Zacks Investment Research downgraded shares of CNOOC Ltd. – ADR (CEO) from NEUTRAL to UNDERPERFORM on January 07, 2015, with a target price of $118.00.
We are downgrading CNOOC ADRs to Underperform from Neutral in a weak oil pricing environment. The price of crude tumbled more than 50% since June this year owing to affluent supply of the commodity and lackluster global demand. On top of that the price of crude is expected to remain low in 2015 too. As CNOOC produces significant amount of oil, we don't expect the company to generate considerable earnings for its shareholders. We also remain concerned as CNOOC's extensive natural gas exposure raises its sensitivity to gas price fluctuation. Owing to these factors, we see the company as a risky bet that investors should exit.
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