ConocoPhillips Q1 Earnings Call Highlights

ConocoPhillips NYSE: COP reported first-quarter 2026 results highlighted by higher cash flow and shareholder returns amid heightened volatility tied to the ongoing Middle East conflict. Management repeatedly emphasized uncertainty in the macro backdrop, while outlining how the company is adjusting guidance and capital plans to reflect production disruptions in Qatar and higher royalties in Canada.

First-quarter results and shareholder returns

Chairman and CEO Ryan Lance said the company delivered “another strong quarter of strong financial and operational performance,” generating $2.4 billion of free cash flow and returning $2 billion to shareholders.

Chief Financial Officer Andy O’Brien reported first-quarter production of 2,309,000 barrels of oil equivalent per day (BOE/d), noting the quarter included “the impacts of the Middle East conflict on Qatar volumes and higher royalty rates at Surmont from higher oil prices.” Those impacts were “partially offset by strong performance across our Lower 48 and international portfolio,” he said.

O’Brien said ConocoPhillips posted $1.89 per share in adjusted earnings and generated $5.4 billion of cash from operations (CFO). Capital expenditures were $2.9 billion. Shareholder returns totaled $2 billion, comprised of $1 billion in ordinary dividends and $1 billion of share repurchases. The company ended the quarter with $6.7 billion of cash and short-term investments and $1.2 billion in liquid long-term investments.

Guidance updated for Qatar disruption and Surmont royalties

O’Brien said the company updated guidance “to account for the impacts of recent macro events and the uncertainty surrounding the Middle East conflict,” adding that the revision was “not a call on when we think the conflict will resolve,” but intended to provide a modeling framework.

For 2026, ConocoPhillips updated the midpoint of its annual production guidance to 2,310,000 BOE/d. O’Brien said the change reflects:

• A 20,000 BOE/d annual impact due to excluding Qatar from second-quarter production guidance
• A 15,000 BOE/d annual royalty rate adjustment at Surmont due to higher prices

Second-quarter production guidance midpoint was set at 2,200,000 BOE/d, reflecting “the full exclusion of Qatar production from guidance for the quarter,” the Surmont royalty adjustment, and planned maintenance.

Operating cost guidance for the full year was maintained at $10.2 billion, which O’Brien said is $400 million lower than 2025 due to a cost reduction and margin enhancement program. He said first-quarter performance reinforced confidence in achieving “the full $1 billion run rate by year-end,” though he told analysts it was “only the first quarter” and the company wanted “a little bit more time” before revisiting guidance reductions.

Capital spending raised slightly as Permian efficiencies accelerate

ConocoPhillips increased its full-year capital spending guidance to a range of $12.0 billion to $12.5 billion, up from prior guidance of about $12 billion. O’Brien said the change represents a “2% increase at the midpoint” driven by “slightly more Permian activity over the second half of the year,” including an additional rig “to keep pace with the completion efficiencies,” and higher non-operated spending.

Executive Vice President of Lower 48 and Global HSE Nick Olds said the additional $250 million of activity is concentrated in the Delaware Basin and includes both operated and non-operated activity. On the operated side, Olds said completion efficiencies are outpacing drilling efficiencies, prompting the company to add a rig to avoid “frack gaps” and maintain its “level loaded steady-state operations approach.”

On the non-operated side, Olds said ConocoPhillips is seeing more well ballots from partners and does not plan to opt out of “low cost of supply, high return” projects in the current price environment.

Lance characterized the incremental activity as “no-brainers” and said it is intended to keep the company from being “drilled out of inventory by others” while maintaining operational momentum into 2027.

Alaska and LNG project updates

In Alaska, Lance said ConocoPhillips is “winding down another successful winter construction season” and that the Willow Project is now 50% complete, with the gravel scope finished and summer mobilization underway.

Executive Vice President of Global Operations and Technical Functions Kirk Johnson provided more detail, saying teams completed the winter work scope despite weather challenges, including bridges and the “entirety of the gravel scope,” covering roads, pads, and an airstrip. Johnson also said the east-west pipeline scope is advancing to connect Willow back into existing operations, and that within the coming week the company expects to bring in fuel gas and begin powering the project.

Johnson said process module fabrication on the Gulf Coast is “just slightly better than 50% complete,” with plans next summer to sea-lift modules to Alaska. He said these milestones support an “early oil expectation” for 2029 and align with the company’s previously discussed $7 billion free cash flow inflection by 2029, driven by cost reductions, LNG projects, and Willow.

On exploration, Johnson said the company completed a four-well Alaska exploration program and found hydrocarbons where it drilled, while emphasizing commerciality typically requires multiple seasons of appraisal.

In LNG, Lance said ConocoPhillips executed a third-party tolling agreement in Equatorial Guinea that extends the facility’s life “well into the next decade.” Johnson said the agreement allows the plant to run at a strong utilization rate and “pushes the life of that asset again well into the 2030s,” providing time to evaluate “discovered resource” opportunities nearby.

Lance also said the Port Arthur LNG project is progressing “very well” with first LNG expected next year. O’Brien added that ConocoPhillips has already placed “the first 5 million tons” of its Phase I volumes “predominantly into Europe and a bit into Asia,” and said discussions around remaining volumes have intensified as global markets tighten.

Macro commentary: oil and LNG markets tighten

Management devoted significant time to the impact of the Middle East conflict on commodity markets. In response to an analyst question, O’Brien said roughly 10 million barrels per day of production has been offline for about two months, with some lost supply partially offset by inventory and strategic petroleum reserve releases. He also said the “brunt of the supply shortfall is currently being absorbed by refinery run cuts and demand curtailments,” estimating global refinery run cuts at around 8 million barrels per day when including damaged Persian Gulf refineries.

O’Brien said ConocoPhillips is downgrading its view of global oil demand to “flat year-over-year,” with downside risk if the conflict continues. Lance said the company believes the floor for prices may be rising versus its prior mid-cycle view of $65 WTI, and that it is assessing what the “mid-cycle equilibrium price” could become.

On LNG, O’Brien said the company views recent events as a “structural tightening” in global LNG. He noted that with Qatar volumes shut in and unable to transit, about 20% of LNG supply has not been flowing, equating to roughly 200 cargoes that have not sailed. Lance added that European gas inventories are “well below where they should be.”

Johnson said ConocoPhillips’ producing asset in Qatar (QG3) ran at roughly 80,000 BOE/d last year, around 3% of total company production and “very similar” in terms of CFO contribution. He said QatarEnergy executed a controlled ramp-down and that two trains were struck, “not ours,” removing just under 12 million tons per annum from the market. Johnson said construction on North Field East (NFE) and North Field South (NFS) has continued despite the conflict, though with some interruptions, and that while delays are expected, it is “premature” to give firm guidance; he said ConocoPhillips expects delays “to the tune of months.”

During the call, Lance also reiterated the company’s shareholder return framework, saying ConocoPhillips aims to grow its base dividend competitively with the top quartile of the S&P 500 while using share repurchases to help reach its stated objective of returning 45% of CFO to shareholders.

About ConocoPhillips NYSE: COP

ConocoPhillips NYSE: COP is a Houston-based international energy company focused on exploration and production of oil and natural gas. Formed in 2002 through the merger of Conoco Inc and Phillips Petroleum Company, the firm operates as an independent upstream company that explores for, develops and produces crude oil, natural gas and natural gas liquids across a portfolio of global assets.

The company's activities span conventional and unconventional resources and include onshore and offshore operations in multiple regions around the world.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.