Investor Interest in Chinese Stocks Changes Outlook on CNOOC

We revise our recommendation to Hold from Buy for the stock of CNOOC Limited (CEO) as a result of the nice positive surprise of intense investor interest in Chinese stocks.

Stock price exceeds estimated net present value [NPV] of $108 a share by more than any normal allowance for uncertainty in our industry estimates. Yet, we are the research source that thinks oil may reach $150 a barrel in 2010 (no guarantees!).

Nonetheless, we take a neutral stance on CEO for now and will see if the McDep Ratio drops back into buy range considering future stock price action and progress in company operations and industry conditions.

CEO 1-yr chart:

Originally published on September 24, 2007.