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ConocoPhillips vs. Enbridge: Which Energy Stock Should You Buy?
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Key Takeaways
ConocoPhillips and Enbridge differ in upstream vs midstream models, driving contrasting risk-return profiles.
COP benefits from rising oil prices and low-cost supply, boosting cash flow and earnings potential.
Enbridge relies on take-or-pay contracts and a C$39B backlog for stable, predictable cash flows.
In the energy sector, ConocoPhillips (COP - Free Report) and Enbridge Inc. (ENB - Free Report) are two leading companies with contrasting business operations. ConocoPhillips is a pure play upstream energy company with operations in 14 countries worldwide, including the United States, Norway, Canada, Australia and Qatar. The company holds a deep inventory of low-cost supply in the U.S. Lower 48, which contributes to the majority of its consolidated liquids and natural gas production.
Enbridge, on the other hand, is a prominent name in North America’s midstream energy sector. It operates an extensive crude oil and liquids transportation network, along with gas transportation pipelines, while maintaining a presence in renewables and utility businesses.
Over the past six months, COP shares have rallied 33.2%, outperforming ENB’s 9.5% gain. While price performance demonstrates the attractiveness of any stock, it would be wiser to evaluate the fundamentals and overall business environment of both stocks before coming to an investment decision.
Image Source: Zacks Investment Research
Low-Cost Inventory and Elevated Oil Prices to Drive Earnings Upside
ConocoPhillips highlights that it has built a high-quality, capital-efficient inventory position in the U.S. Lower 48 that is expected to deliver significant value. In the Lower 48, ConocoPhillips boasts more than 20 years of low-cost supply inventory, and the acquisition of Marathon Oil in November 2024 further strengthens its inventory position. The company has further stated that its assets beyond the U.S. Lower 48 provide a high-quality and low-cost supply of resources.
The commodity pricing scenario has changed significantly since the beginning of the year. Oil prices have risen from an average of $65 per barrel to more than $90 since the start of the war between the United States and Iran at the end of February. While a two-week ceasefire was announced and the two countries are negotiating a deal, uncertainty prevails. As a result, oil prices have eased slightly but remain above 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, which boasts a high-quality, low-cost supply base, with an extremely favorable earnings environment. As a pure-play upstream energy firm, COP stands to benefit significantly from rising oil prices, as higher prices support increased cash flow.
Image Source: ConocoPhillips
Enbridge’s Stable Business Model Is Supported by Take-or-Pay Contracts
ENB’s midstream business is highly stable, owing to its contractual nature. In fact, a significant portion of EBITDA is underpinned by long-term “take-or-pay” contracts, which protect it from commodity price swings. The company has previously mentioned that more than 95% of its customer base comprises investment-grade companies.
Enbridge’s utility business adds another layer of stability to its operations, resulting in predictable earnings supported by regulated rates and long-term agreements. Thus, the company’s earnings are expected to remain stable with minimal exposure to fluctuations in commodity prices.
The combination of its low-risk business model, supported by long-term contracts, allows the company to generate stable cash flows. ENB’s current backlog stands at C$39 billion and extends till 2033, which is expected to drive growth and contribute to its EBITDA positively. This underscores strong revenue visibility for the company.
Valuation Snapshot
Considering the valuation snapshot, it appears that COP is trading at a cheaper valuation compared to ENB. This is reflected in the fact that ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 16.6X, above COP’s 6.2X.
Image Source: Zacks Investment Research
COP vs. ENB: Should You Buy or Exit?
Since ConocoPhillips is an upstream energy player, its performance is significantly affected by the commodity pricing environment. In contrast, Enbridge’s midstream business, supported by long-term take-or-pay contracts, is insulated from commodity price swings. As a result, COP is expected to benefit from the rise in oil prices, which is likely to persist in the near term. On the same note, ENB’s contractual nature of business allows it to capture limited upside from rising oil prices.
So, investors who are risk-averse and prefer stability can continue to hold ENB stock, which carries a Zacks Rank #3 (Hold) at present. Investors who wish to gain exposure to the commodity price upside should consider owning COP, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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ConocoPhillips vs. Enbridge: Which Energy Stock Should You Buy?
Key Takeaways
In the energy sector, ConocoPhillips (COP - Free Report) and Enbridge Inc. (ENB - Free Report) are two leading companies with contrasting business operations. ConocoPhillips is a pure play upstream energy company with operations in 14 countries worldwide, including the United States, Norway, Canada, Australia and Qatar. The company holds a deep inventory of low-cost supply in the U.S. Lower 48, which contributes to the majority of its consolidated liquids and natural gas production.
Enbridge, on the other hand, is a prominent name in North America’s midstream energy sector. It operates an extensive crude oil and liquids transportation network, along with gas transportation pipelines, while maintaining a presence in renewables and utility businesses.
Over the past six months, COP shares have rallied 33.2%, outperforming ENB’s 9.5% gain. While price performance demonstrates the attractiveness of any stock, it would be wiser to evaluate the fundamentals and overall business environment of both stocks before coming to an investment decision.
Low-Cost Inventory and Elevated Oil Prices to Drive Earnings Upside
ConocoPhillips highlights that it has built a high-quality, capital-efficient inventory position in the U.S. Lower 48 that is expected to deliver significant value. In the Lower 48, ConocoPhillips boasts more than 20 years of low-cost supply inventory, and the acquisition of Marathon Oil in November 2024 further strengthens its inventory position. The company has further stated that its assets beyond the U.S. Lower 48 provide a high-quality and low-cost supply of resources.
The commodity pricing scenario has changed significantly since the beginning of the year. Oil prices have risen from an average of $65 per barrel to more than $90 since the start of the war between the United States and Iran at the end of February. While a two-week ceasefire was announced and the two countries are negotiating a deal, uncertainty prevails. As a result, oil prices have eased slightly but remain above 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, which boasts a high-quality, low-cost supply base, with an extremely favorable earnings environment. As a pure-play upstream energy firm, COP stands to benefit significantly from rising oil prices, as higher prices support increased cash flow.
Image Source: ConocoPhillips
Enbridge’s Stable Business Model Is Supported by Take-or-Pay Contracts
ENB’s midstream business is highly stable, owing to its contractual nature. In fact, a significant portion of EBITDA is underpinned by long-term “take-or-pay” contracts, which protect it from commodity price swings. The company has previously mentioned that more than 95% of its customer base comprises investment-grade companies.
Enbridge’s utility business adds another layer of stability to its operations, resulting in predictable earnings supported by regulated rates and long-term agreements. Thus, the company’s earnings are expected to remain stable with minimal exposure to fluctuations in commodity prices.
The combination of its low-risk business model, supported by long-term contracts, allows the company to generate stable cash flows. ENB’s current backlog stands at C$39 billion and extends till 2033, which is expected to drive growth and contribute to its EBITDA positively. This underscores strong revenue visibility for the company.
Valuation Snapshot
Considering the valuation snapshot, it appears that COP is trading at a cheaper valuation compared to ENB. This is reflected in the fact that ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 16.6X, above COP’s 6.2X.
Image Source: Zacks Investment Research
COP vs. ENB: Should You Buy or Exit?
Since ConocoPhillips is an upstream energy player, its performance is significantly affected by the commodity pricing environment. In contrast, Enbridge’s midstream business, supported by long-term take-or-pay contracts, is insulated from commodity price swings. As a result, COP is expected to benefit from the rise in oil prices, which is likely to persist in the near term. On the same note, ENB’s contractual nature of business allows it to capture limited upside from rising oil prices.
So, investors who are risk-averse and prefer stability can continue to hold ENB stock, which carries a Zacks Rank #3 (Hold) at present. Investors who wish to gain exposure to the commodity price upside should consider owning COP, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.