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ConocoPhillips (COP) Releases Update on Alaska Operations

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ConocoPhillips (COP - Free Report) provided an update on its Alaska operation plans, which are faring well, courtesy of the company’s efforts to lower costs, advance technology and recovery in exploration activities.

The company intends to grow by investing in legacy assets and recognizes Alaska as an appropriate destination for this strategy. ConocoPhillips’ legacy assets in Alaska comprise a non-operated interest in the Prudhoe Bay Field, an operated interest in the Kuparuk Field and an operated interest in the Alpine Field/Western North Slope assets. In 2018, the company raised its stake in the Alpine Field/Western North Slope assets through acquisition and also inked an agreement to purchase additional interest in the Kuparuk Field, which is awaiting regulatory approvals.

On a pro-forma basis, the company projects 2018 production from its legacy assets to be around 225 thousand barrels of oil equivalent per day (MBOED). This includes the recent transactions.

Till date, the company has reportedly captured net resource of 2.0 billion barrels of oil equivalent (BBOE) at a cost of less than $40 per barrel from the legacy assets.

Since 2016, ConocoPhillips has been active in Alaska with an impressive exploration program. Based on exploration results, the company projects total capture of 0.5-1.1 BBOE of gross discovered resource. However, 75% of its prospective exploration acreage is still unexplored. The company holds an interest of 100% in this resource.

The 2016-2018 exploration and appraisal program of ConocoPhillips has discovered 400-750 million barrels of oil equivalent (MMBOE) of gross resource in the Greater Willow Area, which still has undrilled resource upside.

Per the company’s initial estimates, the region will produce its first oil by 2024-2025. The company will spend about $2-3 billion over a period of four to five years after a final investment decision. Once the field starts producing, related work will be accelerated to enable full production.

Thereafter, an estimated additional cumulative drilling capital of $2-3 billion will be required to maintain production for multiple years at the facility. Currently, results from 2018 assessment are being evaluated to facilitate development planning and ascertain future appraisal requirements.

ConocoPhillips also carried out drilling, coring and flow testing of the Putu and Stony Hill wells in the Narwhal trend south of Alpine as part of its 2018 exploration campaign. The current discovered resource from these two discoveries is projected in the range of 100-350 MMBOE gross. However, further appraisal is necessary for the discoveries. ConocoPhillips has a stake of 100% in this resource.

Price Performance

Over the last year, ConocoPhillips’ shares have gained 61% compared with the industry’s rise of 38.5%.



 

Zacks Rank & Other Stocks

ConocoPhillips currently sports a Zacks Rank #1 (Strong Buy).

A fewother top-ranked players in the same sector are Occidental Petroleum Corp. (OXY - Free Report) and China Petroleum and Chemical Corp. , also known as Sinopec, and CVR Refining, LP . All these stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 7.05% in the last four quarters.

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