ConocoPhillips Earnings: Growth Where It Matters Most

Source: ConocoPhillips (link opens a PDF).

Source: ConocoPhillips Investor Presentation (link opens a PDF).

As the chart on the right-hand slide shows, the company has pushed its overall cash margin per barrel up from $28.58 to $29.28 over the past year when normalizing prices.

That number should continue to move higher as ConocoPhillips focuses on North American shale plays like the Bakken and Eagle Ford, where it expects to deliver 22% annual production growth through 2017. Because of that focus, as well as its investments in other high-margin projects, the company expects to produce $20 billion-$23 billion in annual cash flow by 2017. That's well ahead of the $15.8 billion the company produced last year. Needless to say, ConocoPhillips' growth will really move the needle.

Looking further afield

While ConocoPhillips' current plan takes it through 2017, it has its eye on growth beyond that date as it remains focused on finding high-margin assets to fuel future growth. The company is taking a balanced approach as it is searching out new shale plays in the U.S., Canada, Colombia, and Poland as well as looking for deepwater discoveries in the Gulf of Mexico, Canada, Angola, and Senegal.

The hope is the company's exploration program will find the next Eagle Ford or Bakken shale play as well as an offshore oil field that has the margins of Malaysia or the North Sea, which produce margins between $30 and $40 per BOE. Finding the next high-margin growth asset is a real key to the company's ability to grow beyond 2017. So far, the company has made a lot of progress on that front, having made several large discoveries in the Gulf of Mexico along with delivering promising well results in shale plays in the Permian Basin, Niobrara, and two Canadian shale plays. Because of this, the company's future results should continue to grow stronger with no end in sight.

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The article ConocoPhillips Earnings: Growth Where It Matters Most originally appeared on

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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