Morgan Stanley visited CNOOC's (00883) Gaolan gas terminal and came away with the conclusion that there is large gas reserve potential in both the South China Sea and Bohai Bay.
If a 'National Gas Pipeline Company' is established, CNOOC is highly likely to benefit from a wider customer base, said the research house. Its gas could finally reach those clients located in inland provinces via the pipeline connection.
Morgan said CNOOC's exploration is at an early stage. For shallow water fields, the gas reserve exploration ratio stands at 7%, while for deepwater, the gas reserve ratio is only 4%, both materially lower than the oil exploration ratio. This profile suggests that there is large reserve potential in new gas fields, and management indicates that recent findings in Bohai Bay support its optimistic outlook.
Morgan maintained its "overweight" rating on CNOOC, with a target price of HK$15.19.
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