Conoco Phillips (NYSE:COP) is actively exploring for new oil and gas discoveries across its vast inventory of worldwide properties, as the company attempts to generate production growth later in the decade.

ARTICLE: A Primer On Offshore Drilling

2011 Capital Expenditures
Conoco Phillips has budgeted $1.7 billion for these activities in 2011, up from $1.3 billion in 2010. These funds will be spent on exploratory and appraisal drilling, as well as lease acquisition costs.

One area that Conoco Phillips is working on is Angola, where the company is negotiating leases on two deepwater blocks. The industry believes that this area has similar characteristics to a pre salt play located offshore Brazil. Conoco Phillips is looking to conduct seismic over the next two years and start drilling in 2013.

Many companies are active in exploring this pre salt play in Angolan waters including Cobalt International (NYSE:CIE), which is the operator of three blocks. Other operators that were awarded blocks by the Angolan government include Statoil ASA (NYSE:STO), Total (NYSE:TOT) and BP (NYSE:BP)

Gulf of Mexico
Conoco Phillips is also exploring for oil and gas in the deepwater area of the Gulf of Mexico. The company hopes to drill the Coronado prospect as it explores the Lower Tertiary formation in the deepwater. Conoco Phillips is also involved as a non operator on the Tiber and Shenandoah discoveries, and hopes that appraisal wells move forward here in 2011.

Conoco Phillips is one of many energy companies that are exploring for unconventional resources in Europe, as other countries seek to emulate the successful exploitation of that has occurred in North America. Conoco Phillips is active in exploring for these resources in Poland, and has one million acres in several different parts of the country. The company drilled two vertical pilot wells in 2010, and plans to drill two horizontal test wells in 2011.

Some independent oil and gas companies have also started to get involved in exploring shale formations in Europe. Continental Resources (NYSE:CLR) recently announced a program targeting the Paris Basin.

Other Areas
Conoco Phillips also plans to drill two wildcat wells in the Norwegian section of the North Sea over the next two years. The company believes that these two prospects have similar characteristics to a discovery nearby in the English part of the North Sea. On top of that, the company is active in exploring in the Caspian Sea, and recently finished drilling an exploratory well in Kazakhstan. It is also evaluating the results of this well, and plans a second one in late 2011 or 2012.

The Bottom Line
Conoco Phillips has a large inventory of prospective opportunities across the world, and will spend billions in 2011 to explore these areas. The company needs to be successful here in order to set up for future growth later in the decade. (For related reading, see A Guide To Investing In Oil Markets.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Regional Banks

    Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!