We recently compiled a list of the 10 Best LNG and LNG Shipping Stocks to Buy According to Analysts. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against the other stocks.
The global market for Liquefied Natural Gas (LNG), with the support of secure energy and industrial demand, is looking at continued expansion. The industry is forecasted to grow from $143.35 billion in 2024 to $155.85 billion in 2025, according to The Business Research Company. This reflects a Compound Annual Growth Rate (CAGR) of 8.7%. Looking further ahead, it is expected that the LNG market will reach $205.95 billion by 2029, exhibiting a CAGR of 7.2%, which is predominantly attributed to the global demand for cleaner energy. The demand for LNG is majorly fulfilled by the U.S., exporting around 88.3 million metric tons (MT), which is up by 4.5% from 2023, according to LSEG.
In contrast, the global market also has a major impact from Europe’s LNG demand. The region’s demand accounted for 55% of total LNG exports by the U.S. in 2024, according to LSEG. LNG shipments of 5.84 MT were sent to Europe by the U.S. in December 2024, which is up from 5.09 MT in the previous month.
This increased demand is driven by strong winters as well as supply-related issues from Russia. Previously, Europe imported LNG through Ukraine in 2024, while it is currently seeing increasing geopolitical issues. On the other hand, Asia’s LNG demand has also seen growth, making up 34% of the total LNG exports made by the U.S. in 2024. Accordingly, shipments to Asia rose to 2.01 MT in December from 1.64 MT in November (up by 24%).
However, the industry is currently facing challenges in the form of the U.S.-China trade war, under which China imposed a 15% tariff on the U.S. LNG, as U.S. President Donald Trump put a 10% charge on Chinese imports. While long-term commitments are significant, in 2024, China’s imports made up for only 5.5% (4.3 MT) of the total exports by the U.S., as per Kpler. It has been reported by Reuters that under 20-year agreements, Chinese buyers are to import 20 million tons per annum (MTPA) of LNG from U.S. terminals. However, ongoing issues may curb further contracts.
Thus, for short-term ease, the U.S. may rely on Europe’s demand, however, IEA predicts that the European gas demand will decline from 507 billion cubic meters (bcm) in 2023 to somewhere between 281 and 407 bcm by 2035, owing to its transition to renewable energy sources. On the other hand, China’s LNG demand is expected to grow and reach between 397 and 522 bcm by 2035.
Moreover, advancements in technology in liquefaction and regasification have helped in improving energy efficiency and in reducing methane emissions across the supply chain. Furthermore, offshore gas extraction has been enabled by floating LNG (FLNG) with minimal onshore infrastructure, which adds to flexibility in production. The global LNG liquefaction capacity by 2028 is expected to increase from 473 million tons per annum (MTPA) in 2023 to 968 MTPA by 2028 with the help of new projects as per BusinessWire. The expansion will be led by North America, making up for 54% of the total capacity increase.
Looking on to the other side, Australia also makes up for a key LNG player with over $126 billion invested in new and upcoming projects, as reported by Deloitte. These investments look to increase production capacity and help Australia secure long-term contracts amidst changing global demand.
Despite these developments, natural gas futures prices have increased by around 98.02% in the past six months. This is an increase from $1.956 on August 26, 2024 to $4.23, as of writing this article. This reflects on the high volatility of the market as well as evolving trade flows.
Methodology
To curate our list of the 10 Best LNG and LNG Shipping Stocks to Buy According to Analysts, we picked the top LNG companies having an exposure to LNG production and distribution. Furthermore, we made sure that we picked companies with strong market capitalization. Additionally, we looked into the number of hedge funds having a stake in the respective stocks, and made sure the hedge fund sentiment was positively strong for the respective stocks. Finally, we ranked the stocks based on the upside potential predicted by a healthy number of analysts, as of writing this article.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An underground network of pipelines transporting oil through an expansive terrain.
ConocoPhillips (NYSE:COP)
Average Upside Potential: 27.39%
Number of Hedge Fund Holders: 85
ConocoPhillips (NYSE:COP) is one of the top exploration and production companies. The company has an extensive global portfolio in crude oil, liquefied natural gas (LNG) and natural gas. Its operations span through Canada, Europe, Asia-Pacific and the U.S. shale basins, proving them to be a strong driving force in the LNG market.
The company reported total production of 1,987 million barrels of oil equivalent per day (MBOED) for the year ended December 31, 2024, which was a 3% year-on-year increase. Such an increase was made possible through strong output from the U.S. shale operations and higher LNG volumes.
Accordingly, ConocoPhillips (NYSE:COP)’s cash flow was around $21.3 billion, with support from better commodity prices and efficient capital allocation. However, the company’s net income was reported to be $11.2 billion, down from $18.7 billion in 2023. This decline can be attributed to higher costs as well as expenses related to acquisitions.
Moreover, ConocoPhillips (NYSE:COP) signed a long-term regasification agreement at Belgium’s Zeebrugge LNG terminal and a long-term LNG sales agreement in Asia, in order to bolster its LNG sales. They also hold stakes in LNG producing facilities in Australia and Qatar, indicating the company’s strategic expansion within the LNG sector.
The company also acquired Marathon Oil for $22.5 billion in late 2024 and divested $1.3 billion at the start of 2025 to streamline its portfolio and reduce debt. The divestment includes the sale of its interests in the Ursa and Europa Fields to Shell for $735 million, expected to close by Q2 2025, as well as the sale of $600 million worth of non-core Lower 48 assets. These efforts helped the company achieve its asset disposition target of $2 billion.
Looking ahead, ConocoPhillips (NYSE:COP) is expected to produce in a stable manner through 2025. It is looking to focus on high-return U.S. shale assets and LNG expansion. In light of such efforts, the company wants to hold an optimized portfolio, maintaining a strong cash flow, all set for long-term sustainable growth.
Overall COP ranks 1st on our list of the best LNG and LNG shipping stocks to buy according to analysts. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.