Should You Buy ConocoPhillips Stock With Oil Prices Below $80 a Barrel?

Oil Price and Market Context - WTI crude oil price has fluctuated, reaching over $80 per barrel multiple times but currently trading in the mid-$70s [1] - The price of crude oil significantly impacts oil stocks, including ConocoPhillips [1] ConocoPhillips Financial Performance - ConocoPhillips averaged 1.9 million BOE per day in Q3 last year, selling oil at $76.77 per barrel and total output at $54.18 per BOE [2] - Generated $4.7 billion in cash from operations in Q3, used for investments, dividends ($900 million), share repurchases ($1.2 billion), and maintaining a strong balance sheet ($7.1 billion in cash and short-term investments) [2] - Through the first nine months of last year, the company generated $14.9 billion in cash from operations, covering capital expenditures ($8.8 billion), share repurchases ($3.5 billion), and dividends ($2.7 billion) [3] - Repaid $500 million of debt at maturity [3] Low-Cost Supply Advantage - ConocoPhillips has 20 billion barrels of resources with a cost of supply of $40 per barrel or lower, averaging $32 per barrel [4] - The company can generate significant cash flow even with crude prices in the $70s [4] Marathon Oil Acquisition Impact - ConocoPhillips closed a $22.5 billion acquisition of Marathon Oil, adding over 2 billion barrels of resources with an average cost of supply below $30 per barrel [5] - The acquisition is immediately accretive to cash flow from operations and free cash flow [6] - Expected to capture over $1 billion in cost and capital synergies within the first year, double the initial estimate of $500 million [6] Future Cash Return to Investors - ConocoPhillips increased its dividend by 34% and plans to deliver dividend growth in the top 25% of S&P 500 companies [7] - Plans to ramp up share repurchases from over $5 billion annually to more than $7 billion per year [7] Investment Outlook - ConocoPhillips remains a buy at sub-$80 oil due to its low-cost oil production and the added benefits from the Marathon Oil acquisition [8] - The company is well-positioned to generate significant cash flow even at lower oil prices [8]