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Kurt Wulff: ConocoPhillips shares price gives no value to downstream

December 26, 2011 | About:
Kurt Wulff: ConocoPhillips shares price gives no value to downstream.

In a report published December 6 and just released to non subscribers, Kurt Wulff claims that the current price of ConocoPhillips shares in effect do not incorporate a value for the downstream businesses. Those assets are planned to be spun off into the new Phillips66 company some time by the middle of next year.

It appears to me that his assumption is based on his valuation of the O&G reserves and presumed production growth over the next several years, which may or may not hold true. Here's the URL:


Rating: 3.3/5 (6 votes)


LwC - 4 years ago    Report SPAM
On Dec. 27, 2011 COP traded for around $73. Today COP (ex Phillips66) traded for around $58, and the Phillips66 spinoff (PSX) traded for around $53, for a total current price of about $111 and a resulting gain of about 53%.

Turns out that Wulf made a pretty good suggestion, at least so far. If his prediction is to be accepted as especially prescient, the COP shares must rise at least another $15 or 25% based on his assertion that the share price of the combined company prior to the spinoff didn't reflect any value for the Phillips66 business.

In the past there has been some discussion in the GuruFocus forums about BRK's unfortunately timed investment in COP several years ago. Does anybody know how this outcome has affected BRK's COP investment outcome?

Disclosure: I didn't buy any COP shares on Wulf's report.

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GuruFocus has detected 3 Warning Signs with ConocoPhillips $COP.
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