Conocophillips Adds New Risk Factors


Texas-based Conocophillips (COP) is a global oil and gas company with operations in 14 countries. It has $87 billion in assets and a workforce of 9,900 people. Conocophillips recently agreed to acquire Royal Dutch Shell’s (RDS.A) assets in Texas for $9.5 billion in cash.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Conocophillips. (See Analysts’ Top Stocks on TipRanks)

Q3 Financial Results

Conocophillips reported revenue of $11.62 billion for Q3 2021, compared to $4.38 billion in the same quarter last year. It posted adjusted EPS of $1.77 against an adjusted loss per share of $0.31 in the same quarter last year, and beat the consensus estimate of adjusted EPS of $1.39.

The company plans to return $6 billion to shareholders in 2021 in dividends and share repurchases. It has paid out $4 billion year-to-date on those programs. During Q3, Conocophillips made a $0.5 billion deposit toward the Shell assets purchase. It ended the quarter with $10.2 billion in cash.

Risk Factors

Conocophillips carries 39 risk factors, according to the new TipRanks Risk Factors tool. The company recently updated its risk profile with seven new risk factors related to the pending acquisition of Shell’s assets in Texas.

Conocophillips has cautioned investors that the Shell deal is subject to a number of conditions that could prevent it from closing the transaction or delay the closing. The company says that if the Shell deal collapses, it could lose the deposit it has made toward the acquisition. The company has told investors that if closing of the Shell transaction delays, it could fail to achieve the anticipated benefits of the acquisition.

Even if it succeeds to acquire Shell’s assets, Conocophillips warns that integrating the assets into its system may be more difficult than anticipated. As a result, costs associated with the acquisition may increase and the company may fail to realize the benefits it expects.

Most of Conocophillips’ risk factors come under the Finance and Corporate category, with 46% of the total risks. That is above the sector average of 37%.

Analysts’ Take

Following Conocophillips’ Q3 earnings report, RBC Capital analyst Scott Hanold reiterated a Buy rating on Conocophillips stock with a price target of $98. Hanold’s price target suggests 30.1% upside potential.

Consensus among analysts is a Strong Buy based on 14 Buys and two Holds. The average Conocophillips price target of $91.63 implies 21.5% upside potential to current levels.

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