ConocoPhillips Operational Strength Offsets Commodity Headwinds, UBS Says

MT Newswires Live01-15

ConocoPhillips (COP) is expected to deliver another strong operational quarter in Q4, with volumes near the top end of guidance, offsetting headwinds from weak commodity prices, UBS Securities said in an earnings preview.

While its earnings per share estimates are currently below Wall Street consensus, the brokerage said in a Tuesday note that it expects the Street to adjust toward its forecast as Q4 estimates are marked to market for pricing weakness, which drove a roughly $0.40 per share sequential headwind.

UBS expects Q4 adjusted EPS at $1.08 versus market anticipation of about $1.04 to $1.23 per share and production to be 2.33 million barrels of oil equivalent per day, near the top end of the company's guidance of 2.3 to 2.34 million boepd.

The investment firm expects the company to reiterate its previously reported outlook of between 2.33 and 2.37 million boepd if crude prices stay near current levels. UBS forecasts 2026 production of 2.36 million boepd and capital spending of $12 billion, with most of the spending planned for the first half of the year.

The brokerage expects $1.05 billion in Q4 buybacks and anticipates $4.5 billion of total buybacks in 2026, resulting in total shareholder returns of $8.6 billion.

ConocoPhillips also appears best-positioned among exploration and production companies to capture value from Venezuela. After the company had various assets expropriated in 2007, it now holds more than $10 billion in claims awarded by the International Chamber of Commerce against the Venezuelan government and PDVSA.

As of year-end 2024, COP had received around $800 million from the first ICC award, and UBS believes the company could recover roughly $1 billion in additional proceeds over the next two to three years.

The brokerage updated its model to reflect a $2 per barrel reduction in its fiscal 2026 oil price deck and other adjustments.

UBS kept a buy rating on ConocoPhillips with a $120 price target.

Shares of the company rose more than 5% in recent Wednesday trading.

Price: 101.60, Change: +5.14, Percent Change: +5.33

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