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ConocoPhillips: Creating a Dangerous Duo



July 15, 2011 – Comments (0) | RELATED TICKERS: COP , XOM

ConocoPhillipsreleased information today stating that they plan to split into two entities. One being the exploration and production side and the other a refining division. What exactly does this mean for the company and what should be expect to come from this? Christopher Helman gives us the run down on this big oil split and what it means for  shareholders.


" …The move makes good sense in terms of unlocking shareholder value. Despite its shares outperforming its supermajor peer groupby more than 25% in the past 18 months, ConocoPhillips’s enterprise value is just 5.5 times its expected 2012 ebidta, according to Tudor, Pickering & Holt. Compare that with an average 8 times multiple for large-cap E&P pure plays and 6 times for independent refiners…

…Even so, it’s hard to see Conoco competing in the long-run for access to big untapped fields controlled by foreign governments. That’s because its production, at 1.7 million bpd is significantly less than the world’s other publicly traded integrated supermajors.Exxon leads the pack with 4.8 million bpd, followed by BP at 3.6 million, Shell at 3.5 million, Chevron at 2.8 million and Total with 2.4 million bpd. Without the heft, Conoco will have a tough time getting the best projects…"


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