Does ConocoPhillips’s Growth Potential Make it a Buy?

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Source: Thinkstock

Source: Thinkstock

On Thursday, the third largest American oil company – ConocoPhillips (NYSE:COP) — released its first-quarter earnings figures. The company’s report was nothing short of outstanding.

The company reported earnings of $2.25 billion, or $1.81/share versus $2.14 billion or $1.63/share in the first-quarter of 2013. The reason for the increase was a combination of higher natural gas prices and an increase in production — oil equivalent production for the first-quarter increased 3 percent year-over-year.

While the company has operations all over the world, with Asia and the Middle East contributing the highest amount of production, a great deal of this production increase can be attributed to the 16 percent year-over-year growth in oil equivalent production in the company’s “Lower 48 and Latin America” region (the company reports its Alaskan production separately from its U.S. production, and its Latin American production is limited so management groups this production with the U.S.) The reason for this gain is the company’s aggressive exploration of the Bakken (the northwest United States) and Eagle Ford (southern Texas) shale regions.

As you are probably aware, there has been an incredible amount of oil and gas production growth and exploration in these regions. While many of the companies that operate in these regions are smaller speculative oil and gas companies, the big oil companies are involved, too.

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