2 Reasons Why ConocoPhillips Can Sail Through Low Oil Prices

Core Viewpoint - ConocoPhillips (COP) is highly vulnerable to oil and natural gas price volatility, with the U.S. Energy Information Administration (EIA) projecting a decline in oil prices, which may impact COP's exploration and production activities [1][5]. Group 1: Price Projections and Impact - EIA projects the average West Texas Intermediate (WTI) price at $64.16 per barrel for 2025, down from $76.60 last year, and further declining to $47.77 per barrel in 2026 [1][5]. - Declining oil prices are expected to negatively affect exploration and production activities across the industry, including ConocoPhillips [1]. Group 2: Company Resilience Factors - ConocoPhillips has a strong presence in the Lower 48, particularly in the Permian Basin, which has lower breakeven costs, providing a buffer against low oil prices [2][5]. - The company's debt-to-capitalization ratio is 26.4%, indicating a robust balance sheet that can help it navigate uncertain market conditions [2][5]. Group 3: Comparison with Peers - EOG Resources Inc. (EOG) and Exxon Mobil Corporation (XOM) also maintain strong balance sheets, with debt-to-capitalization ratios of 12.7% and 12.6%, respectively, allowing them to withstand periods of low oil prices [3]. Group 4: Stock Performance and Valuation - ConocoPhillips shares have declined by 3.4% over the past year, compared to a 13.6% decline in the broader industry [4]. - The trailing 12-month enterprise value to EBITDA (EV/EBITDA) for COP is 5.51X, which is below the industry average of 11.29X, indicating potential undervaluation [7]. Group 5: Earnings Estimates - The Zacks Consensus Estimate for ConocoPhillips' 2025 earnings has seen downward revisions over the past 30 days, reflecting market concerns regarding future profitability [6].