ConocoPhillips plans $9B cash return amid market shifts
- JPMorgan initiated coverage of ConocoPhillips with a Neutral rating, lowering the price target due to geopolitical uncertainties.
- The company plans to return $9 billion to shareholders in 2024, potentially increasing to $11 billion in 2025 after merging with Marathon Oil.
- Despite a cautious outlook, ConocoPhillips is seen as a core holding in the E&P sector, with strong potential for production growth and cash returns.
In October 2024, JPMorgan initiated coverage of ConocoPhillips with a Neutral rating, adjusting the price target from $139 to $126 due to a cautious outlook on oil fundamentals amid geopolitical uncertainties. The analyst highlighted the company's defensive strengths, including low sustaining capital requirements and a strong balance sheet, which position it well for potential upside in oil prices. ConocoPhillips plans to return $9 billion in cash to shareholders in 2024, with projections to increase to $11 billion in 2025 following a merger with Marathon Oil. This strategy reflects the company's commitment to shareholder returns despite the volatile oil market. Additionally, ConocoPhillips is focusing on long-cycle projects, such as the Willow and Port Arthur developments, which are expected to drive production growth and free cash flow through 2032. The company anticipates a 4% annual production growth, reaching 3.1 million barrels of oil equivalent per day by 2032, with cumulative free cash flow potentially hitting $99 billion. Despite the cautious outlook, ConocoPhillips is viewed as a core holding in the exploration and production sector, offering attractive cash returns and the ability to navigate macroeconomic uncertainties effectively.