ConocoPhillips' Strong 2024 Performance and 2025 Outlook
Cyrus ColeFriday, Feb 7, 2025 4:46 am ET

ConocoPhillips, the Houston-based energy giant, reported robust fourth-quarter 2024 earnings and provided an optimistic outlook for 2025. The company's strong operational execution and strategic initiatives have positioned it well to generate competitive returns and cash flow for decades to come.
In 2024, ConocoPhillips delivered 4% production growth year-over-year, exceeding the high end of its full-year guidance. The company's portfolio demonstrated strong performance across the board, with 5% growth in the Lower 48 and 3% growth in Alaska and International on the same basis. Additionally, ConocoPhillips achieved a 123% preliminary organic reserve replacement ratio in 2024, with a three-year average of 131%.
ConocoPhillips enhanced its portfolio by closing the acquisition of Marathon Oil in late November 2024. This acquisition added high-quality, low-cost supply inventory to the company's portfolio and is expected to generate more than $1 billion in run rate synergies by the end of 2025. Over half of these synergies are already reflected in the company's announced capital guidance.
In Alaska, ConocoPhillips opportunistically exercised its preferential rights to acquire additional working interest at attractive valuations in Kuparuk River and Prudhoe Bay units. The company also progressed its global LNG strategy through additional regasification and sales agreements into Europe and Asia. Furthermore, ConocoPhillips announced that it is making solid progress on its planned $2 billion of asset sales, with agreements in place to sell noncore Lower 48 assets for approximately $600 million before customary adjustments in the first half of 2025.
ConocoPhillips' strong performance in 2024 was reflected in its trailing 12-month return on capital employed of 14%, or 15% on a cash-adjusted basis. The company returned $9.1 billion of capital to shareholders, representing 45% of its cash flow from operations, consistent with its long-term track record and well above its 30% commitment.
Looking ahead to 2025, ConocoPhillips remains confident in its plan to deliver low single-digit production growth for $12.9 billion of capital expenditures. In the Lower 48, on a pro forma basis, the company plans to reduce capital spending by over 15% year-over-year while still delivering low single-digit production growth. This is primarily due to expected material synergy capture associated with the acquisition of Marathon and significant drilling and completion efficiency gains.
ConocoPhillips also expects to grow production in Alaska and Canada while continuing to invest in differentiated high-return, longer-cycle projects. The company expects 2025 to be the peak year of its long-cycle spending at around $3 billion, followed by a steady stream of project start-ups from 2026 to 2029. Once these projects are all online, ConocoPhillips expects $3.5 billion of incremental CFO from NFE, Port Arthur, NFS, and Willow, all combined at $70 WTI, $10 TTF, and $4 Henry Hub, leading to roughly $6 billion of incremental annual sustaining free cash flow relative to 2025.

ConocoPhillips' strategic focus on returns and cash flow distribution aligns with its long-term growth objectives by prioritizing efficient capital allocation and maximizing shareholder value. The company's acquisition of Marathon Oil and planned asset sales are key examples of this strategy in action. By integrating acquisitions efficiently and optimizing its portfolio, ConocoPhillips creates value for shareholders and positions itself for long-term success.
ConocoPhillips' strong operational performance and strategic initiatives have positioned the company well to generate competitive returns and cash flow for decades to come. The company's focus on efficient capital allocation, portfolio optimization, and maximizing shareholder value has enabled it to deliver robust earnings and provide an optimistic outlook for 2025. As ConocoPhillips continues to execute on its strategic plan, investors can expect the company to maintain its competitive position in the energy sector.
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