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3 Big Opportunities That Could Cause ConocoPhillips' Stock to Rise

  1. ksingh

    736 Posts.

    Opportunity No. 3:

    Make a big splash in exploration

    Despite cutting its capital spending program twice over the past few months, ConocoPhillips isn't completely axing its exploration budget. In fact, the company still plans to spend $1.5 billion on testing its global portfolio of future opportunities, as we see on the following slide.

    ConocoPhillips really is venturing into uncharted waters in a lot of its exploration efforts, and these efforts could lead to the company discovering a future growth engine. For example, the company has already announced two new discoveries in Senegal, and appraisal drilling this year should help the company better understand the extent of these finds. A discovery of a big oil field could provide the company with a major growth driver over the next decade while also providing a near-term boost to the stock price.

    Investor takeaway

    Despite the weak oil market, 2015 could be a real pivotal year for ConocoPhillips. In the near term, the company has the potential to capture substantial cost savings from oil-field services, which would enable it to earn much better returns than it would otherwise. Meanwhile, the company also has the potential to lead what could very well be a big consolidation wave as oil companies bulk up to better handle future downturns. Finally, ConocoPhillips hasn't abandoned its oil exploration program, and a big new oil find could fuel future gains in its stock.

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