Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a sizable position in the Permian. Goldman Sachs is very positive:
We see four key drivers of an attractive view on COP including:
(1) Leverage to an oil price recovery, particularly given the stock’s recent dislocation versus Brent prices, to which it has historically been highly correlated.
(2) Robust free cash flow generation, representing attractive capital returns potential.
(3) Asset quality accretion via the recently completed Concho transaction.
(4) Attractive valuation following underperformance versus peers.
While we continue to get pushback around federal land exposure, we see positive catalyst opportunities via the company’s March guidance update, a potential buyback announcement, and an oil demand recovery.
Investors receive a 3.39% dividend. The Goldman Sachs price target for the shares is $66, and the Wall Street consensus target is $62.54. ConocoPhillips stock closed on Tuesday at $50.79 a share.
This stock may be offering one of the best value propositions of the Goldman Sachs ideas. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and NGLs in the United States and Canada. It operates approximately 19,000 wells.
The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.
Production is weighted toward crude oil while growth opportunities are liquids focused, anchored by the Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett. Devon also owns equity in the publicly traded midstream master limited partnership EnLink.
Investors receive a 2.03% dividend. Goldman Sachs has a $29 price target, in line with the consensus target of $29.93. The last trade for Devon Energy stock on Tuesday hit the tape at $21.69.