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CONOCOPHILLIPS (COP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered stronger financials: adjusted EPS $2.09 and GAAP EPS $2.23; total revenues and other income $17.10B. Adjusted EPS modestly beat Wall Street ($2.05*) and revenue materially beat ($15.91B*) as volumes rose despite lower realized prices . Values retrieved from S&P Global.*
  • Guidance improved: full-year capital expenditures reduced to $12.3–$12.6B (from ~$12.9B), adjusted operating cost guidance cut to $10.7–$10.9B (from $10.9–$11.1B), with production guidance maintained; Q2 production guided to 2.34–2.38 MMBOED .
  • Capital returns remained robust: $2.5B returned (buybacks $1.5B; ordinary dividend $1.0B), with a $0.78 per-share Q2 dividend declared; management reiterated a long-run target to return ~45% of CFO, while signaling a modest buyback reduction in Q2 given macro softness .
  • Strategic execution highlights: record Eagle Ford drilling performance, largest winter construction season at Willow met critical milestones, $1.3B of noncore Lower 48 asset sales completed/closed, integration of Marathon Oil tracking ahead of schedule with >$500M capital synergies already realized .
  • Leadership transition: CFO Bill Bullock announced retirement; Andy O’Brien named CFO effective June 1, 2025—expected to sustain cost/efficiency focus and synergy capture .

What Went Well and What Went Wrong

What Went Well

  • Volume-driven earnings: GAAP EPS $2.23 and adjusted EPS $2.09 rose YoY, driven by higher volumes; total production reached 2,389 MBOED with Lower 48 at 1,462 MBOED (Permian 816, Eagle Ford 379, Bakken 212) .
  • Cost and capex discipline: Lowered full-year capex by ~$0.5B and adjusted operating costs by ~$0.2B while maintaining production guidance—“delivering the same volume for less” per CEO Ryan Lance .
  • Execution milestones: record Eagle Ford drilling performance; Willow project achieved critical winter-season construction milestones; $1.3B of noncore asset sales completed .

Selected management quote:

  • “We have flexibility in our capital program… delivering the same volume for less, less capital and reduced operating costs.” – Ryan Lance, CEO .

What Went Wrong

  • Pricing headwinds: total average realized price fell 6% YoY to $53.34/BOE, pressuring margins despite volume gains .
  • Tax mix and cash taxes: effective corporate tax rate expected to be ~higher than prior 36–37% guidance due to geographic mix; cash taxes in Q1 showed discrete headwinds tied to Lower 48 dispositions .
  • Macro uncertainty: management flagged demand downgrades and faster-than-expected OPEC+ unwind; buybacks likely step down by “a couple hundred million” in Q2 vs Q1 given the softer environment .

Financial Results

Income Statement and EPS vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Total Revenues and Other Income ($USD Billions)$13.604 $14.737 $17.101
Net Income ($USD Billions)$2.059 $2.306 $2.849
GAAP Diluted EPS ($)$1.76 $1.90 $2.23
Adjusted EPS ($)$1.78 $1.98 $2.09
Average Realized Price ($/BOE)$54.18 $52.37 $53.34

Margins (calculated; citations reference underlying components)

MarginQ3 2024Q4 2024Q1 2025
Net Income Margin (%)15.1% ]15.6% ]16.6% ]

Cash Flow and Capital Allocation KPIs

KPIQ3 2024Q4 2024Q1 2025
Cash Provided by Operating Activities ($USD Billions)$5.763 $4.457 $6.115
Cash from Operations (CFO, excl. WC) ($USD Billions)$4.722 $5.419 $5.467
Capital Expenditures and Investments ($USD Billions)$2.916 $3.317 $3.378
Return of Capital ($USD Billions)$2.1 (Repurchases $1.2; Div+VROC $0.9) $2.9 (Repurchases $2.0; Dividends $0.9) $2.5 (Repurchases $1.5; Dividend $1.0)
Cash & Short-Term Investments ($USD Billions)$5.522 $5.607 $7.5 (Cash & STI)

Segment Production Breakdown (MBOED)

SegmentQ3 2024Q4 2024Q1 2025
Alaska182 202 208
Lower 481,147 1,308 1,462
Canada129 180 184
Europe, Middle East & N. Africa171 207 235
Asia Pacific62 69 74
Total Company1,917 2,183 2,389

Results vs Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Adjusted EPS ($)$2.05*$2.09 Beat
Total Revenues ($USD Billions)$15.91*$17.10 Beat
EBITDA ($USD Billions)$7.13*$7.28*Beat

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ProductionQ2 20252.34–2.38 MMBOED 2.34–2.38 MMBOED Maintained
Production (FY 2025)Full Year2.34–2.38 MMBOED Maintained (unchanged) Maintained
Capital ExpendituresFull Year 2025~$12.9B $12.3–$12.6B Lowered
Adjusted Operating CostsFull Year 2025$10.9–$11.1B $10.7–$10.9B Lowered
Ordinary DividendQ2 2025$0.78/share (raised in Q4 2024) $0.78/share declared Maintained
TaxFull Year 202536–37% effective corporate tax (prior) Slightly higher due to mix Raised (mix-driven)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Macro/pricesRaised ordinary dividend to $0.78; noted lower realized prices YoY Volatility and demand downgrades; OPEC+ unwind; cautious on buybacks in Q2 Cautious stance persists
Capital efficiencyProgress on Willow; capex guided ~$11.5B in 2024; FY25 capex ~$12.9B Capex cut by ~$0.5B and opex cut by ~$0.2B; same volumes Efficiency accelerating
Returns of capital$9B+ planned for 2024; buybacks authorization +$20B ~$2.5B returned in Q1; mid-40% of CFO long-term; modest Q2 reduction Consistent with CFO framework
Marathon integration/synergiesDeal closed late Q4; integration underway; >$1B run-rate synergies targeted Ahead of schedule; >$500M capital synergies realized; cost synergies to ramp H2’25 Positive momentum
Long-cycle projectsWillow milestones; Eldfisk North first oil Willow winter-critical milestones; execution on schedule for 2029 first oil On track
Taxes/working capitalPrior tax guidance 36–37% Cash tax discrete headwinds; effective rate likely ~40% due to mix Higher tax mix
LNG/APLNG distributions2024 LNG strategy advances APLNG ~$800M FY, $600M in Q3; none in Q2/Q4 Timing shift to Q3

Management Commentary

  • “We are delivering the same volume for less, less capital and reduced operating costs… We have flexibility in our capital program we could exercise should conditions warrant.” – Ryan Lance, CEO .
  • “Our first quarter CFO was $5.5B… We ended the quarter with cash and short-term investments of $7.5B plus $1B in long-term liquid investments.” – Bill Bullock, CFO .
  • “Capital reduction… is a combination of capital efficiency improvements across the portfolio and plan optimization… we’ve reduced capital to $12.3–$12.6B.” – Andy O’Brien, incoming CFO .
  • “This quarter, our teams achieved record drilling performance in Eagle Ford, leveraging combined best practices from both companies.” – Andy O’Brien on Marathon integration .
  • “We ramped to ~2,400 people on the North Slope… roughly 50% complete on civil scopes… about 80 miles of pipeline installed.” – Kirk Johnson on Willow .

Q&A Highlights

  • Return of capital/buybacks: Management reaffirmed targeting mid-40% of CFO to shareholders, indicating a “couple hundred million” Q2 buyback reduction vs Q1 given macro softness, but no intention to issue gross debt to fund buybacks .
  • Capital flexibility & breakeven: Capex reduction driven by efficiency and deferring non-production-driving spend; free cash flow breakeven mid-$40s plus ~$$10 for dividend, trending to low-$30s as projects roll off .
  • Willow execution cadence: Peak winter construction season delivered critical milestones; capital expected to taper through the year .
  • Taxes: Effective corporate tax rate likely ~40% due to geographic mix (Norway, Libya); discrete cash tax items tied to Lower 48 dispositions impacted Q1 cash taxes .
  • Portfolio management: Ongoing asset optimization; hundreds of millions to ~$0.5B of disposals as a regular cadence after completing targeted post-Marathon sales .

Estimates Context

  • Q1 2025 adjusted EPS beat ($2.09 vs $2.05*), revenue beat ($17.10B vs $15.91B*), and EBITDA modestly beat ($7.28B* vs $7.13B*). Actual revenue strength reflects higher volumes despite a 6% YoY decline in realized price . Values retrieved from S&P Global.*
  • With capex and opex guidance cuts, consensus may need to reflect improved capital efficiency and higher production run-rate integration benefits (Eagle Ford performance, synergy capture) .

Key Takeaways for Investors

  • Volume strength trumped pricing: Higher production drove EPS and revenue beats; realized price was down 6% YoY, but margin held/increased due to operating leverage .
  • Guidance reset is constructive: Lower capex ($12.3–$12.6B) and opex ($10.7–$10.9B) with maintained production implies better capital productivity and should support estimate revisions .
  • Capital return durable but tactically paced: Expect continued buybacks and $0.78 dividend; Q2 buybacks likely step down modestly given macro .
  • Integration synergies advancing: >$500M capital synergies already realized; cost synergies expected to ramp in H2’25—supportive for multi-year FCF trajectory .
  • Willow/LNG are long-term FCF catalysts: Execution milestones at Willow and LNG distribution timing (APLNG $600M in Q3) underpin improving FCF and lower breakeven over time .
  • Watch tax mix and APLNG timing: Effective corporate tax rate drift higher and discrete cash taxes affect intra-year CFO timing; no APLNG distributions anticipated in Q2/Q4 .
  • Near-term trading catalysts: Positive narrative around capex/opex cuts and maintained production; Q2 turnaround activity (~40 MBD) and Q2 buyback moderation could temper momentum into mid-year .