The temporary impact of weather is reflected in the widely-quoted low oil price for February 2007 of $53 a barrel compared to the average price for delivery over the next six years of about $60 a barrel. In McDep analysis a long-term price of $60 real implies net present value of $100 a share.
Meanwhile, COP stock price adjusted for dividends and debt has appreciated to the equivalent of perhaps $46 a barrel when indexed to the price of oil five years ago (see chart below). Any further expropriation by the leader of Venezuela seems covered as part of the explanation for our estimate of NPV being lower than that implied by correlation with other companies.
Fourth quarter 2007 results, reported on January 24, reflect lower oil price and refining margin compared to the third quarter. We favor COP stock at a double weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean energy to support global growth.
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