CNOOC says oilfield halt to hit output, shares dive - Reuters

* Suspension to cut CNOOC output by further 40,000 bpd

* CNOOC co-owns PL19-3 oilfield with ConocoPhillips

* Shares fall as much as 11 pct, biggest drop in 3 years

* Order to cut CNOOC earnings 2-4 pct this year-analysts

* Regulator threatens to sue ConocoPhillips (Edits)

By Donny Kwok and Alison Lui

HONG KONG, Sept 5 (Reuters) - CNOOC shares slumped on Monday as much as 11 percent, their biggest single-day drop in three years, after a regulator ordered the suspension of operations at one of its major oilfields because of oil leaks.

China's State Oceanic Administration (SOA) ordered the PL19-3 oilfield in the northern Bohai Bay, co-owned and operated by ConocoPhillips , to suspend all operations because the American firm had failed to seal a leak that had lasted for more than two months, CNOOC said. SOA intends to sue ConocoPhillips.

CNOOC, China's biggest offshore state oil company, said it would lose 62,000 barrels per day of output because of the suspension at China's biggest offshore oil field.

It had already been losing 22,000 bpd since the regulator ordered a halt to operations at two PL19-3 platforms on July 13 because of the leaks.

The oilfield was producing 150,000 bpd before the oil leak, Standard Chartered Bank said in a research note on Monday. CNOOC owns a 51 percent stake and ConocoPhillips 49 percent.

Investors thought the leak had been sealed so did not expect the government to order a full suspension of output, analysts said. Last Wednesday, ConocoPhillips had said it had sealed off all the leaks before an Aug. 31 deadline.

"It was a negative surprise to the market," said Lee Wee Keat, an analyst from DBS Group Research.

CNOOC shares fell to a four-week low of HK$13.54, down 11 percent on the day, the biggest single-day percentage fall in three years.

CNOOC shares closed at HK$13.84, down 8.9 percent, while the broader Hang Seng Index fell 2.95 percent.

Analysts expect the loss of output to reduce CNOOC's total output and earnings by about 2 percent this year.

Beijing has been vocal about cracking down on industrial polluters, focusing on private-sector companies. In this case, the SOA threatened to sue ConocoPhillips, but not its state-owned partner CNOOC.

HARSH CRITICISM

ConocoPhillips drew harsh criticism from the People's Daily, the mouthpiece of China's Communist Party, for its handling of the spill.

"Time after time, delays, negligence, cover-ups and cheating, ConocoPhillips China's oilfield operation was finally stopped by China's maritime authority," said an article in the newspaper, which was also picked up by the official Xinhua news agency.

"There is a sharp contrast between the company's sensitivity regarding its image and its inadvertence towards China's oceanic environment," Xinhua quoted the article as saying.

Monday's plunge in CNOOC shares was also fuelled by fears of a U.S. recession that is weighing heavily on global stock and oil markets, analysts said.

"Earnings impact is only several percentage points, but given a fragile market sentiment, any negative news would trigger panic selling," said Mona Chung, a fund manager at Daiwa Asset Management.

The PL 19-3 oilfield has about 647 million barrels of proven and probable reserves, a note by Deutsche Bank said.

In 2010, CNOOC produced 906,000 boe (barrels of oil equivalent) per day.

Suspension of PL 19-3 would cut CNOOC's production by 4.4 percent, based on 2010 output figures and assuming a 12-month closure, Deutsche Bank said.

CNOOC had already said last month it was lowering its annual output target to 331-341 million boe from 355-365 million because of the oil spill and delays with an acquisition.

"We do not foresee an adjustment to CNOOC's current 2011 production guidance of 331 to 341 mm boe," Deutsche Bank analyst David Hurt said in the note.

"We think that selling on the news is probably not the right move," Hurt said, adding the bank maintained a "buy" rating on CNOOC with a price target of HK$20.9.

JPMorgan, which maintained an "underweight" rating on CNOOC, said on Monday it estimates a 2 percent impact on CNOOC's domestic crude production for 2011 with impact on full-year earnings closer to 4 to 5 percent.

"It is still not clear how costs and penalties will affect the two parties involved," JPMorgan analyst Brynjar Eirik Bustnes said in a note to clients. (Additional reporting by Beijing bureau; Editing by Charlie Zhu and Vinu Pilakkott)

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