If this is the first time you are exploring ConocoPhillips, here is a quick reminder that in May of 2012 the company broke off into two separate companies: ConocoPhillips (COP) and Phillips 66 (PSX). ConocoPhillips is involved in exploration and production of the oil and natural gas. Analysts expect ConocoPhillips to earn $6.26 per share in 2013.
The company continues to move ahead of its schedule as it continues to sell assets to optimize its work and focus on its Bakken region, which includes parts of Montana, North Dakota, and Saskatchewan. It recently sold 86,000 acres in the north central United States for $1.05 billion. Total assets sold over the last year have reached $12 billion, well ahead of the projected sales of ($8-$10 billion).
Reinvesting in Itself
COP intends to reinvest in its Oil Sands project in Alberta, Canada, with its partners, Total (TOT) and Cenvovus Energy (CVE). For this particular project to have high success for these companies, the price of oil must remain high. The cost for extracting sand oil has been estimated to be $28CAD to $36CAD (U.S.$28.0306 to $36.0409) in operating and supply costs according to the Canadian Energy Board. This particular region is considered the second largest "oil source" in the world.
Another area that has great promise is off Malaysia. It has been estimated by Petronas that the region is capable of producing 300,000 barrels of oil and 1 billion cubic feet of gas per day. ConocoPhillips is a partner here and expects operations to come online this year.
I speculate ConocoPhillips is banking on oil prices to remain high and exporting LNG-although not as profitable, may remain attractive enough to make a profit. 2013 looks like a year of long-term investment for the company in its future as it looks to work smarter and develop a better return on its labor. This could mean better (ROI, ROA, ROC.) Therefore, look for 2013 to be a year of investment for the company and not a great year of growth. For the long-term investor, this makes sense.
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Technically Speaking
ConocoPhillips is currently fighting through a major resistance point at around 58.64. This particular point has been a thorn in the side of a bullish move by COP as the stock has challenged it and lost at least 10 times since early 2011. It has recently pushed through and looks like it has the strength to continue to move through resistance. The lows continue to get higher and so do the highs. As the stock attempts to rebound to the upper Bollinger band, I can observe some weakness revealed in both the RSI indicator and MACD. There is negative divergence in the RSI and also in the MACD MA's that appear to be going down. Does this mean a reversal is coming soon? Well, barely pushing through resistance I would not be surprised to see a slow down and watch the stock peak and then pull back (short term). But momentum is still bullish.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
