ConocoPhillips is an international, integrated energy company. It is the third largest integrated energy company in the United
States, based on market capitalization, oil and gas proved
reserves and production; and the second largest refiner in the
United States. Worldwide, of non-government controlled companies, ConocoPhillips has the eighth largest total of proved reserves and is the fifth largest refiner in the world.
ConocoPhillips is known worldwide for its technological expertise
in deepwater exploration and production, reservoir management and
exploitation, 3-D seismic technology, high-grade petroleum coke
upgrading and sulfur removal.
[Source: Company Web Site]
Reasons to Invest:
With assets of approximately $104 billion and operations in more
than 40 countries, this integrated energy company is making waves
in “deepwaters” across the globe. ConocoPhillips (COP) has been
drilling deeper, developing quality partnerships, and investing
in improving their access to worldwide exploration and production
resources. Furthermore, this energy mogul’s financial strategy
includes a future dividend hike and share repurchasing programs,
which is why COP is this week’s Drip of the Week.
COP focuses on four core activities: 1) petroleum exploration and
production; 2) petroleum refining, marketing, supply and
transportation; 3) natural gas gathering, processing and
marketing, including a 50% interest in Duke Energy Field
Services, LLC; and, 4) chemicals and plastics production and
distribution through a 50% interest in Chevron Phillips Chemical
Even Mother Nature couldn’t slow down COP, as their largest Gulf
Coast offshore asset only received minimal damage from hurricane
Rita. Even more surprisingly, the onshore fields that were in
Rita’s storm path received little or no damage, which bodes well
for the company’s productivity.
On November 16, 2005, CEO Jim Mulva “outlined investment
opportunities to further develop the company’s integrated energy
portfolio and to build on its strong financial position”
(ConocoPhillips Investing for Growth). He went on to state that
the company would continue to provide value for shareholders
through continued execution of strategy. The company has
earmarked $12 billion for reinvestments in the company during
2006. COP also reduced its debt-to-capital ratio to 15 to 20
percent. In the same article Mulva stated, “We have the
technological capabilities, financial resources and a talented,
dedicated work force to support the company’s sustainable
Some of COP’s near, medium and long-term strategies for growth
include: projects that will increase global gas supply;
developments to bring arctic gas from Alaska and Canada’s
Mackenzie Delta; liquid energy projects in the Timor Sea, Qatar,
Russia, Nigeria and Venezuela; reserve and production projects in
Russia and the Caspian Sea, including its interest in LUKOIL, the
Asia Pacific region; and the Middle East. Furthermore,
ConocoPhilips intends to maintain stable production in OECD
countries, while managing cost and production efficiencies across
Ready for a little chart analysis? Since January 2003 COP has
steadily climbed higher, moving through a tight regression
channel, while using the middle bar of the channel as support for
higher ground. A quick glance at the yearly chart and I note a
strong buy signal on the MACD indicator.
For the first time in 13 quarters COP won’t close in the green.
Speculation would suggest that it’s time for this energy giant to
take a breather. Perhaps COP is just waiting for their batteries
to recharge before making a move back to its all time high of
71.48, which was set a few months ago.
With the 200-DMA ($59.43) nestled just below the December 2nd
close at $62.39, ownership in ConocoPhillips stock is a bargain.
It’s safe to say that there will not be another opportunity to
start a COP DRIP for this cheap. Nonetheless, if the stock does
fail to use the 200-DMA (daily chart) or the 10-DMA (monthly
chart) as support for higher ground, a drip investor should jump
at the opportunity to increase their ownership. Do you need a
little more fuel for the fire? How about a Point and Figure
bullish price objective of $79?
Moreover, the monthly stochastics indicator is close to forming a
bullish crossover, while the MACD indicator is close to retesting
its bearish counterpart. That said it might be interesting to
know that the monthly MACD indicator has never sported a bearish
ConocoPhillips market cap is over 86 billion, and the company
reported to make nearly 151 billion in revenue over the past
year. COP gained more than six percent in past 52-weeks, with an
average trading volume of 7.75M shares per day. The company
expects to see an earnings growth rate of 9% over the next five
The five-year average dividend yield percentage rests at
2.5percent, while COP currently offers a 2% annual dividend
yield, which tabulates out to a $1.24 per share owned, per year.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Plan your trade, and trade your plan.
Until Next Week,
Editor In Chief
Strong Buy: 12
Strong Sell: 0
Mellon Investor Services LLC
P.O. Box 3315
South Hackensack, NJ 07606-1915
600 North Dairy Ashford
Houston, TX 77079