On February 9, CNOOC Limited ("CNOOC Ltd.") announced that its partner, Husky Oil China Limited (a subsidiary of Husky Energy Inc., "Husky"), has made a new deepwater gas discovery, Liuhua (LH) 29-1 on Block 29/26, marking another important step of the deepwater exploration in the South China sea.

LH 29-1 is the third deepwater gas discovery made on Block 29/26 in the Pearl River Mouth Basin in the Eastern South China Sea. Another two significant discoveries, Liwan (LW) 3-1 and LH 34-2, were also made on the Block.

The discovery well LH 29-1-1 was located about 43 kilometers northeast of LW 3-1 gas field and 20 kilometers northeast of LH 34-2 gas field. The well was drilled to a total depth of 3,331 meters, with a water depth of about 720 meters.

LH 29-1-1 encounters gas pay zones with net total thickness of approximately 70 meters. During drill stem tests, the well was tested to flow 57 million cubic feet (mmcf) of natural gas per day.

LW 3-1 and LH 34-2 fields are expected to be developed in parallel with first gas production from LW 3-1 anticipated in 2013. LH 29-1 field will share the development and production facilities with LW 3-1 and LH 34-2.

Zhu Weilin, Executive Vice President of the company and General Manager of Exploration Department commented, "Deepwater is one of our major exploration efforts this year. The successive deepwater discoveries made in the South China Sea will further encourage us to carry out our deepwater exploration activities."

LH 29-1 field will be appraised later this year by Husky to further determine the size of the discovery.

According to the Production Sharing Contract, CNOOC Limited has the right to participate in up to 51 percent working interest in any commercial discoveries on Block 29/26.
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