I have owned shares of ConocoPhillips (NYSE:COP) since late 2009. While I could have invested in any oil company, I thought ConocoPhillips would be a reliable producer to own for the long term because it was a fully integrated global company and therefore less risky than other options. So far, my returns have been decent when factoring in dividends and the gains I've enjoyed by holding on to Phillips 66 (NYSE:PSX), which ConocoPhillips spun off to investors in 2012.

I see even more upside ahead for the company, which is why I continue to hold. That said, if there's one thing I've learned about investing in oil over the years, it's that failing to consider the bear case can prove costly. With that in mind, here are a few things that could affect the company's ability to live up to its full potential.

An oil rig at night time with the moon.

Image source: Getty Images.

Built to thrive at 50 bucks a barrel

ConocoPhillips spent most of the oil market downturn repositioning so it could run on lower oil prices. These actions included cutting spending (including the dividend), focusing on innovation to get more barrels out of the ground for less money, and shedding non-core assets to reduce debt. As a result, the company can now fund the capital investment necessary to keep production flat and pay its reset dividend, while remaining cash-flow neutral as long as oil is around $50 per barrel, which is a significant improvement from the $75 per barrel breakeven point it had in prior years.

That said, crude does still need to cooperate. Otherwise, the bull case in ConocoPhillips could fall apart because it might not generate enough cash flow to finance its plans, which could result in another dividend cut. Meanwhile, if crude were to crash below $35 a barrel and stay there, the company might have trouble maintaining its production because its average cost of supply is $35 per barrel. While its expenses might fall to help offset weaker crude prices, the company still needs oil to be at least $50 a barrel to create meaningful value for investors.

Getting impatient

One of the many moves ConocoPhillips completed as part of its repositioning was selling a slew of Canadian assets to Cenovus Energy (NYSE:CVE) for $13.3 billion earlier this year. Under the terms of that deal, ConocoPhillips received $10.6 billion in cash and 208 million shares of Cenovus stock, valued at $2.7 billion at the time of the deal. However, the market didn't like the transaction from Cenovus' side because it took on a boatload of debt to finance the purchase. Because of that, its stock has dropped like a rock, which affects the value of the shares held by ConocoPhillips.

Since ConocoPhillips doesn't need the cash, it has the flexibility to hold the shares in hopes of selling into a future rally. That said, according to recent reports, the company doesn't plan on sticking around for long. While the company said it intends to liquidate over time, if it gets impatient and starts selling while Cenovus is down, it would leave ConocoPhillips with fewer proceeds to allocate toward initiatives that could create value for shareholders.

A single oil well pumpjack silhouetted against a prairie sunset.

Image source: Getty Images.

Mis-timing the buyback and incinerating cash

One of the things ConocoPhillips plans to do with its asset sale proceeds is buy back stock. The company initially planned to repurchase $1 billion in stock this year and up to $3 billion by 2019. However, the Cenovus deal supercharged that strategy, with the company now expecting to repurchase $3 billion in stock this year and $6 billion over the next three years.

The company's aim with the repurchase program is to return capital to investors in the most efficient way possible. That said, if it's too aggressive with the buyback and repurchases the entire $3 billion in the near term, it runs the risk squandering value if oil prices take a deep dive and bring the stock down with them. Because the oil market remains unsettled, impatience could prove costly. 

Investor takeaway

While ConocoPhillips has made tremendous progress over the past few years to position the company so it can thrive at lower oil prices, that doesn't necessarily mean it will. Not only does the company need oil to stay above $50 a barrel, but it also must remain disciplined in both selling the stock it received from Cenovus and repurchasing its shares. Otherwise, ConocoPhillips might not perform as well as bullish investors anticipate.