Industry Overview - Crude oil prices remained stable in 2023, with Brent oil closing at approximately $77 per barrel, down 3%, and WTI ending at around $71 per barrel, unchanged from the start of the year [1] - Analysts predict that crude prices will continue to hover in the $70s range in 2025, indicating that oil stocks will need additional catalysts beyond oil price increases to drive share price growth [2] ConocoPhillips - ConocoPhillips completed a significant acquisition of Marathon Oil for $22.5 billion, which included assuming $5.4 billion in debt, enhancing its resource portfolio with over 2 billion barrels at an average supply cost below $30 per barrel [3] - The company initially projected $500 million in cost and capital synergies from the acquisition but has since revised this estimate to over $1 billion within the first year, which is expected to significantly boost free cash flow [4] - ConocoPhillips has increased its dividend by 34% and plans to return a substantial portion of its growing cash flow to shareholders, aiming for dividend growth in the top 25% of S&P 500 companies [5] - The company has raised its share repurchase program from $5 billion to $7 billion annually, with plans to retire all equity issued for the Marathon Oil acquisition within two to three years [6] Chevron - Chevron is in the process of acquiring Hess for $60 billion, a deal that would enhance its production and free cash flow growth outlook into the 2030s, potentially doubling its free cash flow by 2027 under a $70 oil scenario [7] - There is an ongoing arbitration regarding a change of control clause related to a joint development agreement with Exxon and CNOOC in Guyana, which could impact the acquisition [8] - If Chevron successfully navigates the arbitration, the acquisition will significantly strengthen its long-term growth profile, adding valuable resources in Bakken, Gulf of Mexico, and Southeast Asia [9][10] - Even in the event of a loss in arbitration, Chevron expects to grow its free cash flow by over 10% annually through 2027, supported by high-return capital investments [11] - Chevron has a long-standing history of increasing dividends annually for over three decades and plans to continue share repurchases within a $10 billion to $20 billion target range [12] Conclusion - Both ConocoPhillips and Chevron are positioned for significant growth in 2025 due to their recent acquisitions, making them standout investment opportunities in the oil sector [13]

Energy stocks delivered an underwhelming performance in 2024. For example, the Energy Select Sector SPDR Fund -- which holds the energy stocks listed in the S&P 500 -- delivered a meager 2% return last year, significantly underperforming the broader market index's 23% return. Oil prices, which initially rallied but ended the year right about where they started, kept a lid on oil stocks last year.While oil stocks performed poorly last year, they could bounce back in 2025. Devon Energy (DVN -0.53%), ConocoPhi ...

The latest trading session saw ConocoPhillips (COP) ending at $101.09, denoting a +1.01% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 1.26%. Elsewhere, the Dow gained 0.8%, while the tech-heavy Nasdaq added 1.77%.Heading into today, shares of the energy company had lost 4.17% over the past month, outpacing the Oils-Energy sector's loss of 5.1% and lagging the S&P 500's loss of 2.82% in that time.The investment community will be paying close attention to ...

Oil Market Overview - Crude oil prices in 2024 were volatile, with WTI closing at around $71 per barrel, nearly 20% below its April peak due to weakened demand from China and a global oversupply [1] - The oil market in 2025 is expected to remain volatile, balancing rising supply with tempered demand growth, with potential price stabilization from geopolitical developments and economic recovery [2] Supply Dynamics - US oil production reached a record 13.46 million barrels per day (bpd) in 2024, a 259,000 bpd increase from the previous year, with further growth projected to 13.52 million bpd in 2025 [3] - The growth rate of US production is moderating compared to the nearly 1 million bpd increase seen in 2023, with infrastructure constraints limiting further expansion [3] - The US remains a key driver of global supply growth alongside Brazil, Canada, and Norway [3] Demand Trends - China's oil demand is faltering due to economic slowdown and accelerated adoption of electric vehicles, with consumption expected to peak at 3.66 million bpd by 2025 [4] - Global oil demand growth is projected at a modest 1.1 million bpd in 2025, with emerging Asian economies partially offsetting China's decline [4] Geopolitical Risks - Geopolitical risks, including conflicts in Ukraine and the Middle East, have had limited impact on oil prices due to minimal supply disruptions [5] - OPEC+ extended production cuts through March 2025, and potential sanctions on Iran could tighten supply, but rising non-OPEC+ production may lead to a surplus of up to 1.4 million bpd by the end of 2025 [5] 2025 Market Outlook - Analysts forecast WTI crude to average just over $70 in 2025, with supply growth and Chinese demand uncertainties weighing on the market [6] - Economic recovery in the US and stimulus measures in China could create pockets of optimism, with the petrochemical sector driving future demand growth [6] Investment Strategy - Investors are advised to focus on resilient oil and energy companies like ExxonMobil, Diamondback Energy, and ConocoPhillips to navigate market volatility and capitalize on recovery opportunities [2][7] - These companies are well-positioned due to efficient operations and diversified portfolios, offering a hedge against fluctuating oil prices [7] Company Profiles - **ExxonMobil**: A fully integrated global oil and gas company with operations spanning production, refining, and marketing [8] - **Diamondback Energy**: An independent oil and gas exploration and production company focused on the Permian Basin, with over 490,000 net acres in key formations [9] - **ConocoPhillips**: A major global explorer and producer of oil and natural gas, headquartered in Houston, TX [10]

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

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]