ConocoPhillips Beats Q1 Estimates on Strong Free Cash Flow, Raises Capex for Permian

Transcript intelligence

What changed

EPS beat the $1.72 estimate by 9.9% at $1.89, and revenue of $16.05B exceeded the $15.62B estimate by 2.8%. The company generated $2.4B in free cash flow and returned $2B to shareholders. Capex guidance was raised to $12.0-12.5B, adding $250M for an additional Permian rig and non-operated OBO spend. The Willow project reached 50% completion with full winter construction finished, and a third-party tolling agreement was signed to extend the Equatorial Guinea LNG facility into the 2030s. Despite the beat, the stock posted a -2.9% abnormal move on the session and drifted -9.4% subsequently.

Guidance delta

Capex guidance was raised to $12.0-12.5B from the prior range, adding $250M for Permian and non-operated OBO activity. Full-year production guidance was maintained. The cost-reduction program targeting $1B in run-rate savings was maintained. The 45% CFO shareholder return target was reaffirmed. Overall guidance sentiment was maintained despite heightened macro volatility from Middle East conflict.

Key takeaways

• Free cash flow of $2.4B keeps ConocoPhillips on track for its $7B FCF inflection target by 2029.
• Willow project is 50% complete with winter construction finished, de-risking the Alaska growth pillar.
• A new Equatorial Guinea LNG tolling agreement extends the facility into the 2030s, adding portfolio longevity.
• Capex was raised modestly for Permian growth without altering full-year production or cost guidance.
• The stock sold off post-earnings despite the beat, with a -2.9% abnormal move and -9.4% subsequent drift, reflecting macro rather than company-specific concerns.

Management priorities

• Complete Willow construction including summer activities and pipeline connections.
• Bring Port Arthur LNG Phase 1 online by 2027.
• Add a Permian rig and increase non-operated OBO spend in H2 2026.
• Pursue further divestitures under the $5B program and evaluate opportunistic acquisitions.
• Maintain 45% CFO return to shareholders through dividends and share repurchases.