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Q2 in the Rearview: Is COP a Smart Hold Stock or a Hot Chase?
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Key Takeaways
COP's Q2 EPS of $1.42 beat estimates on higher Lower 48 production, despite a year-over-year decline.
Marathon Oil acquisition lifts COP's resource estimate to 2.5B barrels after integration.
COP targets $2B annual cost savings by 2026 from Marathon efficiencies and broader expense cuts.
Last Thursday, ConocoPhillips (COP - Free Report) reported second-quarter 2025 earnings, which exceeded expectations. This was driven by higher oil-equivalent production volumes, especially from the Lower 48, which contributed to a strong business outlook.
Before analyzing the factors driving this positive outlook, let’s review the second-quarter results.
COP’s Q2 Earnings Snapshot
ConocoPhillips reported adjusted earnings per share of $1.42, which beat the Zacks Consensus Estimate of $1.36. The bottom line, however, decreased from the prior-year level of $1.98.
Image Source: Zacks Investment Research
One of the world’s leading independent oil and gas producers, headquartered in Houston, TX, ConocoPhillips’ quarterly revenues of $14.74 billion increased from $14.14 billion in the year-ago period. The top line, however, missed the Zacks Consensus Estimate of $14.93 billion. For more details, check our blog: ConocoPhillips Q2 Earnings Beat Estimates, Revenues Improve Y/Y.
Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) are two other energy giants and have already reported results.
The acquisition of Marathon Oil late last year has strengthened ConocoPhillips’ upstream presence in the Lower 48, comprising prolific shale plays like the Delaware Basin, Eagle Ford and Midland Basin. With the acquisition, COP has been able to enhance its scale, production capacity and operational efficiencies since the resources of Marathon Oil closely complement the existing assets of the upstream giant.
In its second-quarter transcript, COP stated that it has completed merging systems, teams, operations and assets of Marathon Oil into its own business. The upstream energy player initially estimated the total resource from Marathon Oil’s resources at roughly 2 billion barrels of oil equivalent. But, now after the full review, the company has revised upward this estimate by 25% to 2.5 billion barrels.
COP’s Focus on Cost Savings: More Profit From Every Barrel
Initially, ConocoPhillips expects the Marathon Oil acquisition alone will help it save $500 million a year. But, now, with the completion of integration, the upstream energy player expects to achieve more than $1 billion in yearly savings just from Marathon-related efficiencies by the end of 2025.
In addition, COP has mentioned another $1 billion per year in cost savings—covering lower administrative costs, reduced field operating expenses, cheaper transportation and processing costs, and commercial margin expansion, which will likely result in a total of $2 billion in annual savings by the end of 2026. This implies more profit from every oil equivalent barrel of production.
How the Diversified Energy Majors XOM, CVX Fared in Q2
Chevron reported adjusted second-quarter earnings per share of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company’s key upstream segment.
However, the bottom line came well below the year-ago adjusted profit of $2.55 due to weaker oil price realizations.
CVX generated revenues of $44.8 billion. The sales figure missed the Zacks Consensus Estimate of $47.1 billion and decreased 12.4% year over year. For more details, read our blog: Chevron Q2 Earnings Beat Estimates as Production Hits Record.
Coming to XOM’s story, the large integrated player reported earnings per share of $1.64 (excluding identified items), which beat the Zacks Consensus Estimate of $1.49. The bottom line declined from the year-ago level of $2.14.
ExxonMobil’s total quarterly revenues of $81.5 billion missed the Zacks Consensus Estimate of $82.8 billion. The top line declined from the year-ago figure of $93.06 billion. For more details, read our blog: Strongest Q2 Production Yet: Continue to Hold ExxonMobil Stock.
Should Investors Bet on COP?
Despite the positive developments, ConocoPhillips plunged 11.6% over the past year, outperforming the 19.9% decline of the industry’s composite stocks.
One-Year Price Chart
Image Source: Zacks Investment Research
Though ConocoPhillips declined less than the industry average, the stock is presently undervalued. COP is trading at a 5.27x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a discount compared with the broader industry average of 9.03x.
Image Source: Zacks Investment Research
Although COP is an undervalued stock with a strong outlook, investors shouldn’t immediately bet on it since several business uncertainties are engulfing the company’s business.
Notably, a significant portion of the $7 billion future cash flow increase will likely come from projects and developments that probably won't start generating at full capacity until 2027–2029, like Alaska’s Willow project. This means investors will need to wait several years to see the full benefits, and delays or cost overruns could adversely impact returns.
Thus, it might not be the right time to bet on the stock and investors should wait for the uncertainties to subside. Those who own the stock can retain it. COP carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Q2 in the Rearview: Is COP a Smart Hold Stock or a Hot Chase?
Key Takeaways
Last Thursday, ConocoPhillips (COP - Free Report) reported second-quarter 2025 earnings, which exceeded expectations. This was driven by higher oil-equivalent production volumes, especially from the Lower 48, which contributed to a strong business outlook.
Before analyzing the factors driving this positive outlook, let’s review the second-quarter results.
COP’s Q2 Earnings Snapshot
ConocoPhillips reported adjusted earnings per share of $1.42, which beat the Zacks Consensus Estimate of $1.36. The bottom line, however, decreased from the prior-year level of $1.98.
One of the world’s leading independent oil and gas producers, headquartered in Houston, TX, ConocoPhillips’ quarterly revenues of $14.74 billion increased from $14.14 billion in the year-ago period. The top line, however, missed the Zacks Consensus Estimate of $14.93 billion. For more details, check our blog: ConocoPhillips Q2 Earnings Beat Estimates, Revenues Improve Y/Y.
Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) are two other energy giants and have already reported results.
COP Completes Marathon Oil Integration, Ups Resource Estimate
The acquisition of Marathon Oil late last year has strengthened ConocoPhillips’ upstream presence in the Lower 48, comprising prolific shale plays like the Delaware Basin, Eagle Ford and Midland Basin. With the acquisition, COP has been able to enhance its scale, production capacity and operational efficiencies since the resources of Marathon Oil closely complement the existing assets of the upstream giant.
In its second-quarter transcript, COP stated that it has completed merging systems, teams, operations and assets of Marathon Oil into its own business. The upstream energy player initially estimated the total resource from Marathon Oil’s resources at roughly 2 billion barrels of oil equivalent. But, now after the full review, the company has revised upward this estimate by 25% to 2.5 billion barrels.
COP’s Focus on Cost Savings: More Profit From Every Barrel
Initially, ConocoPhillips expects the Marathon Oil acquisition alone will help it save $500 million a year. But, now, with the completion of integration, the upstream energy player expects to achieve more than $1 billion in yearly savings just from Marathon-related efficiencies by the end of 2025.
In addition, COP has mentioned another $1 billion per year in cost savings—covering lower administrative costs, reduced field operating expenses, cheaper transportation and processing costs, and commercial margin expansion, which will likely result in a total of $2 billion in annual savings by the end of 2026. This implies more profit from every oil equivalent barrel of production.
How the Diversified Energy Majors XOM, CVX Fared in Q2
Chevron reported adjusted second-quarter earnings per share of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company’s key upstream segment.
However, the bottom line came well below the year-ago adjusted profit of $2.55 due to weaker oil price realizations.
CVX generated revenues of $44.8 billion. The sales figure missed the Zacks Consensus Estimate of $47.1 billion and decreased 12.4% year over year. For more details, read our blog: Chevron Q2 Earnings Beat Estimates as Production Hits Record.
Coming to XOM’s story, the large integrated player reported earnings per share of $1.64 (excluding identified items), which beat the Zacks Consensus Estimate of $1.49. The bottom line declined from the year-ago level of $2.14.
ExxonMobil’s total quarterly revenues of $81.5 billion missed the Zacks Consensus Estimate of $82.8 billion. The top line declined from the year-ago figure of $93.06 billion. For more details, read our blog: Strongest Q2 Production Yet: Continue to Hold ExxonMobil Stock.
Should Investors Bet on COP?
Despite the positive developments, ConocoPhillips plunged 11.6% over the past year, outperforming the 19.9% decline of the industry’s composite stocks.
One-Year Price Chart
Though ConocoPhillips declined less than the industry average, the stock is presently undervalued. COP is trading at a 5.27x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a discount compared with the broader industry average of 9.03x.
Although COP is an undervalued stock with a strong outlook, investors shouldn’t immediately bet on it since several business uncertainties are engulfing the company’s business.
Notably, a significant portion of the $7 billion future cash flow increase will likely come from projects and developments that probably won't start generating at full capacity until 2027–2029, like Alaska’s Willow project. This means investors will need to wait several years to see the full benefits, and delays or cost overruns could adversely impact returns.
Thus, it might not be the right time to bet on the stock and investors should wait for the uncertainties to subside. Those who own the stock can retain it. COP carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.