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Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now
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ConocoPhillips (COP - Free Report) is a leading upstream energy firm in the world on the basis of production and reserves. Currently, the firm carries a Zacks Rank #3 (Hold).
Factors Working in Favor
West Texas Intermediate crude price, trading at more than $75 per barrel, is highly favorable for upstream activities. Being a leading exploration and production company globally, ConocoPhillips is well-positioned to capitalize on handsome crude prices. It has a strong footprint in prolific oil-rich plays like the Permian Basin, Eagle Ford and Bakken, brightening the company’s production outlook. For 2023, ConocoPhillips expects production at 1.8-1.81 million barrels of oil equivalent per day (MMBoE/D), suggesting an improvement from 1.74 MMBoE/D for 2022.
COP is strongly focused on returning capital to shareholders. In the second quarter, the upstream firm returned a handsome $2.7 billion to shareholders. The company employed a three-tier framework that comprised $1.4 billion in cash distributions through the ordinary dividend and variable return of cash route, while the remaining $1.3 billion was distributed through share repurchases.
ConocoPhillips is currently paying a dividend yield of 1.78%, slightly higher than the 1.76% yield of the composite stocks belonging to the industry.
Risks
Being an upstream energy player, the overall operations of the company are exposed to volatility in oil and natural gas prices. Moreover, increasing production and operating expenses are hurting its bottom line.
Stocks to Consider
Better-ranked players in the energy space include Evolution Petroleum Corporation (EPM - Free Report) , Profire Energy, Inc. (PFIE - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) . While Evolution Petroleum and Profire Energy carry a Zacks Rank #2 (Buy), Helix Energy sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Profire Energy is mainly focused on the oil and gas industry’s upstream, midstream and downstream transmission segments. PFIE has boosted that its legacy business is doing extremely well, thanks to the resumption of maintenance work of exploration and production players.
Helix Energy is a leading player and is well poised to grow in the favorable crude pricing environment since it primarily provides specialty services to the offshore energy industry.
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Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now
ConocoPhillips (COP - Free Report) is a leading upstream energy firm in the world on the basis of production and reserves. Currently, the firm carries a Zacks Rank #3 (Hold).
Factors Working in Favor
West Texas Intermediate crude price, trading at more than $75 per barrel, is highly favorable for upstream activities. Being a leading exploration and production company globally, ConocoPhillips is well-positioned to capitalize on handsome crude prices. It has a strong footprint in prolific oil-rich plays like the Permian Basin, Eagle Ford and Bakken, brightening the company’s production outlook. For 2023, ConocoPhillips expects production at 1.8-1.81 million barrels of oil equivalent per day (MMBoE/D), suggesting an improvement from 1.74 MMBoE/D for 2022.
COP is strongly focused on returning capital to shareholders. In the second quarter, the upstream firm returned a handsome $2.7 billion to shareholders. The company employed a three-tier framework that comprised $1.4 billion in cash distributions through the ordinary dividend and variable return of cash route, while the remaining $1.3 billion was distributed through share repurchases.
ConocoPhillips is currently paying a dividend yield of 1.78%, slightly higher than the 1.76% yield of the composite stocks belonging to the industry.
Risks
Being an upstream energy player, the overall operations of the company are exposed to volatility in oil and natural gas prices. Moreover, increasing production and operating expenses are hurting its bottom line.
Stocks to Consider
Better-ranked players in the energy space include Evolution Petroleum Corporation (EPM - Free Report) , Profire Energy, Inc. (PFIE - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) . While Evolution Petroleum and Profire Energy carry a Zacks Rank #2 (Buy), Helix Energy sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Profire Energy is mainly focused on the oil and gas industry’s upstream, midstream and downstream transmission segments. PFIE has boosted that its legacy business is doing extremely well, thanks to the resumption of maintenance work of exploration and production players.
Helix Energy is a leading player and is well poised to grow in the favorable crude pricing environment since it primarily provides specialty services to the offshore energy industry.