ConocoPhillips: An unfair rap?

So ConocoPhillips has not done well on the stock market in recent times.  It also did not help when Warren Buffett described his super-investment in the company as a “dumb” mistake.  Conventional analysis has held ConocoPhillips’ $35.6-billion acquisition of Burlington Resources responsible for its recent woes.  We are not convinced.

For example, ExxonMobil’s $41-billion acquisition of XTO Energy prices out at $15.57 per barrel of oil equivalent.  In comparison, the ConocoPhillips-Burlington transaction was at $17.79 per barrel of oil equivalent, a premium of about 14%.  While any premium in hindsight is too large, this is not as large as analysts make it out to be.

Renewables M&A gets down to earth

KPMG has published an interesting survey of mergers and acquisitions in the renewable energy industry.  Major conclusions include:

1. Deal volume has, of course, fallen from nearly $26 billion in 2007 to a little over $18 billion in 2008 …
2. … With the billion-dollar transactions of 2008 being replaced by smaller-sized deals in the $300-500 million range and …
3. … Focused on currently operating assets in contrast to acquiring promising but undeveloped capacity
4. Investors are also using the depressed valuations to focus, consolidate, and grow positions
5. Government regulations and support drive renewable investments and, in recognition, nearly 16% of worldwide stimulus funds totaling almost $3 trillion have been allocated to “green” energy