ConocoPhillips targets $1 billion cost cuts in 2026, profit misses on weaker oil prices

By Pooja Menon

Feb 5 (Reuters) – ConocoPhillips said on Thursday it aims to cut capital and operating costs by $1 billion in 2026, after the U.S. oil and gas producer missed Wall Street estimates for fourth-quarter profit due to weaker crude prices.

Oil producers have been under mounting pressure from falling prices, prompting efforts across the sector to rein in spending, scale back drilling and cut headcount.

ConocoPhillips received an average price of $42.46 per barrel of oil equivalent (boe), 19% lower than prices a year earlier, as it typically does not hedge its production.

The company’s upstream-only business leaves it more exposed to oil price swings than oil majors Exxon Mobil and Chevron, which beat profit estimates last week as higher margins in their refining business cushioned the impact of lower crude prices.

CEO Ryan Lance said the cost-reduction push builds on more than $1 billion in run-rate synergies captured in 2025, following the $22.5 billion acquisition of Marathon Oil.

“We’re focused on driving a $1 billion reduction in our capital and costs in 2026, while returning 45% of our cash from operations to shareholders,” Lance said.

The largest independent U.S. oil and gas producer said it closed $3.2 billion in asset sales in 2025 and remains on track to meet its $5 billion disposition target by the end of 2026, as it streamlines its business. 

ConocoPhillips said last year it planned to reduce its workforce by 20% to 25% as part of a broader restructuring.

“Investor concerns still largely focus on timing of the significant free-cash-flow inflection and usage of the cash balance for shareholder returns,” RBC Capital Markets analyst Scott Hanold said.

Shares of the company were down 2.5% in afternoon trading.

VENEZUELA LEGAL CLAIMS

Separately, Lance said on an investor earnings call that the company remains focused on recovering money owed under existing legal judgments in Venezuela. It is also engaging with the U.S. government on policy developments in the South American country over the short, medium and long term.

Exxon Mobil, ConocoPhillips and Chevron were once leading partners of Venezuela’s state oil company PDVSA before the industry was nationalized between 2004 and 2007 under late President Hugo Chavez.

While Chevron later struck deals to continue operating in the country, ConocoPhillips and Exxon exited and pursued arbitration.

OIL PRICES SQUEEZED BY OVERSUPPLY

Benchmark Brent crude prices averaged $63.13 a barrel during the October-December period, 11.3% lower than a year earlier, as concerns about oversupply and tariffs outweighed geopolitical risks.

Quarterly production rose 6.3% to 2.320 million barrels of oil equivalent per day (boepd). The company forecast 2026 output to be between 2.33 million and 2.36 million boepd.

ConocoPhillips posted an adjusted profit of $1.02 per share for the quarter ended December 31, compared with analysts’ average estimate of $1.11, according to data compiled by LSEG.

(Reporting by Pooja Menon in Bengaluru and Arathy Somasekhar in Houston; Editing by Shilpi Majumdar, Sriraj Kalluvila, Will Dunham and Leroy Leo)