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Don't Discount ConocoPhillips

NEW YORK (TheStreet) -- It wasn't that long ago when the prevailing sentiment surrounding ConocoPhillips (COP - Get Report) was "what else can go wrong?" While Conoco's management has made good business decisions, including spinning off the company's refining business, the outcomes have been anything but favorable.

Unlike, say, Exxon Mobil (XOM), which has a strong history of execution, Conoco's management's decision to spin-off its downstream businesses to create a pure-play exploration and production (E&P) company, wasn't well received by the Street, especially from an economic standpoint. Conoco, which before the split was always compared to Exxon and Chevron (CVX), suddenly became a "hybrid" energy major.

Today, the post-split Conoco, which, not only competes with Exxon and Chevron, but Conoco is taking on large E&P titans like Apache (APA) and Anadarko (APC). And following a better-than-expected third-quarter earnings report that produced 66% increase in Eagle Ford Shale production, not only does the Street owes Conoco an apology, these shares look attractively undervalued.

Unlike Exxon, which produced third-quarter revenue declines of 2.4%, Conoco posted revenues of $15.47 billion, which were up almost 10% year-over-year. The company's production output reached 1.51 million barrels of oil-equivalent per day, of which 1.47 million barrels production came from continuing operations.

Bears will argue that Conoco's output was indeed flat. That's true, but standpoint of overall production performance, it bested Royal Dutch Shell's (RDS-A) combined oil and gas production decline of 2%. Plus, this is where management's recent decisions are beginning to pay dividends.

For instance, Conoco benefited greatly from higher prices, which helped advance margins. And regardless of what pundits wish to believe, it can't be coincidence that the prices of oil-equivalents increased by more than 6% on a per-barrel basis - not when the likes of Exxon, Chevron and Shell are seeing the opposite reaction.

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