ConocoPhillips (COP) – You Better Bet Your Life

If you’re placing a bet on the nation’s leading independent energy exploration & production company today, you had better bet your life you are placing a bet on a turnaround in energy prices in the current environment. ConocoPhillips (NYSE: COP) recently reported its second quarter results, and really only one thing mattered, the difference in the company’s total realized price per barrel of oil equivalent (BOE). It looks as if the company can manage the burn if oil prices stay at current levels. Meanwhile, it just raised its dividend and assured investors it was safe; the dividend yield is a stabilizer for the stock today at 5.7% for as long as investors mostly believe in it. The company rightly notes that the price of oil is out of its control, but there are factors within its control. ConocoPhillips, as the world’s most important independent E&P, stands to benefit from the failures of smaller marginal players, some of which will have important assets to sell cheap today and tomorrow. Given this company’s current production positives and its ability to manage cash flow, and my expectations for oil price recovery either later this year or in 2016, I see COP primed for long-term investment today. More nimble risk takers might wait a month longer for a potential capitulation of oil prices ahead of the September Fed meeting and as China continues to weigh. See my full report on ConocoPhillips (COP) here.

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