A recent article in the Financial Times of London where Conoco's (NYSE:COP)chief executive officer Jim Mulva said the company may have to "reaccess" the Denali pipeline it is proposing to develop with partner BP (NYSE:BP).
The comment was based upon the enormous amount of natural gas reserves in the lower 48 states, which Conoco spokesman John McLemore commented on saying: "Clearly, shale gas (in the Lower 48) has changed the dynamics of natural gas in North America."
He added that there hasn't been a new review of the project launched.
This gave the idea to some that maybe the pipeline deal will be put on hold or abandoned, but McLemore said the company is continuing on with the work on the project.
Mulva did say after his comments to FT that natural gas still remains an "attractive" investment for the company, although it seems he's starting to think longer term than he was in the past.
This coming Monday McLemore said Conoco will look closely at natural gas prices over the long term, supply projections, response of the market and tax issues.
It sounds like in the shorter term things aren't looking nearly as good because of the huge supply for the pipeline, and it'll be interesting to see if that affects the timing of starting the pipeline, if it gets built at all by Conoco and BP.
Another factor is a competing proposal from Exxon Mobil (NYSE:XOM) and TransCanada to built a pipeline serving the same region.
Showing posts with label Conoco. Show all posts
Showing posts with label Conoco. Show all posts
Thursday, October 14, 2010
Tuesday, October 5, 2010
BP (NYSE:BP), Conoco (NYSE:COP) Denali Joint Venture Receives Bids
Bids to transport natural gas down the proposed natural gas pipeline from Alaska to major American markets from the BP (NYSE:BP), Conoco (NYSE:COP) joint venture called Denali, have been coming in said the energy companies.
A 90-day period where natural gas producers could bid for space on the pipeline to be built just ended. The pipeline hasn't been built yet, although the overall process has been underway for some time.
Bud Fackrell, Denali's president, said in a statement, "After two years of work, more than 700,000 man-hours and more than $150 million of private investment, I can report that Denali has received bids for significant capacity from potential shippers."
"As expected, the bids include conditions, some of which are outside of Denali's control. We will carefully evaluate these bids and their conditions and continue confidential negotiations with potential shippers in an effort to reach binding agreements," added Fackrell.
Market conditions have changed since the joint venture was put together, as enormous reserves of shale natural gas have been found in the lower 48, and that has companies concerned over how competitive natural gas from the Alaska North Slope will be, which is affecting the negotiations and bids.
Plans by Denali are to develop a pipeline about 1,700 miles long which would go through Alaska to Alberta, Canada. It would also include a huge gas treatment facility at Prudhoe Bay.
The pipeline would be able to transport about 4.5 billion cubic feet a day.
Cost to build the pipeline by Denali are estimated at $35 billion.
Approximately 35 trillion cubic feet of proven natural gas reserves are located on the Alaskan North Slope.
A 90-day period where natural gas producers could bid for space on the pipeline to be built just ended. The pipeline hasn't been built yet, although the overall process has been underway for some time.
Bud Fackrell, Denali's president, said in a statement, "After two years of work, more than 700,000 man-hours and more than $150 million of private investment, I can report that Denali has received bids for significant capacity from potential shippers."
"As expected, the bids include conditions, some of which are outside of Denali's control. We will carefully evaluate these bids and their conditions and continue confidential negotiations with potential shippers in an effort to reach binding agreements," added Fackrell.
Market conditions have changed since the joint venture was put together, as enormous reserves of shale natural gas have been found in the lower 48, and that has companies concerned over how competitive natural gas from the Alaska North Slope will be, which is affecting the negotiations and bids.
Plans by Denali are to develop a pipeline about 1,700 miles long which would go through Alaska to Alberta, Canada. It would also include a huge gas treatment facility at Prudhoe Bay.
The pipeline would be able to transport about 4.5 billion cubic feet a day.
Cost to build the pipeline by Denali are estimated at $35 billion.
Approximately 35 trillion cubic feet of proven natural gas reserves are located on the Alaskan North Slope.
Monday, October 4, 2010
Morgan Stanley (NYSE:MS) Downgrades Conoco (NYSE:COP) to "Underweight"
With September being such a strong month for equities, many companies across a number of sectors have been downgraded on valuation. ConocoPhillips (NYSE:COP) was among those downgraded, as Morgan Stanley (NYSE:MS) lowered the rating of the company from "Equal Weight" to "Underweight."
Morgan said they liked the strategy of Conoco, but all of that is already priced into the stock in their estimation, and don't see much room for growth at their current multiples.
They recommend Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), as they offer an improved risk/reward scenario for investors, according to Morgan Stanley.
Conoco closed Friday at $57.86, gaining $0.43, or 0.75 percent.
A price target of $56 is maintained on Conoco.
Morgan said they liked the strategy of Conoco, but all of that is already priced into the stock in their estimation, and don't see much room for growth at their current multiples.
They recommend Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), as they offer an improved risk/reward scenario for investors, according to Morgan Stanley.
Conoco closed Friday at $57.86, gaining $0.43, or 0.75 percent.
A price target of $56 is maintained on Conoco.
Wednesday, September 15, 2010
RBC on Conoco (NYSE:COP), Marathon (NYSE:MRO) and Chevron (NYSE:CVX)
RBC Capital Markets evaluated a number of large players in the oil and gas industry, including ConocoPhillips (NYSE:COP), Chevron Corp. (NYSE:CVX) and Marathon Oil (NYSE:MRO).
In the view of RBC, the major determinant is how exposed the oil companies are to natural gas. With the weak market, the less exposed, the better.
Their two favorites were Conoco and Chevron, with Conoco rated as a "Outperform," Chevron as a "Top Pick," and Marathon rated as "Sector Perform."
The price target on Conoco is $65 a share; Chevron, $93 a share; and Marathon, $35 a share.
RBC sees Chevron outperforming Exxon (NYSE:XOM) over the next two years on earnings per barrel.
In the view of RBC, the major determinant is how exposed the oil companies are to natural gas. With the weak market, the less exposed, the better.
Their two favorites were Conoco and Chevron, with Conoco rated as a "Outperform," Chevron as a "Top Pick," and Marathon rated as "Sector Perform."
The price target on Conoco is $65 a share; Chevron, $93 a share; and Marathon, $35 a share.
RBC sees Chevron outperforming Exxon (NYSE:XOM) over the next two years on earnings per barrel.
Wednesday, September 8, 2010
Conoco (NYSE:COP), Exxon (NYSE:XOM) Price Targets Raised by The Benchmark Company
Price targets at ConocoPhillips (NYSE:COP) and Exxon Mobil (NYSE:XOM) were increased by The Benchmark Company, citing upward revisions on their normalized earnings.
The price target on Conoco was raised from $43 a share to $48 a share, while Exxon was bumped up from $48 a share to $52 a share.
Benchmark said the normalized earnings of Conoco were partially offset by the dilution related to the divestiture of its Lukoil stake and associated share-buyback program.
Concerning their "Sell" rating on Conoco, the company said, "We reaffirm our Sell rating based upon our continuing belief that the modestly discounted normalized multiple valuation currently in place is insufficient given the significant weakness in the company's portfolio, management-related concerns, and the comparatively high earnings and cash flow sensitivity to the anticipated weakness in the refining sector."
They also reiterated a "Sell" rating on Exxon Mobil, saying, "We reaffirm our Sell rating reflecting our unchanged belief that the sizable premium normalized earnings multiple currently in place is excessive given a sector average, at best, upstream growth rate and financial management/strategy oriented concerns."
The price target on Conoco was raised from $43 a share to $48 a share, while Exxon was bumped up from $48 a share to $52 a share.
Benchmark said the normalized earnings of Conoco were partially offset by the dilution related to the divestiture of its Lukoil stake and associated share-buyback program.
Concerning their "Sell" rating on Conoco, the company said, "We reaffirm our Sell rating based upon our continuing belief that the modestly discounted normalized multiple valuation currently in place is insufficient given the significant weakness in the company's portfolio, management-related concerns, and the comparatively high earnings and cash flow sensitivity to the anticipated weakness in the refining sector."
They also reiterated a "Sell" rating on Exxon Mobil, saying, "We reaffirm our Sell rating reflecting our unchanged belief that the sizable premium normalized earnings multiple currently in place is excessive given a sector average, at best, upstream growth rate and financial management/strategy oriented concerns."
Wednesday, September 1, 2010
ConocoPhillips (NYSE:COP), Lukoil (MM:LKOH) Deal Not a Certainty
ConocoPhillips (NYSE:COP) was sure they had a deal to sell their entire stake in Lukoil (MM:LKOH) back to the company, which they're 40 percent on the way to doing. Comments by Lukoil CEO Vagit Alekperov have raised some doubt as to the rest of the stake, saying the shares should be sold on the open market instead of Lukoil buying them back.
Russian business daily Vedomosti cited Alekperov, "We do not have any intentions to transform LUKOIL into a private company, it should in the future stay public."
According to Alekperov, there hasn't been a decision by the board of directors or management on whether or not they'll exercise the option to acquire the other 60 percent of the stake of Conoco, where the option is scheduled to expire on September 26.
It's hard to tell if this is a serious comment by Alekperov, or one that carries weight, as he made said similar comments before the first phase of acquiring Conoco's stake.
The value of the remaining stake of Conoco is about $5 billion.
Russian business daily Vedomosti cited Alekperov, "We do not have any intentions to transform LUKOIL into a private company, it should in the future stay public."
According to Alekperov, there hasn't been a decision by the board of directors or management on whether or not they'll exercise the option to acquire the other 60 percent of the stake of Conoco, where the option is scheduled to expire on September 26.
It's hard to tell if this is a serious comment by Alekperov, or one that carries weight, as he made said similar comments before the first phase of acquiring Conoco's stake.
The value of the remaining stake of Conoco is about $5 billion.
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