ExxonMobil vs. ConocoPhillips: A Safe Stock or a Risky Upside Play?

ExxonMobil Corporation XOM and ConocoPhillips COP are two energy giants. While XOM has an integrated business model, COP is mainly focused on upstream activities. The price performance of both stocks does not reflect strong investor participation. Over the past year, XOM has declined a marginal 0.8% compared with COP’s 12.8% plunge.

COP’s Shale Synergies vs. XOM’s Permian & Guyana Power

Both ConocoPhillips and ExxonMobil have a solid presence in the upstream business. COP has operations in the Lower 48, which comprise the Permian, the most prolific basin in the United States. Other low-cost shale plays in the Lower 48 include Bakken and Eagle Ford. On the second-quarter 2025 earnings call, COP highlighted the completion of its integration with Marathon Oil's assets. The development is thus naturally leading to increased combined production. Importantly, the combination also helped boost operational efficiency, thereby aiding in higher volumes despite employing fewer drilling rigs and a team of workers.

ExxonMobil’s core upstream assets comprise the Permian and offshore Guyana. In the Permian, XOM has highly productive acres, where operations could be significantly economical. By the end of this decade, XOM expects its Permian production to grow to 2.3 million oil equivalent barrels. Also, XOM stated on its latest earnings call that it has a huge inventory of well locations to sustain production for decades. As mentioned on the call, in offshore Guyana, it has a resource base of roughly 11 billion barrels, thanks to massive oil discoveries over the years.

Rewarding Shareholders: XOM’s Consistency vs. COP’s Volatility

Backed by its robust upstream strength, ConocoPhillips is committed to returning capital to shareholders. But, since exploration and production activities are highly vulnerable to commodity price fluctuations, ConocoPhillips’ dividend payments have not been stable. On Feb. 4, 2016, along with the fourth-quarter 2015 results, the upstream giant announced a 66% slash in dividend payments owing to the crude crash.

ExxonMobil’s dividend payments are relatively stable, thanks to its integrated business model. During the period of low oil prices, its refining business benefits, providing a cushion against upstream weakness. Thus, XOM has rewarded shareholders with dividend hikes for more than four consecutive decades.

Which is a Better Stock? COP or XOM

Both XOM and COP have strong balance sheets, on which they can rely during periods of uncertain business environments. Notably, ExxonMobil has significantly lower debt capital exposure than ConocoPhillips. This is getting reflected in XOM’s debt-to-capitalization of 12.6% compared with COP’s 26.4%.

Now, let’s look at the companies’ valuations. From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.20X. This is below XOM’s 7.19X. This means investors are willing to pay a premium for XOM’s earnings over COP.

However, investors should note that the U.S. Energy Information Administration (“EIA”) expects oil prices to decline significantly this year. EIA, in its latest short-term energy outlook, stated that the spot average price of West Texas Intermediate crude will be $64.16 per barrel this year, lower than the $76.60 per barrel recorded last year. EIA stated that rising worldwide oil inventory will hurt the commodity price.

Lower oil price, thus, is unfavorable for exploration and production activities, and ConocoPhillips and XOM will not be exceptions. Hence, investors shouldn’t bet on the stocks right away. However, those who have already invested can stick to their investments.

In detail, investors looking for stable operations with lower risks and steady income should continue to hold on to ExxonMobil, which carries a Zacks Rank #3 (Hold). On the contrary, those who are willing to take risks and prefer oil price volatility can retain #3 Ranked COP. 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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