Thursday, 15 December 2011 15:13

Investing in ConocoPhillips, one of the oil majors

Interesting and exciting news for shareholders: 

ConocoPhillips plans to split the exploration and production (E&P) and refining and marketing segments into two standalone public companies. (Every two shares of COP will get you one share in the new Phillips 66.)

This reorganization makes sense for many tactical reasons. For one, the refining business is cyclical and capital intensive. So financial resources that used to be drained can now be fully brought to bear on increasing oil and gas reserves. (...)
After the split, Conoco will become the nation's largest pure-play E&P company. The company's operations already span 17 countries around the globe, and its wells bring 1.5 million barrels of oil to the surface each and every day -- with 8.5 billion waiting in reserve.
Shareholders will also have plenty to look forward to in the years ahead. Conoco has exploration projects underway from Bangladesh to the Barents Sea and 53 million acres filled with future drilling targets. (...)
Conoco plans to spend $15.5 billion in capital expenditures for the upcoming year, a 15% increase from the $13.5 billion that was put to work this year. About $1.2 billion of next year's outlays will be spent on maintenance to keep refineries running smoothly. But the remaining 90% will be dedicated to growth projects to help stimulate oil & gas production. 
Much of that will be invested overseas, most notably on a major liquefied natural gas (LNG) venture in Australia. But the lion's share will stay in North America, where the company is taking aim on high-return shale plays such as the Bakken and Eagle Ford formations. As these upstream investments take root, Conoco's oil production in the lower 48 states alone is expected to rise by 50% (from 400,000 barrels a day to 600,000) through 2015 -- at higher margins per barrel.

Source: - Energy Commodities


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