Beyond the 5%+ dividend and the forward PE of 6, my primary reason for purchasing COP at these levels is in anticipation of further trashing of the currencies by the world central banks in their efforts to combat slowing growth, exploding debt, the crisis in Europe.
In this environment of unprecedented currency devaluation, deficit spending and QE one wants to hold hard assets, such as oil. COP fits the bill.
Throw in the unrest in key oil producing nations, COP makes a lot of sense!
that is why I added to my position today also, but realizing that oil is overpriced competitive to NG should the US decide to push the use of that type of energy through any tax incentive to develop networks. This is a bet on a better economy once we get a new president also.
Oil is going to stay relatively high due to continuing supply and demand issues. There are about 700 major oil fields in the world and most are in rapid decline. The world needs to find 5million barrels a day per year just to stay even due to the rapid degedation of these fields. Except for some shales, and some dep water, no new large fields have been found since Alaska in the 1970's. US uses about 18.5 million barrels a day down from 21.5; however, the growing nations have taken that at more. We could be energy selfsufficient and the price will still be hig due to world wide demand.
Forget the govt for natural gas incentives. Industry is going to convert a lot of energy requirements dependent on oil to natural gas on their won due to $$ savings. It has already started and will start to speed up. Fleets are converting to CNG & LNG in the utility indusrty and long haul trucking. Garbage and things like Fedex also moving in that direction. Lots of nat gas stations going in. The oil & gas industry is converting their vehicles and the drill rigs to run on gas and there is still a push in the NE US to replace oil burners with gas heating systems.