Goldman Sachs has issued a research report announcing increased target prices for several Chinese energy majors. The target price for CNOOC (00883) has been raised from HK$21.1 to HK$31, with a "Buy" rating maintained. For PetroChina, the A-share (601857.SH) target price was lifted from RMB 11.8 to RMB 15.3, while the H-share (00857) target increased from HK$8.6 to HK$11.5; both maintain a "Buy" rating. For SINOPEC CORP (00386), the H-share target price was raised from HK$3.6 to HK$4.9, and the A-share (600028.SH) target was increased from RMB 4.8 to RMB 6.7; it maintains a "Neutral" rating. The bank expects SINOPEC's free cash flow to be weaker than the upstream companies under its coverage due to oversupply in the chemical market.

Over the past three years, CNOOC and PetroChina have demonstrated strong cash flow generation capabilities, with their rankings in cash return on capital invested (CROCI) improving among global peers, justifying valuation convergence. Looking ahead, they are expected to maintain top-tier free cash flow yields of approximately 10%. Goldman Sachs' analysis reinforces CNOOC's leading cost advantages, with the breakeven point for its future production assets as low as around $30 per barrel of Brent crude. PetroChina benefits from robust upstream natural gas earnings and significant potential for cost savings. Goldman estimates that by replacing external grid power with self-generated green electricity, along with AI and digital initiatives, PetroChina could potentially lower its Brent breakeven point by $8 per barrel by 2035 (forecast at $62 per barrel for 2025).

The report notes that the current valuations for both CNOOC and PetroChina are below the industry average, with an implied long-term Brent crude price of $60 to $70 per barrel. Given the bank's long-term oil price forecast of $75 per barrel for 2028 and beyond, this suggests potential for re-rating. Goldman Sachs has transferred primary coverage responsibility for the Chinese oil giants—PetroChina, SINOPEC, and CNOOC—from Nikhil Bhandari to Amber Cai. The bank has also raised its forecasted earnings for these three companies for 2026-2027 by an average of approximately 2%.