Goldman Sachs Recommends Two Major Chinese Oil Companies

LootboxPhobia · 2026-03-17T06:57:39+00:00

Goldman Sachs has upgraded the ratings and target prices for China's two major oil producers due to their competitive costs and strong cash flow generation potential. The target price for China National Offshore Oil Corporation has been raised to HKD 31, highlighting its low-cost advantage; the target price for China National Petroleum Corporation has been increased to HKD 11.50, emphasizing its cost control and future growth opportunities.

LootboxPhobia

2026-03-17 06:57:39

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Investing.com – Goldman Sachs has upgraded the outlook for two major Chinese oil producers, emphasizing their competitive cost positions and strong cash flow generation potential as key drivers for valuation growth in the coming months.

The investment bank has raised the target prices for these two stocks rated as “Buy,” citing improved long-term oil price outlooks and operational efficiencies that position these stocks favorably compared to global peers.

With this upgrade, Goldman Sachs has shifted its valuation approach, moving away from focusing on short-term market fluctuations and instead emphasizing these companies’ structural advantages along the global cost curve and their ability to generate strong free cash flow even in lower oil price environments.

CNOOC

Goldman Sachs has set a 12-month target price of HKD 31.00 for CNOOC, up from HKD 21.10, making it the company’s top pick in the sector. Goldman Sachs states that CNOOC’s leading cost position, with an average breakeven point of about $30 per barrel for Brent crude, supports robust cash flow generation. The bank estimates that the current stock price discount corresponds to a long-term Brent crude price of $67 per barrel, with projected free cash flow and dividend yields in 2027 of approximately 11% and 5%, respectively. Goldman Sachs believes that CNOOC’s production growth will mainly be driven by projects offshore China and in Guyana, both of which are at the low end of the oil cost curve.

PetroChina

For PetroChina, Goldman Sachs has set a 12-month target price of HKD 11.50 for H-shares and RMB 15.30 for A-shares, up from HKD 8.60 and RMB 11.80, respectively. The upgrade considers potential cost savings and an adjusted valuation base year. Goldman Sachs assesses that, supported by strong upstream natural gas revenues and strict cost controls, PetroChina could achieve a breakeven point for projected free cash flow in 2027 at a Brent crude price below $30 per barrel. The current stock price discount corresponds to a long-term Brent crude price of $62 per barrel, with estimated free cash flow and dividend yields in 2027 of about 10% and 5%. Goldman Sachs states that cost control remains a top priority for PetroChina, and new opportunities such as green energy, artificial intelligence, and digital initiatives offer further potential for cost reductions.

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