I just purchased 300 shares of ConoCoPhillips. Here is what Morningstar's discussion on the valuatio of the stock:

We're raising our fair value estimate to $73 per share from $70 based on our higher oil price outlook. We assume benchmark oil prices of $69 in 2006, $60 in 2007, $46 in 2008, $44 in 2009, and $46 in 2010. Even with the acquisition of Burlington, our average production growth estimate remains around 3% annually over the next five years. However, we expect the differential between our benchmark and the firm's natural-gas average selling prices (ASP) to narrow as a result of the deal--Burlington's natural-gas ASPs have historically been greater than ConocoPhillips' natural-gas ASPs. Strong demand for refined products and the relative availability of lower-quality crude-oil feedstocks are playing into ConocoPhillips' hands. We think these market conditions are set to help refiners like ConocoPhillips achieve above-average returns over the near to medium term. ConocoPhillips' stake in Russian oil producer Lukoil offers production growth opportunities with reasonable returns that should boost cash flows over the long run, in our view. After boosting the quarterly dividend 24% last year, ConocoPhillips recently gave it another 16% bump to $0.36 per share, which would yield 2% at our fair value estimate. If we increase our oil and natural-gas price assumptions 10%, all else equal, our fair value estimate increases to $80 per share. A 10% decrease in our oil and natural-gas price assumptions translates into a fair value estimate of $66, all else equal.