[ET Net News Agency, 11 June 2018] Jefferies Research raised its target price for CNOOC
(00883) to HK$19.75 from HK$17, and retained its "buy" rating.
The research house said the oil market is tight and supply side risks will drive prices
higher in 2018. It raised its per-barrel Brent price forecast to US$77 from US$64 in 2018;
to US$75 from US$60 in 2019; and to US$70 from US$65 in 2020. There is no change to its
long-term forecast of US$65.
Jefferies said CNOOC is the simplest, most oil levered upstream producer in emerging
markets. The stock is absurdly cheap compared to North American peers as it did not
re-rate as oil prices collapsed in 2014 - CNOOC shares, in fact de-rated for being a
Chinese "industrial company". While the company does not have the best assets - offshore
China has disappointed - management has communicated increasing confidence in its
international portfolio this year.
With a lightly levered balance sheet with over 80% liquids production, CNOOC is a low
risk play on a bullish oil price view, the research house added. (KL)