ConocoPhillips (COP Quick QuoteCOP - Free Report) announced a preliminary 2022 capital budget following the recent acquisition of Permian Basin assets.

For 2022, ConocoPhillips expects a company-wide capital expenditure of $7.2 billion, which includes $700 million associated with the Permian asset acquisition. The capital budget increased from $5.3 billion expected for 2021.

About 60% of the total budget will be addressed to the Lower 48 for short-cycle projects across ConocoPhillips’ high-quality unconventional asset base. The rest will be directed to mid- and longer-cycle projects across COP’s diverse Alaska and international regions. The intended capital involves $200 million for emission-reduction projects across the company’s global operations and investments in multiple low-carbon technologies to address end-use emissions.

In 2022, ConocoPhillips expects to produce an average of 1.8 million barrels of oil equivalent per day (boe/d) compared with 1.5 million boe/d expected this year. The production estimate includes about 200,000 boe/d expected from the Permian transaction.

ConocoPhillips expects to return about $7 billion of capital to shareholders next year, indicating a 16% increase year over year. COP plans to return capital via a three-tier distribution system, which includes dividends, share repurchases and a new variable return of cash (“VROC”). VROC will provide a flexible medium to meet ConocoPhillips’ pledge to return more than 30% of cash flow from operations when commodity prices are significantly higher than its planning price range.

In a separate transaction, ConocoPhillips entered into an agreement to divest its Indonesia assets to MedcoEnergi for $1.355 billion. For the nine months ended Sep 30, 2021, the Indonesia assets for sale produced about 50,000 boe/d and had 85 million barrels of oil equivalent of proved reserves at year-end 2020.

Besides this, ConocoPhillips was exercising its right to acquire an additional 10% stake in Australia Pacific LNG (“APLNG”) from Origin Energy for $1.645 billion. COP currently holds a 37.5% interest in APLNG. Once the deal closes, which is expected in first-quarter 2022, COP would own as much as 47.5% stake in APLNG. In 2020, the company's production from APLNG totaled 115,000 boe/d.

The Asia Pacific region plays an important role in ConocoPhillips’ strategy to diversify as an independent exploration and production company. The transactions boost that advantage by lowering the company’s aggregate decline rate and diversifying its product mix.

Company Profile & Price Performance

Headquartered in Houston, TX, ConocoPhillips is a leading upstream energy company.

Shares of COP have outperformed the industry in the past three months. The stock has gained 24.9% compared with the industry's 14.7% growth.

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Zacks Rank & Other Stocks to Consider

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

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Continental Resources, Inc. is an explorer and producer of oil and natural gas. CLR operates resources across the East, South and North areas in the United States.  Continental Resources’ strategic water assets add huge value to its operations in Bakken and Oklahoma. As of Dec 31, 2020, CLR’s estimated proved reserves were 1,103.8 MMBoe.

In the past year, shares of Continental Resources have increased 114.3% compared with industry’s growth of 92.2%. CLR’s earnings for 2021 are expected to surge 484.6% year over year. CLR currently sports a Zacks Style Score of A for Growth and B for Value. Notably, CLR’s board of directors increased the quarterly dividend payment to 20 cents per share from 15 cents in the previous quarter. Continental Resources also resumed its existing stock-repurchase program. It already executed $65 million of share repurchases in the September-end quarter, while $618 million of the share-repurchase capacity remains available.

Marathon Oil Corporation (MRO Quick QuoteMRO - Free Report) , based in Houston, TX, is a leading oil and natural gas exploration and production company. MRO’s operations are mainly concentrated in the United States (including Oklahoma, Eagle Ford, Bakken and Northern Delaware) and Equatorial Guinea. As of year-end 2020, MRO had approximately 972 million oil-equivalent barrels in net proved reserves (52% crude oil/condensate and 69% proved developed) and 86% was located in the United States.

In the past year, shares of Marathon have surged 209.4% compared with the industry's growth of 92.2%. MRO's earnings for 2021 are expected to increase 212.1% year over year. MRO currently holds a Zacks Style Score of B for Growth and A for Momentum. MRO witnessed seven upward revisions in the past 60 days.

Sunoco LP (SUN Quick QuoteSUN - Free Report) is a master limited partnership that engages in the distribution of motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores as well as distributors. In the United States, Sunoco is among the largest motor fuel distributors in the wholesale market by volume. In 2020, the partnership sold a total of 7.1 billion gallons of motor fuel.

SUN's earnings for 2021 are expected to surge 743.4% year over year. SUN currently has a Zacks Style Score of A for both Value and Growth. For 2021, Sunoco expects fuel volumes within 7.25-7.75 billion gallons, indicating a rise from the 2020 level of 7.09 billion gallons.