ConocoPhillips delivered a solid but price-pressured Q3 2025, posting $1.7 billion in GAAP earnings ($1.38/share) and $2.0 billion in adjusted earnings ($1.61/share), as higher production couldn’t fully offset a sharp drop in realized commodity prices. The company generated $5.4 billion in operating cash flow, easily covering $2.9 billion in capex and supporting an 8% dividend increase to $0.84/share. Production rose to 2,399 thousand barrels of oil equivalent per Day (MBOED), up about 4% on a like-for-like basis, though the average realized price slid to $46.44 from $54.18 a year ago.
ConocoPhillips struck an optimistic but disciplined tone with its updated outlook for 2025 and preliminary guidance for 2026. For FY 2025, the company lifted its full-year production forecast to 2.375 MMBOED while trimming operating-cost guidance to $10.6 billion, reflecting efficiency gains and solid execution. Management also expects Q4 production between 2.30–2.34 MMBOED and remains on track to reach $5 billion in asset dispositions by end-2026, having already completed more than $3 billion this year.
Looking ahead to FY 2026, ConocoPhillips expects capital spending to ease to about $12 billion and operating costs to fall to roughly $10.2 billion, supporting an underlying production growth outlook of 0–2%. The company reiterated its long-term free-cash-flow inflection target—adding roughly $1 billion of annual FCF improvement from 2026 to 2028, followed by a larger step-up in 2029 as major projects, including Willow, come online. While the guidance signals tighter cost control and steady operational momentum, management also acknowledged inflationary pressures on large projects, with the Willow cost estimate now $8.5–$9 billion.
COP completed the acquisition of Marathon Oil, adding high-quality, low-cost supply inventory adjacent to the company’s U.S. unconventional position - in an all-stock transaction valued at $22.5 billion. The merger includes $5.4 billion of net debt.
Below are the key drivers for ConocoPhillips, which present opportunities for upside or downside to the current Trefis price estimate for ConocoPhillips.
ConocoPhillips is the world's largest independent exploration and production company, based on proven reserves and production of liquids and natural gas. After the spin-off of its midstream and downstream businesses into an independent company (Phillips 66), ConocoPhillips has become a pure-play exploration & production company. The company conducts exploration activities in 19 countries and supplements its income with equity stakes in other oil & gas and chemical companies. About 56% of its production consists of liquids, and about 44% consists of natural gas. Of the 56% that are liquids, roughly half is tied to Brent or international prices. The remaining 11% of liquids is tied to North American crude markers, NGL, or bitumen prices. On the natural gas side, comprising about 44% of its portfolio, roughly 45% consists of international gas. Price differentials between Brent and West Texas Intermediate (WTI), a widely used North American crude marker, have been narrowing of late. This has reduced the disparity in realized prices for crude oil in domestic and international markets. The price realized by the company on the domestic and international sale of natural gas is also different.
Crude oil exploration and production is the most valuable segment for ConocoPhillips for the following reasons:
The amount of proven hydrocarbon reserves is an extremely critical metric for any oil and gas exploration and production company. It directly impacts the company's production growth outlook, as it represents the total quantity of technically and economically recoverable oil and gas reserves owned by the company at a given point in time.
More importantly, ConocoPhillips has reported a greater than 100% reserve replacement ratio for the last five years. This shows that the company has been able to grow its reserve base through a successful exploration program consistently. Proved reserves increased by 15% year-over-year to 7.8 billion BOE, with a 244% reserve replacement ratio, ensuring long-term production capabilities in 2024.
ConocoPhillips holds 11.4 million (as of 2024) net acres of onshore conventional and unconventional acreage in the Lower 48 states. The company's unconventional holdings include approximately 792,000 net acres in Delaware, 790,000 net acres in the Bakken and 484,000 net acres in the Eagle Ford. Currently, ConocoPhillips' activities in this region are mostly centered on the continued optimization and development of existing and emerging assets, with a particular focus on areas with higher liquid production.
ConocoPhillips' price-adjusted cash operating margins have also been helped over the past few years by the continuous improvement in its sales volume mix, which is primarily being driven by the development of its assets in the Lower 48 states. Liquids (crude oil and natural gas liquids) now represent 76% (as of 2024) of the total hydrocarbons produced by ConocoPhillips from the Lower 48 states, compared to just over 45% at the end of 2013, and their production has been increasing over the last few years.
