Does ConocoPhillips Stock Face A Downside Risk?
Share this

The shares of ConocoPhillips (NYSE: COP) have touched the highs of $100 in recent months, assisted by skyrocketing benchmark oil & gas prices and rising transportation demand. In 2021, the company reported 1.04 MMBPD of liquid production which is almost 1% of the global crude oil output. While the geopolitical uncertainty due to the Russia-Ukraine war is leading to spikes in benchmark oil prices, rising inflation is jeopardizing global economic growth and triggering measures such as new energy security alliances. Our interactive dashboard on ConocoPhillips valuation highlights the historical trends in revenues, earnings, valuation multiple, and forecast for FY2022.

Before the pandemic, ConocoPhillips revenues observed a 15% annual growth from $24.3 billion in 2016 to $36.6 billion in 2019, assisted by benchmark prices and expanding production. COP’s average realized price for oil has ranged from $37/bbl in 2016 to $65/bbl in 2018 to $58/bbl in 2019. Due to a deep contraction in benchmark prices in 2020, the company reduced total crude oil & natural gas production by 15% as low production costs assisted cash generation. Moreover, the company retained dividend payouts by implementing a prudent capital investment plan and utilizing cash on hand. Given the recent surge in benchmark oil prices, the company has been returning excess cash to shareholders through dividends and buybacks. In a recent investor presentation, the company highlighted its plan to return $10 billion of capital to shareholders and accelerate debt reduction in 2022.

EIA and World Bank project a downside in the Brent benchmark

In 2021, the company’s crude oil, natural gas, natural gas liquids, and other products contributed 51%, 37%, 4%, and 8% of total revenues, respectively. With revenues to be pushed by rising capital investments in oil & gas assets, the company announced a net-zero (only scope 1 and scope 2) roadmap by prioritizing opportunities in CCUS (carbon capture, utilization & storage) and hydrogen. Per EIA, the Brent benchmark is likely to trend downward from $103 in 2022 to $97 in 2023. Similarly, the World Bank expects Brent crude to observe a decline from $100 in 2022 to $92 in 2023 and $80 in 2024. While the West has imposed stringent sanctions on Russia, the oil & gas embargo is a difficult decision due to multiple transportation and economic concerns. (related: Can Amazon Stock Add Two Exxon Mobils To Its Market Capitalization?)

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Invest with Trefis Market Beating Portfolios

See all Trefis Price Estimates

Share this
You May Also Like

5 Steps To Pursue Financial Stability In A World Of Volatility

Stone composition on the beach. getty How would it feel to have…

Gas Prices Continue To Drop—Here’s How Far They May Fall As Oil Prices Crater

Topline Gas prices fell two cents Wednesday to $4.779 per gallon, according…

SBF denies FTX is eyeing distressed crypto mining companies

Sam Bankman-Fried, the founder of crypto exchange FTX, has calmed speculation that…

This Cult-Favorite Pottery Brand Was Founded by the Great-Grandson of Henri Matisse. Now, Its Factory Is an Experiment in Equitable Labor Practices.

East Fork didn’t start out as an equitable workplace experiment. Its 2009…

As the Founder of an Intensive Teen Therapy Program, ‘Setting Boundaries’ Is Hard. Here’s How I Learned to Do It.

Carter Barnhart founded Charlie Health to provide therapy for at-risk youth. Part…

7 Books That Will Help You Build a Better Business

Opinions expressed by Entrepreneur contributors are their own. According to the Institute…

Covid-19 Vaccine Doses, Once in High Demand, Now Thrown Away

Governments, drugmakers and vaccination sites are discarding tens of millions of unused…

Eight Games Between Two Cities

SAN FRANCISCO, CALIFORNIA – OCTOBER 30: Josh Giddey #3 of the Oklahoma…