ConocoPhillips (COP)

[eFinanceMarkets]

ConocoPhillips +6.5% as divestiture seen as big win for shareholders
ConocoPhillips (COP +6.4%) is the top gainer on the S&P 500 in early trading amid widespread praise for the sale of its 50% interest in the FCCL partnership with Cenovus Energy (CVE -10.6%), as it allows for debt reduction and share buybacks.
Cowen analyst Charles Robertson says some investors were skeptical of COP's plan announced in November to sell $3B-$5B in assets and buy back $3B worth of stock, but the "unexpected big deal" with CVE accomplished the plan in less than a year.
UBS upgrades shares to Buy from Neutral with a $55 price target, up from $51, saying COP is divesting a “low growth, low margin asset that will enable it to immediately reduce its debt load by ~$7B," and the deal improves COP’s production mix with lower margin bitumen dropping to 5% from 15% as higher margin oil increases to 40% from 35%.
Evercore ISI says the deal creates “significant value," and appears accretive to return on equity, earnings and cash margins; analyst Doug Terreson says COP management is leading Big Oil and the E&P industry on positive, shareholder oriented change.