While the McDep Ratio of 0.85 indicates the stock is valued low even for $60 a barrel, we see oil price turning up again later in 2007, heading toward our vision of $150 in 2010. China’s rapid economic growth and its increasing dependence on oil imports should favor reasonable taxation and political support for its own oil producers.
Natural gas at 11% of NPV has three times the annual volume potential measured by proven reserves and four times the price potential measured by heating equivalence to catch up with oil today. Approaching NPV at year end, CEO stock price has dropped back to what may prove to be a classic buy point on the 200-day average.
Though no one can make such assurances, we comfortably assign CNOOC stock a full weight in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.
