Yahoo Finance ConocoPhillips (COP) Challenges Biden's Arctic Drilling Ban
ConocoPhillips (COP), the U.S. oil giant, has filed a lawsuit to challenge the Biden administration's recent ban on drilling across nearly half of the National Petroleum Reserve in Alaska (NPR-A), per a Bloomberg report. The lawsuit, filed on Friday, claims that the administration's measure violates a federal law that mandates oil development in the area.
The Biden administration's new rule, enacted by the Interior Department, prohibits oil leasing on 10.6 million acres of the 23-million-acre reserve and imposes restrictions on future oil development in the remaining 13 million acres designated as "special areas." According to the report, conservationists celebrated the regulation when it was announced in April, emphasizing its importance in protecting a rugged landscape of tundra and wetlands that supports diverse wildlife.
Conversely, the oil industry advocates argue that the regulation unlawfully stifles development in a region that’s historically earmarked as an energy source for the Navy.
ConocoPhillips contends that this rule contradicts the directive from Congress, which stated that the NPR-A should be utilized for the "expeditious production of oil to meet the nation's energy needs." The company asserts that the 2017 US Geological Survey expects the reserve to contain 8.7 billion barrels of recoverable oil.
In its lawsuit, ConocoPhillips argues that the Congress did not grant the Bureau of Land Management the authority to implement regulations that hinder petroleum production throughout the NPR-A. The company asserts that the new rule introduces "numerous new provisions that elevate resource preservation over energy production," effectively transforming the petroleum reserve into a "de facto wilderness area" where development is essentially prohibited.
ConocoPhillips' Alaska unit, which owns 1.8 million acres of state and federal leases in the region, including 1 million net undeveloped acres as of the end of 2023, views the rule as a significant impediment to its operations and prospects in the state. The company maintains that the rule severely limits its ability to develop its leases and contribute to the nation's energy needs. The Interior Department has refused to comment on the lawsuit.
The outcome of this lawsuit could have far-reaching implications for the future of oil development in the NPR-A. It might also influence the broader energy policy and environmental protection efforts in the United States.
Zacks Rank & Key Picks
Currently, ConocoPhillips carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Hess Corporation HES, Sunoco LP SUN and SM Energy Company SM, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.95. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past seven days.
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