CN:ConocoPhillips Calls Off Alaska JV Citing Low Gas Prices
The trend for natural gas price is difficult to forecast as it's driven by demand and supply factors, including factors like natural gas reserves, crude oil price and inter-state pipeline charges. However persistently low prices in the US gas market relative to other commodity prices increases contributed to ConocoPhillips ( COP ) and BP ( BP ) calling off their $34 billion Alaska natural gas pipeline joint venture. Other key oil & gas players likely to be affected by this declining trend are Exxon Mobil (NYSE:XOM), Chevron ( CVX ) and Anadarko ( APC ). While we expect prices to recover, Trefis members predict higher gas prices in the coming years.
We expect that storage and extraction of natural gas will continue to be an issue which will eventually drive up natural gas prices, although at a moderate rate. While we anticipate the average price realized by ConocoPhillips on natural gas will increase moderately to $8.08 per 1,000 cubic ft., Trefis members predict a slightly higher price level of close to $10. The member estimates represent a marginal upside to our near $75 price estimate for COP stock. This is because of a relatively small contribution of natural gas to ConocoPhillips' stock value compared to other petroleum products produced by ConocoPhillips such as crude oil, natural gas liquids, gasoline, distillates, fuel oil, and a variety of others.
We have a price estimate of $75 for ConocoPhillips's stock , implying an upside of around 5% to current market price.
