CNOOC's project capacity additions likely to be highest ever in 2014

But outlook is "uninspiring".

According to Barclays, CNOOC's 2014 volume outlook is uninspiring, but analysts are encouraged by the details on its new project pipeline.

"Indeed, we estimate that the startups slated for 2014 may add ~170kboepd of peak output capacity – the highest ever in CNOOC's history and ~18% of its current production," Barclays said. 

Here's more from Barclays:

As these 10 or so projects are to be commissioned over the next 12 months, we expect investor confidence on CNOOC's production trajectory to return. With valuations also attractive, we retain our OW rating.

Downbeat strategy outlook: CNOOC's production has risen at just a 2.1% CAGR over 2010-13. While this isn't terrible in the context of global large cap E&Ps, it is still a contrast to its own history that has led to a 27-35% de-rating in its shares over that time. The soft 2014 strategy outlook in which CNOOC guided for ~1-4% y/y growth in the year came as further disappointment with the stock closing down ~6% on Tuesday, 21 January.

Project details: We expect CNOOC to meet the upper end of its guidance range in 2014 and its growth to accelerate in 2015. While its own 2010-15 guidance has always pointed to this, the lack of detail had left investors sceptical. Encouragingly, though, CNOOC has now started to indicate timelines and peak capacities for its key projects.

Peak aggregate capacity: For example, we expect 10-12 projects to come on stream over 2014 vs. 13 in the past three years in aggregate. More importantly, CNOOC's disclosures and our own estimates suggest that the aggregate capacity being added from these new projects in 2014 will be ~170kboepd. This is the highest ever in CNOOC's history and about 18% of its current baseline production excluding Nexen.

Steady startups over 2014: Of these, the Liwan gas project (expected in 2013 previously) is due in 1Q14; the Kenli 3-2 oilfield in 2Q14; and the QHD 32-6 oilfield adjustment, Liuhua 34-2 and Panyu gas projects in 2H14. As these projects are steadily completed over 2014, we expect investor confidence to return on a revival in production growth.