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ConocoPhillips Message Board

  • opinvestments12 opinvestments12 Mar 6, 2010 3:38 PM Flag

    1oK

    Ispent last weekend and some time this weekend reading the 10K. The company has made sound improvements in a number of areas. The OCI (other comprehensive income) which is sent through retained earnings (net of tax) is a very strong and positive number. Particularly the currency exchange dollars. These generally flow through the income in subsequent periods (although not always). However I estimate the BK Value per share at around 42.40 per share without any adjustment for the under reporting of the LUKOIL investment, which I think realistically brings the BK Value to around 46.50-47.00 per share. The current valuations on debt indicate the strong cash flows (low rates of interest on debt). I would like to see the company continue to grow free cash flow, slightly increase the dividend (to say .525) and continue to reduce shares and debt. I hope that they do not over rely on the asset sales for the business, as they simply do not need the capital or tax liability unless they have a better use of capital. IF the firm is close to expectations on earnings for the year (which seem reasonable) they could return (earn) over $5.00 per share on a book value of 42.50 which is a nice ROE. I think at currently levels the shares are undervalued. I have been buying and probably will continue to buy through the $53.50 per share level. Morningstar has a fairvalue on the shares of $57.00 per share and I would not be suprised to see them increase the FV to somewhere between $60-$65.

    I would also think the firm has a somewhat modest chance of a takover. As large as they are, they are still #3 in the industry. Exxon would make good use of capital at these price points ans cement their position, or Chevron could create a true long term rival (particularly with COP NG position).

    I would welcome disucssion on the 10K, forward valuation, Dividend levels, and potential takeover discussion.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • wow YOU WERE REALLY RIGHT ON THE CALL. It appears to me that the stock is looking to post a blow out quarter in terms of both earnings, equity growth, and nice cash flow

    • After review of the plan presented by management, the objective to grow share price is pretty clear. While I am a bit concerned about certain aspects of the plan, I would note that each item on the list is pro-shareholder. From a risk perspective, I want to make certain we get a strong fair price on the Lukoil shares.

      I did note that several people have discussed the superiority of XOM and Chevron. Look at the earnings projections and PE as compared to COP. Pretty interesting that XOM has virtually the same earnings projections for 2010 (5.71) and 2011, lower book value, and trades at a much higher price than COP.

    • Would it not be better for the dividend to stay at its current level and let the stock price rise? I also would not want them to be over zealous in selling of assets to reduce their debt. With a possible notion of take over,I have to be a staunch "nationalist" here and limit it to "American Only" energy companies.

    • The LUkOIL shares continue to trade up. This is a huge underreported asset of COP. Probably at year end an increase of $5-6 book value. Because of the increase in the value of the dollar the shares fell a bit early in the year, but now have responded. In addition, because we use an equity basis of reporting, the strong earnings will flow through potentially in the 2nd quarter (they don't report on our same timeline).

    • Nice post....I haven't gotten to their 10K yet because I've been in other companies' 10Ks, and don't ya know they're all like a bazillion pages of data. The only thing that has been gnawing at me is their level of debt, but they said they're committed to paying it down and the 80+ price of oil is a good thing for them.

      Chief

    • Feds more open to COP integration into XOM or CVX rather than BP, Shell or Total, IMHO.

      • 1 Reply to scammr
      • i too would not want to see COP gobbled up by a foreign energy company but with this ???hole administration and the way they are steering/not steering this economy one wonders what they would allow to happen. maybe the economic genius of T Geitner would have the right answer. (did i just say that?) yeah,right.

    • i feel the integration of COP int0 XOM or CVX would be a tough sell with the economic sentiment of our current administration(whom i don't agree with) has. this may have until a new broom takes over(the sooner the better).this administration would probably like to have the energy companies government owned...parish the thought. not to get off the integration subject but how about the balls of the balls of PDVSA suit after the shit that lunatic of a Chavez pulled on COP and XOM years ago.

 
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80.56+0.59(+0.74%)Sep 19 4:01 PMEDT

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