Oil and gas explorer ConocoPhillips ( COP - Analyst Report ) has finally resumed drilling operations in the Greater Poseidon area, off Western Australia.

The field was being spud by Transocean Ltd.’s ( RIG - Analyst Report ) semi-submersible rig Transocean Legend. ConocoPhillips had to halt operations in late May – consequent to the drilling of the Boreas-1 exploration well in WA-314-P – because a blowout preventer (BOP) was required to be repaired.

The repair work took two and a half months. According to the project partner, Karoon Gas Australia Ltd., various efforts to repair were ineffective. However, the BOP is fully serviceable and spudding has restarted.

Located about 2.4 miles (4 kilometers) south of the Poseidon-1 gas discovery in WA-315-P on a large tilted fault block, Boreas-1 is among the first of a minimum five exploration wells in the Greater Poseidon area. The block forms part of the northeast leaning structural high of the greater Poseidon structure.

ConocoPhillips and Karoon have jointly discovered Poseidon-1, Poseidon-2 and Kronos-1 in the area. In order to support a liquefied natural gas project, they are targeting to build reserves.

ConocoPhillips retains the operatorship of the jointly held WA-314-P, WA-315-P and WA-398-P Browse Basin permits, which comprise the earlier announced Poseidon and Kronos gas discoveries. Karoon has a 40% stake in the WA-315-P and WA-398-P permits and 90% in WA-314-P.

ConocoPhillips’ exploration initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and North Barnett shale plays. ConocoPhillips has separated its downstream business to unlock value, unlike its peer companies –– ExxonMobil Corporation ( XOM - Analyst Report ) and Chevron Corporation ( CVX - Analyst Report ) , which continue to operate as single units.

However, the company faces greater challenges than its larger peers in generating attractive growth, given its above-average exposure to the mature regions. Again, though Conoco is one of the largest natural gas companies in North America, it lacks material exposure to the prolific non-conventional plays.

We maintain an Underperform recommendation on ConocoPhillips for the long term.