TenQ

The ConocoPhillips story

ConocoPhillips is the largest independent oil and gas producer, with no refining business, and faces the question of whether its Lower 48 operations and LNG expansion can support cash returns despite production setbacks abroad.

Written from ConocoPhillips's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $126.04share price, last close
  • $151.4Bmarket value
  • 25/36TenQ Score checks passed
  • 3.9%growth a year the price assumes

The story in brief

  • Prices drove earnings. In the quarter to June 2026, realized prices rose 36%, lifting earnings to $3.9 billion even as production adjusted for acquisitions and dispositions fell 4%.
  • Cash covered distributions. In the quarter to June 2026, operating activities generated $7.4 billion against $3.0 billion of capital expenditures and investments and $3.0 billion of shareholder distributions.
  • Growth assumption trails history. The reverse DCF implies 3.9% annual growth in free cash flow after stock pay for ten years, compared with a historical pace of 17.5%.

What drives the business

  • ConocoPhillips' Lower 48 shale position, built through Concho and Marathon Oil, anchors an oil and gas production business without refining operations.
  • In the quarter to June 2026, Lower 48 production was 1,479 MBOED out of company production of 2,248 MBOED, with the Delaware Basin contributing 720 MBOED and the Midland Basin 202 MBOED.
  • Noncore Lower 48 asset dispositions totaling $1.7 billion closed in July 2026, completing the company's $5 billion disposition program ahead of schedule.
  • The commercial LNG strategy expanded through an additional 2 million tonnes per annum of offtake agreements, bringing total commitments to 12 MTPA.
  • ConocoPhillips also agreed to acquire a 42% interest in a Kirkuk-area joint venture in northern Iraq and signed an agreement to re-enter Syria using existing infrastructure to restore and increase onshore production.

What the price assumes

At $126.04, the reverse DCF implies that free cash flow after stock pay grows 3.9% a year for ten years, using a 10.2% discount rate.

That compares with 17.5% annual growth over the last 7 years and the TenQ check's 10.8% bar, which slows the historical record halfway toward 4%.

The cash growth assumption is below both benchmarks, but the 17.02 earnings multiple exceeds its historical comparison of 9.45, failing TenQ's earnings valuation history check.

Value COP on your own assumptions

What could change the story

  • The earnings improvement in the quarter to June 2026 depended primarily on higher commodity prices rather than higher production, leaving cash generation exposed to price reversals.
  • Conflict affecting Qatar and higher Surmont royalties more than offset organic Lower 48 production growth, while the Iraq and Syria agreements extend the company's Middle East presence.
  • Revenue grew 9.6% over the last twelve months but recorded annual growth of -9.1% over the last three years, failing both corresponding peer growth checks.
  • Cash conversion of 34.6% trailed the 52.6% peer benchmark, despite an operating margin of 24.9% exceeding the 20.8% peer benchmark.
  • Shareholder distributions consumed 93.1% of free cash flow in TenQ's coverage check, and a worst annual dividend change of -34.7% shows that distributions have not been steady.

What to watch next

  • ConocoPhillips expects production of 2.29 to 2.32 million barrels of oil equivalent per day in the quarter to September 2026, making Lower 48 output and the effect of Qatar disruptions key measures of delivery.
  • Management left full-year guidance unchanged and said it remained on track to return 45% of cash from operations to shareholders in 2026, so cash generation, capital spending and distributions will show whether that plan remains funded.
  • Progress on LNG commitments and the Iraq transaction, expected to close by the end of 2026, will help assess execution alongside management's stated $7 billion free cash flow inflection by 2029.

Sources

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