Source: ConocoPhillips. 

ConocoPhillips (NYSE:COP) was the very first oil stock I ever bought, and I continue to hold it to this day. As a long-term investor, I've certainly seen the stock rise and fall, sometimes rather dramatically. While I'm not worried ConocoPhillips' stock will crater and never recover, there are reasons the stock could fall in the future. This could present a nice buying opportunity for long-term investors like me, who would love to add to their position. Here are the areas I'm watching most closely.

Impacted by falling oil prices

Take a look at the following chart, and note what happens to ConocoPhillips' stock price when oil prices fall.

COP Chart

COP data by YCharts.

It's pretty clear from the chart above that when oil prices fall, so does ConocoPhillips' stock price. Because of this, investors need to keep an eye on oil prices. If falling oil prices cause the stock to fall, this might just be an opportunity to buy more stock.

Dry holes in droves

ConocoPhillips is pretty good at finding oil around the world. However, it does drill a dry hole every once in a while. That's to be expected. The issue would be if one of its major growth areas turn out to be a dud.

Last quarter, for example, ConocoPhillips noted that its exploration expenses were $85 million higher than expected as a result of its Coronado Miocene appraisal well and Deep Nansen wildcat well both being deemed non-commercial. Both wells were drilled in the Gulf of Mexico, which is an important future growth area for the company. Investors need to be watching to see if the company encounters additional dry holes in the area. A string of dry holes could cause the stock price to fall, as investors expect the Gulf to be a big future production growth driver.

That said, the company has more than 2 million net acres in the deepwater Gulf of Mexico and has already made four discoveries. So, while a string of dry holes would be a disappointment, it wouldn't sink the company's potential in the Gulf. Further, the company is so diversified that no one project makes up more than 1% of production. So, any negativity around a few bad wells might offer investors a buying opportunity given that the company has found oil in the the Gulf before and has plenty of places to find it again.

Policy setbacks

Oil has always been a hotly contested commodity. Nations have fought over it for years. Meanwhile, environmentalists continue to push against drilling, as oil isn't seen as environmentally friendly. Because of these issues, ConocoPhillips and its oil-producing peers continue to face geopolitical and environmental risks.

Policy issues have had an impact on the company over the years. For example, it had its assets in Venezuela unlawfully seized in 2007, and more recently, its oil production in Libya has been cut back because of fighting in the country. There are new issues emerging as environmentalists in Colorado have been trying to get anti-fracking measures put on the ballot. If fracking was banned in the state, it would impact the company's emerging operations in the Niobrara. Finally, ConocoPhillips has been ramping up oil production in Alaska because of the passage of the More Alaska Production Act, which cut taxes on oil producers. However, that measure could be repealed if Alaskans are unhappy with oil production growth in the state, which would impact ConocoPhillips' future plans and profitability. 

Source: ConocoPhillips.

With so many potential issues, ConocoPhillips could be hit by one or more policy setbacks over the next few years, which could cause its stock price to fall. However, more often than not, the initial reactions to sell a stock are overdone, which creates buying opportunities. Because of this, investors should keep an eye on any setbacks the company faces, and if investors overreact, it could be time to take advantage of that opportunity.

Investor takeaway

ConocoPhillips faces a lot of risks. However, these risks can also be opportunities for long-term investors to add to their positions. That's why investors need to know the risks and be ready when the market overreacts. 

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.