ConocoPhillips (COP) shareholders are currently experiencing what feels like a particularly awkward family dinner-nobody wants to talk about it, but everyone’s staring at the 7% drop in value this year. Meanwhile, the S&P 500 sips champagne, up 13.5%, while COP’s boardroom debates whether to break out the emergency oil price fire extinguisher. The culprit? Crude prices have dipped like a toddler on a pogo stick, down over 10% since January. One wonders if OPEC forgot its own meeting invite.
Yet here we are, faced with a paradox: a stock in freefall, but a future that smells faintly of cash flow and tax savings. It’s the business equivalent of tripping over your own shoelaces but discovering a $20 bill in the process. Let’s dissect this mess with the precision of a historian who’s seen 14 oil booms and busts-and still can’t parallel park.
A Symphony of Small-Scale Catastrophes
Lower oil prices have turned ConocoPhillips’ financials into a game of Jenga. Q1 adjusted earnings: $2.7 billion. Q2: $1.8 billion. Operating cash flow? Down from $5.5 billion to $4.7 billion. Free cash flow? A tragic $2.1 billion to $1.4 billion. It’s like watching a carefully curated Netflix queue get deleted by a mischievous nephew.
But wait! The company claims salvation arrives in the form of “higher cash distributions from APLNG,” “tax benefits from that one big beautiful bill,” and “lower capital spending.” If only corporate jargon were as satisfying as a perfectly timed dad joke. Even if oil prices stay stubbornly mediocre, ConocoPhillips insists it can wring free cash flow from the back half of 2025 like a barista milking a coffee bean. One suspects the real magic happens in the spreadsheet footnotes.
The Marathon Oil acquisition, meanwhile, has become a case study in overpromising and under-delivering-or is it the reverse? The deal now boasts 2.5 billion BOE in resources (up from 2 billion) and $1 billion in annual synergies (up from $500 million). By 2026, they’ll apparently squeeze another $1 billion in “cost and margin enhancements.” It’s the corporate equivalent of telling your in-laws you’ve “optimized” the family vacation budget by switching from steak to tofu. Nobody asks how.
The Long Game: Or How to Build a Future While Ignoring the Present
ConocoPhillips’ long-term strategy reads like a Victorian novel-slow, methodical, and filled with projects that won’t pay off until after everyone involved has retired. Take the Port Arthur LNG Phase 1 project: a 30% equity stake, 5 million tons of LNG per year, and a 2027 start date. It’s the business version of planting an oak tree and expecting shade by lunchtime.
Their QatarEnergy partnerships (North Field East and South) are similarly glacial. Startups in 2027 and 2028? That’s not growth-it’s geologic patience. And then there’s the Willow project in Alaska: $7 billion for 600 million barrels, with production starting in 2029. If they’d invested that money in a vending machine in 1999, we’d all be billionaires by now. Or at least have better snacks.
Still, the math is staggering. By 2029, these projects allegedly add $6 billion to annual free cash flow-$7 billion if you count Marathon Oil synergies. That’s double what the company expects this year. Assuming, of course, oil hits $70/barrel by 2026. If not? They’ll settle for $60/barrel and a shrug. It’s the financial equivalent of ordering a steak and accepting the side salad when it arrives. Classy, if slightly defeatist.
The Grand Illusion: Shareholder Returns or Corporate Theater?
ConocoPhillips promises dividend growth in the S&P 500’s top 25% and “meaningful” share buybacks. It’s the corporate version of promising to clean your room-if you don’t look too closely. The real question isn’t whether these projects will generate cash flow; it’s whether anyone will still care in 2029. By then, we’ll have forgotten 2025 ever happened, and the stock price might have remembered its own value.
So, is COP a “compelling long-term buy”? Perhaps. But it’s the kind of buy that requires a 20-year vision, a tolerance for ambiguity, and a willingness to ignore the nagging feeling that history repeats itself. Just don’t be surprised if, in 2030, someone asks, “Remember when oil was $60/barrel? How did that work again?” And you’ll have to admit: you have no idea. 📉
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2025-09-24 11:34