CNOOC (CEO) Downgraded to Underperform

We are downgrading CNOOC Limited (CEO) ADRs to Underperform from Outperform. We believe that the company has lost its attractiveness as a pure Chinese offshore oil explorer.

While domestic initiatives continue, CNOOC is currently exploring various international upstream projects to cope with the country’s rising demand. We initially thought the $3.1 billion Bridas deal to be a prudent step, but now we are concerned about the challenging Argentine tax regime.

The company is currently experiencing a downward movement in the performance of its ADRs, which we believe will again run into rough weather with oil prices hovering in the mid-$70s. We recommend investors to go for attractively valued peers such as Sinopec.

CNOOC LTD ADR (CEO): Free Stock Analysis Report
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