3 Reasons To Buy This Oil & Gas Company
By Piyush Arora - June 14, 2013 | Tickers: APC, COP, E | 0 Comments
Piyush is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Natural gas prices have been steadily rising over the last year, due to which ConocoPhillips (NYSE: COP) witnessed a 6% improvement in its cash margins during the previous quarter. The company produces around 40% natural gas, while petroleum liquids account for the rest. This allows ConocoPhillips to perform in-line with the rising gas prices. But besides that, here are 3 reasons why ConocoPhillips appears to be a solid investment option.
Since rising gas prices is an industry wide advantage, all major oil and gas producers with significant leverage towards natural gas production stand to benefit here. Anadarko Petroleum (NYSE: APC) and Eni (NYSE: E) perfectly fit the criteria. Eni produces around 51% natural gas, while petroleum liquids account for the rest. On the other hand, Anadarko is the world’s largest natural gas producer by volume, which produces only a fraction of petroleum liquids.
Both Anadarko and Eni are jointly developing the world’s second largest LNG export terminal in Africa, with an estimated development cost of $50 billion. Once the facility is fully opeartional, Anadarko and Eni would be catering to rising energy demand of Asian and African countries. This would further leverage both the companies towards natural gas, thus allowing them to profit with the rising gas prices.
However I personally prefer ConocoPhillips over its mentioned peers. It is the largest natural gas producer in North America, and recently received the regulatory approval to expand its Freeport LNG export terminal. It’s a well known fact that LNG exports from the continent have been bottlenecked due to the lack of liquefaction facilities. Once the expansion work is complete, Freeport LNG terminal would have the cap