ConocoPhillips reports $2.3bn Q4 2024 profit as Marathon Oil acquisition reshapes growth strategy

ConocoPhillips has announced its fourth-quarter and full-year 2024 financial results, showcasing a strategic shift driven by the recent acquisition of Marathon Oil. Despite facing headwinds from fluctuating commodity prices and acquisition-related expenses, the company reported a solid performance, underpinned by strong operational execution and disciplined capital management.

With a sharp focus on shareholder returns, operational growth, and integration synergies, ConocoPhillips’ latest earnings reflect both the challenges and opportunities presented by its evolving portfolio. The company’s forward-looking strategy for 2025 revolves around robust capital guidance and a significant return of capital target, indicating confidence in its long-term growth trajectory.

How did ConocoPhillips perform in Q4 2024?

For the fourth quarter of 2024, ConocoPhillips reported earnings of $2.3 billion, or $1.90 per share, compared to $3.0 billion, or $2.52 per share, in the same period the previous year. Excluding special items, adjusted earnings were $2.4 billion, or $1.98 per share, down from $2.9 billion, or $2.40 per share, in Q4 2023. The decline in earnings was largely attributed to acquisition-related transaction and integration costs from the Marathon Oil acquisition, coupled with the impacts of lower commodity prices and increased depreciation expenses.

Despite the earnings dip, the company demonstrated resilience through strong production growth. Production volumes rose to 2,183 thousand barrels of oil equivalent per day (MBOED), marking an increase of 281 MBOED compared to Q4 2023. After adjusting for closed acquisitions and divestitures, production growth stood at 139 MBOED, representing a 6% increase year-over-year.

Lower 48 operations contributed significantly, delivering 1,308 MBOED, with key contributions from the Permian Basin (833 MBOED), Eagle Ford (296 MBOED), and Bakken (151 MBOED). This production growth helped offset some of the earnings pressure from declining commodity prices, with the company’s average realised price per barrel of oil equivalent (BOE) falling 10% year-over-year to $52.37.

What are the key highlights from ConocoPhillips’ full-year 2024 results?

For the full year 2024, ConocoPhillips reported earnings of $9.2 billion, or $7.81 per share, down from $11.0 billion, or $9.06 per share, in 2023. Adjusted earnings matched the reported figure at $9.2 billion, or $7.79 per share, compared to $10.6 billion, or $8.77 per share, in the prior year.

The company generated $20.1 billion in cash from operating activities, with cash flow from operations (CFO) reaching $20.3 billion after excluding a $0.2 billion change in working capital. This robust cash generation enabled ConocoPhillips to return $9.1 billion to shareholders through $5.5 billion in share repurchases and $3.6 billion in dividends, including variable returns of cash (VROC).

Notably, the Marathon Oil acquisition played a pivotal role in reshaping the company’s portfolio. The transaction not only expanded ConocoPhillips’ low-cost supply inventory but also positioned the company for long-term growth, particularly in its U.S. unconventional operations.

What does ConocoPhillips’ 2025 capital guidance reveal about its growth plans?

Looking ahead, ConocoPhillips has set an ambitious target to return $10 billion to shareholders in 2025, reflecting confidence in its operational strength and financial flexibility. The company declared a first-quarter 2025 ordinary dividend of $0.78 per share, payable on March 3, 2025, to shareholders of record as of February 17, 2025.

The company’s 2025 capital guidance includes projected capital expenditures of approximately $12.9 billion. This guidance incorporates investments aimed at sustaining production growth, enhancing asset efficiency, and realising synergies from the Marathon Oil acquisition.

ConocoPhillips expects full-year 2025 production to range between 2.34 and 2.38 million barrels of oil equivalent per day (MMBOED). This outlook accounts for the impacts of scheduled maintenance turnarounds and potential weather-related disruptions, particularly in the first quarter.

In terms of cost management, the company anticipates adjusted operating costs of $10.9 to $11.1 billion and depreciation, depletion, and amortisation (DD&A) expenses of $11.3 to $11.5 billion. The guidance also includes an expected adjusted corporate segment net loss of approximately $1.1 billion, excluding special items.

How is the Marathon Oil acquisition impacting ConocoPhillips’ financial strategy?

The Marathon Oil acquisition represents a strategic milestone for ConocoPhillips, providing access to high-quality, low-cost assets that complement its existing U.S. unconventional portfolio. According to CEO Ryan Lance, the company is targeting over $1 billion in integration-related synergies by the end of 2025, with more than half of these efficiencies already factored into the current capital guidance.

These synergies are expected to enhance operational efficiency, reduce costs, and strengthen the company’s ability to generate sustainable free cash flow. Additionally, the acquisition has allowed ConocoPhillips to simplify its capital structure through strategic debt transactions, extending the average debt maturity while lowering the overall cost of debt.

What are the latest developments in ConocoPhillips’ global operations?

ConocoPhillips achieved several operational milestones in 2024, reflecting its global footprint and diversified asset base. The company commenced production at Nuna in Alaska, Bohai Phase 5 in China, and Eldfisk North in Norway, contributing to its strong production growth.

In the liquefied natural gas (LNG) sector, ConocoPhillips advanced its global strategy with long-term agreements, including a regasification deal at the Zeebrugge LNG terminal in Belgium and an LNG sales agreement in Asia. These developments are part of the company’s broader effort to capitalise on the growing global demand for LNG.

The company also reported preliminary year-end 2024 proved reserves of 7.8 billion barrels of oil equivalent (BBOE), with a reserve replacement ratio of 244%. Excluding acquisitions and divestitures, the organic reserve replacement ratio was 123%, underscoring the company’s success in replenishing its resource base through exploration and development activities.

What’s next for ConocoPhillips in 2025 and beyond?

ConocoPhillips enters 2025 with a strong balance sheet, a diversified asset portfolio, and a clear focus on delivering shareholder value. The company’s strategy revolves around disciplined capital allocation, operational excellence, and sustainable growth, supported by the transformative impact of the Marathon Oil acquisition.

With a $10 billion capital return target, robust production guidance, and a clear path to achieving integration synergies, ConocoPhillips is well-positioned to navigate the evolving energy landscape. The company’s emphasis on cost discipline, portfolio optimisation, and strategic investments signals its commitment to driving long-term value for shareholders and stakeholders alike.