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Is ConocoPhillips a Bullish Bet Despite Volatile Oil Prices?
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Key Takeaways
ConocoPhillips' diversified assets across 14 countries support low-cost, resilient production.
COP's U.S. shale inventory enables operations at break-even costs near $40 per barrel WTI.
COP prioritizes strong free cash flow and shareholder returns even in volatile oil markets.
ConocoPhillips (COP - Free Report) , a leading energy company worldwide, is primarily involved in the exploration and production of crude oil, natural gas liquids (NGLs), bitumen and natural gas. The company’s involvement in the upstream sector makes its overall financial performance heavily dependent on the oil and gas pricing environment. With the West Texas Intermediate ("WTI") spot price close to $65 per barrel, it is worth assessing whether COP’s operations remain profitable in this pricing scenario.
ConocoPhillips has a diversified asset base spread across 14 countries. The company’s portfolio includes assets in the prolific shale basins of the United States, the oil sands in Canada, and conventional assets in Asia, Europe and the Middle East, which support low-cost production. Notably, in the U.S. Lower 48, COP has an advantaged inventory position that can support operations at a break-even cost as low as $40 per barrel WTI cost. Per the U.S. Energy Information Administration, oil prices are projected to decline sharply in the coming quarters of this year and into 2026 due to an oversupplied market resulting from production increases by the OPEC+ and sluggish demand growth for the commodity.
However, COP’s high-quality, low-cost portfolio of assets makes it resilient to these difficult pricing environments and allows it to maintain stable performance and sustainable cash flows. The company mentioned that it continues to prioritize investing in its high-quality portfolio to generate higher free cash flows and stronger returns for shareholders.
High-Quality Assets: The Core of XOM and EOG's Competitive Edge
Exxon Mobil Corporation (XOM - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two global energy firms that can thrive even during periods of low oil prices.
ExxonMobil’s advantaged assets in the Permian Basin of the United States and Guyana, with low breakeven costs, should support its bottom-line profitability. The company mentioned on a recent earnings call that it plans to lower its break-even costs to $35 per barrel by 2027 and $30 per barrel by 2030. In other words, even if crude oil prices decline significantly, XOM will be able to maintain its financial performance and generate profits.
EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should enable it to weather oil price volatility.
COP’s Price Performance, Valuation & Estimates
Shares of COP have plunged 14.9% over the past year compared with the 22.2% decline of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.33x. This is below the broader industry average of 10.79x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2025 earnings has been revised downward over the past seven days.
Image: Bigstock
Is ConocoPhillips a Bullish Bet Despite Volatile Oil Prices?
Key Takeaways
ConocoPhillips (COP - Free Report) , a leading energy company worldwide, is primarily involved in the exploration and production of crude oil, natural gas liquids (NGLs), bitumen and natural gas. The company’s involvement in the upstream sector makes its overall financial performance heavily dependent on the oil and gas pricing environment. With the West Texas Intermediate ("WTI") spot price close to $65 per barrel, it is worth assessing whether COP’s operations remain profitable in this pricing scenario.
ConocoPhillips has a diversified asset base spread across 14 countries. The company’s portfolio includes assets in the prolific shale basins of the United States, the oil sands in Canada, and conventional assets in Asia, Europe and the Middle East, which support low-cost production. Notably, in the U.S. Lower 48, COP has an advantaged inventory position that can support operations at a break-even cost as low as $40 per barrel WTI cost. Per the U.S. Energy Information Administration, oil prices are projected to decline sharply in the coming quarters of this year and into 2026 due to an oversupplied market resulting from production increases by the OPEC+ and sluggish demand growth for the commodity.
However, COP’s high-quality, low-cost portfolio of assets makes it resilient to these difficult pricing environments and allows it to maintain stable performance and sustainable cash flows. The company mentioned that it continues to prioritize investing in its high-quality portfolio to generate higher free cash flows and stronger returns for shareholders.
High-Quality Assets: The Core of XOM and EOG's Competitive Edge
Exxon Mobil Corporation (XOM - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two global energy firms that can thrive even during periods of low oil prices.
ExxonMobil’s advantaged assets in the Permian Basin of the United States and Guyana, with low breakeven costs, should support its bottom-line profitability. The company mentioned on a recent earnings call that it plans to lower its break-even costs to $35 per barrel by 2027 and $30 per barrel by 2030. In other words, even if crude oil prices decline significantly, XOM will be able to maintain its financial performance and generate profits.
EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should enable it to weather oil price volatility.
COP’s Price Performance, Valuation & Estimates
Shares of COP have plunged 14.9% over the past year compared with the 22.2% decline of the industry.
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.33x. This is below the broader industry average of 10.79x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2025 earnings has been revised downward over the past seven days.
Image Source: Zacks Investment Research
COP, XOM and EOG currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.