| This Oil Giant Continues to Quietly Strengthen Its Core | |
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U.S. oil giant ConocoPhillips (NYSE: COP) has jettisoned assets left and right during the past few years, paring its portfolio down to a stronger core. The proceeds from those sales significantly bolstered the company's balance sheet, and enabled it to jump-start its share repurchase program as well. Those catalysts helped fuel a nearly 30% gain in the stock since it launched its transformational initiative back in November 2016. While most investors have focused on the assets exiting the company's portfolio, it's worth noting that ConocoPhillips also quietly bought several oil and gas properties this year -- purchases that strengthened its positions in two core areas and added to its upside potential. These less-noticed moves could turn out to be important value creators in the coming years. Image source: Getty Images. Taking control of the futureThese two recent acquisitions followed a similar one by the company earlier in 2018. Along with reporting fourth-quarter results in early February, ConocoPhillips noted that it had purchased a package of assets from Anadarko Petroleum (NYSE: APC) in Alaska for $400 million. The properties included Anadarko's 22% interest in the Western North Slope of Alaska, as well as its stake in the Alpine pipeline. The transaction enabled ConocoPhillips to gain full control over this core asset for a low price while providing Anadarko with some additional cash to pay off debt and buy back shares. The deal also gave ConocoPhillips total control over 1.2 million acres of development and exploration land, including the Willow discovery. That find could turn out to be a needle-mover for the company, which believes Willow could hold as much as 300 million barrels of recoverable oil, making it a potential multibillion-dollar investment that could eventually produce up to 100,000 barrels of oil per day. The downside is that the company won't see a drop of that oil until 2023 at the earliest, given the time required to obtain permits and build out the infrastructure necessary to access that resource. However, that timing meshes well with when some forecasters predict a potential gap in the world's oil supply. Going off the beaten path to create valueWhile most of its rivals are focused on scooping up as much high-priced acreage in the Permian Basin as they can, ConocoPhillips is content to cash in on some of its land holdings so it can quietly buy properties in overlooked areas where it sees some high-upside potential. These deals have not only firmed up its core positions, but have given the company some compelling growth drivers. It's a bit of a contrarian approach that could pay big dividends in the coming years. More From The Motley Fool Matthew DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. |
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EXPLORATION STAGE |
CODE : ECA.TO |
ISIN : CA2925051047 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Encana is a oil and natural gas producing company based in Canada. Encana holds various exploration projects in Canada. Its main exploration property is BUFFALO HILLS in Canada. Encana is listed in Canada and in Germany. Its market capitalisation is 235.3 millions as of today (US$ 179.1 millions, € 162.4 millions). Its stock quote reached its highest recent level on November 23, 2018 at 9.99, and its lowest recent point on January 24, 2020 at 4.96. Encana has 47 442 200 shares outstanding. |