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CONOCOPHILLIPS (COP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered higher production (2,399 MBOED) and stronger CFO ($5.4B), while GAAP EPS of $1.38 and adjusted EPS of $1.61 declined year over year on lower realized prices; the company raised its ordinary dividend by 8% to $0.84 per share .
  • Guidance improved: FY25 production raised to 2.375 MMBOED and adjusted operating costs lowered to $10.6B; preliminary FY26 guide calls for ~$12B CapEx, ~$10.2B adjusted operating costs, and 0–2% underlying production growth .
  • Strategic projects updated: Willow capital increased to $8.5–$9.0B with first oil narrowed to early 2029; total LNG project capital cut to $3.4B; management reiterated multi-year free cash flow inflection of $7B by 2029, with ~$1B annually in 2026–2028 .
  • Return of capital was robust ($2.2B in Q3: $1.3B buybacks, $1.0B dividend) and asset dispositions surpassed $3B year-to-date, on track for $5B by year-end 2026; cash and short-term investments ended at $6.6B .

What Went Well and What Went Wrong

What Went Well

  • Production outperformed guidance again: total company production at 2,399 MBOED, with Lower 48 at 1,528 MBOED; strong basin contributions (Delaware 686, Midland 196, Eagle Ford 403, Bakken 200) .
  • Operating costs and CFO improved: CFO was $5.4B (excluding $0.5B working capital), with adjusted operating cost guidance cut to $10.6B; management noted ~75% of Marathon synergies realized and full-year benefit expected by year-end .
  • Strategic clarity and dividend growth: ordinary dividend increased by 8% to $0.84; FY26 guide shows lower CapEx and OpEx while keeping production flat to slightly up; LNG strategy advanced with 20-year SPAs and total LNG project capital reduced .
    • “We raised our base dividend by 8%, consistent with our goal to provide top quartile dividend growth in the S&P 500” .
    • “We expect $7 billion of free cash flow inflection by 2029…about $1 billion annually through 2026–2028” .

What Went Wrong

  • Pricing headwind and YoY earnings decline: total realized price fell 14% YoY to $46.44/BOE; GAAP EPS fell to $1.38 and adjusted EPS to $1.61 versus $1.76 and $1.78 in Q3 2024 .
  • Willow capital escalation: total project capital increased from $7–$7.5B to $8.5–$9.0B due to general inflation and North Slope cost escalation, raising F&D costs though timing remains intact (first oil early 2029) .
  • Margins compressed QoQ: net income margin fell to 11.23%* (from 13.76%* in Q2) and EBIT margin held around 19.54%, reflecting lower realized prices and higher costs in certain segments (S&P Global).

Financial Results

P&L and EPS vs prior periods and estimates

MetricQ3 2024Q2 2025Q3 2025
Total Revenues and Other Income ($USD Millions)13,604 14,740 15,522
Diluted EPS ($USD)$1.76 $1.56 $1.38
Adjusted EPS ($USD)$1.78 $1.42 $1.61
Consensus Revenue ($USD Millions)*N/A14,89014,628
Consensus Primary EPS ($USD)*N/A1.3561.412

Values with asterisk are from S&P Global (GetEstimates).
Q3 2025 actual revenue beat consensus by ~$0.75B and adjusted EPS beat by ~$0.20 (S&P Global)*.

Margins (quarterly)

MetricQ4 2024Q1 2025Q2 2025Q3 2025
Net Income Margin %*15.71%16.85%13.76%11.23%
EBIT Margin %*26.29%26.68%19.73%19.54%

Values marked with * were retrieved from S&P Global (GetFinancials).

Segment production (MBOED)

SegmentQ3 2024Q2 2025Q3 2025
Lower 481,147 1,508 1,528
Alaska182 205 182
Canada129 191 169
Europe, Middle East & North Africa171 208 227
Asia Pacific62 70 68
Total Consolidated Ops1,691 2,182 2,174
Equity Affiliates226 209 225
Total Company1,917 2,391 2,399

Lower 48 basin detail (Q3 2025 only): Delaware 686, Midland 196, Eagle Ford 403, Bakken 200 .

KPIs

KPIQ2 2025Q3 2025
Cash From Operations (CFO) ($USD Billions)$4.721 $5.366
Net Cash Provided by Operating Activities ($USD Billions)$3.485 $5.878
Capital Expenditures & Investments ($USD Billions)$3.286 $2.866
Return to Shareholders ($USD Billions)$2.2 (buybacks $1.2; dividend $1.0) $2.2 (buybacks $1.3; dividend $1.0)
Cash & Short-term Investments ($USD Billions)$5.7 $6.6
Total Realized Price ($/BOE)$45.77 $46.44

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Production (MMBOED)FY 20252.35–2.37 2.375 Raised
Production (MMBOED)Q4 2025N/A2.30–2.34 New
Adjusted Operating Costs ($USD Billions)FY 2025$10.7–$10.9 $10.6 Lowered
Ordinary Dividend ($/share)Q4 2025$0.78 $0.84 Raised
CapEx ($USD Billions)FY 2026 (prelim)~$12.5 (FY25 midpoint prior) ~$12.0 Lower vs FY25 midpoint
Adjusted Operating Costs ($USD Billions)FY 2026 (prelim)~$10.6 (FY25 guide) ~$10.2 Lower
Underlying Production GrowthFY 2026 (prelim)N/A0–2% New
Willow Project Capital ($USD Billions)Total Project$7.0–$7.5 (prior) $8.5–$9.0 Raised
LNG Project Capital ($USD Billions)Total (NFE/NFS/Port Arthur)~$4.0 $3.4 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Dividend & Break-evenTarget ~45% CFO returns; breakeven mid-40s plus ~$10 dividend; glide to low-$30s as projects come online Dividend raised 8% to $0.84; breakeven trajectory intact; sustainable returns Improving
WillowPeak winter season completed; critical milestones; spend tapering later in 2025 Capital revised to $8.5–$9.0B; first oil narrowed to early 2029; drivers: inflation & North Slope escalation Cost up, schedule intact
LNG StrategyPlacing Port Arthur Phase 1 offtake; growing regas access; commercial LNG complements resource LNG Total LNG capital down to $3.4B; offtake portfolio ~10 MTPA; progressing toward 10–15 MTPA ambition Executing/Scaling
Lower 48 ProgramAchieved steady-state; 30% fewer rigs/crews vs pro-forma; strong Eagle Ford performance ~24 rigs/8 frac crews steady in 2026; capital efficiency up; oil mix ~50% Lower 48 Efficient/Stable
Cost & SynergiesCapex/OpEx reduced; identified >$1B cost/margin enhancements by 2026; Marathon synergies >$1B run-rate by YE25 ~75% Marathon synergies realized; 2026 OpEx down ~$0.4B; continuing continuous improvement Improving
Macro & MixCautious near-term macro; constructive long-term demand; oil mix guided Company oil mix ~53% in Q3; guide 53% FY26; Lower 48 ~50% Stable mix

Management Commentary

  • “Looking to 2026, we expect lower capital and operating costs with flat to modest production growth...Powered by our deep, durable and diverse portfolio, we remain on track to deliver an expected $7 billion in incremental free cash flow by 2029” — Ryan Lance (CEO) .
  • “We produced 2,399,000 BOE/d…$1.61 per share in adjusted earnings and $5.4 billion of CFO…we ended the quarter with cash and short-term investments of $6.6 billion” — Andy O’Brien (CFO) .
  • “Willow total project capital is updated to $8.5 to $9 billion…we have narrowed expected first oil to early 2029” — Company statement .
  • “We are reducing our total LNG project capital estimate from $4 billion to $3.4 billion…with this credit, we’re approximately 80% complete” — Andy O’Brien .

Q&A Highlights

  • Willow: Management detailed inflation and local market pressures as primary drivers of capital increase; >90% of facility contracts now secured, tied to market indices; schedule remains intact with first oil early 2029 .
  • Break-even and dividend sustainability: Despite Willow capex uplift, company-wide break-even continues to decline; capital break-even expected to reach low-$30s with projects online, sustaining dividend growth .
  • Oil mix: Company guided to ~53% oil in 2026; Lower 48 ~50%, reflecting Delaware growth and basin mix dynamics .
  • Lower 48 efficiency and steady-state capital: 2026 capital run-rate similar to Q3 2025; ~24 rigs, 8 frac crews; continued productivity improvements .
  • LNG portfolio: Offtake now ~10 MTPA; path to 10–15 MTPA to optimize portfolio and control value chain; resource LNG (Qatar/Australia) complemented by commercial LNG .

Estimates Context

  • Q3 2025 beat: Adjusted EPS of $1.61 vs consensus $1.41; revenue of $15.38B vs consensus $14.63B (S&P Global)*.
  • Q2 2025: EPS beat ($1.42 vs $1.36), revenue miss ($14.32B vs $14.89B) (S&P Global)*.
  • Q1 2025: EPS and revenue both beat ($2.09 vs $2.05; $16.91B vs $15.91B) (S&P Global)*.
  • Directionally, estimate revisions likely to reflect stronger Q3 execution, improved cost profile, and updated FY25/FY26 guidance, with potential upward bias for FY26 CFO assumptions given lower CapEx/OpEx (S&P Global)*.

Key Takeaways for Investors

  • Operational outperformance and improved FY25/FY26 guidance combined with robust returns of capital signal resilience despite pricing headwinds; the 8% dividend increase and declining break-even underpin durable shareholder returns .
  • The Willow capex uplift is a manageable headwind given schedule certainty and anticipated ~$4B CFO contribution in 2029, plus broader portfolio cost reductions and LNG capital relief .
  • Lower 48 remains a steady growth and efficiency engine under a level-loaded program; oil mix guidance provides clarity for modeling margins and cash generation .
  • LNG strategy is increasingly de-risked with offtake and regas capacity secured; portfolio scale (10–15 MTPA) positions COP to capture international pricing upside .
  • Asset sales program and synergy capture enhance capital efficiency and balance sheet flexibility; >$3B dispositions executed YTD and on track to $5B by 2026 support high-grading .
  • Near-term trading implications: Expect focus on beats versus consensus, dividend uplift, cost guidance cuts, and Willow/LNG updates; medium-term thesis centers on multi-year CFO inflection and declining reinvestment rate into late decade .

Appendix: Actual vs Consensus (S&P Global)*

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean2.0491.3561.412
Primary EPS Actual2.091.421.61
Revenue Consensus Mean ($USD Millions)15,91014,89014,628
Revenue Actual ($USD Millions)16,90914,31915,376

Values marked with * were retrieved from S&P Global (GetEstimates).