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ConocoPhillips Looks to Make Moves in New Energy Technologies

ConocoPhillips ( COP ), one of the largest oil and gas exploration and production companies in the world, recently announced that it will partner with NRG Energy and GE Capital to invest $300 million in a joint venture that will promote emerging energy technologies. ConocoPhillips has been a leader in development of new energy technologies with several of its activities focused on power generation and new technologies. Its main competitors are ExxonMobil ( XOM ), British Petroleum ( BP ), Anadarko ( APC ) and Chevron ( CVX ).

We maintain a $68.44 price estimate for ConocoPhillips stock, which is roughly 10% below market price.

The new joint venture, named "Energy Technology Venture", will fund approximately 30 venture and growth-stage companies over the next four years from the $300 million in total capital that the three partners have committed. Among the first beneficiaries of this fund are Alta Devices (manufacturer of solar photo-voltaic cells), Ciris Energy (developer of cleaner coal), and CoolPlanetBioFuels (which produces clean bio-fuels).

According to ConocoPhillips' press release, "the wide range of deep technical and financial expertise, relationships, services and products, of the three companies behind Energy Technology Ventures" will help start-ups develop next generation energy technologies.

Emerging Business Activities

ConocoPhillips actively seeks investment opportunities in wind, solar and geothermal energy to provide new opportunities for future growth. As a part of its emerging business, ConocoPhillips owns a 1,180 megawatt power plant in the UK that provides steam and electricity to the Humber Refinery and also provides steam to a neighboring refinery. It owns a gas-fired co-generation plant in Texas and offers a gasification technology (E-Gas) that uses petroleum coke, coal, and other low-value hydrocarbons as feedstock, and results in high-value synthesis gas used for a slate of products, including power, substitute natural gas (SNG), hydrogen and chemicals.

ConocoPhillips' emerging business segment generated revenues of about $600 million in 2009. We estimate that the company's revenue from emerging business will see a steady uptick towards $1.1 billion by the end of our forecast period. However, as ConocoPhillips' core business is the production and refining of oil and gas, these new initiatives would still represent a relatively small portion of the company's total revenues.

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


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

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