CNOOC’s Lock-Up Expiration: A Watershed Moment for Shareholder Confidence?

As the lock-up period on 148.15 million A shares of CNOOC Limited (600938.SS, 00883.HK) nears its April 21, 2025, expiration, investors are weighing how this pivotal event might impact the energy giant’s stock dynamics. With CNOOC’s total outstanding shares standing at 47.28 billion as of April 2025—a figure unchanged since the end of 2024—the locked-up shares represent just 0.3% of the total float, suggesting limited immediate sell-side pressure. Yet, the expiration’s symbolic role in shareholder confidence cannot be understated.

The Lock-Up in Context

The 148.15 million shares subject to expiration are part of CNOOC’s dual listing strategy, with A shares trading on the Shanghai Stock Exchange and H shares on Hong Kong. While the locked-up portion is small relative to the total float, its timing coincides with broader market scrutiny of China’s energy sector. Investors will monitor whether institutional holders or insiders—often the recipients of lock-up agreements—choose to exit positions or retain stakes.

Historically, CNOOC has managed equity dilution carefully. The company’s shares outstanding grew only 0.13% annually from 2023 to 2024, reflecting disciplined capital allocation. This stability, combined with a robust dividend policy (committing to 40%+ of net profit distribution), has underpinned investor loyalty.

Operational Strengths Anchor Value

CNOOC’s fundamentals provide a mooring against near-term volatility. In 2023, it reported record oil and gas production of 726.8 million barrels of oil equivalent (BOE)—a 7.2% jump from 2022—and maintained industry-leading operational costs of $7.54 per BOE. Even amid flat oil prices in early 2024, Q1 net profit surged 23.7% YoY to RMB 39.7 billion, driven by cost discipline and production efficiency.

Analysts project further growth: CNOOC’s 2024–2026 net profits are forecast at RMB 145.7 billion, RMB 158.2 billion, and RMB 163.9 billion, respectively. With a dividend yield of 4.2% for A shares and 7.0% for H shares (as of mid-2024), the stock offers income-seeking investors a rare blend of stability and energy sector exposure.

Strategic Moves Signal Long-Term Confidence

Amid the lock-up expiration, CNOOC’s parent company, CNOOC Group, has signaled unwavering support. On April 8, 2025, it announced plans to increase its holdings of both A and H shares by up to RMB 4 billion within 12 months, a bold move to counter potential selling pressure. This增持 (buyback) program follows a HK$99.2 million H-share repurchase in July 2024, underscoring management’s belief in the stock’s undervalued status.

The Shanghai listing itself—raising RMB 28.08 billion in April 2025 for oil and gas projects—also sent a strong message. The debut saw shares surge, reflecting investor optimism about CNOOC’s role in China’s energy transition. With proceeds earmarked for high-return projects, the company aims to boost production and capitalize on Asia’s growing LNG demand.

Risks on the Horizon

Despite these positives, risks linger. Volatile crude prices—a key determinant of CNOOC’s profitability—could test margins if output costs rise unexpectedly. Additionally, geopolitical tensions and regulatory shifts in China’s energy sector pose tail risks. Yet, CNOOC’s diversified asset base and state-backed mandate offer a cushion against such headwinds.

Conclusion: A Test of Conviction, Not a Crisis

The lock-up expiration on April 21, 2025, is likely to be a non-event for CNOOC’s stock. With the shares subject to release representing just 0.3% of the total float, institutional selling would need to be extraordinarily concentrated to meaningfully impact prices. More importantly, CNOOC’s operational prowess—bolstered by record production, low costs, and a shareholder-friendly dividend policy—creates a compelling floor for its valuation.

The RMB 2–4 billion增持 plan by CNOOC Group further reinforces this narrative, signaling that insiders view the stock as undervalued. Combined with its Shanghai listing’s success and a 2025–2026 EPS growth trajectory of 3–6% annually, CNOOC appears positioned to navigate the lock-up expiration with minimal disruption.

For investors, the event may even present a buying opportunity. As the company executes its capital strategy and benefits from China’s energy transition, CNOOC’s shares could outperform in the quarters ahead. The lock-up expiration is less a crisis and more a test of market confidence—a confidence the data increasingly justifies.