On Thursday, ConocoPhillips (NYSE:COP) stock experienced a notable decline after the oil and gas producer delivered its fourth-quarter fiscal year 2025 earnings report, which failed to meet the consensus expectations set by analysts. The company disclosed net earnings of $1.4 billion, translating to $1.17 per share; this figure is considerably lower compared to the $2.3 billion, or $1.90 per share, it generated in the corresponding quarter of the previous year.
Adjusting for certain items, earnings per share (EPS) came to $1.02, falling short of the $1.11 consensus estimate held by market participants. This represents a steep 39% drop in earnings year over year, a decline largely attributed to the softer average realized price per barrel of approximately 19% below year-ago levels. Specifically, the company recorded an average realized price of $42.46 per barrel of oil equivalent (BOE) during the quarter.
The firm also reported quarterly revenue of $14.185 billion, slightly missing the forecasted $14.194 billion. This marginal revenue shortfall accompanied a production increase to 2.32 million barrels of oil equivalent per day (BOED), which reflects a rise of 137 thousand BOED compared to the previous year. However, when production figures are adjusted to exclude impacts from recent acquisitions and asset sales, a decline of 2.6%, or about 63 thousand BOED, is evident.
Production from the Lower 48 formed a significant part of the total quarterly output, reaching 1,439 thousand BOED. The breakdown within key basins included 673 thousand BOED from the Delaware Basin, 194 thousand BOED from the Midland Basin, 370 thousand BOED from the Eagle Ford shale, and 198 thousand BOED emanating from the Bakken formation.
On the capital allocation front, ConocoPhillips declared a first-quarter regular dividend payable at 84 cents per share on March 2, 2026, to shareholders recorded by February 18, 2026. During the quarter, capital expenditures totaled $3.0 billion. The company also repurchased $1.0 billion worth of its own shares and committed $1.0 billion towards dividend payments, demonstrating its continued commitment to shareholder returns.
From a cash flow perspective, ConocoPhillips reported generating $19.8 billion of operating cash flow over the fiscal year. It ended the fourth quarter with a robust liquidity position, holding $7.4 billion in cash and short-term investments alongside $1.1 billion in long-term investment assets.
Strategically, significant progress was announced on several fronts. Notably, the company completed the integration of Marathon Oil, a merger that effectively doubled synergy capture to over $1 billion on a run-rate basis by 2025, alongside additional one-time benefits approximating $1 billion. Project execution advanced as expected on several major initiatives, including the Willow project in Alaska, equity LNG developments at North Field East and South in Qatar, and the Port Arthur LNG terminal in the U.S. Gulf Coast, all slated for startup phases aligned with prior projections. The North Field East (NFE) project is anticipated to begin operations in the second half of 2026.
ConocoPhillips further enhanced its LNG commercial strategy by securing an initial offtake of 5 million tonnes per annum (MTPA) for Port Arthur LNG Phase 1, with an additional 5 MTPA offtake secured, bringing its total commercial LNG portfolio to 10 MTPA.
Looking ahead, the production outlook for the first quarter of 2026 is forecasted between 2.30 million and 2.34 million BOED. The company anticipates achieving incremental cost reductions and margin enhancements exceeding $1 billion in run-rate terms by the end of 2026. Capital expenditure guidance for the year is estimated at approximately $12 billion, with adjusted operating costs projected near $10.2 billion, consistent with previous guidance. Total expected production for 2026 falls between 2.33 and 2.36 million BOED, factoring in some weather-related operational downtime in the initial quarter.
ConocoPhillips plans to return 45% of its operational cash flow to shareholders in 2026, continuing its shareholder-friendly approach. Chairman and Chief Executive Officer Ryan Lance expressed confidence, stating, "We are well-positioned to deliver an expected $7 billion in incremental free cash flow by 2029, including $1 billion each year from 2026 through 2028."
Following earnings publication, ConocoPhillips shares decreased by 3.81%, trading at $103.49 per share as of the time of reporting. The decline reflects investor reactions to the earnings miss amid a challenging pricing environment, balanced against the firm's ongoing strategic initiatives and capital discipline.