ConocoPhillips reported mixed fourth quarter 2025 results, with earnings and revenue modestly below market expectations amid softer commodity realizations. The company posted net income of approximately $1.4 billion, or $1.17 per share, with adjusted earnings of about $1.02 per share. Revenue came in near $13.8 billion, slightly under consensus estimates. Production averaged roughly 2.32 million barrels of oil equivalent per day, reflecting continued operational momentum and contributions from recent portfolio additions. Cash from operations totaled about $4.3 billion, comfortably covering quarterly capital expenditures of around $3.0 billion and supporting $2.1 billion in shareholder returns through dividends and buybacks.
The company outlined a capital spending plan of roughly $12 billion, modestly below prior levels, signaling a focus on efficiency rather than aggressive growth. Full-year production is expected to average approximately 2.33 million to 2.36 million barrels of oil equivalent per day, implying relatively stable volumes with incremental growth from ongoing developments. Management also highlighted efforts to capture about $1 billion in cost and efficiency improvements year over year, while maintaining a commitment to return roughly 45% of operating cash flow to shareholders through dividends and buybacks.
COP completed the acquisition of Marathon Oil, adding high-quality, low-cost supply inventory adjacent to the company’s U.S. unconventional position - in an all-stock transaction valued at $22.5 billion. The merger includes $5.4 billion of net debt.
Below are the key drivers for ConocoPhillips, which present opportunities for upside or downside to the current Trefis price estimate for ConocoPhillips.
ConocoPhillips is the world's largest independent exploration and production company, based on proven reserves and production of liquids and natural gas. After the spin-off of its midstream and downstream businesses into an independent company (Phillips 66), ConocoPhillips has become a pure-play exploration & production company. The company conducts exploration activities in 14 countries and supplements its income with equity stakes in other oil & gas and chemical companies.
About 56% of its production consists of liquids, and about 44% consists of natural gas. Of the 56% that are liquids, roughly half is tied to Brent or international prices. The remaining 11% of liquids is tied to North American crude markers, NGL, or bitumen prices. On the natural gas side, comprising about 44% of its portfolio, roughly 45% consists of international gas. Price differentials between Brent and West Texas Intermediate (WTI), a widely used North American crude marker, have been narrowing of late. This has reduced the disparity in realized prices for crude oil in domestic and international markets. The price realized by the company on the domestic and international sale of natural gas is also different.
Crude oil exploration and production is the most valuable segment for ConocoPhillips for the following reasons:
The amount of proven hydrocarbon reserves is an extremely critical metric for any oil and gas exploration and production company. It directly impacts the company's production growth outlook, as it represents the total quantity of technically and economically recoverable oil and gas reserves owned by the company at a given point in time.
More importantly, ConocoPhillips has continued to demonstrate a strong track record of replacing its reserves, though with some moderation in the most recent year. At year-end 2025, proved reserves stood at approximately 7.6 billion barrels of oil equivalent, with a reported reserve replacement ratio of about 80%, and an organic reserve replacement ratio of roughly 99% when excluding acquisitions and dispositions. On a longer-term basis, the three-year reserve replacement ratio was about 145% and the three-year organic ratio was about 106%, underscoring the company’s ability to broadly sustain its reserve base through successful exploration and development activities even amid asset sales and production.
ConocoPhillips continues to hold a substantial footprint in the U.S. Lower 48, where it remains focused on its core unconventional shale positions. Following the integration of the Marathon Oil acquisition, the company’s acreage base includes its large unconventional positions in the Delaware Basin (about 792,000 net acres), Bakken (approximately 790,000 net acres) and Eagle Ford (around 484,000 net acres), alongside complementary positions in the Midland Basin and other plays. While specific consolidated Lower 48 net acreage figures for 2025 are not disclosed in the most recent annual report, these core holdings remain central to ConocoPhillips’ development strategy due to their low cost of supply and long inventory lives, with activity in the region concentrated on optimizing existing assets, deploying drilling and completion efficiencies, and maintaining production. The company has also been divesting certain non-core Lower 48 assets as part of portfolio optimization.
Oil and gas markets in 2025 were influenced by rising non-OPEC supply and evolving demand dynamics in major economies. As a price taker, ConocoPhillips remains sensitive to benchmark fluctuations, but its diversified asset base and liquids-weighted mix help cushion downside risk relative to higher cost producers.
Rather than pursuing aggressive production expansion, ConocoPhillips has emphasized capital efficiency and free cash flow generation. This strategy prioritizes returns on invested capital and shareholder distributions, aligning growth with commodity price realities and reinforcing long term value creation.
ConocoPhillips’ price-adjusted cash operating margins have continued to benefit from an improving sales volume mix, largely driven by the development of its unconventional portfolio in the U.S. Lower 48. As of 2025, liquids, including crude oil and natural gas liquids, account for roughly three-quarters of total Lower 48 production, maintaining a significantly higher weighting than a decade ago, when liquids represented just over 45% of volumes in 2013. This sustained shift toward higher margin barrels reflects the company’s capital allocation toward oil-rich plays such as the Delaware Basin, Bakken, and Eagle Ford, where drilling activity has remained concentrated. The emphasis on liquids has supported stronger realized pricing and enhanced cash margins, even amid commodity price volatility, reinforcing the strategic importance of the Lower 48 portfolio to overall profitability.
