Hold-rated CNOOC Limited (CEO) offers 15% volume growth in 2009 after a similar gain likely achieved in 2008. That could strengthen the validity of our estimated net present value (NPV) of $135 a share, 67% above current stock price for the no-debt company. While detailed financial and operating data for 2008 will not be released for some weeks, management presented its 2009 Strategy Review on January 20.
As a result, we raise our projections for future oil and gas production to near the low end of guidance from the company. Meanwhile, lower price for crude oil and natural gas leads to lower cash flow (Ebitda) for the next year.
Awaiting a stronger indication that the stock market recovery will be sustained, we limit our buy recommendations to two of the five stocks in the Brazil/China/Russia segment of our oil and gas coverage. Less complicated CEO along with its favorable operating record could supplement or substitute for its larger peers in a McDep Energy Portfolio.
Originally published on January 21, 2009.