) has entered into a settlement with coalbed methane gas producer
Green Dragon Gas Ltd. Per the agreement, ConocoPhillips would
receive $40 million as the final settlement to renounce all claims
from Green Dragon on various proceedings in multiple jurisdictions.
The payment will be made using Green Dragon's existing cash
resources. Its appeal hearing scheduled for Nov 2014, has been
withdrawn, bringing the matter to a closure.
In Aug 2009, Green Dragon had received $42.6 million from
ConocoPhillips under a farm-out agreement. The funds were used for
further reserve development and drilling of gas production wells on
the Shizhuang South block, and exploration activities within the
Shizhuang North and Qinyuan blocks.
ConocoPhillips holds leading positions in both natural gas and
heavy crude oil acreages in North America, as well as a legacy
position in the North Sea and growing exposure to lucrative
international regions. The Houston, TX-based company thus looks
forward to replacing reserves and sustaining production growth over
the long term.
ConocoPhillips' initiatives toward liquids-rich plays are gaining
momentum through the Eagle Ford, Bakken and Permian plays. The
company is also poised to benefit from a pipeline of projects in
the Gulf of Mexico, Malaysia, the liquefied natural gas project in
Australia, the U.K., Norway, and the Canadian oil sands, apart from
the US Lower 48 liquids-rich plays. Oil sands expansion projects
are also on track.
Since Apr 2012, when ConocoPhillips divested its refining
operations to Phillips 66 (
), it has delivered total shareholder returns of 22%.
ConocoPhillips' complete shift of focus to upstream operations and
thus oil and gas prices play a major role in determining its
performance. The company plans to expand production by maintaining
its growth focus on reserves, through global drilling programs in
legacy assets, unconventional assets and major projects.
ConocoPhillips' margin growth would also be aided by its shift of
production mix to higher-value products. The company expects to
spend $16 billion on average annually and allocate 95% of its
capital to investments that deliver above-average margins. The
recent activity targets offshore prospects in Australia, Angola and
Senegal, conventional exploration in Norway and Indonesia, and
unconventional exploration in North America, Poland and Colombia.
Currently, ConocoPhillips holds a Zacks Rank #3 (Hold). Investors
can consider top-ranked stocks in the oil and gas sector such as
Weatherford International plc (
) and Sunoco Logistics Partners L.P (
), all sporting a Zacks Rank #1 (Strong Buy).
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