ConocoPhillips: A Strategy Shift And Asset Sales Come High On Agenda
Richard Zeits • 16 Comments
Richard Zeits • 16 Comments
Fri, Oct. 21, 9:57 AM
- ConocoPhillips (COP -0.8%) has gained an extension of a deadline to deliver a plan for further development of its Eldfisk field off Norway, Upstream reports.
- COP reportedly has a development plan to drill six long-reach wells into the Bravo structure in the northern part of the field, but so far has drilled only two and has suffered drilling difficulties with the third probe due to reservoir challenges, so it has applied to postpone a year-end deadline to submit the plan.
- COP says it is now looking at lower-cost development solutions - such as unmanned wellhead platforms and subsea production - to tap satellite finds in the greater Ekofisk area, including Eldfisk, in the North Sea.
Tue, Oct. 18, 2:25 PM
- The consensus among execs, traders and officials at the annual Oil & Money conference in London: Get used to $50-$60/bbl oil prices, as falling costs in U.S. shale fields counteract OPEC’s renewed commitment to supply management.
- Any sustained oil price rally will be held back by the return of U.S. shale oil production from fields previously rendered unprofitable by the two-year slump, says IEA head Fatih Birol.
- “Investments are back... but it’s only going to be the very best,” BP's Bob Dudley says, adding that his company has taken final investment decisions on a handful of projects this year and is expected to approve more in 2017.
- ConocoPhillips (NYSE:COP) CEO Ryan Lance emphasizes that some U.S. shale fields have dramatically reduced their breakeven levels, with new wells in parts of the Permian, Bakken and Eagle Ford areas now profitable at $40/bbl.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Mon, Oct. 10, 4:32 PM
- The ConocoPhillips (NYSE:COP) operated Australia Pacific liquefied natural gas plant confirms that production had started at the second of its two units.
- Australia Pacific LNG, a 9M metric tons/year project co-owned by COP, Origin Energy (OTCPK:OGFGF) and China's Sinopec (NYSE:SNP), is among three coal seam gas-to-LNG plants to have opened on Curtis Island off Australia's east coast over the past two years.
- Traders believe APLNG will ship its first cargo from the second production train in the second half of October; The plant has loaded 47 cargoes since starting up last December.
Fri, Oct. 7, 5:52 PM
- ConocoPhillips (NYSE:COP) is suing Venezuela's PDVSA in a Delaware court, accusing it of fraudulent operations involving its U.S. subsidiary Citgo.
- COP claims that several PDVSA operations, including an ongoing bond swap that uses shares in Citgo as collateral, are part of an effort to prevent it from collecting compensation in a dispute over a 2007 nationalization of its Venezuela holdings.
- COP has long pursued a case against Venezuela in a World Bank tribunal to obtain billions of dollars in compensation for the Hugo Chavez-led takeover of its Venezuela assets; a partial ruling in 2013 by the tribunal said the takeover was illegal.
- PDVSA says the bond swap is legal and that the lawsuit has no legal basis.
Thu, Oct. 6, 4:41 PM
Wed, Sep. 28, 3:19 PM
- The energy sector (XLE +4%) bursts to the top of the leaderboard after OPEC announces a planned production cut to 32.5M bbl/day at the informal OPEC meeting in Algiers.
- Among individual energy stocks: XOM +3.8%, CVX +2.7%, RDS.A +2.8%, BP +3.4%, TOT +2.4%, PBR +4.5%, COP +6.4%, MRO +8%, MPC +1.4%, PSX +1.9%, VLO -0.1%, EOG +6.2%, PXD +6.4%, OXY +4.5%, DVN +7.9%, CLR +8.3%, APA +6.2%, NOV +8.1%, SLB +3.3%, BHI +3.6%, HAL +4.3%, KMI +3.4%, ENB +2.6%, EPD +1.9%, ETP +2.9%.
Wed, Sep. 21, 10:47 PM
- ConocoPhillips (NYSE:COP) and Alaska's state-owned gas corporation say they are in negotiations to form a joint venture aimed at marketing North Slope natural gas to utilities outside the state.
- COP and the state are inviting BP and ExxonMobil (NYSE:XOM), the two other major slope gas owners, to join the group.
- The initiative for the new marketing group sidesteps failed commercial negotiations last year among the four parties - the three companies and the state corporation - in the Alaska LNG project, which involves an 800-mile gas pipeline and large export facility.
Wed, Sep. 21, 9:47 AM
- Suncor Energy (SU +0.6%) says it will write off ~$105M in costs related to an exploration well in the Shelburne Basin offshore Nova Scotia after the development failed to yield commercial volumes of oil.
- SU says it was told by Royal Dutch Shell (RDS.A, RDS.B), operator of the joint venture, that the first exploration well had been completed but was non-commercial.
- Joint venture participants are Shell Canada with a 50% stake, ConocoPhillips (NYSE:COP) with 30% and SU at 20%.
Mon, Sep. 19, 8:35 AM
- Indonesia's Medco Energi says it agreed to acquire ConocoPhillips' (NYSE:COP) 40% interest in an oil and gas production sharing block that COP operates in the Natuna Sea offshore Borneo, confirming an earlier report; the purchase price is not disclosed.
- Medco's acquisition follows its purchase of a majority stake in Newmont Nusa Tenggara, Indonesia's second-biggest copper and gold miner.
Fri, Sep. 16, 8:44 AM
- ConocoPhillips (NYSE:COP) is close to selling its 40% stake in an oil and gas production sharing block in the Natuna Sea off the coast of Borneo island to Indonesia's Medco Energi, Reuters reports.
- A Medco acquisition would follow its purchase of a majority stake in Indonesia's second-biggest copper and gold miner Newmont Nusa Tenggara.
- Chevron (NYSE:CVX) has a 25% interest in the Natuna block, while Japan's Inpex owns 35%.
Mon, Sep. 12, 3:58 PM
- ConocoPhillips (COP +1%) is upgraded to Overweight from Neutral with a $51 price target, raised from $44, at J.P. Morgan, which sees COP's 2016-20 dividend growth coming in at 2x U.S. peers with no risk of another dividend cut in a flat $40/bbl case.
- The firm says it is more comfortable that COP "can 'walk' (de-lever with maturity schedule) and 'chew gum' (buy back stock).
- Near term, JPM foresees catalysts around COP's November analyst day, such as a potential share buyback authorization and/or expanded asset sale program, which could address investors’ balance sheet fears.
- Meanwhile, the firm downgrades Occidental Petroleum (OXY -0.3%) to Underweight from Neutral with a $78 price target, noting that while OXY has executed well, it believes valuation is stretched with an estimated 2020 sustaining free cash flow yield of ~5.7% (group average ~7.2%), despite similar leverage.
Wed, Sep. 7, 2:48 PM
- ConocoPhillips (COP +0.9%) is looking to find and develop a new field project off Norway, despite seeing earnings plunge from its country operations last year, Upstream reports.
- COP says it “still has a strong belief in the potential” of Norway’s offshore play, despite low oil prices that chopped its income from operations off the country to NOK18.8B ($2.3B) last year from NOK24.9B in 2014, to leave it with a full-year pre-tax profit of NOK4.1B, 67% lower than the prior-year NOK12.5B.
- ExxonMobil has been scaling back its activities off tNorway as it focuses on more profitable global plays, Shell likely also will look to shed North Sea assets following its recent acquisition of BG Group, and BP recently merged its Norwegian assets into local player Det Norske Oljeselskap.
- Separately, Oppenheimer’ analysts note that COP is the stock among the 20-largest E&P companies that is still lower YTD, and needs to make progress in reducing its debt and cost structure, high-grading its asset portfolio and delivering on its pledge of returning 20%-30% of its operating cash flow to shareholders.
Wed, Sep. 7, 12:30 PM
- ConocoPhillips (COP +0.5%) is upgraded to Hold from Underperform with a $40 price target, raised from $37, at Jefferies, which cites valuation and improving financial metrics.
- Jefferies says COP has been among the most aggressive companies in the sector in cutting costs since the oil price downturn, and it expects the company can balance its cash cycle at $49/bbl.
- The firm thinks COP's high financial leverage likely is near its peak, but it expects that balance sheet repair will be among the highest priorities for any free cash.
Mon, Aug. 29, 5:47 PM
- Crude oil markets will continue to be plagued by volatility in the short and medium term, according to executives from ConocoPhillips (NYSE:COP) and other oil companies at the ONS Conference in Norway.
- "Volatility is here to stay,” COP CEO Ryan Lance said at the conference, one of the industry's biggest. Market rebalancing “will extend into 2017. The inventory levels are still quite high."
- The huge global oil oversupply that has weighed on prices for the past two years may not clear until H2 2017, according to Royal Dutch Shell (RDS.A, RDS.B) chief energy adviser Wim Thomas.
- Not everyone is so pessimistic: IHS Markit's Daniel Yergin said oil supply and demand will balance this year, adding that spending on onshore oil and gas will increase in 2017.
- But that does not mean a turnaround is imminent, according to Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield: “The downturn’s behind us, but the question is how long do we stay in a $45-$50 oil-price scenario? I think 2017 could be another tough year," adding that things could turn around in 2018.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Fri, Aug. 26, 6:50 PM
- BP, ConocoPhillips (NYSE:COP) and Exxon Mobil (NYSE:XOM) tell state legislators that they will not proceed further with the Alaska LNG project as it is currently structured, saying they support a state takeover of the project.
- The companies say the project is still not economical even after cost estimates have been trimmed to the lower range of a previous estimate of $45B-$65B.
- Energy consultant Wood MacKenzie says the traditional model of a producer owned and financed gasline would be the least competitive of major LNG projects now being planned, although alternatives such as third party investors or full state ownership and tax-exempt status could make the project more competitive.
- The Department of Energy has issued a license to Alaska LNG to export up to 20M metric tons/year of liquefied natural gas, which would make it one of the world's largest LNG projects.
Tue, Aug. 23, 9:55 AM
- ConocoPhillips' (COP +0.3%) plan to sell its 35% stake in a the deepwater SNE oil field off Senegal to Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY) has hit a snag, as junior partner FAR Ltd. attempts to buy time to stop the deal.
- FAR, which owns a 15% stake in the field, says COP failed to comply with the terms of their joint operating agreement as it relates to the proposed sale of its stake, and thus the clock has yet to start for it to exercise its pre-emption rights.
- An analyst tells Reuters that FAR's effort to re-set the clock on its pre-emptive rights, as well as its increase in the estimate of 2C contingent oil resources for SNE to 641M barrels, suggests that the company is still trying to line up funding to buy COP's stake.