Why ConocoPhillips Stands Out as a High-Resilience Upstream Player

ConocoPhillips COP, a leading player in the upstream sector, boasts a diversified asset base spread across 14 countries. Notably, the company holds a strong portfolio of assets in the shale basins of the United States, including the Delaware Basin, Midland Basin, Eagle Ford and Bakken shale. The company stands out among leading exploration and production players due to its diversified asset portfolio that supports low-cost production. COP’s advantaged inventory position in the U.S. Lower 48 enables it to sustain operations at a break-even cost as low as $40 per barrel WTI.

Furthermore, COP’s balance sheet strength enables it to weather unfavorable pricing environments. ConocoPhillips has a debt-to-capitalization ratio of 26.4%, significantly lower than the sub-industry average of 49.1%. By the end of the second quarter, ConocoPhillips had $5.7 billion in cash and short-term investments, which demonstrates its strong liquidity position. The company’s low-cost asset portfolio, which includes the advantaged U.S. shale basin assets, enables it to sustain profitability even during unfavorable commodity price environments. Furthermore, its strong balance sheet with low leverage positions it to navigate commodity price volatility more effectively than many of its peers.

Leveraging Low Debt and Quality Assets: EOG & XOM

Like COP, EOG Resources EOG and Exxon Mobil Corporation XOM can withstand commodity price volatility better than many of their peers.

EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. The company has a debt-to-capitalization ratio of 12.66%, significantly lower compared to the composite stocks belonging to the industry.

Exxon Mobil Corporation is a global integrated energy firm with a strong presence in the Permian Basin of the United States and the Starbroek Block offshore Guyana. These resources are crucial to XOM’s upstream production and profits. The company has a debt-to-capitalization ratio of 11.06%, significantly lower compared to the composite stocks belonging to the industry.

COP’s Price Performance, Valuation & Estimates

Shares of COP have plunged 15% over the past year compared with the 17.1% decline of the industry.

From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.27x. This is below the broader industry average of 10.98x.

The Zacks Consensus Estimate for COP’s 2025 earnings has been revised downward over the past 30 days.

COP, XOM and EOG each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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