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ConocoPhillips Completes $390 Million Montney Acquisition

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ConocoPhillips (COP - Free Report) recently announced the completion of the acquisition of additional liquid-rich Montney acreage in British Columbia, Canada, from Kelt Exploration Ltd. The acreage is adjacent to ConocoPhillips’ Montney assets. Notably, the company announced the acquisition plan on Jul 22.

The deal assumed a cash consideration of around $390 million. Moreover, the U.S. upstream energy major has assumed around $30 million in financial obligations related to some of the infrastructure at the site that are partially owned. With the acquisition of 140,000 net acres, the company’s Montney acreage holding has risen to 295,000 net acres, wherein it holds 100% working interest.

The company stated that the acquired acreage produced 15,000 barrels of oil equivalent per day (Boe/d) in the second quarter. ConocoPhillips commenced production from the Montney development in the March quarter. The move added more than 1 billion barrels of oil equivalent to the company’s resource base, per its earlier release. It has a cost of supply in mid-$30s on a West Texas Intermediate crude price basis. This move added more than 1,000 high-quality well locations to the company’s portfolio.

The latest move is expected to provide the company with the opportunity to scale up production from the region, without depending on new investment in infrastructures. Notably, ConocoPhillips divested a chunk of Canadian assets three years back to Cenovus Energy Inc. (CVE - Free Report) . The upstream major reduced production at its Surmont Canadian site last April as oil prices tumbled to historic lows. The region is expected to witness a rise in production in the third quarter. It has completely restored production in Alaska during July. The company expects Lower 48 production to be 100% restored by September. Notably, its Montney second pad is expected to start-up in the third quarter.

Price Performance

The company’s shares have lost 11.8% in the past three months compared with 7.7% fall of the industry it belongs to.

Zacks Rank & Stocks to Consider

ConocoPhillips currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Royal Dutch Shell plc and Noble Energy, Inc. , each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shell’s bottom line for 2021 is expected to rise 112.5% year over year.

Noble Energy’s bottom line for 2021 is expected to surge 58.5% year over year.

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