Conoco's strategy starting to pay off as bigger oil rivals struggle


ConocoPhillips (COP) didn't shock with its Q4 results but they look great when compared with its biggest competitors as it moves to overcome the problems of high costs and lack of fresh reserves that have nagged at Exxon (XOM) and Shell (RDS.A, RDS.B).

Analysts say COP's plan to sell lower-yielding assets to focus on more profitable oil production is beginning to pay off as the industry faces pressure from shareholders to lift returns despite flat oil prices and rising costs for risky exploration work designed to replace reserves.

Credit Suisse calls COP the best performing large oil company, citing 7% growth in cash flow despite asset sales, a reduced share count and more cash on the balance sheet.

Meanwhile, XOM's results reflect a "mediocre quarter," especially in international production, Edward Jones says, adding XOM has already lost momentum already, reverting back to declining production and stagnant earnings.

Shell is seen as off to a good start under its new CEO but with far to go.

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Comments (4)
  • Phenom1
    , contributor
    Comments (524) | Send Message
     
    Lets see, all this pro COP, anti XOM talk would have you think there might have been some difference in performance all these months. In fact, XOM has far outperformed over the past three months. In fact, these are two different investments, an upstream company subject to the viscissitudes of the oil market, vs. an integrated company, with chemicals, downstream and upstream, and a much smoother equity curve.

     

    Lets give COP some time to log performance as a company on their own, and see which provides the better long term performance. For my money, its no contest.
    30 Jan 2014, 07:33 PM Reply Like
  • KeithRichards
    , contributor
    Comments (142) | Send Message
     
    I think XOM's performance the last few months can best be attributed to Buffett's purchase of the stock and the scaling back of COP. If not for the Buffett effect, I believe XOM would be taking a harder hit with this correction.
    30 Jan 2014, 08:25 PM Reply Like
  • Esekla
    , contributor
    Comments (4660) | Send Message
     
    It is no contest. Given the shift in hydrocarbon usage, which has just begun, a vertically integrated company with a huge refining and other infrastructure can't possibly compare to one whose main assets are in line with the coming shift. I'm sure there will be some ups and down in favor of one model then the other, but the overarching direction is pretty clear.
    30 Jan 2014, 10:40 PM Reply Like
  • Phenom1
    , contributor
    Comments (524) | Send Message
     
    of course, you're referring to the shift towards natural gas.
    31 Jan 2014, 08:35 AM Reply Like
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