be able to sustain its strong
profit growth in the second half if costs continue to escalate
and if oil prices continue to trade sideways around the $70-$80
per barrel range, relatively flat from the average price of $72
per barrel in the same period a year ago.

Unlike peers PetroChina (0857.HK: )(601857.SS: )(PTR.N: ) and
Sinopec Corp (0386.HK: )(600028.SS: )(SNP.N: ), CNOOC Ltd (CEO.N: ) makes
almost all of its profit from exploration and production and does
not have to sell fuel at state-capped prices below production
costs.

“Even though we have led the industry in terms of
profitability in recent years, our cost is undoubtedly under
upward pressure,” CNOOC said in a statement to the Hong Kong
stock exchange. “With those oil and gas fields developed under
the high oil prices environment coming on stream, cost control
has become more challenging.”

The company has benefited directly from higher crude prices
in the first half, which have averaged around $78 per barrel, 52
percent higher than a year earlier.

Some analysts are also concerned that CNOOC, which could be
the most acquisitive Chinese oil company this year as it races to
meet its aggressive production growth targets, could overpay for
future acquisitions.

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For a graphic on CNOOC’s overseas operations and countries

it is targeting, click: http://link.reuters.com/mek85n

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Among the deals that CNOOC is reported to be eyeing are BP
Plc’s (BP.L: )(BP.N: ) stake in Argentina-focused oil and gas company
Pan American Energy (PAE), which the British oil giant could sell
to raise money to cover its Gulf of Mexico oil spill costs.
[ID:nN05228477]

CNOOC, the first of China’s trio of energy companies
including PetroChina and Sinopec to report earnings, posted a net
profit of 25.99 billion yuan ($6.8 billion) for the first half of
2010 versus 12.4 billion yuan a year earlier.

That beat a consensus forecast of 21.46 billion yuan from
eight analysts polled by Reuters.

Total oil and gas output rose 40.8 percent to a record 149
million barrels of oil equivalent (boe) in the first half. Its
average realised oil price was $76.59 per barrel, up 55.2 percent
from the same period a year earlier.

Before the results, Hong Kong-listed CNOOC shares ended up
0.9 percent at HK$13. Shares in CNOOC are up 6.6 percent so far
this year, compared with PetroChina, which has lost 6.2 percent,
and Sinopec, which is down 8 percent.
(Editing by Chris Lewis)

UPDATE 1-CNOOC says CEO to resign, H1 net 2nd best ever