You Should Watch China's Offshore Star

And you thought earnings season had run its course. But yesterday, CNOOC (NYSE: CEO), China's largest offshore oil and gas company, showed up fashionably late to report a 55% decline in its income for the first half of 2009.

For the six months ended June 30, the company generated net profits of 1.82 billion U.S. dollars on a revenue decline of 42% for the period. The biggest culprit being crude prices averaging $52 a barrel, or 52% below last year's $109.

So it wasn't only the western likes of ExxonMobil (NYSE: XOM), ConocoPhillips (NYSE: COP), and Shell (NYSE: RDS-A) that turned in earnings declines, versus a year ago, when commodities prices were running up. Indeed, CNOOC's earnings dip occurred in the face of a 15% increase in oil and gas production during its reporting period. That improvement put the company's output at 105.8 million barrels of oil equivalent. And if you look solely at crude oil production, the year-over-year improvement was about 20%, or far higher than any of the bigger western producers.

During a briefing following the release of his company's results, CNOOC's CEO Fu Chengyu tossed something of a curve ball when he stated that CNOOC does not plan to participate in a bid with China National Petroleum Corp. (CNPC) for YPF, Repsol's (NYSE: REP) Argentine unit. Such a combination had been widely discussed a couple of weeks ago. CNPC is the parent of PetroChina (NYSE: PTR).

Beyond that, he emphasized that his company really isn't eager to participate in any big acquisitions at this time. As he noted, "The economic recovery in the U.S. and Europe still needs to take some time. Under this macro environment, we will not do large-scale acquisitions." However, he wouldn't rule out the possibility of forming a joint venture with "any company in the world."

But don't get the idea that CNOOC is sitting along the China coast, forgoing international opportunities. What the company calls a "huge deep-water project" in which it is participating came online in Nigeria during the period. And an Indonesia liquefied natural gas project became productive in July.

From what I can see, Fools would be wise to keep their eyes on CNOOC. Personally, I'm betting that before too many more reporting periods have passed, the company will have spread its (water) wings into a variety of global locations.