Zacks_Analysts' Blog : Conoco Ups NGL Capacity - Analyst Blog

ConocoPhillips (COP) intends to expand the capacity of natural gas liquids (NGL) fractionation at a plant located at Mont Belvieu, Texas. Conoco owns this plant with two other partners Devon Energy Corp. (DVN) and Targa Resources Partners LP (NGLS).

The companies have decided to increase production capacity of the plant by 42% to 145,000 barrels per day with total cost of approximately $75 million. Conoco, as the operator, will manage the expansion project. Existing operations are not expected to be disrupted during the construction phase. The project is expected to close in the second quarter of 2012.

Conoco is one of the largest natural gas producers in North America, with more than a billion dollars per year in commercial transactions. The capacity expansion will further strengthen Conoco’s position in the natural gas liquids space.

Management is optimistic about production growth and expects production per share to increase at a 3% CAGR from 2010 to 2013. Beyond 2013, management expects the per share growth rate to accelerate beyond 3% as new projects come online.

With leading positions in both natural gas and heavy crude oil in North America, a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term.