Fall Is Temporary for This Oil and Gas King: ConocoPhillips (COP)

Comparison with Peers

ConocoPhillips peers include BP plc (ADR) (NYSE: BP) and Exxon Mobil Corporation (NYSE: XOM). BP has recently sold its refinery in Texas City, where an explosion killed 15 workers and other assets to Marathon Petroleum Corp. for $2.4 billion. Sale includes the refinery and a portion of its retail and logistics network in the Southeastern U.S. BP is betting on oil rather than gas for its future growth. Furthermore, the company will increase capital expenditures to over $24 billion a year from $22 billion. On the other hand, ExxonMobil might suffer slightly due to the law suit about knowingly adding an environmentally harmful chemical to gasoline. The company faces an $800 million trial, which may cause the price to shift downwards. However, if the price falls, it will be a good opportunity to buy as it will not have a long-term affect. Exxon has an extremely strong cash position with over $50 billion in operating cash flows.

Summary

In the current world, the energy sector is going to be the defining catalyst of economic growth. Therefore, a lot of faith can be placed into energy stocks overall. The overall shortage having arisen from geo-political factors, will lead to an increased emphasis on exploration and diversification of energy resources. The stock currently trades at a P/E ratio of 6.29 and P/BV of 1.2. At the current price levels, COP can prove to be a great investment.

The article Fall Is Temporary for This Oil and Gas King originally appeared on Fool.com and is written by Ishtiaq Ahmed.