ConocoPhillips: A Strategy Shift And Asset Sales Come High On Agenda
Richard Zeits • 16 Comments
Richard Zeits • 16 Comments
ConocoPhillips' Pragmatic Management Continues To Be Ahead Of The Curve (And Exxon Mobil)
Michael Fitzsimmons • 100 Comments
Michael Fitzsimmons • 100 Comments
Jul. 23, 2015, 12:31 PM
- Eni (E +0.5%) is considering selling all or part of its onshore Nigerian operations as it seeks to divest non-core businesses amid a drop in oil prices, Bloomberg reports.
- Eni is said to have asked advisers to look at options for the assets, which include interests in oil and natural gas fields; depending on what Eni would decide to sell, a deal could raise $2B-$5B.
- Eni’s wholly owned subsidiary in the country operates under a joint venture agreement with Nigeria’s state oil company NNPC and ConocoPhillips (COP -2.5%).
Jul. 22, 2015, 10:58 AM
- More on Goldman Sachs' addition of Exxon Mobil (XOM +0.7%) to its Conviction Buy list: Analyst Neil Mehta thinks the company is positioned to outperform the sector and calls the company a "rare dividend/FCF growth story among big oils."
- Metha highlights four key positives: improving free cash flow, driving premium dividend growth; an inflection in production growth; strong refining earnings improvement driven by higher global crack spreads; and investor positioning, with many large cap portfolio managers still meaningfully underweight the stock.
- The analyst expects free cash flow will ramp from $9B at $57/bbl Brent in 2015 to $19B in 2017 at $65/bbl Brent, as capex decreases and volumes improve, and believes XOM can raise its dividend, on average, by 6% through 2017 vs. zero improvement for ConocoPhillips (COP -0.7%) and just 1% for Chevron (CVX +0.3%).
Jul. 22, 2015, 8:55 AM
- ConocoPhillips (NYSE:COP) says it has ended talks with PetroChina (NYSE:PTR) on a shale gas development in the country after a two-year study.
- COP signed an agreement with the Chinese company to evaluate shale potential in the Neijiang-Dazu field in the Sichuan basin in early 2013.
- "Given the complicated shale formations in China, only the state-owned Chinese energy firms are more likely to pursue their investment in the sector" in the current low oil price environment, says a strategy director at ICIS China.
Jul. 17, 2015, 3:26 PM
- ConocoPhillips’ (COP -1%) cancellation of a contract with Ensco (ESV -5.9%) "calls backlog sanctity into question for offshore drillers," raising uncertainty about contracted newbuild rigs even though COP has been vocal about tightening offshore exploratory spending since March, J.P. Morgan analyst Sean Meakim writes.
- Backlog uncertainty will remain an overhang until major operators prove commitment to their drilling programs, and exposure to Petrobras (PBR -5.4%), Shell (RDS.A -0.1%) and Chevron (CVX -1.1%) could serve as a headwind until the binary risk to contracts is resolved through dayrate renegotiations or terminations, according to Meakim.
- The firm maintain a negative outlook on the offshore drillers, with an Underweight rating on ESV, Noble Corp. (NE -4.3%) and Transocean (RIG -7.1%).
- Earlier: Offshore drillers under heavy pressure
Jul. 17, 2015, 11:32 AM
- Offshore drillers are significantly underperforming the broader market following cautious commentary from Schlumberger (SLB -0.1%) despite its Q2 earnings beat, a contract termination and an analyst downgrade.
- On its earnings call this morning, SLB said it expects little improvement in pricing levels in the near future and declines in activity for offshore drillers, while land rigs provide a more attractive opportunity and better margins.
- For its Q3, SLB foresees a further 5%-6% decline in Q/Q revenue as well as lower EPS, and says the $0.77 consensus is a realistic number.
- Yesterday, ConocoPhillips (COP -1.8%) said it plans to cut future deepwater exploration spending, particularly in its operated Gulf of Mexico program; in light of the decision, COP is terminating a contract for an Ensco (ESV -4.9%) deepwater drill ship.
- Also, UBS today downgraded National Oilwell Varco (NOV -1.5%) to Sell from Neutral.
- SDRL -6.4%, RIG -4.7%, RDC -6%, DO -3.3%, ATW -4.2%, HP -1.2%, PTEN -1.2%, PACD -5.7%.
Jul. 16, 2015, 5:41 PM
- ConocoPhillips (NYSE:COP) says it will reduce future spending on deepwater drilling, due to low crude oil prices.
- COP says the most significant spending reductions will come from its program in the Gulf of Mexico, where it will terminate its contract for an Ensco deepwater drill ship which was scheduled to begin drilling later this year.
- COP says its decision to cut deepwater spending will strengthen its ability to achieve cash flow neutrality in 2017, even if lower commodity prices persist.
- However, COP raises its quarterly dividend to $0.74 from $0.73, which will cost an additional $12.3M per quarter.
Jul. 16, 2015, 4:52 PM
- Ensco (NYSE:ESV) -1.1% AH after the offshore drilling contractor says ConocoPhillips (NYSE:COP) confirmed a notice of termination for a three-year contract on the Ensco DS-9 drillship.
- ESV says COP is obligated to pay termination fees for two years equal to the ~$550K operating dayrate; as a result, ESV does not expect a material negative impact to 2015 and 20-16 financial results as a result of the termination.
- The ship recently was delivered and had been scheduled to commence its initial drilling contract in Q4.
- Also, ESV discloses that it will issue fleet status reports quarterly rather than monthly; the next report will be released in October.
- July fleet status report
Jul. 16, 2015, 4:22 PM
- ConocoPhillips (NYSE:COP) declares $0.74/share quarterly dividend, 1.4% increase from prior dividend of $0.73.
- Forward yield 5.11%
- Payable Sept. 1; for shareholders of record July 27; ex-div July 23.
Jul. 16, 2015, 3:32 PM
- Statoil (STO +1.6%) is higher following an upgrade to Buy at Citigroup, which adds the stock to its short list - which also includes Total (TOT +0.9%) and ConocoPhillips (COP -0.9%) - of companies the firm believes is leading change in the industry.
- Citi cuts its estimates for 2015 prices by 8% and 2016 prices by 10% to $58/bbl and $63/bbl, respectively; in turn, with companies’ "feet to the fire,” the firm lowers its earnings estimates by an average of 4% for this year and 9% for 2016.
- But Citi thinks new CEO Eldar Saetre is driving deep-seated change at STO, with a core ambition to improve on self-help initiatives that already have been active over the last 12-18 months, bringing cost-efficiencies towards best-in-class within the big oil group.
Jul. 9, 2015, 7:21 PM
- Bloomberg's Carl Pope makes the case that the largest publicly traded oil companies face a problem that will only grow worse with time: Dependence on ever higher oil prices to match their ever higher costs of discovery.
- Pope notes that publicly traded oil and gas companies have access to only 10% of the world’s oil reserves, and those reserves increasingly are located in areas that are among the most difficult and expensive to extract; meanwhile, more accessible, inexpensive crude reserves in places like Russia and the Persian Gulf are set aside by governments for their own national oil companies.
- The columnist notes that the percentage of Exxon’s (NYSE:XOM) proven reserves made up of tar sands and heavy oil increased from 15% in 2006 to 32% by 2013, and relying on a larger share of more expensive oil has worn on XOM's margins and returns.
- Other relevant tickers: CVX, COP, BP, RDS.A, RDS.B, TOT, E
- ETFs: XOP, IEO, PXE, NDP, GUSH, DRIP
Jul. 8, 2015, 7:05 PM
- ConocoPhillips' (NYSE:COP) stock price target is raised to $82 from $75 at Argus, implying ~40% upside from current levels as the firm believes COP’s combination of major long-cycle and unconventional short-cycle projects will enable it to generate shareholder value in a range of commodity price environments.
- Argus says COP has successfully differentiated itself from other large-cap peers: It is the world's largest independent pure-play E&P company; it is increasingly levered to high-margin liquids production; and it has most of its proven reserves in low-risk, OECD countries.
- The firm also believes COP's high-quality, low-cost asset base will help it outperform peers when commodity prices are low, and likes the above average 4.7% dividend yield.
Jul. 7, 2015, 6:43 PM
- Barclays’ Paul Cheng predicts all 10 Americas-based oil majors - XOM, CVX, COP, HES, MUR, SU, CVE, IMO, OTCPK:HUSKF, PBR - will beat earnings forecasts, benefiting from strong downstream and chemical performances as well as better than expected production volumes and a lower operating cost environment.
- Cheng estimates the oil majors will exceed the current EPS consensus by a median of 30% while the refiners will beat by 9%.
- Cheng raises his full-year EPS forecast for CVX to $3.75 from $3.55 and for COP to $0.25 from $0.20, but lowers his forecast for XOM to $4 from $4.05.
Jul. 6, 2015, 3:15 PM
- WTI crude oil settled at a three-month low $52.53/bbl, -7.7%, on a confluence of worries about the Greece debt drama, China’s stock markets and a new flood of Iranian oil; Brent crude fell to $56.50, -6.3%, to snap its 100-day MA.
- WTI has dropped 10% over three straight sessions and Brent more than 7% lower in two consecutive days, breaking out of the narrow trading band of the past three months and risking a deeper slide ahead.
- The energy sector (XLE -1.3%) is easily the worst performing equity group today: CLR -7.4%, NOG -7.8%, OAS -8.5%, DNR -6.7%, WLL -6%.
- Oil supermajors also are sharply lower: XOM -1%, COP -2.8%, CVX -1.1%, BP -3.3%, TOT -3%.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
Jun. 24, 2015, 11:39 AM
- The oil majors that prepare for a world of $65-$75 crude will be the ones that reward shareholders, Citigroup says, naming ConocoPhillips (COP -0.1%) and Total (TOT +0.4%) at the top of the list.
- Success in the current environment involves a steep focus on self-help in the form of cost cutting and delivery of current growth investment, with the potential around costs substantial for an industry that has seen 10 years of inflationary pressures, the firm says, seeing TOT as a leading self-help story by its deep cultural change and COP by the ability to combine a cost-cutting story with a high exposure to low cost shale growth.
Jun. 16, 2015, 2:49 PM
- Royal Dutch Shell (RDS.A, RDS.B) gains approval from Canada's environment ministry for an offshore drilling project in Nova Scotia, saying the exploration program was "not likely to cause significant adverse environmental effects.”
- The approval is contingent on meeting several conditions, including mitigating the potential impact on fish and marine habitats.
- Shell plans to drill up to seven exploration wells over a four-year period in an area in the Shelburne Basin ~250 km off the coast.
- Shell holds a 50% stake in the project, while joint venture partner ConocoPhillips (NYSE:COP) has a 30% share and Suncor Energy (NYSE:SU) owns 20%.
Jun. 12, 2015, 6:44 PM
- North Dakota oil production fell 1.8%, or nearly 22K bbl/day, in April to ~1.17M bbl/day after recording a surprising jump in March, as weak crude prices led producers to ease production.
- The number of drilling rigs operating in North Dakota stands at 76, the lowest since December 2009, according to the latest monthly report from the state's Department of Mineral Resources.
- The agency director has said he expects the state’s oil production to remain at 1.1M-1.2M bbl/day until oil prices recover.
- April natural gas production was up slightly at 1.54B cf/day from 1.51B cf/day in March.
- Unimpressed commentator Gregor McDonald tweets: "Sorry America, but 9,525 wells in the North Dakota Bakken producing on average 116 bbl/day is more cartoon than triumph."
- Top Bakken producers include: CLR, EOG, XOM, HES, COP. MRO, WLL, OAS, NOG, EOX
ConocoPhillips is the world's largest independent exploration and production (E&P) company based on proved reserves and production of liquids and natural gas. The company explores for, produces, transports and markets crude oil, bitumen, natural gas, natural gas liquids and liquefied natural gas... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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