The Oil/Energy sector witnessed dynamic M&A activity in 2024, driven by shifting market dynamics and strategic realignments. Although the overall deal value fell to $26 billion from $60 billion in 2023, the year stood out for its focused consolidations and transformative acquisitions. Noteworthy transactions included major players such as Diamondback Energy (FANG) , ConocoPhillips (COP) , EQT Corporation (EQT) , Expand Energy (EXE) and Sunoco LP (SUN) , demonstrating the sector's strategic focus on growth a ...

After my last review of ConocoPhillips ( COP) at hold in late 2023, I am upranking the company to buy based on its successful acquisition of Marathon Oil completed in November 2024, moderate dividend, hefty share repurchase program, good price-earnings ratio, strongLaura Starks is the founder and CEO of Starks Energy Economics, LLC (since 2007). She has a degree in chemical engineering and an MBA with a concentration in finance which she has used for many years to invest personally and to share her ideas ab ...

ConocoPhillips (COP) is currently considered relatively undervalued, trading at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 4.97x. This figure is below the broader industry average of 6.79x and lower than other major upstream companies, such as Diamondback Energy Inc (FANG) and EOG Resources Inc (EOG) , which are trading at 9.73x and 5.32x EV/EBITDA, respectively. This discounted valuation suggests that the stock may offer the potential for further price appreciation. Image Source: Zacks I ...

Industry Overview - US crude oil production is expected to increase to 13 52 million barrels per day (MMBbl/D) in 2025, up from 13 24 MMBbl/D in 2024 [4] - Net crude imports in the US are projected to decline by more than 20% to 1 9 million barrels per day in 2025, the lowest level since 1971 [2] - Global crude demand for 2025 is revised downward from 104 4 MMBbl/D to 104 3 MMBbl/D [5] - The average West Texas Intermediate (WTI) spot price is forecasted to drop to $69 12 per barrel in 2025 from $76 51 in 2024 [5] Upstream Sector - Exploration and production companies are expected to benefit from increased domestic production and reduced import volumes [4] - EOG Resources Inc (EOG) and ConocoPhillips (COP) are positioned for continued profitability due to lower breakeven WTI prices, especially for existing wells [6] - EOG Resources has an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook [9] - ConocoPhillips has a solid production outlook due to its diversified upstream asset base and efficient drilling and completion activities in key US basins [10] Midstream Sector - Higher crude production and lower imports will increase demand for transportation and storage assets, benefiting midstream companies [11] - Kinder Morgan Inc (KMI) operates a 79,000-mile pipeline network, transporting natural gas, gasoline, crude oil, and carbon dioxide [12] - Enbridge Inc (ENB) operates the world's longest and most complex crude oil and liquids transportation network, spanning 18,085 miles, and a gas transportation pipeline network covering 71,308 miles [13] Commodity Export Trends - Crude export volumes are expected to increase due to rising crude availability from refinery retirements and increased production [3]

Core Viewpoint - A consolidation wave in the oil industry has led to significant acquisitions by companies like ConocoPhillips and Devon Energy, positioning them for growth in shareholder value in 2025 and beyond [1][12] ConocoPhillips - ConocoPhillips completed its acquisition of Marathon Oil for $22.5 billion, including $5.4 billion in debt [2] - The acquisition adds over 2 billion barrels of resources at a cost of supply below $30 per barrel, enhancing ConocoPhillips' inventory [3] - The deal is expected to be immediately accretive to earnings, free cash flow, and return of capital per share, with anticipated synergies exceeding $1 billion in the next 12 months [4] - ConocoPhillips has increased its dividend by 34% and plans to return more cash to shareholders, with a share-repurchase plan ramping up from $5 billion to $7 billion annually [5] - The combination of growing earnings and capital returns positions ConocoPhillips for robust total returns in 2025, contingent on stable oil prices [6] Devon Energy - Devon Energy closed its acquisition of Grayson Mill Energy for $5 billion, significantly enhancing its position in the Williston Basin [7][8] - The acquisition adds 307,000 acres and 100,000 barrels of oil equivalent per day, making Devon the third-largest onshore pure play producer in the U.S. [8] - The deal is expected to boost earnings and free cash flow per share, with anticipated annual cash-flow savings of $50 million and margin improvements of $125 million from midstream infrastructure [9][10] - Devon has increased its share-repurchase authorization by 67% to $5 billion and plans to reduce debt by $2.5 billion over the next two years [10] - The growth and increased cash returns position Devon for strong total returns in 2025 if oil prices remain stable [11]

ConocoPhillips (COP) recently completed the acquisition of Marathon Oil Corporation, which was initially announced in May, 2024. The acquisition will enhance its deep, durable and diverse portfolio aligned with its strict financial framework. It will bolster COP's high-quality inventory at low cost alongside its prominent U.S. unconventional assets. Financial Details of COP's Acquisition Per the terms of the acquisition deal, the shareholders of Marathon Oil would have the right to receive 0.255 shares of C ...

Group 1 - ConocoPhillips has successfully completed the acquisition of Marathon Oil, enhancing its position in the U.S. oil and natural gas sector, now ranking third in production [2][3] - The acquisition provides ConocoPhillips with a significant inventory of land for future development and low average production costs of around $30 per barrel of oil [3] - Following the acquisition, ConocoPhillips announced a 34% increase in its dividend and a boost in share buyback authorization to $20 billion, demonstrating commitment to returning value to shareholders [4] Group 2 - Despite positive developments, ConocoPhillips' stock is currently over 15% below its 52-week high, primarily due to the inherent volatility of the energy sector [5][6] - The company's stock price is closely correlated with oil prices, which have been declining since April, leading to a 10% drop in realized prices and an 18% year-over-year decline in earnings [6][7] - While ConocoPhillips shows strong operational execution, it is advised that investors approach the stock with caution, considering it as a modest part of a diversified portfolio due to the volatility of the energy industry [8][9]

Core Insights - Companies that pay dividends have significantly outperformed non-payers over the last 50 years, with an average annual total return of 9.2% compared to 4.3% for non-payers, and dividend growers achieving 10.2% [1] Company Summaries ConocoPhillips - ConocoPhillips recently increased its quarterly dividend by 34%, continuing a trend of high dividend growth, with increases of 14% in 2023 and 11% in 2022 [3] - The company aims to be in the top 25% of dividend growth stocks in the S&P 500, supported by accretive acquisitions, high-return capital projects, and share repurchases [3][4] - ConocoPhillips is closing a $22.5 billion acquisition of Marathon Oil, expected to enhance cash flow per share and generate over $500 million in annual cost savings [4] Diamondback Energy - Diamondback Energy has achieved an industry-leading average quarterly compound annual growth rate of 8% for its base dividend since 2018, with a total increase of 620% during this period [5] - The company recently completed its largest acquisition, purchasing Endeavor Energy Resources for $26 billion, which is expected to add 10% to its free cash flow per share next year [6] - Diamondback plans to return at least 50% of its growing free cash flow to shareholders through dividends and share repurchases, while using the remaining 50% to strengthen its balance sheet [6] EOG Resources - EOG Resources has raised its regular dividend by 7%, maintaining a sustainable dividend growth for 27 years, with a nearly 22% compound annual growth rate over the past decade [7][8] - The company focuses on organic growth rather than costly acquisitions, discovering low-cost, high-return oil and gas resources across the U.S. [8] - EOG Resources plans to return more than 100% of its annual free cash flow to shareholders through share repurchases and special dividends, supported by a strong balance sheet [10] Investment Potential - ConocoPhillips, Diamondback Energy, and EOG Resources are positioned for continued high-octane dividend growth, making them attractive options for investors seeking income growth and strong total return potential [11]

ConocoPhillips (COP) , a leading upstream energy firm in terms of production and reserves, is well-positioned to capitalize on handsome crude prices. Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Factors Working in Favor of COPWest Texas Intermediate crude price, trading close to $70 per barrel, is highly favorable for upstream activities.COP secured a solid production outlook thanks to its decades of drilling inventories ...

Group 1 - ConocoPhillips reported better than expected third fiscal quarter earnings, but the overall earnings picture deteriorated due to lower average prices [1] - The energy producer benefited from supportive price actions implemented by OPEC+ members in FY 2024 [1]