We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can ConocoPhillips Sustain Future Production Growth With Lower CapEx?
Read MoreHide Full Article
Key Takeaways
ConocoPhillips expects modestly lower 2027 capital spending alongside low-single-digit production growth.
COP plans to boost Permian output through longer laterals and improved drilling and completion techniques.
ConocoPhillips targets a $7 billion free cash flow improvement by 2029 through cost cuts & efficiency gains.
ConocoPhillips (COP - Free Report) is focused on increasing production while reducing capital spending in 2027, backed by operational efficiencies and its extensive resource portfolio. Management expects capital expenditures to decline modestly year over year, alongside low-single-digit underlying production growth, primarily driven by its Lower 48 assets. The outlook underscores ConocoPhillips' emphasis on capital discipline and steady development activity across its core operations.
COP's Lower 48 portfolio, particularly its Permian Basin assets, benefits from an extensive inventory of low-cost resources, supporting production growth while maintaining competitive operating costs. Longer horizontal laterals, simultaneous fracturing and improved drilling and completion techniques are expected to boost well productivity and lower development expenses. The company plans to expand surfactant treatments at a measured pace in 2027, following encouraging productivity gains in treated wells. The recently commissioned Surmont pad in Canada is expected to support incremental production growth without significant additional capital investment.
Inflationary pressures on fuel, logistics and chemicals, along with tightening oilfield service capacity, remain concerns. Management anticipates a decline in per-unit operating costs, aided by structural cost reductions and sustained efficiency improvements. These initiatives, coupled with disciplined capital allocation, position ConocoPhillips to advance toward its targeted $7 billion free cash flow inflection by 2029.
EOG & FANG Target Capital-Efficient Production Growth
Other energy companies such as EOG Resources, Inc. (EOG - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) are focusing on capital efficiency and cost optimization to support production growth.
EOG is prioritizing disciplined investments and operational improvements across its upstream portfolio. In the third quarter of 2026, EOG achieved record oil, natural gas liquids and natural gas production, while per-unit cash operating costs remained below management's guidance midpoint. Continued investment in high-return assets and infrastructure expansion supports EOG's efforts to maintain production growth and strengthen long-term profitability.
Diamondback Energy is focused on improving drilling and completion efficiency across its Permian Basin operations. The company plans to operate five electric simul-frac fleets consistently in 2027 to maximize completion efficiency and maintain steady development activity. Improved drilling and completion efficiency, combined with disciplined spending, position FANG to optimize development costs and strengthen capital returns.
COP’s Price Performance, Valuation & Estimates
ConocoPhillips shares have gained 52.4% over the past year compared with the industry’s 31.9% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, COP trades at a trailing 12-month enterprise-value-to-EBITDA (EV/EBITDA) of 5.55X. This is higher than the broader industry average of 4.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2026 earnings has seen upward revisions over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Can ConocoPhillips Sustain Future Production Growth With Lower CapEx?
Key Takeaways
ConocoPhillips (COP - Free Report) is focused on increasing production while reducing capital spending in 2027, backed by operational efficiencies and its extensive resource portfolio. Management expects capital expenditures to decline modestly year over year, alongside low-single-digit underlying production growth, primarily driven by its Lower 48 assets. The outlook underscores ConocoPhillips' emphasis on capital discipline and steady development activity across its core operations.
COP's Lower 48 portfolio, particularly its Permian Basin assets, benefits from an extensive inventory of low-cost resources, supporting production growth while maintaining competitive operating costs. Longer horizontal laterals, simultaneous fracturing and improved drilling and completion techniques are expected to boost well productivity and lower development expenses. The company plans to expand surfactant treatments at a measured pace in 2027, following encouraging productivity gains in treated wells. The recently commissioned Surmont pad in Canada is expected to support incremental production growth without significant additional capital investment.
Inflationary pressures on fuel, logistics and chemicals, along with tightening oilfield service capacity, remain concerns. Management anticipates a decline in per-unit operating costs, aided by structural cost reductions and sustained efficiency improvements. These initiatives, coupled with disciplined capital allocation, position ConocoPhillips to advance toward its targeted $7 billion free cash flow inflection by 2029.
EOG & FANG Target Capital-Efficient Production Growth
Other energy companies such as EOG Resources, Inc. (EOG - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) are focusing on capital efficiency and cost optimization to support production growth.
EOG is prioritizing disciplined investments and operational improvements across its upstream portfolio. In the third quarter of 2026, EOG achieved record oil, natural gas liquids and natural gas production, while per-unit cash operating costs remained below management's guidance midpoint. Continued investment in high-return assets and infrastructure expansion supports EOG's efforts to maintain production growth and strengthen long-term profitability.
Diamondback Energy is focused on improving drilling and completion efficiency across its Permian Basin operations. The company plans to operate five electric simul-frac fleets consistently in 2027 to maximize completion efficiency and maintain steady development activity. Improved drilling and completion efficiency, combined with disciplined spending, position FANG to optimize development costs and strengthen capital returns.
COP’s Price Performance, Valuation & Estimates
ConocoPhillips shares have gained 52.4% over the past year compared with the industry’s 31.9% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, COP trades at a trailing 12-month enterprise-value-to-EBITDA (EV/EBITDA) of 5.55X. This is higher than the broader industry average of 4.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2026 earnings has seen upward revisions over the past seven days.
Image Source: Zacks Investment Research
COP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.