Attention Dividend-Seekers: ConocoPhillips Just Made This 'Prudent' Move

ConocoPhillips COP recently unveiled plans to further slash its capital spending, which should help insure continued healthy dividends, an analyst said Friday.

On Tuesday, Houston-based Conoco cut its three-year annual spending plan 28 percent to $11.5 billion.

Drilling

Development drilling will increase as project spending falls.

"It's a prudent move to support the dividend," Bank of America's Douglas Leggate said, reiterating a Buy rating and $75 target.

Peer Comparison

Conoco's dividend yield of 4.7 percent compares favorably with Exxon Mobil Corporation XOM' 3.2 percent and Chevron Corporation CVX's 4.1 percent, according to Leggate.

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Upcoming Analysts' Meeting

Conoco will flesh out details of its newly lowered spending plan at a meeting with analysts scheduled for April 8.

Also on the agenda: financial priorities, regional projects, details on technology and cost initiatives and a review of the company's resource base.

Response To Initial Announcement

Leggate called the company's announcement Tuesday "preemptive" relative to the upcoming meeting, but "light on details."

Conoco continues to expect 2015 volume growth between 2 and 3 percent, but said Tuesday that volume will increase to 1.7 million barrels in 2017.

Leggate believes currently low oil prices are "unsustainable" and that Conoco is "amongst the most leveraged [sic.]" of the major oil companies to a medium-term recovery in prices.