CNOOC serves as the upstream division of China National Offshore Oil, the third state-owned oil company in China. Consequently, it represents the most direct investment opportunity for those looking to gain exposure to China's energy security policy and its long-term objectives for increasing oil supply. The absence of downstream operations has allowed the company to avoid inheriting a large legacy labor force. Additionally, none of its sales are subject to government price controls. We believe CNOOC is currently undervalued due to its cost efficiency. Our projections indicate that CNOOC will maintain an average all-in cost of approximately USD 30 per barrel over our explicit five-year forecast period, reflecting the company's strong track record in cost management. Therefore, we anticipate that the firm will remain profitable in the long term, even with our midcycle Brent oil price forecast set at USD 60 per barrel.
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