Is ConocoPhillips Positioned to Benefit From Elevated Oil Prices?

COP's low-cost assets, Marathon Oil integration and near $100 oil prices are expected to boost its margins and cash flows.

ConocoPhillips $COP COP, a leading energy company worldwide, is primarily involved in the exploration and production of crude oil, natural gas liquids (NGLs), bitumen and natural gas. Being an upstream energy player, the company’s earnings are exposed to commodity price swings. Due to the conflict in the Middle East, the West Texas Intermediate ("WTI") oil price has risen significantly from the prior-year levels. Therefore, it is worth assessing whether the current business environment is beneficial for ConocoPhillips.

COP has completed the integration of Marathon $MPC Oil, adding high-quality, low-cost resources to its asset base. The Marathon Oil assets add to COP’s low-cost supply inventory in the U.S. Lower 48, which can support low-cost production for over 20 years. The company has highlighted that its deep and durable inventory in the U.S. Lower 48 can support production at low breakeven costs of $40 per barrel of WTI. In the current geopolitical scenario, in which oil prices are close to $100 per barrel of WTI, the company’s low breakeven cost structure will allow it to realize higher margins.

ConocoPhillips’ priority is to reduce its capital expenditures and operating costs by nearly $1 billion in the year. The reduction in capex will allow the company to generate higher free cash flows, which can support greater returns for shareholders. COP’s strong asset base in the U.S. Lower 48 and enhanced scale from the Marathon Oil integration, coupled with a favorable commodity price environment, are expected to benefit the company’s earnings and cash flows. The decline in capex is expected to enhance its financial resilience.

High-Quality Inventories Give XOM and EOG a Competitive Edge

Exxon Mobil Corporation XOM and EOG $EOG Resources, Inc. EOG are two global energy firms that can thrive even during periods of low oil prices.

ExxonMobil $XOM’s advantaged assets in the Permian Basin of the United States and Guyana support low-cost production and have lower emissions. XOM is leveraging innovation and technology to improve production from the Permian Basin. The company plans to increase Permian production volumes to more than 2.5 million oil-equivalent barrels per day beyond 2030. In Guyana, ExxonMobil has turned a 2015 oil discovery into one of the fastest-growing projects in the world, reaching record gross production of 875,000 barrels per day in the fourth quarter of 2025.

EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company focuses on maintaining a resilient balance sheet and lowering production costs, which should enable it to capture higher margins.

COP’s Price Performance, Valuation & Estimates

Shares of COP have gained 39% over the past year compared with the industry’s 34.6% growth.

Image Source: Zacks Investment Research

From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 6.62X. This is above the broader industry average of 5.59X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for COP’s 2026 earnings has been revised downward over the past seven days.

Image Source: Zacks Investment Research

COP, XOM and EOG each carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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