We are upbeat about CNOOC Limited’s (NYSE:CEO) prospects and view it as a promising pick at the moment.
The company currently carries a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities.
Let’s delve deeper to analyze the factors that are working in favor of this Hong Kong-based energy player.
New Oil & Gas Discoveries
Through 2018, CNOOC reported 17 new oil and natural gas discoveries of which 12 were made in China and the remaining five in Stabroek block, Guyana. In the Stabroek block — with total recoverable resources of 5.5 billion barrel of oil equivalent (BOE) — the company has made a total of 12 discoveries. Notably, the five latest discoveries made by CNOOC in Stabroek are considered among the best 10 oil and gas discoveries across the globe in 2018.
In early 2019, CNOOC reported two major discoveries — Tilapia and Haimara — in the Stabroek block.
The massive success in the exploration front is likely to back the company’s oil and gas production.
Potential to Capitalize on LNG Business
To combat the dangerously high pollution levels, China has been taking bold steps to generate energy from natural gas instead of coal. Strong focus on cleaner energy by Beijing is giving the LNG market a significant boost. Notably, China is now the second-largest importer of LNG in the world.
Since CNOOC has invested the maximum in LNG receiving terminals in China, the company is well positioned to capitalize on the growing LNG business. Owing to this, CNOOC is likely report earnings growth of 5% and 6.1% through 2019 and 2020, respectively.
Other Stocks to Consider
A few other prospective players in the energy space are Antero Resources Corporation (NYSE:AR) , Royal Dutch Shell (LON:RDSa) plc RDS.A and ProPetro Holding Corp. (NYSE:PUMP) . While Antero Resources and NGL Energy sport a Zacks Rank #1, ProPetro Holding carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Resources is likely to see earnings growth of 20% over the next five years.
Royal Dutch Shell is likely to see earnings growth of 8% over the next five years, higher than the industry’s 7.6%.
ProPetro Holding is likely to see 19.5% earnings growth through 2019.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
CNOOC Limited (CEO): Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
Antero Resources Corporation (AR): Free Stock Analysis Report
ProPetro Holding Corp. (PUMP): Free Stock Analysis Report
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Zacks Investment Research