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ConocoPhillips Expects a Spike in LNG Prices in the Long Haul

Zacks Equity Research

ConocoPhillips’ COP chief executive, Ryan Lance, recently stated that the present weakness in the global liquified natural gas (LNG) prices is expected to be a temporary issue, per Reuters. He expects growth in demand for LNG to cover up the supply-surplus prevalent in the market by the mid-2020s.

Currently, LNG prices are below $5 per million British thermal units (MMBtu), hitting the lowest levels in three years. Lance recently attended an industry conference in Australia, where he suggested that with the reduction in supply glut, LNG prices will likely improve.

Management at the European energy major, Royal Dutch Shell plc RDS.A, stated in its Shell LNG Outlook 2019 that with the surge in demand for cleaner fuel sources, especially in Asia, demand for LNG is anticipated to reach around 384-million tons mark in 2020 from 319 million tons in 2018.

Notably, ConocoPhillips owns several LNG assets all over the world, through which it can make significant profits during this rising demand for cleaner energy sources. In northern Australia, the company has the Darwin LNG plant with a capacity of 3.7 million tons a year. Supply to this plant is expected to be exhaustedby 2022 from the BayuUndan field in the Timor Sea. The company is likely to take a final investment decision this year on developing the Barossa gas field – located around 300 kilometers north of the plant – that can support the facility in the long-run. Moreover, in the east coast, the company has Australia Pacific LNG plant, comprising 9 million tons a year capacity.

The location of these plants is strategically beneficial to the company as major part of demand is projected to be generated from the Asia-Pacific region.

Zacks Rank and Other Stocks to Consider

ConocoPhillips currently carries a Zacks Rank #2 (Buy). Some other top-ranked players in the energy space are Apache Corporation APA and Hess Corporation HES. While Apache sports a Zacks Rank #1 (Strong Buy), Hess holds a Zacks Rank of 2. You can seethe complete list of today’s Zacks #1 Rank stocks here.  

Apache’s earnings beat estimates in all the trailing four quarters, the average being 31.1%.

Hess’ earnings are expected to skyrocket more than 130% through 2019.

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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
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