Market News

COP Stock Down 8.5% Despite Joining Qatar’s $29B LNG Expansion

Story Highlights

Amid resurging demand for LNG, ConocoPhillips collaborates with Qatar Energy to join the world’s largest liquefied natural gas (LNG) project worth $29 billion.

ConocoPhillips (COP) inked a deal with QatarEnergy to become the third partner to join the world’s largest liquefied natural gas (LNG) project worth $29 billion.

However, following the news, shares of the oil and gas major were down 8.5% to close at $93.74.

ConocoPhillips is an American multinational oil and gas company. It engages in the exploration, production, transportation, and marketing of crude oil and natural gas. Its portfolio includes conventional assets in North America, Australia, Europe, and Asia, as well as oil sands assets in Canada.

Details of the North Field East Project

According to the terms of the deal, ConocoPhillips will own a 3.12% stake in the overall North Field East project for 27 years.

On Sunday, QatarEnergy entered into a partnership deal with TotalEnergies (GB:TTE) and ENI (DE:ENI) for the Gulf state’s North Field East expansion with respective stakes of 6.3% and 3.1%, respectively.

The recently announced partnerships will bolster Qatar’s position as the world’s top LNG exporter.

Overall, the North Field Expansion project will comprise six LNG trains that will increase Qatar’s liquefaction capacity to 126 million metric tons/year from 77 million by 2027.

Furthermore, the fifth and sixth trains are part of a second phase, called North Field South. Onshore contracts for the second phase will be awarded by Qatar in Q1 2023.

Notably, according to Qatar Energy’s latest schedule, North Field East will commence operations by early 2026.

Wall Street’s Take

Last week, Barclays analyst Jeanine Wai increased the price target on ConocoPhillips to $142 (51.48% upside potential) from $132 and reiterated a Buy rating.

Overall, the stock has a Strong Buy consensus rating based on 12 Buys and one Hold. The average ConocoPhillips price target of $130.69 implies 39.42% upside potential from current levels.

TipRanks’ Smart Score

COP scores a ‘Perfect 10’ on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

Conclusion

Currently, there is an upsurge in demand for LNG, exacerbated by Russia’s attack on Ukraine.

Historically, the majority of LNG from Qatar was directed to Asia. However, due to the ongoing crisis, exports to Europe are expected to increase by 40% to 50%.

With the expansion, Qatar will become the second-largest LNG exporter in 2028, after the U.S.

Shares of COP have jumped 55% over the past year, massively outperforming benchmark indices. The current partnership bodes well for the stock in the long term.

Disclosure

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