ExxonMobil has also been hard at work in Alaska. The world’s largest oil company has been building a 22-mile pipeline, designed to carry LNG condensates from the company’s Point Thomson wells to the oil fields of Badami. The liquid fuel would then end up being sent to a pipeline spur that carries oil to the Trans-Alaska Pipeline System. ExxonMobil expects to be producing 10,000 barrels of condensates per day at the Point Thomson site by 2016.
BP plc (ADR) (NYSE:BP), ConocoPhillips, and ExxonMobil in conjunction have also, according to a press release: “..reached an important milestone in selecting a project concept that includes an 800-mile, 42-inch pipeline, up to eight compression stations, at least five take-off points for in-state gas delivery, a gas treatment plant located on the North Slope and a liquefaction plant in the south-central region.”
All three oil majors are investing big in Alaska and are looking to profit big in Alaska– especially if an LNG export terminal is approved in the state. This will also allow the three partners to export gas directly to customers in Europe and East Asia without the “choke points” that are found with the lower U.S. terminals that must go through areas such as the Panama Canal.
This will be a huge money-maker for the oil trio in the future if they are allowed to export, and its very realistic to expect that they will be allowed to export in the future as more terminals are approved.
The bottom line
BP plc (ADR) (NYSE:BP) is a risky buy, but also has the possibility to be a very rewarding one as well. The company’s major issue is its litigation risk, but with its importance in the British pension system its unlikely a judge will devastate the company’s pocketbooks. Even in a worse case scenario BP has a gigantic cash horde as well.
Alaska also provides relatively untapped resources that will help the company significantly boost revenue and earnings alike. An approved export terminal in the state is a real possibility in the near future as well, and would be a huge catalyst for earnings.
BP makes for a good turnaround play and its high-yielding dividend will also pay you to wait. An investor can also take BP’s generous dividend payments and put them into a safer company to offset some of the risk as well. The BP litigation is getting messy, with the latest news centering around lawyer misconduct, which is leading to more uncertainty. Once the trials are settled and uncertainty is gone, however, BP shares could very well pop if the settlements aren’t too harsh. If not, the company is likely strong enough financially to withstand the abuse. Therefore, I think BP is definitely worth the risk and will prove to be a great long-term investment in the end.
The appeal of massive capital appreciation mixed with a heavy-hitting dividend payment on the way there is just too much to pass up.
The article Is This Fallen Oil Giant Worth the Risk? originally appeared on Fool.com and is written by Joseph Harry.
Joseph Harry owns shares of ExxonMobil, BP p.l.c. (ADR), and ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. Joseph is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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