Summary
- ConocoPhillips has an impressive portfolio of assets augmented by its Concho Resources acquisition and its recent discoveries.
- The company managed to handle 2020 with impressive cash flow, covering all of its expenses and 25% of its shareholder rewards, with low prices.
- Going forward, the company should breakeven in 2021 at $39 WTI and generate strong shareholder rewards and growth past that.
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ConocoPhillips (NYSE: COP) recently announced another massive discovery in the Norwegian sea. The midpoint size on this discovery is nearly 140 million barrels, which across a 10-year production lifecycle, would mean almost 40 thousand barrels / day in potential production. This discovery alone has the potential to increase the company's production by several %.
As we'll see throughout this article, the company's asset base along with its breakeven and growth potential make the company a high potential investment.
ConocoPhillips and Concho Resources
ConocoPhillips is a massive $40 billion company that took advantage of the COVID-19 related downturn to acquire Concho Resources. The near $10 billion acquisition is a massive acquisition for ConocoPhillips and enables the company to significantly expand its shale resources. These low cost shale resources should generate the company strong returns.
ConocoPhillips with Concho Resources - ConocoPhillips Investor Presentation
The combined company will have unconventional production of 430 thousand barrels / day, a near doubling in unconventional oil production. It'll come with more than 1.5 million acres with ~17 thousand remaining drilling locations at a less than $40 cost of supply. This unconventional asset position, with a low cost asset base, should support strong long-term cash flow.
