Morningstar - CNOOC Limited (00883) A weak oil price environment stifles CNOOCs cash flow and reserves growth.

Report

Morningstar

Chokwai Lee, CFA

EUR 101.80 For Business Accounts Only

A weak oil price environment stifles CNOOC's cash flow and reserves growth.

We raise our fair value estimate for no-moat CNOOC to HKD 10.20 per share (USD 131 per ADR) from HKD 9.40 per share (USD 120 per ADR) after taking into account the time value of money and the firmâ€™s higher production targets, which increase our 2018-19 earnings estimates by 10%-14%. Our midcycle Brent oil price assumption is unchanged at USD 60 per barrel, and we think CNOOC is currently fairly valued, with near-term upside capped by our view of falling oil prices in 2018 due to rising U.S. shal...

02/04/2018 12 EN

Underlying

CNOOC Limited

Cnooc is an investment holding company. Through its subsidiaries, Co. is principally engaged in the exploration, development, production and sale of crude oil, natural gas and other petroleum products in offsore of the People's Republic of China. Co.'s core operation areas are Bohai, Western South China Sea, Eastern South China Sea and East China Sea in offshore China. Co. has oil and gas assets in Asia, Africa, North America, South America, Oceania and Europe. As of Dec 31 2016, net proved reserves for oil, gas, and synthetic oil were 2,015.4 million barrels, 7,486.1 billion cubic feet, and 7,486.1 million barrels, respectively.

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HK0883013259 Hong Kong Stock Exchange Hong Kong

Provider

Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.

Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.

We have operations in 27 countries.

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Analysts

Chokwai Lee, CFA

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