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ConocoPhillips (COP) Settles Terms of Payment With Ecuador

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ConocoPhillips (COP - Free Report) has finalized the terms of payment by the Republic of Ecuador under a February 2017 International Centre for Settlement of Investment Disputes (ICSID) arbitration award. The payment will be made to the company’s wholly-owned subsidiary — Burlington.  

Per the agreement, ConocoPhillips will receive a total of $337 million from Ecuador. On Dec 1, 2017, the company recovered $75 million from Ecuador, while the remaining $262 million will be paid by April 2018.

The settlement amount consists of a compensation of $42 million to Ecuador for decisions on its counterclaims, of which Burlington is allowed an extra $24 million through a third-party contribution.  

In December 2012, the ICSID Tribunal ruled that Ecuador illegally seized the company's considerable oil investments in Blocks 7 and 21, in breach of the U.S.-Ecuador bilateral investment treaty.

In February 2016, the tribunal issued a reward on damages. In August 2017, the ICSID Annulment Committee lifted the stay of enforcement, permitting ConocoPhillips to begin enforcing the award.  

About ConocoPhillips

ConocoPhillips is a major global exploration and production (E&P) company with operations and activities in 21 countries. The company is involved in exploration, development and production of crude oil and natural gas worldwide.

The bulk of acres that ConocoPhillips holds in the Eagle Ford shale and Permian basin are rich in oil. We also appreciate the company’s initiative to divest non-core assets. Proceeds from the sale can be utilized in the prospective Eagle Ford shale and Permian Basin. The proceeds will also help the upstream company lower debt that has accumulated owing to the persistent slump in oil for more than three years. However, the company’s rising debt load is a concern.

Price Performance

Shares of the company have gained 16.4% compared with the industry’s rally of 12.5% in the last three months.



 

Zacks Rank & Other Key Picks

ConocoPhillips currently carries a Zacks Rank #1 (Strong Buy). Other prospective players in the energy sector include Holly Energy Partners, LP (HEP - Free Report) , SunCoke Energy Inc (SXC - Free Report) and Northern Oil and Gas Inc (NOG - Free Report) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners, owner and operator of refined product pipelines and terminals, delivered an average positive earnings surprise of 57.14% in the preceding quarter.

SunCoke Energy produces metallurgical coke in the United States. The company delivered an average positive earnings surprise of 113.52% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average earnings surprise of 175.00% in the last four quarters.

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