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Vivek Kumar
WTI Crude Oil

ConocoPhillips, an independent oil and gas exploration company, said on Wednesday that it will resume share repurchases of $1 billion during the last quarter of 2020 under its existing authorization and forecasts lower-than-expected quarterly adjusted loss.

The company estimated an adjusted loss in the range of $210 million to $260 million for the third quarter and forecast quarterly production between 1.05 and 1.07 million barrels of oil equivalent per day (boepd), including net curtailments of about 90,000 boepd. ConocoPhillips had reported output of 1.32 million boepd, excluding Libya, in the year-ago quarter, Reuters reported.

The company fully restored production in the Lower 48, Alaska and Canada by the end of the third quarter. Seasonal planned turnaround activity primarily impacted Canada, the Asia Pacific region and Alaska. During the quarter, the company also completed the previously announced transaction to acquire additional Montney acreage in Canada from Kelt Exploration Ltd.

At the time of writing, ConocoPhillips shares traded 2% higher at $33.09 on Wednesday. However, the stock is still down about 50% so far this year.

ConocoPhillips stock forecast

Thirteen analysts forecast the average price in 13 months at $49.67 with a high forecast of $56.00 and a low forecast of $45.00. The average price target represents a 50.79% increase from the last price of $32.94. From those 13 equity analysts, 11 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley target price is $47 with a high of $69 under a bull scenario and $23 under the worst-case scenario. BofA Global Research lowered their price objective to $46 from $50 and Keybanc initiates coverage with overweight rating and price target of $46. Wells Fargo raised their price target to $56 from $54; MKM Partners lowered their target price to $55 from $57 and Susquehanna cuts target price to $52 from $54.

A number of other equities research analysts have also recently issued reports on the stock. MKM Partners increased their target price on ConocoPhillips to $58 from $57 and gave the stock a “buy” rating in May. UBS Group increased their target price to $62 from $50 and gave the stock a “buy” rating in June. Raymond James increased their target price to $48 from $46 and gave the stock an “outperform” rating.

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Analyst views

“COP checks all the boxes for sustained outperformance: excellent management, disciplined investment, and consistent return of cash coupled with high quality, low-cost portfolio that can deliver an attractive combination of FCF and growth. Attractive value proposition even in the current commodity price environment with leverage to any rally in oil and with resiliency should prices remain low,” said Devin McDermott, equity analyst and commodities strategist at Morgan Stanley.

“Strong balance sheet. While management received some investor pushback in 2019 for building an $8 billion strategic cash balance, that disciplined strategy is paying off in 2020 – creating financial and strategic flexibility,” McDermott added.

Upside and Downside Risks

Upside: 1) Higher commodity prices. 2) Upside to Alaska resource discovery. 3) Better well performance in Lower 48 – highlighted by Morgan Stanley.

Downside: 1) Lower commodity prices. 2) Cost inflation. 3) Alaska discovery has less potential resources than expected. 4) Worse than expected well results in the Eagle Ford, Permian, and Bakken.

Check out FX Empire’s earnings calendar

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