ConocoPhillips (COP) shares tumbled Thursday after the energy giant posted fourth-quarter results that disappointed Wall Street, with lower oil prices taking a bite out of what was otherwise a solid operational quarter.
The company reported earnings of $1.4 billion, or $1.17 per share, compared with $2.3 billion, or $1.90 per share, in the same quarter last year. On an adjusted basis, earnings per share came in at $1.02, falling short of the $1.11 consensus estimate analysts were looking for.
Revenue for the quarter reached $14.185 billion, just missing the expected $14.194 billion. The earnings decline of 39% year-over-year was driven primarily by weaker commodity prices during the period, even as production volumes climbed.
Production Grows, But Prices Pinch
Total production for the quarter rose to 2.32 million barrels of oil equivalent per day (BOED), up 137,000 BOED from a year ago. That's the headline number, but here's the catch: after adjusting for the Marathon Oil acquisition and asset dispositions, organic production actually declined 2.6%, or 63,000 BOED.
The Lower 48 operations produced 1,439,000 BOED, with the Delaware Basin contributing 673,000 BOED, the Midland Basin adding 194,000 BOED, the Eagle Ford providing 370,000 BOED, and the Bakken chipping in 198,000 BOED.
The real pain point? Average realized prices fell to $42.46 per barrel of oil equivalent, down 19% year-over-year. When prices drop that much, even strong production numbers can't fully offset the revenue impact.
Marathon Integration Delivers Big Synergies
On the positive side, ConocoPhillips completed its integration of Marathon Oil and doubled synergy capture to over $1 billion on a run-rate basis in 2025, while realizing an additional $1 billion in one-time benefits. That's meaningful cost savings in an industry where efficiency gains directly boost margins.
The company also closed $3.2 billion in asset dispositions during 2025 and expects to hit a $5 billion total disposition target by year-end 2026, further streamlining its portfolio.
Big Bets on LNG Projects
ConocoPhillips is making serious progress on several major projects. The Willow project in Alaska is advancing, and the company's equity LNG developments at North Field East and North Field South in Qatar, along with Port Arthur LNG on the U.S. Gulf Coast, are all on track. North Field East startup is expected in the second half of 2026.
The company also beefed up its commercial LNG strategy, securing an initial offtake of 5 million tonnes per annum for Port Arthur LNG Phase 1, plus an additional 5 million tonnes, bringing its total commercial offtake portfolio to 10 million tonnes per annum.
Cash Management and Shareholder Returns
During the quarter, ConocoPhillips spent $3.0 billion on capital investments, repurchased $1.0 billion in shares, and paid $1.0 billion in dividends. The company declared a first-quarter regular dividend of 84 cents per share, payable March 2 to shareholders of record as of February 18, 2026.
For the full year, the company generated $19.8 billion in operating cash flow and ended the quarter with $7.4 billion in cash and short-term investments, plus $1.1 billion in long-term investments.
Looking Ahead
Management expects first-quarter production between 2.30 million and 2.34 million BOE per day. For full-year 2026, total production is projected between 2.33 and 2.36 million BOED.
Capital expenditures for 2026 are expected to be roughly $12 billion, with adjusted operating costs of $10.2 billion, in line with prior guidance. The company says it's on track to achieve incremental cost reductions and margin enhancements of over $1 billion on a run-rate basis by year-end 2026.
ConocoPhillips plans to return 45% of cash flow from operations to shareholders in 2026. Chairman and CEO Ryan Lance added, "We are well-positioned to deliver an expected $7 billion in incremental free cash flow by 2029, including $1 billion each year from 2026 through 2028."
Price Action: ConocoPhillips shares were down 3.81% at $103.49 at the time of publication Thursday.
