We raise Net Present Value (NPV) for China independent producer CNOOC Ltd. (CEO) to $170 a share from $145 as it generated volume and profits above expectations raised three months ago. On the higher NPV, McDep Ratio of 0.99 is still higher than for buy recommended large cap stocks in today’s environment.
Emerging market champion Petrobras (PBR) has a lower McDep Ratio of 0.67 ahead of an upcoming share offering of perhaps $25 billion, complicated by a plan for the Brazilian government to pay for its proportion of the new shares with unproven oil reserves.
Australian independent producer Woodside Petroleum (WOPEY.PK) at a McDep Ratio of 0.91 is a Contrarian Buy in anticipation of growing volume of liquefied natural gas ultimately for sale to Asia.
NPV and cash flow forecasts for the three companies take account of latest financial results. Except for CEO stock price, recent quotes are below 200-day or 40 week averages for most large cap stocks and next six year futures prices. We look for positive trends in 2011 and 2012, perhaps beginning after the U.S. election in November.
Originally published on August 24, 2010.