Credit Suisse Downgrades CNOOC Amid Exhausted Cost-Cutting Efforts, Rising CapEx

"Opex is already close to 2009 levels and there is hardly any room for further cuts. But a structural increase in F&D costs means CNOOC will need higher capex and higher DD&A," analyst Horace Tse wrote in a note.

"Oil prices have corrected 20% since June peak and the 2H16 growth concern is coming through earlier than anticipated. The extremely weak Asia refining margin could also induce more refinery outages, dampening Asia crude oil demand. A peak in oil prices typically marks a peak in CNOOC's share price," Tse noted.

Related Link: Set Your Calendar, Oil Investors: OPEC Confirms September Meeting

The analyst said though shares of CNOOC appear cheap versus global peers, the company's oil reserve life (5.6 years) is also the lowest among peers (12 years, on average). In fact, CNOOC is pricing in a $75/bbl LT oil price, one of the most expensive in Asia.

ADRs of CNOOC closed Friday's regular trading at $119.36 and were flat on the day at time of publication Monday.

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