ConocoPhillips’s Big Question in December: Will It Beat Its 200-Day Moving Average?



ConocoPhillips’s moving averages as of December

ConocoPhillips (COP) is an independent exploration and production company. It is headquartered in Houston, Texas, and operates in 25 countries.

In this series, we’ll be discussing ConocoPhillips’s past performance, management goals, and its valuation, as well as how the company compares with its peers. Let’s begin by taking a look at its 50-day and 200-day moving averages.

As we can see in the graph above, on December 2, 2015, ConocoPhillips was trading ~1.5% below its 50-day moving average, which indicates a short-term downside support for the stock. COP broke above its declining 50-day moving average or DMA, in October, and remained above the 50-DMA until December 1.

At the same time, on December 2, COP was trading ~9.2% below its 200-day moving average, a strong upside resistance for the stock. COP has narrowed the gap between itself and its 200-day moving average considerably since October 2015.

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ConocoPhillips’s stock movements in 2015

ConocoPhillips’s stock started gaining momentum in late 3Q15, as we can see in the graph above. While the stock did fall to its 2015 low of $42.19 on August 25, by December 2, it has recovered ~29% from those levels. The 3Q15 low was on the heels of the sub-$40 crude oil price settlement on August 24. These were the lowest levels that prices had seen since February 2009. YTD (year-to-date), ConocoPhillips’s stock has declined by 21%.

One of the key reasons behind ConocoPhillips’s improved performance since August is its efforts on capital and cost reductions. We’ll go over these in detail later in this series.

A quick earnings review compared with peers

ConocoPhillips reported a 3Q15 adjusted net loss of $466 million, compared with adjusted earnings of $1.6 billion in 3Q14. The company’s loss per share was $0.38 in 3Q15, in line with consensus estimates.

Many upstream companies have been hit by weak crude and natural gas prices in 2015. For example, Apache Corporation (APA) recorded an adjusted net loss of $21 million in 3Q15. Anadarko Petroleum (APC), Hess Corporation (HES), and Marathon Oil Corporation (MRO) reported adjusted net losses of $291 million, $358 million, and $138 million, respectively, during the same period. (For an in-depth analysis on Apache Corporation, read Market Realist’s Apache: A Key Investor Overview.)

These companies combined make up ~10% of the Vanguard Energy ETF (VDE).

Next, we’ll take a deeper look at ConocoPhillips’s stock movements and key management objectives in 4Q15.


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