高盛-中國能源行業(yè)-China Energy Oil Pullback appears overdone;remain Buy on PetroChina and CNOOC09162024

17September2024|5:36PMSGT

ChinaEnergy:Oil:Pullbackappearsoverdone;remainBuyonPetroChinaandCNOOC

Ourglobalcommoditiesteammaintainarange-boundBrentoilviewof

NikhilBhandari

+65-6889-2867|

US$70-85/bblheadinginto2025drivenbysolidex-ChinademandgrowthandChina

nikhil.bhandari@

GoldmanSachs(Singapore)Pte

restocking,whileoureconteamestimateaUSrecessionriskremainslow.Assuch,

AmberCai

weseetherecentpullbackinupstreamequitysharepricesasoverdone,asthe

+852-2978-6602|amber.cai@GoldmanSachs(Asia)L.L.C.

H-sharesofPetroChinaandCNOOCarenowdiscountingalong-termBrentpriceof

RandyLau

US$63andUS$57,respectively,withthelowesttradedcash?owmultiplesamongglobalpeers.Meanwhile,weexpectPetroChinaandCNOOCtodeliver8%dividend

+65-6889-2468|randy.lau@GoldmanSachs(Singapore)Pte

yieldandabove10%FCFyieldin2025E,whichremainattractiveamongglobal

peers.Followingtheupdatefor2Q24results,ournew12mTPsforPetroChinaH/A

(Buy/Buy)areHK$8.20/Rmb12.70(prior:HK$8.30/Rmb12.90),andforCNOOC

(Buy)isHK$23.50(prior:HK$23.00).ForSinopecA/H(Neutral),ournew12mTPs

fortheH/AareHK$4.50/Rmb5.70(prior:HK$4.60/Rmb5.80).WeexpectSinopecto

experienceaperiodofweakFCFduetomarginweaknessinthere?ningand

chemicalsegments,leadingtoourpreferenceforthemoreupstreamnames

(PetroChina,CNOOC)inourcoverage.

_

GoldmanSachsdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,

investorsshouldbeawarethatthe?rmmayhaveacon?ictofinterestthatcouldaffecttheobjectivityofthis

report.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcerti?cationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/research/hedge.html.Analystsemployedbynon-USaf?liatesarenotregistered/quali?edasresearchanalystswithFINRAintheU.S.

GoldmanSachsChinaEnergy:Oil

Exhibit1:ChinaOils’valuationremainsdiscountedvs.globalpeers

ChinaOilsvs.GlobalEnergycosvaluations/operationalcomparisontable

2025FCF

2025

2025

2024

EV/1P

2025

2025Net

2022-25EE&P

Yield

Dividend

EV/DACF

EV/GCI

Reserves

CROCI

Debt/

VolumeGrowth

(%)

Yield(%)

(X)

(X)

($/BOE)

(%)

Equity(%)

CAGR(%)

A

ChineseBigOils

1

CNOOC

10%

8%

2.9X

0.41X

9.5

14%

(17%)

9%

2

PetroChina

15%

8%

2.6X

0.28X

8.3

9%

(1%)

3%

3

Sinopec

7%

9%

4.0X

0.33X

NA

6%

15%

2%

B

India/ASEANOils

1

PTTEP

1%

5%

3.9X

0.29X

13.4

5%

0%

6%

2

PTT

7%

5%

6.1X

0.48X

6%

34%

3

ONGC

4%

4%

6.2X

0.55X

6.0

8%

27%

1%

C

UpstreamWinners

1

ConocoPhillips

8%

3%

5.9X

0.87X

22.8

10%

31%

5%

2

ChevronCorp

10%

5%

6.3X

0.75X

28.1

9%

19%

5%

D

IntegratedOilWinners

1

Shell

14%

4%

4.3X

0.49X

25.7

8%

16%

(1%)

2

BP

13%

7%

4.1X

0.39X

19.2

8%

44%

1%

E

DownstreamWinners

1

Phillips66

11%

4%

7.7X

1.15X

12%

64%

2

MarathonPetroleum

14%

2%

7.1X

1.09X

11%

121%

3

Neste

7%

4%

6.8X

0.74X

9%

36%

Average

9%

5%

5.2X

0.60X

16.6

9%

30%

4%

GreenhighlightrepresentstopquartileamongGlobalEnergycompanies.Source:GoldmanSachsGlobalInvestmentResearch

Exhibit2:Earningsupdate

EBITDAGSEstimateGSRevisionsGSvsCons

2024E

2025E

2026E

2024E

2025E

2026E

2024E

2025E

mnrmb

mnrmb

mnrmb

%

%

%

%

%

PetroChina

464,699

469,806

493,388

-2%

-1%

2%

-6%

-7%

Sinopec*

211,851

212,700

229,548

-3%

-9%

-7%

-3%

-7%

CNOOC

267,025

270,968

286,905

3%

-2%

1%

-2%

-5%

_

*inclusiveofinvestmentincome

Source:Companydata,GoldmanSachsGlobalInvestmentResearch,Bloomberg

Ratings,12-monthTPsandRisks

PetroChina(0857.HK/601857.SS;Buy/Buy):Ournew12mTPsfortheH/Aare

HK$8.20/Rmb12.70(prior:HK$8.30/Rmb12.90),mainlyduetoreductionin2025Eoilpriceassumptionbyourmacroteam(theteam’s2025EaverageBrentforecasthasreducedtoUS$77/bbl,vs.US$82prior),aswellasmarking-to-marketfor

weaker-than-expectedre?ningmarginsin2Q24.Aftertherecentdropinshareprice,weassessthatthecurrentsharepriceofPetroChinaisdiscountingaBrentoilpriceof

US$63/bbl.Ouranalysissuggeststhatthecompany’svaluationisstilloneofthelowestamongglobalpeers(Exhibit1).Meanwhile,PetroChina’s2025Edividend/FCFyield

remainattractiveatc.8%/15%.

17September20242

GoldmanSachsChinaEnergy:Oil

Exhibit3:PetroChina’searningsbene?tfromhigheroilprices,thoughthenetpositiveimpactonEBITDAnarrowswhenoilgoesaboveUS$85/bbl

PetroChinaearningssensitivityanalysis

PetroChina

13-Sep-24

Shareprice5.640

Brentoilpricescenarios(2025average)Changes

2025EmeasuresUS$60/bblUS$70/bblUS$80/bblUS$90/bblUS$100/bblUS$110/bblUS$120/bbl70vs.6080vs.7090vs.80100vs.90110vs.100120vs.110

TotalEBITDAmnrmb369,702427,509481,162524,433562,857581,579596,24016%13%9%7%3%3%

Explorationandproductionmnrmb246,419305,395360,218404,658444,251479,692515,13258,97754,82344,43939,59435,44035,440

Refiningandchemicalsmnrmb49,08755,77062,45469,13775,82166,95654,0296,6846,6846,6846,684-8,865-12,927

Marketingmnrmb37,76137,76137,76137,76137,76137,76137,761000000

Naturalgasandpipelinemnrmb47,95240,09932,24624,39416,5418,688835-7,853-7,853-7,853-7,853-7,853-7,853

Headofficeandothermnrmb(11,517)(11,517)(11,517)(11,517)(11,517)(11,517)(11,517)000000

DACF

mnrmb354,084397,383437,619470,083498,918512,969523,973

12%10%7%6%3%2%

EPS

rmb/share0.480.690.881.041.181.241.30

44%28%18%13%6%4%

ROE

%

5.7%8.1%10.4%12.1%13.7%14.5%15.1%

43%28%17%13%6%4%

CROCI

%

7.2%8.1%8.9%9.6%10.2%10.5%10.7%

12%10%8%6%3%2%

FCFyield*

%

11.3%13.8%15.9%18.6%20.9%21.8%22.3%

21%15%17%13%4%3%

Dividendyield

%

4.7%6.8%8.7%10.2%11.6%12.3%12.8%

44%28%18%13%6%4%

P/EX11.057.685.995.094.494.244.07-30%-22%-15%-12%-5%-4%

EV/DACFX3.282.882.582.352.182.102.05-12%-10%-9%-7%-3%-2%

*Note:AssumingthesamebasecasecapexforUS$80-120/bbloil,anda5/10%reductionfromthebasecasecapexforUS$70/60/bbloil.

Source:GoldmanSachsGlobalInvestmentResearch

0857.HK

Buy

12mPriceTarget:HK$8.2Price:HK$5.64Upside:45.4%

GSForecast

12/23

12/24E

12/25E

12/26E

Marketcap:HK$1.0tr/$132.4bn

Revenue(Rmbmn)New

3,011,012.0

3,215,633.5

3,170,692.3

3,283,094.6

Enterprisevalue:HK$1.4tr/$185.8bn

Revenue(Rmbmn)Old

3,011,012.0

3,325,393.2

3,324,798.3

3,360,169.2

3mADTV:HK$859.6mn/$110.2mn

EBITDA(Rmbmn)

506,603.0

464,699.1

469,805.8

493,388.4

China

EPS(Rmb)New

0.88

0.83

0.84

0.88

AsiaEnergy&Chemicals

EPS(Rmb)Old

0.88

0.85

0.87

0.86

P/E(X)

5.3

6.2

6.1

5.8

M&ARank:3

P/B(X)

0.6

0.6

0.6

0.6

Leasesincl.innetdebt&EV?:Yes

Dividendyield(%)

9.5

8.5

8.5

8.9

CROCI(%)

10.3

9.1

8.7

8.7

6/24

9/24E

12/24E

E

EPS(Rmb)

0.23

0.21

0.14

--

_

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof13Sep2024close.

601857.SS

Buy

12mPriceTarget:Rmb12.7Price:Rmb7.9Upside:60.8%

GSForecast

12/23

12/24E

12/25E

12/26E

Marketcap:Rmb1.4tr/$203.8bn

Revenue(Rmbmn)New

3,011,012.0

3,215,633.5

3,170,692.3

3,283,094.6

Enterprisevalue:Rmb1.8tr/$257.2bn

Revenue(Rmbmn)Old

3,011,012.0

3,325,393.2

3,324,798.3

3,360,169.2

3mADTV:Rmb1.4bn/$199.0mn

EBITDA(Rmbmn)

506,603.0

464,699.1

469,805.8

493,388.4

China

EPS(Rmb)New

0.88

0.83

0.84

0.88

AsiaEnergy&Chemicals

EPS(Rmb)Old

0.88

0.85

0.87

0.86

P/E(X)

7.9

9.6

9.4

9.0

M&ARank:3

P/B(X)

0.9

1.0

0.9

0.9

Leasesincl.innetdebt&EV?:Yes

Dividendyield(%)

6.3

5.5

5.5

5.8

CROCI(%)

10.3

9.1

8.7

8.7

6/24

9/24E

12/24E

E

EPS(Rmb)

0.23

0.21

0.14

--

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof13Sep2024close.

17September20243

GoldmanSachsChinaEnergy:Oil

CNOOC(0883.HK,Buy):Ournew12mTPisHK$23.50(prior:HK$23.00),mainly

re?ectingmarking-to-marketforstronger-than-expectedresultsin1H24,whichis

partiallyoffsetbythereductionin2025Eoilpriceassumptionbyourmacroteam.Aftertherecentdropinshareprice,weassessthatthecurrentsharepriceofCNOOCis

discountinganoilpriceofUS$57/bbl,anditstradedcash?owmultipleremainsoneofthelowestamongglobalpeers(Exhibit1).WeexpectCNOOCtodeliver10%FCFyieldand8%dividendyieldin2025E,vs.globalpeer’saveragedividendyieldat5%.

Exhibit4:CNOOCofferscleanexposuretochangesinoilprices,thoughthenetbene?tofhigheroilpricesisloweredslightlywhenoilrisesaboveUS$85/bblduetoincreasedroyalties

CNOOCearningssensitivityanalysis

CNOOC

13-Sep-24

Shareprice18.480hkd/share

Brentoilpricescenarios

(2025average)Changes

2025Emeasures

US$60/bbl

US$70/bbl

US$80/bbl

US$90/bbl

US$100/bblUS$110/bblUS$120/bbl70vs.6080vs.7090vs.80100vs.90110vs.100120vs.110

EBITDA

mnrmb

214,104

249,670

279,643

306,594

332,486358,379384,27117%12%10%8%8%7%

Netincome

mnrmb

102,524

128,441

150,283

169,922

188,790207,659226,52725%17%13%11%10%9%

EPS

rmb/share

2.16

2.70

3.16

3.57

3.974.374.7625%17%13%11%10%9%

DACF

mnrmb

193,667

219,588

241,432

261,073

279,942298,811317,68013%10%8%7%7%6%

ROE

%

13.2%

16.4%

19.0%

21.4%

23.6%25.8%27.9%24%16%12%10%9%8%

CROCI

%

11.5%

13.1%

14.4%

15.6%

16.8%17.9%19.1%13%10%8%7%7%7%

FCFyield*

%

6.8%

9.0%

10.7%

12.9%

15.0%17.1%19.2%32%19%21%16%14%12%

Dividendyield

%

5.4%

6.8%

8.0%

9.0%

10.0%11.0%12.0%25%17%13%11%10%9%

P/E

X

8.01

6.40

5.47

4.83

4.353.963.63-20%-15%-12%-10%-9%-8%

EV/DACF

X

3.66

3.15

2.81

2.53

2.292.091.91-14%-11%-10%-9%-9%-9%

*Note:AssumingthesamebasecasecapexforUS$80-120/bbloil,anda5/10%reductionfromthebasecasecapexforUS$70/60/bbloil.

Source:GoldmanSachsGlobalInvestmentResearch

0883.HK

Buy

12mPriceTarget:HK$23.5Price:HK$18.48Upside:27.2%

GSForecast

Marketcap:HK$879.0bn/$112.7bnEnterprisevalue:HK$758.0bn/$97.2bn 3mADTV:HK$2.0bn/$255.2mnChina

AsiaEnergy&Chemicals

M&ARank:3

_

Leasesincl.innetdebt&EV?:Yes

Revenue(Rmbmn)NewRevenue(Rmbmn)OldEBITDA(Rmbmn)

EPS(Rmb)NewEPS(Rmb)OldP/E(X)

P/B(X)

Dividendyield(%)CROCI(%)

EPS(Rmb)

12/23416,609.0416,609.0

236,716.02.602.60 4.3 0.810.213.2

12/231.26

12/24E442,547.4406,577.4

267,025.12.992.89 5.6 1.1 7.814.3

6/241.68

12/25E410,736.4420,633.7

270,968.43.033.085.6 1.07.813.6

12/24E1.31

12/26E437,120.5432,997.5

286,904.93.213.16 5.2 0.9 8.313.3

E

--

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof13Sep2024close.

Sinopec(0386.HK/600028.SS;Neutral/Neutral):Ournew12mTPsfortheH/Aare

HK$4.50/Rmb5.70(prior:HK$4.60/Rmb5.80),mainlyduetomarking-to-marketforweakre?ningsegmentperformancein1H24,lowered2025E-26Ere?ningmarginsdueto

reduced2024Elevels(c.30%lowervs.prior,theimpactofwhichweexpecttobe

partiallyoffsetbycostcuts),aswellasreductionin2025Eoilpriceassumptionbyourmacroteam.WeareNeutral-ratedonSinopec(A/H),asweexpectSinopecto

experienceaperiodofweakFCFduetomarginweaknessinthere?ningandchemicalsegments,leadingtoourpreferenceforthemoreupstreamnames(PetroChina,

CNOOC)inourcoverage(Exhibit5).

17September20244

GoldmanSachsChinaEnergy:Oil

Exhibit5:WeexpectSinopectoexperienceaperiodofweakerFCFthanpeersinourmacroteam’sbasecaseoilrangeofUS$70-$85/bbl

Sinopecearningssensitivityanalysis

Sinopec

13-Sep-24

Shareprice4.350

Brentoilpricescenarios(2025average)Changes

2025EmeasuresUS$60/bblUS$70/bblUS$80/bblUS$90/bblUS$100/bblUS$110/bblUS$120/bbl70vs.6080vs.7090vs.80100vs.90110vs.100120vs.110

TotalEBITDAmnrmb171,174196,722218,608238,955258,040257,056250,85915%11%9%8%0%-2%

Explorationandproductionmnrmb74,02190,524103,364114,666124,705134,628144,55116,50312,84011,30210,0399,9239,923

Refining(incl.inventoryg/l)mnrmb24,33333,37842,42451,46960,51549,60833,4889,0469,0469,0469,046-10,907-16,120

Marketinganddistributionmnrmb47,91647,91647,91647,91647,91647,91647,91600000

0

Chemicalsmnrmb18,23918,23918,23918,23918,23918,23918,23900000

0

Corporateandothers

mnrmb

6,666

6,666

6,666

6,666

6,666

6,666

6,666

0

0

0

0

0

0

Refining(excl.inventoryg/l)

mnrmb

43,033

43,033

43,033

43,033

43,033

23,080

(2,085)

0

0

0

0

-19,953

-25,165

TotalEBITDA(excl.inventoryg/l)

mnrmb

189,874

206,377

219,217

230,519

240,558

230,528

215,286

9%

6%

5%

4%

-4%

-7%

EPS

rmb/share

0.31

0.45

0.57

0.68

0.79

0.78

0.75

46%

27%

20%

15%

-1%

-4%

ROE

%

4.4%

6.5%

8.2%

9.8%

11.3%

11.2%

10.7%

46%

27%

19%

15%

-1%

-4%

CROCI

%

5.4%

6.0%

6.6%

7.1%

7.6%

7.6%

7.4%

12%

9%

8%

7%

0%

-2%

FCFyield*

%

4.6%

6.5%

7.7%

10.3%

12.7%

11.9%

10.3%

40%

20%

33%

23%

-6%

-14%

Dividendyield

%

4.9%

7.2%

9.1%

10.9%

12.6%

12.5%

11.9%

46%

27%

20%

15%

-1%

-4%

P/E

X

13.25

9.07

7.14

5.97

5.17

5.20

5.44

-32%

-21%

-17%

-13%

1%

5%

EV/EBITDA

X

4.21

3.67

3.31

3.01

2.76

2.79

2.88

-13%

-10%

-9%

-8%

1%

3%

*Note:AssumingthesamebasecasecapexforUS$80-120/bbloil,anda5/10%reductionfromthebasecasecapexforUS$70/60/bbloil.

Source:GoldmanSachsGlobalInvestmentResearch

0386.HK

Neutral

12mPriceTarget:HK$4.5Price:HK$4.35Upside:3.4%

GSForecast

12/23

12/24E

12/25E

12/26E

Marketcap:HK$526.7bn/$67.5bn

Revenue(Rmbmn)New

3,212,215.0

3,210,742.0

3,145,372.5

3,170,741.4

Enterprisevalue:HK$1.1tr/$137.2bn

Revenue(Rmbmn)Old

3,212,215.0

3,272,694.9

3,258,639.9

3,285,773.3

3mADTV:HK$549.2mn/$70.4mn

EBITDA(Rmbmn)

210,614.0

212,923.7

227,444.6

240,445.2

China

EPS(Rmb)New

0.49

0.55

0.61

0.68

AsiaEnergy&Chemicals

EPS(Rmb)Old

0.49

0.58

0.66

0.72

P/E(X)

8.2

7.3

6.5

5.8

M&ARank:3

P/B(X)

0.6

0.6

0.6

0.5

Leasesincl.innetdebt&EV?:Yes

Dividendyield(%)

8.6

9.0

10.1

11.1

CROCI(%)

7.7

6.7

6.8

6.7

6/24

9/24E

12/24E

E

EPS(Rmb)

0.15

0.12

0.12

--

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof13Sep2024close.

_

600028.SS

Neutral

12mPriceTarget:Rmb5.7Price:Rmb6.19Downside:7.9%

GSForecast

12/23

12/24E

12/25E

12/26E

Marketcap:Rmb749.4bn/$105.6bn

Revenue(Rmbmn)New

3,212,215.0

3,210,742.0

3,145,372.5

3,170,741.4

Enterprisevalue:Rmb1.2tr/$175.3bn

Revenue(Rmbmn)Old

3,212,215.0

3,272,694.9

3,258,639.9

3,285,773.3

3mADTV:Rmb898.5mn/$124.7mn

EBITDA(Rmbmn)

210,614.0

212,923.7

227,444.6

240,445.2

China

EPS(Rmb)New

0.49

0.55

0.61

0.68

AsiaEnergy&Chemicals

EPS(Rmb)Old

0.49

0.58

0.66

0.72

P/E(X)

11.8

11.3

10.1

9.1

M&ARank:3

P/B(X)

0.9

0.9

0.9

0.9

Leasesincl.innetdebt&EV?:Yes

Dividendyield(%)

6.0

5.7

6.4

7.1

CROCI(%)

7.7

6.7

6.8

6.7

6/24

9/24E

12/24E

E

EPS(Rmb)

0.15

0.12

0.12

--

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof13Sep2024close.

17September20245

GoldmanSachsChinaEnergy:Oil

InvestmentThesisandPriceTarget,Risks&Methodology

PetroChina

PetroChinaisastate-ownedintegratedoilandgascompanyinChina,operatingE&P,re?ning,anddownstreamdistributionbusinessesnationwide.WeareBuy-ratedonPetroChinaH/AsharesaswebelievePetroChinawillcontinuetobene?tfrom

range-boundBrentpricesofUS$70-$85andhealthydomesticgaspricesin2025.UnderBrentpricescenariosofUS$60-120/bbl,we?ndthatPetroChina’searningsarepositivelycorrelatedwithoilprices,thoughthenetpositiveimpactonEBITDAnarrowswhenoil

goesaboveUS$85/bblduetoincreasedroyaltiesandreducedre?ningincome.

Downsiderisks:Loweroilpricesthanexpected;morecompetitivegasmarketleadingtoearningsheadwindsoverthemediumterm(e.g.,largercontractedgasimportlosses).

Our12-monthtargetpricesfortheH/AsharesareHK$8.20/Rmb12.70basedona

sum-of-the-parts(SOTP)methodology.FortheE&Psegment,wecontinuetouse50%DCF+50%EV/DACFinvaluation.Weuse3.5X2025EEV/DACFmultipleforthe50%blendcomponentofE&Pvaluations,whichisinlinewithhowwevalueupstream

pure-playE&PnameslikePTTEPandONGC.Weapplya3.5Xtarget2025EEV/EBITDAmultipleforitsre?ning&chemical,andmarketingsegments.Weapplya4.0X2025E

EV/EBITDAmultipleforthenaturalgassegments,atadiscounttoregionalpeers,tore?ectvolatileLNGimportlosses.

Keyrisks:Loweroilpricesthanexpected;morecompetitivegasmarketleadingto

earningsheadwindsoverthemediumterm(e.g.,largercontractedgasimportlosses).

ChinaPetroleum&Chemical

ChinaPetroleum&Chemical(Sinopec)isastate-ownedintegratedoilandgascompany,withrelativelyhigherearningscontributionfromre?ningthanitspeers.Weare

Neutral-ratedonSinopec(A/H),asweexpectSinopectoexperienceaperiodofweakFCFduetore?ningmarginweaknessandchemicalmarketsurplus,leadingtoour

_

preferenceforthemoreupstreamnames(PetroChina,CNOOC)inourcoverage.Keyrisks:Lower/higheroilpricesorweaker/strongeroiltimespreadsthanexpected;

stronger/weakerre?ningorchemicalmarginsthanexpected;

higher/weaker-than-expectedcostpass-throughofimportedLNG.

Our12-monthtargetpricesarebasedon2025EEV/EBITDA(similartoregional

downstreamre?ningandchemicalstocksundercoverage),applyingatargetmultipleof3.5X.Wecontinuetoexcludeinventorygainsandlossesfromtotalearningsinourprice

targetcalculation,inordertofocusonthecoreincome.WealsoapplyanA-sharepremiumof35%,basedon5-yearaverage.Our12mTPsfortheH/AsharesareHK$4.50/Rmb5.70.

Keyrisks:Lower/higheroilpricesorweaker/strongeroiltimespreadsthanexpected;stronger/weakerre?ningorchemicalmarginsthanexpected;

higher/weaker-than-expectedcostpass-throughofimportedLNG.

17September20246

GoldmanSachsChinaEnergy:Oil

CNOOC

CNOOCisastate-ownedupstreamoilandgascompany,focusingondeveloping

resourcesmainlyinoffshoreChina.WeareBuy-ratedonCNOOC,whosecash?ow

lookssettobene?tfromrange-boundBrentpricesofUS$70-$85androbustproductiongrowth.Thecompany’supstreamassetsaretypicallylowcostandcompetitiveamongstglobalpeers,whichstandoutfromtheotherChineseOilmajors.WebelieveCNOOC

offerscleanexposuretochangesinoilprices,thoughthenetbene?tofhigheroilpricesisshavedslightlywhenoilrisesaboveUS$85/bblduetoincreasedroyalties.Keyrisks:Loweroilpricesthanexpected;geopoliticalrisks;operationalrisksofoffshoreE&P

activities;M&A,especiallythepotentialinjectionoftheCNOOCgroup’sgasassetsintothelistedcompany.

Our12-monthtargetpriceofHK$23.50isbasedona50%/50%blendof2025ESOTPandEV/DACFvaluation.Weuse50%risked-SOTPtocomprehensivelycapturethefullcyclecash?owfromtheprojectsandincorporateourlong-termviewonoilprices,

balancedby50%2025EEV/DACFtobetterre?ectthenear-tomedium-termbullishoil