ConocoPhillips (COP) to Proceed With the Willow Oil Project

ConocoPhillips COP will proceed with its massive Willow development project on the Alaska North Slope, despite a recent court ruling that revoked the project’s approval.

In 2020, the Trump-led administration approved permits for the Willow project after determining that it will not affect the environment or wildlife. In a recent court ruling, U.S. District Court identified that the project approvals were based on an inaccurate environmental survey. Hence, environmental and native groups filed a lawsuit to stop ConocoPhillips' planned Willow gravel-road construction and gravel mining.

ConocoPhillips is the largest crude producer in Alaska. It has been a leader in oil and gas exploration and development in the state for decades. Willow holds about 600 million barrels of recoverable oil. If developed, the project is expected to produce more than 160,000 barrels per day (bpd). It will become the westernmost operating oil field on the North Slope.

ConocoPhillips cited that the legal setbacks have not affected the Willow timeline. COP plans to spend $4-$6 billion on the Willow project. The upstream player continues its technical planning and cost analysis to reach a final investment decision next year.

Alaska officials expect to see an increase in drilling activities to raise tax revenues when most U.S. production is centered in Texas and other nearby states. Apart from the Willow project, ConocoPhillips plans to start production at the GMT-2 field on the western North Slope. COP invested more than $1 billion on the project, which is expected to produce 35,000-40,000 bpd.

Company Profile & Price Performance

Headquartered in Houston, TX, ConocoPhillips is a leading upstream energy company.

Shares of COP have outperformed the industry in the past three months. The stock has gained 33.2% compared with the industry’s 24.5% growth.

Image Source: Zacks Investment Research

Zacks Rank & Other Stocks to Consider

ConocoPhillips currently sports a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector might look at the following stocks that presently flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Diamondback Energy, Inc FANG: Midland, TX-based Diamondback is an independent oil and gas exploration and production company. FANG primarily focuses on the Permian basin, where it has around 414,000 net acres. The upstream operator focuses on growth through a combination of acquisitions and active drilling in America's hottest and lowest-cost shale region. As of 2020-end, Diamondback Energy held 1,316 million barrels of oil-equivalent in proved reserves.

In the past year, shares of Diamondback Energy have increased 176% compared with Zacks Exploration and Production Industry’s growth of 137.1%. FANGexpects to record an earnings growth of 268.4% in 2021. The company’s earnings also witnessed eight upward revisions in the past 30 days. Diamondback Energy’s board of directors recently declared a quarterly dividend of 50 cents per share for the third quarter, indicating a 11.1% hike in its quarterly payout from the previous level of 45 cents.

Devon Energy Corporation DVN: Devon Energy is an independent energy company engaged in the exploration, development and production of oil and natural gas. Devon’s strong U.S. operations are spread across the key oil assets of Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. At 2020-end, Devon Energy had proved reserves of approximately 752 million barrels of oil equivalent.

In the past year, the stocks has soared 245.3% compared with the industry's growth of 137.1%. In the past 60 days, the Zacks Consensus Estimate for Devon Energy’s 2021 earnings has been raised by 18.1%. It is also projected to see a year-over-year earnings surge of 3800% in 2021. DVN’s free cash flow at the end of third-quarter 2021 was $1.1 billion, up eight-fold from fourth-quarter 2020 levels. The company will continue to prioritize free cash flow generation in 2022 and deploy a major portion of the same to dividends and share buybacks. 

Eni SPA E: Eni is among the leading integrated energy players in the world. Its upstream operations involve the exploitation and production of oil and natural gas resources. Through midstream activities, the company transports and stores hydrocarbons. Eni is also engaged in refining hydrocarbons and distributing the end products in 71 nations. Apart from providing natural gas, the company generates and sells electricity.

In the past six months, shares of Eni have gained 18.3% compared with the industry's growth of 13.9%. In the past 60 days, the Zacks Consensus Estimate for Eni's 2021 earnings has been raised by 45%. It is also projected to see a year-over-year earnings surge of 743.8% in 2021. Eni beat the Zacks Consensus Estimate three times in the last four quarters and missed once. It has a trailing four-quarter earnings surprise of 0.43%, on average.

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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 Nasdaq, Inc.