Wednesday, October 7, 2009

ConocoPhillips wants to be good (COP)

It reminds me of Danny Noonan telling Judge Shmaels "I want to be good." And being rewarded with a Fresca!

Today, Houston-based ConocoPhillips (COP) announced a few actions intended to please shareholders. Among them:

--Increasing the quarterly dividend to 50cents from 47cents.
--Plans to sell $10billion in assets over the next few years, using the proceeds to pay down debt.
--Capital Expenditures will fall to $11billion in 2010, down from $12.5 for 2008 and $19billion in 2008

"These actions are consistent with our objectives of creating shareholder value and improving financial flexibility while pursuing our long-term strategic initiatives," said Jim Mulva, chairman and chief executive officer. “This plan capitalizes on our large resource base and our strong portfolio of projects, while providing flexibility for potential changes in business conditions. We will replace reserves and grow production from a reduced, but more strategic, asset base.”

The hike in the dividend to $2.00 annually gives Conoco a FAT dividend yield of 4%.

Earnings at ConocoPhillips are extremely volatile -->> after earning over ten bucks a share last year, 2009 earnings-per-share is estimated at 3.37, maybe hitting 5.50 in 2010. Free Cash Flow of $7.5billion(ish) next year means the company trades at an FCFY of 10%....pretty attractive.

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