ConocoPhillips Raises Dividend 8% Despite Net Income Sliding 17%

Wikimedia Commons

Quick Read

ConocoPhillips (COP) beat adjusted earnings at $1.61 per share and reported revenue of $15.52B, but net income fell 17.2% to $1.7B as lower oil prices offset production gains. ConocoPhillips increased quarterly production 482 MBOED year over year to 2,399 MBOED and raised full-year 2025 guidance, demonstrating operational strength despite commodity weakness. The company raised its dividend 8% to $0.84 per share and repurchased $1.3B in stock, signaling confidence in cash generation despite WTI crude trading near $60 per barrel. Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.

ConocoPhillips(NYSE: COP) beat adjusted earnings expectations in the third quarter, delivering $1.61 per share versus the $1.41 consensus. Revenue climbed to $15.52 billion, topping the $14.63 billion estimate. Yet the stock opened lower at $88.61 as investors weighed the results against a sharply lower reported EPS figure and the persistent headwind of declining oil prices.

The core story here is operational strength masking commodity weakness. ConocoPhillips produced 2,399 thousand barrels of oil equivalent per day in Q3, up 482 MBOED year over year. That production growth is real and material. But net income fell 17.2% to $1.7 billion from $2.05 billion a year ago. Lower realized crude prices are squeezing profitability even as the company executes better on the ground.

Production Gains Offset Price Pressure

The Delaware Basin delivered 686 MBOED, the Eagle Ford 403 MBOED, and the Bakken 200 MBOED. Lower 48 output reached 1,528 MBOED. This production momentum is the clearest bright spot in the quarter. Management raised full-year 2025 production guidance to 2.375 MMBOED and guided Q4 production to 2.30-2.34 MMBOED. The company is executing on its operational roadmap. I'd keep an eye on these production numbers as the real measure of execution quality, separate from commodity price swings.

Margins Under Siege

The reported EPS of $1.38 missed the $1.41 consensus, a detail that stung despite the adjusted beat. Operating cash flow rose 2.4% to $5.9 billion, a modest gain that reflects the margin compression hitting the sector. Capital expenditures fell 1.7% to $2.87 billion, showing discipline. Yet with WTI crude trading near $60 per barrel, down 15.4% year over year, the upside from higher volumes is limited. Gross margins compressed as lower oil prices directly reduced realized revenue per barrel.

Story Continues

Capital Returns Remain Robust

Management increased the quarterly dividend 8% to $0.84 per share, with a record date of November 17 and payment on December 1. The company also repurchased $1.3 billion in stock during the quarter. These moves signal confidence in cash generation despite near-term commodity headwinds. ConocoPhillips remains on track for its $5 billion disposition target by end of 2026, having already exceeded $3 billion in sales this year.

Key Figures

Adjusted EPS: $1.61 (beat est. $1.41); down 9.6% from $1.78 in Q3 2024 Reported EPS: $1.38 (missed est. $1.41) Revenue: $15.52B (beat est. $14.63B); up 19.5% YoY Operating Cash Flow: $5.9B; up 2.4% YoY CapEx: $2.87B; down 1.7% YoY Net Income: $1.7B; down 17.2% YoY Production: 2,399 MBOED; up 482 MBOED YoY Cash & Equivalents: $6.6B; up 26.4% YoY

The adjusted beat reflects operational discipline. Revenue growth of 19.5% year over year looks strong on the surface, but that gain owes more to higher production volumes than to price. The company is doing more with less, which matters. Yet the 17.2% decline in net income shows the real constraint: commodity prices remain the dominant variable.

Management Sounds Cautiously Constructive

CEO Ryan Lance stated that ConocoPhillips "demonstrated strong operational and financial performance in the third quarter, resulting in higher production and reduced operating cost guidance for 2025." The tone was measured but positive. Lance emphasized the 8% dividend increase as consistent with the company's goal of "top quartile dividend growth in the S&P 500." That messaging signals management believes cash generation will remain resilient even if commodity prices stay depressed.

For 2026, the company guided preliminary capital expenditures of $12 billion and adjusted operating costs of $10.2 billion, with underlying production growth expected to be flat to up 2%. That guidance suggests management expects oil prices to remain range-bound rather than spike higher. It's a realistic posture given current market conditions.

What Matters Next

Watch how ConocoPhillips navigates the next 90 days. If oil prices hold above $60, the company's production growth should continue to drive cash flow gains and support the dividend. If prices slip further, margin compression will accelerate despite operational wins. The earnings call at noon today will likely focus on 2026 capital allocation and any commentary on the macro energy outlook. I'd listen for how management frames demand trends in their opening remarks. The real test will come in Q4 results, when we'll see whether this quarter's operational gains hold or fade as commodity headwinds persist.

View Comments