ConocoPhillips & Pearl River Investment Ink Long-Term LNG Supply Deal

ConocoPhillips COP, a leading global exploration and production company, has signed a long-term agreement with Guangdong Pearl River Investment Management Group for the supply of liquefied natural gas (“LNG”). The upstream energy firm has signed an LNG sales and purchase agreement (“SPA”) with Pearl River Investment for a duration of 15 years.

Neither ConocoPhillips nor Guangdong Pearl River Investment Management Group has disclosed the details of the agreement yet. However, according to sources familiar with the matter, COP will supply approximately 300,000 metric tons of LNG per year, starting in 2028.

Strategic Role of Huizhou LNG Terminal

Pearl River Investment Management is an investor in the Huizhou LNG receiving terminal in the Guangdong province, in southern China. The facility is led by the Guangdong Energy Group. The terminal at Huizhou has the capacity to process 4 million metric tons of LNG per year. Additionally, Guangdong Energy is also involved in electricity transmission and power generation, and other services in China.

Global LNG Market Outlook

In the Qatar Economic Forum in Doha, ConocoPhillips’ CEO mentioned that the market for LNG is growing. The LNG market is expected to grow from its current volume of 400 million tons to over 700 million tons within the next decade. The LNG infrastructure on the supply side needs to expand to accommodate the growing demand for the commodity.

Qatar and the United States remain two of the largest suppliers of LNG globally, with U.S. volumes mainly catering to the energy demand in Europe and South America, and Qatar primarily serving the markets in Asia. ConocoPhillips CEO Ryan Lance emphasized that LNG volumes from both the United States and Qatar need to grow to meet the rising demand for energy.

COP’s Zacks Rank and Key Picks

COP currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the energy sector are Diversified Energy Company plc DEC, Expand Energy Corporation EXE and RPC, Inc. RES, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Diversified Energy Company is an independent oil and natural gas producer in the United States. The company is primarily engaged in the production, transportation, and marketing of natural gas and natural gas liquids. The rising demand for natural gas as a cleaner-burning fuel and an uptick in the commodity’s prices are expected to positively impact the company’s bottom line.

Expand Energy is a leading U.S.-based natural gas producer formed through the merger of Chesapeake Energy Corporation and Southwestern Energy Company. Natural gas is expected to play an increasingly important role in the energy transition journey. Expand Energy is poised to benefit from the rising demand for natural gas as a cleaner-burning fuel. The recent rise in natural gas prices is also anticipated to positively impact EXE’s profitability.

RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. RPC is strongly committed to returning value to shareholders through consistent dividend payments and share buybacks, making it an attractive choice for investors seeking steady returns.

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This article originally published on Zacks Investment Research (zacks.com).

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