Executive Summary

Q4 2024 delivered solid operational execution: production rose to 2,183 MBOED (+15% YoY; +266 MBOED QoQ), underpinned by the Marathon Oil close (one month included) and strong Lower 48 performance; adjusted EPS was $1.98 ($1.90 GAAP) as lower realized prices and higher DD&A offset volume gains .
Management set 2025 targets of 2.34–2.38 MMBOED production and ~$12.9B capex, with adjusted operating costs of $10.9–$11.1B and a $10B capital return plan (dividends + buybacks) at current strip, positioning to retire Marathon shares within 2–3 years .
Reserve replacement was strong: preliminary proved reserves 7.8 BBOE with 244% total and 123% organic reserve replacement ratios for 2024, despite lower prices; 3-year organic average now 131% per management .
Key 2025 catalysts: long-cycle project cadence (NFE 2026, Port Arthur, NFS, Willow 2029) with 2025 as peak long-cycle spend (~$3B) and expected ~$3.5B incremental CFO and ~$6B incremental sustaining FCF vs 2025 baseline once online at $70 WTI/$10 TTF/$4 HH .

What Went Well and What Went Wrong

What Went Well
- Strong execution and volume delivery: Q4 production 2,183 MBOED (+281 YoY), including Lower 48 at 1,308 MBOED (Permian 833, Eagle Ford 296, Bakken 151); underlying growth ex-acquisitions +6% YoY; Q4 CFO >$5.4B .
- Portfolio enhancement: Marathon Oil acquisition closed, adding high-quality, low-cost inventory; management targets >$1B run-rate synergies by YE 2025, with over half reflected in capex guidance .
- Capital returns and balance sheet: $9.1B returned in 2024; 2025 ROC target raised to $10B; debt transactions simplified structure and extended maturities; year-end cash & ST investments $6.4B and LT investments $1.1B .
- Quote: “We remain confident that we will deliver more than $1 billion of run rate synergies by the end of 2025… We are starting the year with a $10 billion return of capital target.” — Ryan Lance, CEO .
What Went Wrong
- Price/mix headwinds: total average realized price fell to $52.37/BOE in Q4 (–10% YoY), pressuring revenue and earnings despite higher volumes .
- Cost inflation/DP&A: higher DD&A and increased operating costs weighed on adjusted earnings; adjusted operating costs guided up in 2025 to $10.9–$11.1B .
- Transaction-related noise: sizable non-GAAP adjustments in Q4 for Marathon-related transaction/integration costs and debt items; GAAP EPS $1.90 vs adjusted $1.98 .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024	Q4 2023
Sales & Other Operating Revenues ($MM)	13,620	13,041	14,236	14,729
Total Revenues & Other Income ($MM)	14,136	13,604	14,737	15,307
Net Income ($MM)	2,329	2,059	2,306	3,007
Diluted EPS ($)	1.98	1.76	1.90	2.52
Adjusted EPS ($)	1.98	1.78	1.98	2.40
Avg Realized Price ($/BOE)	56.56	54.18	52.37	58.21
Production (MBOED)	1,945	1,917	2,183	1,902

Segment earnings ($MM):

Segment	Q2 2024	Q3 2024	Q4 2024
Alaska	360	267	353
Lower 48	1,259	1,241	1,294
Canada	261	25	246
Europe, Middle East & North Africa	251	298	336
Asia Pacific	444	455	313
Corporate & Other	(249)	(228)	(232)
Consolidated	2,329	2,059	2,306

KPIs:

KPI	Q2 2024	Q3 2024	Q4 2024
Cash From Operations ($B)	5.07	4.72	5.42
Capex & Investments ($B)	2.97	2.92	3.32
Share Repurchases ($B)	1.02	1.17	1.95
Dividends Paid ($B)	0.92	0.91	0.90
Cash & ST Investments (EoP, $B)	6.3	7.1	6.4

Additional Q4 production color: Lower 48 1,308 MBOED (Permian 833; Eagle Ford 296; Bakken 151) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Production (MMBOED)	FY 2025	N/A (new)	2.34–2.38	New guidance
Production (MMBOED)	Q1 2025	N/A (new)	2.34–2.38 (includes ~20 MBOED weather; ~5 MBOED turnarounds)	New
Capex ($B)	FY 2025	N/A (new)	~12.9	New
Adjusted Operating Costs ($B)	FY 2025	N/A (new)	10.9–11.1	New
DD&A ($B)	FY 2025	N/A (new)	11.3–11.5	New
Adjusted Corporate Net Loss ($B)	FY 2025	N/A (new)	~1.1	New
Return of Capital ($B)	FY 2025	≥$9.0 (2024 actual distribution)	10.0	Raised target vs 2024 actual
Ordinary Dividend ($/sh)	Q1 2025	$0.78 (initiated Q4’24)	$0.78 declared	Maintained

Note: Management reiterated 2025 as peak long-cycle project spend (~$3B, incl. ~$0.4B capitalized interest) with spend stepping down thereafter .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Capital returns	At least $9B 2024; ordinary dividend raised 34% to $0.78; buyback authorization +$20B (Q3)	2025 return of capital target $10B (dividends + buybacks)	Increasing distributions
Lower 48 efficiency	Record Lower 48 output; strong efficiency gains (Q2/Q3)	15%+ pro forma capex cut in L48 with low single-digit growth via synergies and efficiency; flat activity growth potential	Efficiency gains compounding
Marathon integration	Deal announced Q2; expected close late Q4	Closed late Nov; >$1B run-rate synergies by YE’25; retire Marathon shares in 2–3 years	Integration underway, synergy targets affirmed
LNG strategy	Zeebrugge regas + Asia sales signed (start 2027)	Strategy unchanged; building 10–15 MTPA offtake; NFE/Port Arthur/NFS cadence	Steady execution
Long-cycle projects	Willow milestones Q2; capex raised for progress	2025 peak long-cycle spend; NFE 2026 first, Willow 2029; ~$3.5B CFO/$6B FCF uplift at price deck	Clear timeline & cash uplift
Macro/tariffs/regulatory	Standard cautionary language	Monitoring tariff risk; diversified portfolio mitigants; permitting reform focus to enable infrastructure	Active engagement; watchlist
Portfolio optimization	—	Signed PSAs for ~$0.6B non-core L48; targeting ~$2B dispositions in 2025	Dispositions progressing

Management Commentary

Strategic priorities: “We remain confident… to deliver low single-digit production growth for $12.9 billion of CapEx” and return $10B to shareholders in 2025 while integrating Marathon and advancing long-cycle projects .
Synergies: “We will deliver more than $1 billion of run rate synergies by the end of 2025, over half of which is included in our capital guidance” .
Lower 48 operating philosophy: “Operate within an efficient window… avoid whipsawing activity; growth is an outcome of efficiency” .
Long-cycle cadence: “2025 is expected to be the peak year… steady drumbeat of project start-ups from 2026 to 2029” .
Capital return sensitivity: “A good rule of thumb is about $400 million for every $1 of WTI movement… we typically share upside with shareholders” .

Q&A Highlights

Capital returns: Framework supports $10B in 2025 with flexibility up/down as prices move; ~$400MM CFO per $1 WTI sensitivity cited .
Long-cycle spend: 2025 peak; NFE first online 2026; followed by Port Arthur, NFS, then Willow 2029; step-down in project capex thereafter .
Lower 48 strategy: Efficiency enables growth at flat activity; optimization across Permian/Eagle Ford/Bakken; ~$1.4B pro forma capex reduction driven by ~$0.5B synergies, efficiency, activity optimization, modest deflation .
Sustaining capital: Indicative sustaining capex ~$9B at current environment (flat prod) and ~$7.5B in a $40 world on apples-to-apples basis (updated from 2022) .
Willow/Alaska: Winter construction ahead of plan; 2025 will carry ~1/3 of annual Willow spend in Q1; policy developments supportive; base Alaska projects (e.g., Nuna) offset decline .
Dispositions: ~$600MM PSAs signed (non-core Permian, ~15 MBOED in 2024) toward ~$2B 2025 target .
Tariffs/macro: Mixed impacts; diversified portfolio provides offsets; focus on permitting reform to enable infrastructure and efficient operations .
Power/data centers: Assessing opportunities to monetize gas via power; LNG remains primary gas strategy .

Estimates Context

Wall Street (S&P Global) consensus for Q4 2024 EPS and revenue was unavailable at the time of analysis due to data access limits. As a result, we cannot present an “against consensus” beat/miss assessment for Q4 2024. We will update once S&P Global data becomes available.

Key Takeaways for Investors

2025 setup is constructive: higher planned shareholder returns ($10B), visible project cadence with 2025 as peak long-cycle spend, and synergy capture driving Lower 48 efficiency — supportive of medium-term FCF expansion at mid-cycle commodity prices .
Integration execution is the watch item: >$1B run-rate synergy target by YE’25 and retiring Marathon shares in 2–3 years are key milestones; monitor quarterly updates on synergy realization and buyback pace .
Cost and DD&A pressure vs macro: Lower realized prices and higher DD&A/operating costs tempered EPS; sensitivity to WTI remains high (~$400MM per $1 WTI), implying torque on upside/downside .
Portfolio optimization continues: ~$0.6B signed toward ~$2B dispositions in 2025; incremental asset sales (e.g., Ursa/Europa agreement at $735MM announced Feb 21, 2025) provide added flexibility .
LNG optionality and long-cycle leverage: NFE/Port Arthur/NFS/Willow underpin multiyear CFO and sustaining FCF uplift; execution and timing remain crucial catalysts into 2026–2029 .
Near-term trading lens: Q1 production guidance (2.34–2.38 MMBOED) incorporates weather; limited turnaround impact in Q1; focus on pace of buybacks and any early integration synergies as potential stock drivers .
Medium-term thesis: Durable low-cost inventory (bolstered by Marathon), disciplined capital allocation, and rising LNG/long-cycle contributions support competitive returns across cycles .

Management notes non-GAAP use (Adjusted EPS, CFO, adjusted operating costs) and provides reconciliations in the press release and supplemental materials .

CONOCOPHILLIPS (COP)·Q4 2024 Earnings Summary