Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We reaffirmed our Neutral recommendation on Chinese offshore pure play oil and gas exploration and production (E&P) company, CNOOC Ltd. (CEO - Analyst Report), on May 9, 2013. Riding on growth in production volumes, the company reported robust numbers in the first quarter. The company holds a Zacks Rank #1, which is equivalent to a short-term Strong Buy rating.

Why Maintained?

Headquartered in Hong Kong, CNOOC is one of the three oil companies in China and among the leading independent oil and gas E&P companies of the world. The company is a dominant producer of offshore crude oil and natural gas and engages in the exploration, development, production as well as sale of crude oil, natural gas and other petroleum products.

In the first quarter of 2013, CNOOC reported total revenue of 56.18 billion yuan ($8.95 billion), up approximately 14% from the year-earlier level. The upside came primarily from growth in production volume.

CNOOC achieved net production of 93.6 million barrels of oil equivalent (MMBoe), up approximately 17.3% from the year-ago level. The growth was mainly attributable to the production contribution from the acquisition of Nexen Inc, the new oil and gas projects, the resumption of Penglai 19-3 oil field and the overseas projects. Overseas production and steady performances by the already operational oil and gas fields also aided the increase.

CNOOC also has a strong growth profile, exclusivity in the offshore China region and attractive liquefied natural gas investments. Also, we are bullish on the company in the near term owing to its strong revenue growth and significant asset acquisitions.

Over the longer run, however, these positives will likely be somewhat negated by unpredictable oil and gas prices, which are inherently volatile and subject to complex market forces. Realized prices could differ significantly from our estimates, thereby affecting the company’s revenues, earnings and cash flow.

Additionally, the company’s future is closely linked with the successful completion of its growth projects, which in turn, might be adversely affected by operational hindrances, cost inflations and overruns and delays in completion.

Other Stocks to Consider

There are other stocks in the sector that also appear rewarding. These include EPL Oil & Gas, Inc. (EPL - Snapshot Report), Dawson Geophysical Company (DWSN - Snapshot Report) and SM Energy Company (SM - Analyst Report), which are expected to perform impressively over the next few months and carry a Zacks Rank #1 (Strong Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%