ConocoPhillips (COP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are downgrading our Outperform recommendation on ConocoPhillips to Neutral following its second quarter results. The company's performance was backed by a continued portfolio shift to liquids and higher production from new development programs, as well as upstream ventures in key projects. ConocoPhillips' initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and Permian plays. With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, the company expects to deliver 3 5% production growth in 2014. However, ConocoPhillips remains vulnerable to unstable movements in crude oil and natural gas prices , as well as the volatile macro backdrop.

Overview:

Houston, Texas-based ConocoPhillips (COP) is a major global exploration and production (E&P) company with operations and activities in 30 countries that include the U.S., Canada, UK/Norway, China, Australia, offshore Timor-Leste, Indonesia, Libya, Nigeria, Algeria, Russia and Qatar.

As of the end of 2013, the company had estimated proved reserves of 8.9 billion oil-equivalent barrels (BOE) as compared with 8.6 billion BOE at the end of 2012. The company added 1.1 billion BOE of proved organic reserves in 2013, representing a reserve replacement ratio of 179%. Assets disposition in 2013 reduced reserves by 188 million BOE and total reserve replacement was 147%.

Earlier, in May 2012, ConocoPhillips completed the spin-off of its refining/sales business into a separate, independent and publicly traded company, Phillips 66. The move had resulted in the creation of the largest refining company in the U.S. (with a capacity of 2.4 million barrels per day) and the largest exploration and production player based on oil and gas reserves.

The new downstream company, Phillips 66, is headquartered in Houston, Texas. In addition to the refining, marketing and transportation businesses, Phillips 66 also include most of the Midstream and Chemicals segments, as well as power generation and certain technology operations included in the Emerging Businesses segment, creating an integrated downstream company.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: BOE , COP

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