Chinese oil giant CNOOC – ExxonMobil’s partner in Guyana’s lucrative Stabroek Block – surged 44% in its Shanghai debut on Thursday, after raising 28.08 billion yuan (US$4.41 billion) in a public stock offering
Reuters said that the shares began trading on the Shanghai Stock Exchange at 12.96 yuan, 20% higher than the offering price of 10.8 yuan.
Trading in the oil giant was suspended after hitting the upper limit of the daily allowable band for new listings, citing unusual fluctuation, while Hong Kong-listed shares of CNOOC rose as much as 4.3% before retreating.
“CNOOC is being chased by investors who are seeking shelters in big caps with relatively low valuation and high dividends,” Linus Yip, chief strategist at First Shanghai Group, said. “The stock also whets market appetite at a time when oil prices are climbing and inflation accelerating.”
China’s largest offshore oil producer, CNOOC has said it would use the share sale proceeds to fund one gas and seven oilfield projects in China and overseas, and to replenish capital, according to Reuters.
“CNOOC represents historic investment opportunities due to high oil prices, low valuation, and consistent high dividend yields,” Chen Shuxian, an analyst at Cinda Securities, wrote on Thursday, adding that the group‘s market cap has the potential to double over the next few years.
Reuters said that CNOOC started trading in Shanghai against the backdrop of a bleak stock market that has witnessed an increasing number of stocks dipping below initial public offering (IPO) prices.
A third of the roughly 100 companies newly listed this year in Shanghai and Shenzhen dropped below offer prices on debut, data from East Money Information showed. Some, including chipmaker Vanchip Tianjin Technology and electronics firm Rigol Technologies tumbled more than 30%.
China’s tough Covid-19 containment measures at a time of heightened geopolitical risk are also roiling its stock markets, Reuters said, sending the main benchmark stock index CSI300 down 18% so far in 2022.
The Shanghai sale came after CNOOC was delisted in October by the New York Stock Exchange after the United States added the firm to a trade blacklist citing suspected connections to the Chinese military.
State-backed rivals PetroChina and Sinopec are already listed in Shanghai.
Bloomberg noted that the company drills for oil and gas off the coast of China and around the world, including a large stake in ExxonMobil “massive Guyana project”. Bloomberg said that its operations in the South China Sea led the Trump administration to add the firm to a blacklist in January 2021 and accuse CNOOC of being a “bully” for China’s military efforts in the contested waterway.
For investors, Bloomberg said CNOOC offers more direct exposure to high oil prices than its fellow state-owned Chinese oil giants PetroChina Co. and Sinopec, which both have massive refining and fuel-selling businesses.
CNOOC advertised in yesterday’s Sunday Stabroek for a number of services as it begins upping its investment here in the Yellowtail project which recently received approvals from the Environmental Protection Agency and the government.
The ad said that CNOOC Petroleum Guyana Limited (CPGL) is preparing to tender for immigration, work permit and visa services; ground transportation and driver services; contract labour and related support services.
