This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How ConocoPhillips Can Blow Past Its 52-Week High

NEW YORK (TheStreet) -- ConocoPhillips (COP), the world's largest independent energy producer, is looking to higher-margin production to get bigger.

Over the next four years, ConocoPhillips expects to increase its output at a compounded annual growth rate of between 3% and 5%. This will be driven by 20% per year growth in output from the Eagle Ford, Bakken and the Canadian oil sands at the same time it cuts its lower-margin gas output by an average of 6% per year through 2017.

During this period, the company said it will spend nearly $16 billion each year on capital expenditures, 95% of which will flow towards lucrative projects with margins of more than $30 per barrel. Moreover, 30% of its annual capital budget will go towards the development of its assets in the Eagle Ford, Bakken and Canadian oil sands.

As a result, the company wants to expand its margins by between 3% and 5% every year through 2017. This will also lead towards average annual cash margin growth of between 6% and 10%.

ConocoPhillips will release its results for the first quarter on May 1. Its shares, currently around $74, are up over 29% in the last 12 months and nearly 5% for the year to date. Although shares are trading close to 52-week high of $74.95, they are priced just 11.5 times trailing earnings, lower than the industry's average of 14.8 times, according to data compiled by Thomson Reuters. So they can easily blow past the current high as the company ramps up its efforts.

For the first quarter of 2014, ConocoPhillips has forecast production from continuing operations of 1.5 million barrels of oil equivalents, a 2% increase from the previous quarter. The production growth, however, can be offset from the planned downtime as it works on some of its newer projects. Overall, the company has planned 20% more downtime in 2014 than 2013.

For the full fiscal year, analysts are expecting earnings of $6.02 per share, according to data compiled by Thomson Reuters, an increase from adjusted earnings of $5.70 per share in 2013.

Over the last three years, ConocoPhillips has been able to significantly grow its reserve base through exploration and production, as opposed to acquisitions. This is evident in its three-year average organic reserve replacement ratio of 151%. The company's reserve base now stands at 8.9 billion barrels of oil equivalents.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,069.10 -10.47 -0.06%
S&P 500 2,000.54 +3.80 0.19%
NASDAQ 4,573.7710 +16.0760 0.35%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs