ConocoPhillips (COP) announced that it has discovered oil in the FAN-1 exploration well, located approximately 60 miles offshore Senegal. The FAN-1 well, located in the Sangomar Deep block, was drilled to a total depth of 16,164 feet in approximately 4,700 feet of water.
Upon completion of operations at FAN-1, the semi-submersible drilling rig will move to the SNE-1 well, also located in the Sangomar Deep block in approximately 3,600 feet of water.
Cairn Energy Plc is the operator holding a 40% working interest in the FAN-1 well. ConocoPhillips holds a 35% working interest, while FAR Limited and Petrosen hold 15% and 10% interest, respectively.
ConocoPhillips holds leading positions in both natural gas and heavy crude oil acreages in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions. The Houston, TX-based company thus looks forward to replacing reserves and sustaining production growth over the long term.
ConocoPhillips’ initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and Permian plays. The company is also poised to benefit from a pipeline of projects in the Gulf of Mexico, Malaysia, the liquefied natural gas project in Australia, the U.K., Norway, and the Canadian oil sands, apart from the US Lower 48 liquids-rich plays. Oil sands expansion projects are also on track.
Since Apr 2012, when ConocoPhillips divested its refining operations to Phillips 66 (PSX), it has delivered total shareholder returns of 22%. ConocoPhillips has completed shifted of focus to upstream operations and thus oil and gas prices play a major role in determining its performance. The company plans to expand production by maintaining its growth focus on reserves, through global drilling programs in legacy assets, unconventional assets and major projects.
ConocoPhillips’ margin growth would also be aided by its shift of production mix to higher-value products. The company expects to spend $16 billion on average annually and allocate 95% of its capital to investments that deliver above-average margins. The recent activity targets offshore prospects in Australia, Angola and Senegal, conventional exploration in Norway and Indonesia, and unconventional exploration in North America, Poland and Colombia.
Currently, ConocoPhillips holds a Zacks Rank #3 (Hold). Investors can consider top-ranked stocks in the oil and gas sector such as Superior Energy Services Inc. (SPN) and Delek Logistics Partners LP (DKL), both sporting a Zacks Rank #1 (Strong Buy).
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