ConocoPhillips (COP): Selling Out and New Promises

At the beginning of the month, the International Arbitration Tribunal announced its decision to condemn Venezuela’s expropriation of ConocoPhillips (NYSE:COP)’s investments in the Petrozuata and Hamaca heavy oil projects, and the offshore Corocoro development projects. The stock price responded in kind and began to climb, registering the highest rise in the last three months.

It should come as no surprise that SVP & General Counsel, Janet Langford Kelly, sold her shares at a price of US$68.40 for about US$1.79 million on September 6^th. One day before, the company’s CFO, Jeffrey Wayne Sheets, sold his shares at the price of US$67.83 for about US$1.02 million. The specific reason for the insider sell is yet to be unveiled, but the following notes may offer further insight.

First, last Thursday ConocoPhillips (NYSE:COP) was asked by state officials to resume operations at Kenai LNG plant in south Alaska.

The Kenai LNG Plant is located in Nikiski, on the Kenai Peninsula, and is fed by the North Cook Inlet Gas Field discovered in 1962. The field is operated from the Tyonek platform in the northern waters of Cook Inlet, and production averaged nearly 30 MMCFD in 2012. However, no production was destined to the international markets, and the request made by state officials has recommended applying for a three year export license. Company spokeswoman Amy Burnett has announced the firm is considering the request.

Second, UK officials have given a green light to ConocoPhillips (NYSE:COP)’s joint venture with Chevron Corporation (NYSE:CVX) for a new oil development in the North Sea. The project, named Enochdhu, is expected to produce more than 10,000 barrels of oil equivalent per day at its peak.

The firm has made no announcements concerning a start date for the new development that will increase its presence in the Britannia Sea. Management has instead said “The development of Enochdhu in the North Sea is consistent with ConocoPhillips (NYSE:COP)’s overall strategy for delivering on the company’s 3% to 5% production growth targets”.

Disclosure: Jodor Jalit holds no position in any of the mentioned stocks.

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