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High Oil Prices & Cost Discipline Boost ConocoPhillips' 2026 Outlook
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Key Takeaways
ConocoPhillips expects a stronger 2026 outlook driven by high oil prices and disciplined cost reductions.
COP plans about $1B in savings from lower capex and operating costs while boosting upstream output.
Brent crude expected to average above $100 in Q2, supporting COP's earnings and cash flows.
ConocoPhillips (COP - Free Report) is an upstream energy player with operations spread across 14 countries. The company is primarily involved in the exploration and production of oil, natural gas liquids and natural gas, alongside LNG developments. ConocoPhillips’ operations in the U.S. Lower 48, where the company has built a high-quality, capital-efficient inventory, are expected to deliver significant value.
The commodity pricing scenario has changed significantly since the beginning of the year. Oil prices have risen from an average of $60 per barrel to more than $90 since the start of the war between the United States and Iran at the end of February. While the two countries are negotiating a deal, oil prices have not eased much and remain well above the pre-war levels.
Per the data from the U.S. Energy Information Administration, Brent crude is expected to average $114.60 per barrel in the second quarter, indicating that high oil prices are likely to persist through the first half of 2026. This is expected to provide ConocoPhillips, a major upstream player with a high-quality, low-cost supply base, with an extremely favorable earnings environment.
The company has highlighted that its priority for 2026 will be to deliver a combined year-over-year improvement of approximately $1 billion from reductions in capital spending and operating costs, while growing its upstream production. The combination of high crude oil prices and operational discipline is expected to boost COP’s earnings and free cash flow profile. This will enable the company to strengthen its balance sheet and enhance shareholder returns.
Other Energy Players Expected to Benefit From High Oil Prices
SM Energy (SM - Free Report) and EOG Resources (EOG - Free Report) are two upstream energy companies with oil-focused operations that are likely to benefit significantly from rising oil prices due to the geopolitical tensions in the Middle East.
SM Energy owns attractive oil and gas assets across the Permian Basin, Uinta Basin and Eagle Ford regions. The company’s merger with Civitas Resources, announced at the end of the third quarter of 2025, is expected to strengthen its earnings and cash flows. The combination of the two companies has created a high-quality portfolio of assets across highly productive U.S. shale basins, particularly weighted toward the Permian Basin. The company’s oil-focused operations in U.S. shale basins are expected to benefit from increased crude prices.
EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. In fact, the company boasts a multi-basin asset portfolio with as much as 12 billion barrels of oil equivalent resources. The company’s business is mainly focused on crude oil and condensates, which are expected to benefit from the favorable crude pricing environment.
COP’s Price Performance, Valuation & Estimates
Shares of COP have plunged 40.9% over the past year compared to the 33.4% growth 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 6.55X. This is above the broader industry average of 5.47X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2026 earnings has been revised upward over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
High Oil Prices & Cost Discipline Boost ConocoPhillips' 2026 Outlook
Key Takeaways
ConocoPhillips (COP - Free Report) is an upstream energy player with operations spread across 14 countries. The company is primarily involved in the exploration and production of oil, natural gas liquids and natural gas, alongside LNG developments. ConocoPhillips’ operations in the U.S. Lower 48, where the company has built a high-quality, capital-efficient inventory, are expected to deliver significant value.
The commodity pricing scenario has changed significantly since the beginning of the year. Oil prices have risen from an average of $60 per barrel to more than $90 since the start of the war between the United States and Iran at the end of February. While the two countries are negotiating a deal, oil prices have not eased much and remain well above the pre-war levels.
Per the data from the U.S. Energy Information Administration, Brent crude is expected to average $114.60 per barrel in the second quarter, indicating that high oil prices are likely to persist through the first half of 2026. This is expected to provide ConocoPhillips, a major upstream player with a high-quality, low-cost supply base, with an extremely favorable earnings environment.
The company has highlighted that its priority for 2026 will be to deliver a combined year-over-year improvement of approximately $1 billion from reductions in capital spending and operating costs, while growing its upstream production. The combination of high crude oil prices and operational discipline is expected to boost COP’s earnings and free cash flow profile. This will enable the company to strengthen its balance sheet and enhance shareholder returns.
Other Energy Players Expected to Benefit From High Oil Prices
SM Energy (SM - Free Report) and EOG Resources (EOG - Free Report) are two upstream energy companies with oil-focused operations that are likely to benefit significantly from rising oil prices due to the geopolitical tensions in the Middle East.
SM Energy owns attractive oil and gas assets across the Permian Basin, Uinta Basin and Eagle Ford regions. The company’s merger with Civitas Resources, announced at the end of the third quarter of 2025, is expected to strengthen its earnings and cash flows. The combination of the two companies has created a high-quality portfolio of assets across highly productive U.S. shale basins, particularly weighted toward the Permian Basin. The company’s oil-focused operations in U.S. shale basins are expected to benefit from increased crude prices.
EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. In fact, the company boasts a multi-basin asset portfolio with as much as 12 billion barrels of oil equivalent resources. The company’s business is mainly focused on crude oil and condensates, which are expected to benefit from the favorable crude pricing environment.
COP’s Price Performance, Valuation & Estimates
Shares of COP have plunged 40.9% over the past year compared to the 33.4% growth of the industry.
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 6.55X. This is above the broader industry average of 5.47X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2026 earnings has been revised upward over the past seven days.
Image Source: Zacks Investment Research
COP and SM currently sport a Zacks Rank #1 (Strong Buy), while EOG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.