ConocoPhillips Snags Approval For Major Alaska Oil Project

The Bureau of Land Management has approved ConocoPhillips’ (COP) proposed Willow Master Development Plan (MDP) for drilling in Alaska’s National Petroleum Reserve.

According to the bureau’s final environmental impact statement (EIS), the Willow MDP Project could produce in excess of 160,000 barrels of oil per day (with a processing capacity of 200,000 barrels of oil per day) over its anticipated 30-year life, producing up to approximately 590 million total barrels of oil.

More than 1,000 jobs are expected during peak construction with more than 400 jobs during operations- which will help offset declines in production from the North Slope oil fields and contribute to the local economy.

“This project would provide more access to valuable resources in the National Petroleum Reserve in Alaska,” said BLM Alaska State Director Chad Padgett.  “It provides for more throughput in the Trans Alaska Pipeline System, ultimately providing for more jobs for Alaskans and creating more revenue for the State.”

The preferred alternative in the Final EIS allows for construction of up to five drill sites and associated processing and support facilities, including gravel roads and pipelines to provide access to federal leases.

This alternative incorporates modifications to the project to reduce impacts based on input from tribal governments, cooperating agencies, and various other stakeholders, the BLM said.

Shares in COP are down 37% year-to-date, and the stock shows a cautiously optimistic Moderate Buy Street consensus. That’s alongside an average analyst price target of $52 (26% upside potential).

RBC Capital’s Scott Hanold has a buy rating on Conoco with a $50 price target. “We expect the company returns to positive FCF in 3Q20 (excluding dividends) and is well positioned to benefit from continued price improvements with no hedges” the analyst wrote.

He added that COP separates itself from the pack with the sustainability of FCF through cycles but investors are looking for guidance as “the uncertainty on commodity prices appears to make formal guidance a bit elusive for now.” (See COP’s stock analysis on TipRanks).

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