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ConocoPhillips (COP) Hikes Buyback by $1B, Outlines 10-Year Plan
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ConocoPhillips (COP - Free Report) recently provided an ambitious 10-year operating plan and increased the share repurchase program. Its operational update includes the Concho Resources acquisition in January 2021.
Shareholder Return
The company intends to boost stock buybacks by $1 billion for 2021, which is in line with its plan of returning 30% cash from operations to shareholders. It resumed the share repurchase program in March at an annualized level of $1.5 billion. The latest buyback move is likely to bring total 2021 planned distribution to $6 billion. Importantly, in the 2022-2031 time period, the company expects to return more than $65 billion to shareholders, which will be funded by cash from operations. This is impressive.
More Savings
Markedly, ConocoPhillips has increased Concho Resources acquisition-related savings and synergies to $1 billion per annum from prior estimates of $500 million provided last October and $750 million announced in February 2021. The decision, from one of the biggest upstream firms, comes at a time when crude price is showing tremendous recovery from last year’s historic lows.
Capex
Furthermore, it has reduced 2021 capital expenditure by $200 million from the previous estimate of $5.5 billion. Also, it expects adjusted operating costs to decrease $100 million from the prior estimate to $6.1 billion. The company anticipates capital expenditures to average $7 billion per annum, which will likely result in 3% compound annual growth in production.
Others
ConocoPhillips, which has $84 billion of total assets, expects cash from operations to be $145 billion over 10 years. During this period, free cash flow is estimated to be $70 billion, assuming WTI Crude price level at $50 per barrel. It expects average breakeven price at $30 per barrel. Management is also likely to divest $2-$3 billion of assets to streamline its portfolio.
On the ESG front, the company is expected to reach net-zero flaring by 2025. It plans to reduce greenhouse gas intensity by 35-40% and become a net-zero emitter by 2050.
Price Performance
Its shares have gained 12.7% in the past three months compared with 10.9% rise of the industry it belongs to.
Antero Resources’ profits for 2021 are expected to surge 335.7% year over year.
PHX Minerals’ bottom line for 2021 is expected to jump 180% year over year.
Pembina Pipeline’s bottom line for 2021 is expected to rise 42.2% year over year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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ConocoPhillips (COP) Hikes Buyback by $1B, Outlines 10-Year Plan
ConocoPhillips (COP - Free Report) recently provided an ambitious 10-year operating plan and increased the share repurchase program. Its operational update includes the Concho Resources acquisition in January 2021.
Shareholder Return
The company intends to boost stock buybacks by $1 billion for 2021, which is in line with its plan of returning 30% cash from operations to shareholders. It resumed the share repurchase program in March at an annualized level of $1.5 billion. The latest buyback move is likely to bring total 2021 planned distribution to $6 billion. Importantly, in the 2022-2031 time period, the company expects to return more than $65 billion to shareholders, which will be funded by cash from operations. This is impressive.
More Savings
Markedly, ConocoPhillips has increased Concho Resources acquisition-related savings and synergies to $1 billion per annum from prior estimates of $500 million provided last October and $750 million announced in February 2021. The decision, from one of the biggest upstream firms, comes at a time when crude price is showing tremendous recovery from last year’s historic lows.
Capex
Furthermore, it has reduced 2021 capital expenditure by $200 million from the previous estimate of $5.5 billion. Also, it expects adjusted operating costs to decrease $100 million from the prior estimate to $6.1 billion. The company anticipates capital expenditures to average $7 billion per annum, which will likely result in 3% compound annual growth in production.
Others
ConocoPhillips, which has $84 billion of total assets, expects cash from operations to be $145 billion over 10 years. During this period, free cash flow is estimated to be $70 billion, assuming WTI Crude price level at $50 per barrel. It expects average breakeven price at $30 per barrel. Management is also likely to divest $2-$3 billion of assets to streamline its portfolio.
On the ESG front, the company is expected to reach net-zero flaring by 2025. It plans to reduce greenhouse gas intensity by 35-40% and become a net-zero emitter by 2050.
Price Performance
Its shares have gained 12.7% in the past three months compared with 10.9% rise 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 Antero Resources Corporation (AR - Free Report) , PHX Minerals Inc. (PHX - Free Report) and Pembina Pipeline Corporation (PBA - Free Report) , each having a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Antero Resources’ profits for 2021 are expected to surge 335.7% year over year.
PHX Minerals’ bottom line for 2021 is expected to jump 180% year over year.
Pembina Pipeline’s bottom line for 2021 is expected to rise 42.2% year over year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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