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COP's debt-to-capitalization of 26.4% supports resilience amid volatile energy prices.
ConocoPhillips (COP - Free Report) is an exploration and production giant. Hence, by the very nature of the upstream business, COP is highly vulnerable to the volatility in oil and natural gas prices. But, with the U.S. Energy Information Administration (“EIA”) expecting oil prices to decline, can ConocoPhillips sail through if crude prices turn low?
In its latest short-term energy outlook, EIA projects the spot average West Texas Intermediate (WTI) price at $64.16 per barrel for 2025, lower than $76.60 last year. Also, for 2026, EIA expects the commodity price to decline further to $47.77 per barrel. Thus, declining oil prices will likely hurt exploration and production activities, and ConocoPhillips will not be an exception.
However, footprint in low-cost resources and strong balance are expected to be the savior. COP’s strong presence in the Lower 48, comprising the Permian, the most prolific basin in the United States, will likely aid the company when oil price turns low, as the breakeven costs there are much lower. Also, with a debt-to-capitalization of only 26.4%, COP can rely on its robust balance sheet to combat the uncertain business environment.
EOG & XOM Also Have Strong Balance Sheets
Like COP, EOG Resources Inc. (EOG - Free Report) and Exxon Mobil Corporation (XOM - Free Report) also have low debt capital exposure. Thus, both EOG & XOM can combat periods of low oil prices while relying on their balance sheet strengths.
While EOG has a debt-to-capitalization of 12.7%, ExxonMobil’s is 12.6%.
COP’s Price Performance, Valuation & Estimates
Shares of COP have declined 3.4% over the past year compared with the 13.6% dip of the composite stocks belonging to 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 5.51X. This is below the broader industry average of 11.29X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2025 earnings has seen downward revisions over the past 30 days.
Image: Bigstock
2 Reasons Why ConocoPhillips Can Sail Through Low Oil Prices
Key Takeaways
ConocoPhillips (COP - Free Report) is an exploration and production giant. Hence, by the very nature of the upstream business, COP is highly vulnerable to the volatility in oil and natural gas prices. But, with the U.S. Energy Information Administration (“EIA”) expecting oil prices to decline, can ConocoPhillips sail through if crude prices turn low?
In its latest short-term energy outlook, EIA projects the spot average West Texas Intermediate (WTI) price at $64.16 per barrel for 2025, lower than $76.60 last year. Also, for 2026, EIA expects the commodity price to decline further to $47.77 per barrel. Thus, declining oil prices will likely hurt exploration and production activities, and ConocoPhillips will not be an exception.
However, footprint in low-cost resources and strong balance are expected to be the savior. COP’s strong presence in the Lower 48, comprising the Permian, the most prolific basin in the United States, will likely aid the company when oil price turns low, as the breakeven costs there are much lower. Also, with a debt-to-capitalization of only 26.4%, COP can rely on its robust balance sheet to combat the uncertain business environment.
EOG & XOM Also Have Strong Balance Sheets
Like COP, EOG Resources Inc. (EOG - Free Report) and Exxon Mobil Corporation (XOM - Free Report) also have low debt capital exposure. Thus, both EOG & XOM can combat periods of low oil prices while relying on their balance sheet strengths.
While EOG has a debt-to-capitalization of 12.7%, ExxonMobil’s is 12.6%.
COP’s Price Performance, Valuation & Estimates
Shares of COP have declined 3.4% over the past year compared with the 13.6% dip of the composite stocks belonging to the industry.
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.51X. This is below the broader industry average of 11.29X.
The Zacks Consensus Estimate for COP’s 2025 earnings has seen downward revisions over the past 30 days.
ConocoPhillips currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.