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The third-largest energy company in the United States, ConocoPhillips (COP) is flying high. Second quarter results show a 65% net income improvement over last year.

While ConocoPhillips still has a ways to go to catch up with leaders Exxon (XOM) and Chevron (CVX), it is pushing for aggressive growth. Since its initial merger of Conoco and Phillips in 2002, the giant has increased margins and taken advantage of synergies to outperform expectations.

While it has clearly benefited from soaring oil prices with the other big petroleum giants, COP is also one the largest refiners in the United States, and as demand continues to rise for refined products, this division has shone. COP has also benefited from its acquisition of Burlington in March.

And the company isn’t stopping there: ConocoPhillips is still on track to increase its equity stake in Lukoil -- one of Russia’s largest energy companies -- to 20% by the end of 2006, from this past quarter’s 18% stake. Nearly 80% of COP’s oil and gas production is drawn from reserves in North America and Europe, and with dwindling supplies, it is smart to set its sights on other terrain. The aggressive push into Lukoil brings with it the usual risks of dealing with Russia and Vladimir Putin.

COP is also making sizeable investments in pipelines in Asia, Venezuela, and the Middle East, to help diversified locations and increase production. Again, working in these instable regions brings with it high risk, but I like that COP is spreading the risk out.

Type of stock:
The third largest oil and gas company in the US, ConocoPhillips has a $111 billion market cap putting it behind Exxon Mobil (at $419 billion) and Chevron (at $148 billion). With the merger in 2002 (Conoco with Phillips), its acquisition of Burlington, and the push into Lukoil, COP has created synergies beyond expectation -- and the results have been great for shareholders.

Price target:
COP’s aggressive push into new markets and its recent mergers and acquisitions, show me that this is a company poised for aggressive growth over the long term. Some of these new markets carry risk however. Its supremacy in the refining field, and the current demand for refined products also should give COP additional near term gains. This is a strong buy right now at $66. I think this stock will hit as high as the upper $80's in the coming year.

COP 1-yr Chart

Source: ConocoPhillips Poised for Long Term Aggressive Growth