[ET Net News Agency, 14 February 2019] CICC Research lowered its target price for CNOOC
Ltd. (00883) to HK$15.5 from HK$16 and maintained its "buy" rating.
The research house decreased its FY2018 earnings forecast by 9.1% to Rmb51.5bn from
Rmb56.7bn to factor in potential year-end impairment due to the downward spiral in oil
prices in 4Q 2018, and slight cost inflation, particularly on its exploration expenses.
Considering PetroChina (00857) and Sinopec (00386) have both pre-announced 4Q 2018
impairments, any write-down by CNOOC should not come as a negative surprise, CICC said.
CICC expects CNOOC's all-in costs to be well contained to below US$35/boe by 2020, but
exploration expenses could edge up, moving in tandem with more exploration activities and
potentially a greater number of dry wells as a result. (KL)