ConocoPhillipsCOP

Morningstar Rating

Stock Research and Analysis

by Allen Good

Faced with a tightening resource market, ConocoPhillips made significant acquisitions over the past few years to boost reserves and increase production. The ensuing fall in commodity prices made those acquisitions appear poorly timed, however. Now management Read more

Bulls Say

ConocoPhillips produces a higher proportion of natural gas than its peers and should benefit from environmental concerns that favor natural gas.

Recent agreements with Abu Dhabi National Oil Company demonstrate ConocoPhillips' attractiveness to national oil companies and provide opportunities for growth.

Despite variation in short-term energy prices, long-term supply and demand factors should sustain a high price environment, resulting in returns in excess of capital costs.

ConocoPhillips has significant ownership in pipeline and other transportation assets, which offer steady income that is not as tied to variations in commodity prices.

The 20% equity ownership of Lukoil offers production and reserves in Russia that would otherwise be inaccessible to the company. Read more

Bears Say

The company may find it increasingly difficult to increase production and book reserves as nations become more protective of their natural resources and potentially averse to working with foreign energy companies.

The long-term forecast for U.S. refining is dim, with declining demand and increasing foreign supply.

International expansion exposes the company to political risks, evident in its $4.5 billion impairment charge for expropriation of its Venezuelan assets.

ConocoPhillips invested unwisely by acquiring companies and entering partnerships when commodity prices were high. Read more

Strategy

In recent years, ConocoPhillips has relied on acquisitions, such as its 2006 purchase of natural gas producer Burlington Resources, to build reserves and increase production. However, the company is Read more

Management

James Mulva has been chairman and CEO of ConocoPhillips since the 2002 merger of Phillips Petroleum and Conoco, adding the chairman role in 2004. Before 2002, he held the same positions at Phillips Petroleum among other executive management roles in Read more

Profile

ConocoPhillips is an international integrated energy company. In 2009, it produced 865,000 barrels per day of oil and 4.9 billion cubic feet a day of natural gas, primarily Read more

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