[ET Net News Agency, 15 November 2017] Citi Research raised its target price for CNOOC
(00883) to HK$13.5 from HK$11.5, and maintained its "buy" rating.
The research house said CNOOC started to switch the benchmark of its crude ASP to Brent
in 2017, away from Tapis, Daqing & Duri, due to the drying liquidity of the Asian crudes.
Citi said the switch will help narrow its crude ASP discount to Brent significantly,
from 6-8% historically to 3% going forward. The improvement in better pricing helps the
margins instantly without additional efforts or costs.
Following two years of faltering productions in FY2016/17, the company is expected to
get back on the growth track. Citi raised its FY2018/19 earnings forecast by 11.8% and
6.0% respectively by narrowing its crude discount to Brent. (KL)