Saturday, April 11, 2015

Is ConocoPhillips Ramping Up Production?


Summary

  • ConocoPhillips announced a big shift in capital spending from large-scale projects to short-cycle projects.
  • The company continues to maintain capital spending at around $11.5 billion established back in January that will keep production growth in the 2% to 3% range.
  • The biggest concern is that ramped up domestic production could face pricing pressure with the inability to obtain export to international markets.
  • Stock remains expensive, potentially propped up by a large 4.4% dividend yield.
In a surprise move, ConocoPhillips (NYSE:COP) announced at the annual Analyst and Investor meeting that the energy producer was shifting capital spending to domestic shale areas. The company had previously announced plans to cut spending from domestic unconventional areas (see ConocoPhillips: Key Takeaways From Guidance) and the general market mindset was that these areas offered a lower return due to higher costs and lower production.

Read the full article on Seeking Alpha.


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