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Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now

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ConocoPhillips (COP - Free Report) , a leading upstream energy firm in the world in terms of production and reserves, is well-positioned to capitalize on handsome crude prices.  Currently, the firm carries a Zacks Rank #3 (Hold).

Factors Working in Favor

West Texas Intermediate crude price, trading above $70 per barrel, is highly favorable for upstream activities.

ConocoPhillips has secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, the Permian Basin and Bakken shale. ConocoPhillips boasted that drilling and completion activities are increasingly becoming efficient in all the key U.S. basins.

Compared to composite stocks belonging to the industry, the leading upstream energy company has considerably lower exposure to debt capital. This reflects that COP is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.


Being an upstream energy player, the company’s overall operations are exposed to volatility in oil and natural gas prices. Moreover, the company’s overall operating and production expenses continue to increase, hurting the bottom line.

Stocks to Consider

Some better-ranked energy companies include Sunoco LP (SUN - Free Report) , ProPetro Holding Corp. (PUMP - Free Report) and Vista Energy SAB de CV (VIST - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.    

Sunoco, the leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts. 

The business scenario for ProPetro Holding is bright, given the current favorable oilfield service demand. Thus, it secures handsome cashflows as it is a leading provider of pressure pumping and other complementary services. For 2024 and 2025, ProPetro Holding has witnessed upward earnings estimate revisions over the past 30 days.

Vista Energy, a leading exploration and production company, has a significant presence in Vaca Muerta, a highly productive shale oil and gas play outside of North America. The company has set an ambitious goal of achieving net-zero emissions by 2026.

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