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Financial Times: Big already

Published: March 27 2008 20:11 | Last updated: March 27 2008 20:11

CNOOC, the Chinese offshore oil and gas producer, indicated on Thursday that it wanted to turn into a super-major like ExxonMobil or BP or Royal Dutch Shell to improve shareholder returns in the long run.

Fu Chengyu, chairman and chief executive, said the company’s price-to-earnings ratio would not be higher than its larger and more diversified rivals’ because investors thought a pure upstream company, such as CNOOC, would not be able to shoulder risks better than the big guys.

He said eventually the company might seek to expand into other areas to lift its market valuation. “A soldier who doesn’t want to become a general is not a good soldier,” Fu said.

But CNOOC is actually trading at a higher valuation than that of ExxonMobil and BP and Royal Dutch Shell already.

Nice metaphor, bad analysis.

Copyright The Financial Times Limited 2008

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