ConocoPhillips (COP) Q3 2026 earnings review
ConocoPhillips lifts its dividend 11% while production trails last year
ConocoPhillips pays shareholders more, but it still pumps less than a year ago. Higher oil prices doubled profit per share, and new chief executive Andy O'Brien raised the dividend 11%. Output fell 2% once sold assets are stripped out, because the Middle East conflict still holds back its Qatar gas. By our math the new fourth-quarter range puts the full year at the bottom of its own range.
| Profit per share, excluding one-offs | $3.27 $1.61 a year ago |
|---|---|
| Production, excluding sold assets | 2,295 thousand barrels of oil equivalent a day −2% from a year ago |
| Paid to shareholders | $3.4 billion 47.5% of cash from operations |
| Full-year production outlook | Unchanged by our math the Q4 range lands it at the bottom |
⚖️ Verdict: 🟢 Bullish
The story got better because O'Brien put the 2029 cash plan in his own words: lower spending next year, higher output and the same 45% of cash paid out. The bad news: spending has not fallen yet, the Alaska bill rose this quarter, and Qatar remains below last year.
The question now is whether capital spending really drops in 2027 while output grows. A clear cut in the February budget, with Qatar back at full rates, keeps the 2029 cash target on schedule; spending near this year's level pushes it out. The February budget will tell.
🐂 Bull Case
Dividend Up 11% and Buybacks at $2.4 Billion
ConocoPhillips pays shareholders through a quarterly dividend and share buybacks, and it promises them 45% of its cash from operations each year. Chief executive Andy O'Brien, in his first quarter in the job, raised the dividend by 11% to $0.93 a share. Last year's rise was 8%.
- Buybacks: $2.4 billion, up from $2.0 billion last quarter
- Average price paid: about $124 a share by our math, against $115 in the first half
- Total paid out: $3.4 billion, or 47.5% of cash from operations
- Diluted share count: down 4% from a year ago
The dividend is the part that cannot easily go back, so a bigger rise says O'Brien expects cash to keep growing. Critics of the buyback point out that a fixed share of cash means the oil producer buys most of its stock when prices are high, and this quarter's average cost was again above the first half's.
What to watch: fourth-quarter buybacks against cash from operations, in the February release. A payout near half of the quarter's cash would mean ConocoPhillips kept its 45% promise without touching the new dividend.
Permian Volumes Rise and Gas Sells Above Zero
The Lower 48 is ConocoPhillips' US shale business, and the Permian Basin in Texas and New Mexico is its largest part. In the second quarter Permian gas sold for less than nothing, because pipelines out of the basin were full. This quarter the price turned positive, and the company said it improved "as additional takeaway capacity came online".
- Lower 48 gas price: $2.05 per thousand cubic feet, from minus $1.44 last quarter
- Permian production: 954 thousand barrels of oil equivalent a day by our math, up 3% from last quarter
- Lower 48 output excluding sold assets: up 3% from a year ago by our math
This matters because the Lower 48 is the only region growing, so the 2027 plan of "Low-single-digit underlying growth with steady-state Lower 48 activity" rests on it. Oil prices slipped from last quarter, yet the segment's profit excluding one-offs fell only 3%, because gas and efficiency filled part of the gap.
What to watch: the Lower 48 gas price next quarter. A reading that stays near $2 would mean the pipeline shortage is over and the segment no longer loses money on its gas.
Willow Modules Pass 75% as LNG Deals Grow
ConocoPhillips' main promise is an extra $7 billion of free cash flow by 2029. Two projects carry most of it: Willow, an oil field under construction in Alaska, and contracts to buy liquefied natural gas (LNG) and resell it, which the company calls its commercial LNG offtake portfolio.
Both moved this quarter. Willow's "module fabrication scope over 75% complete", with first oil still due in early 2029. The LNG book grew by 0.8 million tonnes a year, to 13 million. O'Brien wrote that "2029 is not the endpoint", because the LNG contracts should lift cash into the next decade.
What to watch: first LNG from the North Field East project in Qatar, due in early 2027. A start on time means the LNG cash arrives when the 2029 plan assumes.
🐻 Bear Case
Qatar and Surmont Keep Output Below Last Year
O'Brien described "strong operational and financial performance across the portfolio". The volume numbers say otherwise: ConocoPhillips produced 4% less than a year ago, and output still fell 2% once sold assets are stripped out.
Two problems the company named: the Middle East conflict still holds back its share of Qatar's gas fields, and "higher Surmont royalties" in Canada take more barrels when oil prices are high. Only the Lower 48 grew.
- Partner-run fields, mainly Qatar: 179 thousand barrels of oil equivalent a day, down 20% from a year ago
- Canada oil sands: 95 thousand barrels a day, down 23%
- Full year, by our math: 2,295–2,305 thousand barrels a day, the bottom of the unchanged range
This matters because the fourth-quarter range already allows for maintenance in Equatorial Guinea, so Qatar is still not at full rates. ConocoPhillips held its annual range, but by our math the number it will reach sits at the bottom. The year's outlook moved lower without a word about it.
What to watch: partner-run production in the fourth-quarter release. A reading back near the 225 thousand barrels of a year ago would mean Qatar is restored and 2027's growth plan starts from full rates.
Alaska Spending Rose Although Willow's Peak Is Past
Willow's modules are three-quarters built, so Alaska spending should be easing, and the 2029 cash plan needs capital to fall. Instead the Alaska segment spent $936 million this quarter, 24% more than a year ago and above the second quarter. Company-wide capital spending rose 9%, the first increase in five quarters.
The full-year range still holds, because nine-month spending is 4% below last year. The concern is the direction: the 2027 outlook promises "Lower Capital" but gives no number, and the Iraqi field purchase due by year-end will add to it. The company says efficiency gains will offset inflation.
What to watch: the 2027 capital budget, due with the February results. A figure clearly below this year's $12 to $12.5 billion would show the inflection is on its way, not just promised.
Risks this quarter didn't answer
Five standing concerns got no new numbers in the release or the slides, so each reading waits for the quarterly filing, the next results or an outside event.
- Oil price: WTI averaged $86, 8% below last quarter; annual profit moves $140 to $150 million for each $1, so the fourth quarter shows the first full effect.
- Leadership: the release is O'Brien's first and names no finance chief; the 2027 outlook has no numbers, so the new team's first figures arrive in February.
- Commercial LNG: no margins, volumes sold or purchase commitments in the release; the quarterly filing will show the obligations.
- Willow cost: progress updated, the total cost estimate not; the next estimate decides whether the 2029 cash figure holds.
- Kirkuk: the Iraqi field purchase due around year-end is not mentioned; the fourth-quarter release will say whether it closed.
👓 Other Themes
A Tax Reserve Reversal Added to Reported Profit
Reported profit was $3.34 a share, above the $3.27 excluding one-offs. The difference is mostly a tax reserve ConocoPhillips reversed, worth $126 million after tax, booked in the Corporate segment. That segment ended the quarter in profit, and the company now expects its full-year loss to be about $0.8 billion rather than $0.9 billion.
Oil Slipped From Its Peak but Stays High
Brent crude averaged $97 a barrel, 7% below the second quarter. It remains about 40% above a year ago, because the Middle East conflict continues. ConocoPhillips does not hedge, so each $1 move in WTI shifts annual profit by $140 to $150 million. US gas stayed near $3 for the quarter.
💲 Other KPIs
Money owed by customers rose faster than sales: up 14% from the second quarter, against revenue growth of 3%. The year-on-year gap is similar. Payables rose as well, so working capital barely moved in the cash flow statement, but a second quarter of receivables outrunning revenue would start to tie up cash.
Running costs excluding one-offs came to $2.6 billion, a little above the second quarter. For the first nine months they are 4% below last year, because the company sold higher-cost fields and cut overhead after the Marathon Oil purchase. Per barrel, costs have stayed between $11.85 and $12.53 this year.
Debt less cash fell to about $12.9 billion from $15.2 billion in June, by our math. Free cash flow and the proceeds of asset sales together exceeded the payout to shareholders, so cash and short-term investments reached $10.4 billion. Total debt stays near $23 billion, and the debt-to-capital ratio is 26%, leaving room for the Iraq purchase.
🔮 Guidance
New. The plan calls for 2.32 to 2.36 million barrels a day. The middle of the range is about 2% above this quarter and 1% above a year ago. It already allows for "4Q turnaround impacts of ~20 MBOED primarily in Equatorial Guinea". By our math it leaves the full year near 2.30 million, the bottom of the unchanged annual range.
Unchanged. The company kept the annual range it set in May, when it cut the earlier 2.33 to 2.36 million for the Qatar shut-in and Surmont royalties. By our math the fourth-quarter range only reaches the bottom of it, 2.295 to 2.305 million. Production has landed inside or above the quarterly range in each of the last four quarters, so an upside surprise in Qatar would change the picture.
Unchanged. Nine-month spending is $9.1 billion, so the fourth quarter has $2.9 to $3.4 billion of room by our math, against $3.1 billion this quarter. The range was raised in May from about $12 billion for extra Permian rigs and Qatar timing, then held twice. For 2027 the company promises "Lower Capital" without a number.
Unchanged. Running costs excluding one-offs total $7.6 billion for nine months, so the fourth quarter implies about $2.6 billion by our math, in line with this quarter. Per barrel the implied fourth quarter sits near $12, slightly below this quarter. The company has held this figure since February and says 2027 unit costs will be lower.
Unchanged. Depreciation, the non-cash charge for wearing out fields and equipment, is $8.9 billion for nine months. The fourth quarter therefore implies $2.8 to $3.0 billion by our math, close to this quarter. It affects reported profit, not cash.
Lowered. The company now expects the Corporate segment, which carries interest and head-office costs, to lose about $0.8 billion this year rather than $0.9 billion. Nine-month losses excluding one-offs are $0.5 billion, so the fourth quarter implies about $0.3 billion by our math, because interest expense fell as cash balances rose.
New. The company expects a tax rate of 35 to 37% in the fourth quarter, the same band it gave for the year. This quarter's reported rate was 33.1% because of the reserve reversal. Excluding one-offs it was 34.8%, just under the band, because the Lower 48, taxed at about 21%, earned a bigger share of profit than higher-taxed Norway and Libya.
Lowered. Cash dividends from partner-run ventures, mainly in Qatar, should be about $0.4 billion in the fourth quarter. In August the company pointed to about $1.5 billion for the year; with $0.9 billion received so far by our math, that implied roughly $0.6 billion. The full year now looks closer to $1.3 billion, a sign that Qatar's cash is still constrained.
Unchanged. The company still plans to pay out 45% of this year's cash from operations as dividends and buybacks. Nine months ran at 43% by our math, so the fourth quarter needs about half of its cash, roughly $3.1 to $3.6 billion depending on oil prices. The 2027 outlook repeats the 45% level.
Raised. The quarterly dividend rises 11% to $0.93, payable December 1. Last year's increase was 8%. At today's share count the dividend costs about $4.4 billion a year by our math, roughly a sixth of this year's cash from operations if the fourth quarter matches the third.
New. The first outlook for 2027 has four parts and no numbers: capital "Consistent with multi-year free cash flow inflection", meaning below 2026; "Low-single-digit underlying growth with steady-state Lower 48 activity"; lower unit operating costs; and 45% of cash from operations returned. The figures arrive with the February results. It answers whether the new chief keeps the 2029 plan: he does.
❓ Key Questions
What Qatar rate sits inside the fourth-quarter range?
The range of 2.32 to 2.36 million barrels a day leaves the year at the bottom of its own range by our math. Whether that assumes Qatar back at full rates or still restricted decides how much growth 2027 starts with.
How far does capital spending fall in 2027?
The outlook says "Lower Capital" but gives no figure. The 2029 cash target assumes spending drops as Willow finishes; the size of the 2027 cut, and the sustaining level after Willow, show whether that drop is real.
What do the 13 million tonnes of LNG earn today?
The contract book grew again, but ConocoPhillips reports no LNG volumes sold, margins or purchase obligations in the release. Without them, nobody outside the company can test whether the LNG leg of the 2029 plan is on track.
Will the Kirkuk purchase still close by year-end?
The Iraqi field deal was due to close around year-end, with cash paid at closing. The release does not mention it, so the fourth-quarter report must say whether it closed, what it cost and what production it adds.
Why did Alaska spending rise 24% from a year ago?
Willow's modules are three-quarters built, yet the Alaska segment spent more than in any third quarter of the last two years. The split between Willow, existing fields and exploration decides whether the rise is timing or a new baseline.