Author: Alessandro Chen
Back in March 2021, the NYSE announced it would suspend trading in China National Offshore Oil Corporation (Cnooc)’s American depository shares, due to compliance with an executive order banning all Chinese firms on the blacklist. Chinese groups put by the Pentagon on the blacklist are accused of working with the People’s Liberation Army and threatening US security. Cnooc is considered a threat by the US because it is China’s third-largest oil company and is controlled by the central government.
After leaving the New York Stock Exchange in October 2021, Cnooc listed its shares on the Shanghai Stock Exchange, where it raised about $4.4 billion, being the third-largest equity capital market deal of the year. After opening 20% higher than its Hong-Kong listed shares, Cnooc’s shares jumped by 44%, reaching Rmb 15.55, far above the offering price of Rmb 10.8.
The home listing is part of Cnooc’s plan. The increasing oil prices have favoured the state-controlled oil major as its net profit made a record high last year, reporting 70.3 billion Rmb. The surge in prices following Russia’s invasion of Ukraine implies Cnooc expects first-quarter profit to grow by 89 per cent from a year earlier. Despite pressure on the Chinese GDP due to the restrictions of the zero-covid policy, the IPO was very successful and highlighted the strong demand for listings within China’s equity market.
The funds would be employed in financing the development of various oil fields. More specifically, the proceeds would be used to fund one gas and seven oilfield projects in China and overseas. China’s largest offshore also added that it will use the home financing channel together with the abroad one to promote quality growth and create value for shareholders.