Recently, global financial giant, Goldman Sachs Group Inc (NYSE: GS), identified ConocoPhillips (NYSE: COP) as a lucrative investment opportunity for the second half of 2023. ConocoPhillips, with its diversified energy production model and refining capacity, has been making significant strides, revealing the promising potential for future gains.
ConocoPhillips has a historical trend of demonstrating profitability at high levels. The company's stock, which fell below $21 in 2020, has had an extraordinary run, correlating to a significant reversal and an incentive to increase production. Indeed, its 52-week low was $78.30 on July 14, 2022, and its 52-week high was $138.49 on November 4, 2022.
Despite the volatility in oil prices, ConocoPhillips remains an appealing investment due to its diversified business model. The company's diversification helps insulate it from market fluctuations, allowing it to maintain its growth trajectory during turbulent times.
ConocoPhillips is efficiently utilizing its resources, buying back shares and paying out impressive dividend. At the moment, the company's trading price stands at $102.35, boasting a price-to-earnings ratio (P/E) of 8, as of June 5, 2023.
Another significant development for the company is the exercise of its preemption right to purchase the remaining 50% interest in Surmont from TotalEnergies EP Canada Ltd. for approximately $3 billion. Currently holding a 50% interest as the operator of Surmont, ConocoPhillips will become the sole owner upon closing, subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the second half of 2023.
This move is part of ConocoPhillips' commitment to enhance its return-focused value proposition, improve its return on capital employed (ROCE), lower its free cash flow breakeven, and further support its $11 billion planned return of capital in 2023. Based on $60 WTI, the company anticipates that the Surmont acquisition will add approximately $600 million of annual free cash flow in 2024.
In alignment with the company's long-term emissions intensity objectives, ConocoPhillips aims to achieve a 50-60% reduction in greenhouse gas (GHG) intensity by 2030, using a 2016 baseline. Since 2016, Surmont's GHG emissions intensity has already declined by about 20%.
In conclusion, ConocoPhillips presents a promising opportunity for investors seeking stable growth in the energy sector. The company's strategic diversification, lucrative Surmont acquisition, and commitment to sustainability make it an enticing investment pick for the second half of 2023.
Commitment to Energy Security in Europe
Moving on from the big-cap opportunity, MCF Energy presents an alternative investment idea in the small-cap sector. This little-known disruptor is making serious moves in the European energy market, generating investor buzz.
The company aims to become a leading energy provider in Europe, driving economic growth and promoting a more sustainable energy future for generations to come.
MCF’s involvement comes at a time when European energy supplies are severely compromised due to the war in Ukraine, and the region is in dire need of a domestic solution.
That’s why MCF Energy is working diligently to address this, focusing on unlocking the potential of natural gas resources within the region. The company is accruing an attractive selection of natural gas prospects in Germany and Austria, with more opportunities on the horizon.
Meanwhile, it is also committed to exploring opportunities that support the renewable energy transition.
If you are looking for a unique investment opportunity in the energy sector, one with a great story and unbounded potential, you really should take a closer look at MCF Energy.