CNOOC closes at record on oil price, Unocal bid

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Hong Kong, July 6: Shares in CNOOC Ltd rose 3.7% to a record close on Wednesday, buoyed by rising oil prices and attracting heavy trading volume despite its costly bid for US-based Unocal.

Oil prices near $60 a barrel helped lift shares across the energy sector. State-run CNOOC was the second most active stock in Hong Kong, with shares closing at HK$4.925.

Rival PetroChina, Asia’s most valuable company, rose 3.39% to a record close of HK$6.10, while the Hang Seng Index rose 0.18%.

“In the near-term, oil stocks will rise because the oil price is high,” said Andrew To, sales director at Tai Fook Securities. CNOOC shares are by far the top blue-chip performer in Hong Kong over the past 5 sessions, gaining more than 10%.

“CNOOC’s bid for Unocal crystallises the company’s intent, and demonstrates CNOOC’s ability to raise debt competitively,” Credit Suisse First Boston said in a Wednesday note. CSFB has a CNOOC price target of HK$5.00.

The investment bank said risks include volatile oil prices and a possible bidding war with US-based Chevron N.

Some investors said they were attracted by CNOOC’s favourable financing plans for its $18.5 billion bid for Unocal, which topped Chevron Corp’s earlier offer of more than $16 billion.

But others said they expected the deal to collapse, which might lift its share price.

CNOOC chief Fu Chengyu told a Hong Kong newspaper that the firm’s bid was progressing smoothly and that he was confident that CNOOC would prevail. Also on Wednesday, China’s foreign ministry criticised the US House of Representatives for demanding a review of CNOOC’s attempted takeover of Unocal.