COP
COP
Hold 2026-03-20
Model
DCF
Price at Report
$126.02
Base IV
$107.34
Bear IV
$42.50
Bull IV
$205.86
Entry Zone: 45-99 · Sell Above: 175
Bore Family Office
Valuation Report — ConocoPhillips (COP) • March 20, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 8.80% • Current Price: $126.02
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
ConocoPhillips is the world's largest independent exploration and production (E&P) company, with production of approximately 2.0 million barrels of oil equivalent per day (Mmboe/d) following the $22.5B acquisition of Marathon Oil completed in November 2024. Headquartered in Houston, COP operates a diversified, low-cost global portfolio spanning Alaska (Willow, Kuparuk), the Lower 48 (Permian Basin, Eagle Ford, Bakken), Canada (oil sands, Montney), Europe, Asia-Pacific, and the Middle East.
COP's competitive advantage is its industry-leading cost structure — with a corporate breakeven below $40/bbl WTI — combined with a disciplined capital allocation framework that prioritizes free cash flow generation, shareholder returns (dividends + buybacks), and low-breakeven resource additions. FY2025 revenue was $58.9B with $22.4B EBITDA (38% margin). The company has returned over $50B to shareholders since 2016 via dividends and buybacks, establishing one of the most shareholder-friendly capital return programs in global energy.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Lower 48 | $30,000M | 51% | +10.0% | — | Permian, Eagle Ford, Bakken — highest-margin onshore US production |
| Alaska | $8,500M | 14% | +5.0% | — | Willow project (expected 180k boe/d), Kuparuk, Alpine — long-life Arctic assets |
| Canada | $7,500M | 13% | +3.0% | — | Oil sands (Surmont), Montney natural gas — TMX pipeline provides pricing uplift |
| Europe/MENA/Asia-Pacific | $7,000M | 12% | -2.0% | — | Norway, UK, Libya, Australia, Malaysia, Indonesia — mature, declining |
| Marathon Oil (acquired) | $5,944M | 10% | — | — | Eagle Ford, Bakken, Permian, EG — acquired Nov 2024 for $22.5B |
| Blended Growth Rate | — | 100% | +6.6% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 12.3% | ≥12% strong |
| FCF Margin | 12.3% | ≥10% strong |
| Debt / EBITDA | 1.1x | ≤2x conservative |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $45,828 | $78,494 | $56,141 | $54,745 | $58,944 |
| EBITDA ($M) | $18,261 | $32,775 | $22,997 | $21,796 | $22,418 |
| Operating Income ($M) | $11,053 | $25,271 | $14,727 | $12,197 | $10,918 |
| Net Income ($M) | $8,079 | $18,680 | $10,957 | $9,245 | $7,988 |
| EPS (diluted) | $6.07 | $14.57 | $9.06 | $7.81 | $6.35 |
| Free Cash Flow ($M) | $11,672 | $18,155 | $8,717 | $8,006 | $7,243 |
| Annual DPS | $1.750 | $4.490 | $4.610 | $3.120 | $3.180 |
| Total Debt ($M) | $19,934 | $16,643 | $18,937 | $24,324 | $23,444 |
| Rev YoY Growth | — | +71.3% | -28.5% | -2.5% | +7.7% |
| Gross Margin | 48.0% | 47.8% | 47.2% | 47.5% | 44.6% |
| EBITDA Margin | 39.8% | 41.8% | 41.0% | 39.8% | 38.0% |
| Operating Margin | 24.1% | 32.2% | 26.2% | 22.3% | 18.5% |
| Net Margin | 17.6% | 23.8% | 19.5% | 16.9% | 13.6% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 1.000 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 9.80% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.51% | × (1 − 22%) |
| Weight Equity (We) | 86.8% | Mkt cap $0.0B |
| Weight Debt (Wd) | 13.2% | Gross debt $0.0B |
| WACC | 8.80% | DCF discount rate |
📈 DCF Scenarios
$42
🔴 Bear
$107
📊 Base
$206
🚀 Bull
$126.02
Current Price
$118
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -6.0% | -2.0% | 2.0% | 10.30% | $42 | ▼66.3% |
| 📊 Base | 2.0% | 2.0% | 2.5% | 8.80% | $107 | ▼14.8% |
| 🚀 Bull | 5.0% | 3.5% | 3.0% | 7.80% | $206 | ▲63.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -6.0% | Stage 2: -2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $7.50B | $6.80B | $6.80B |
| Year 2 ✦ | Stage 1 | $6.80B | $5.59B | $12.39B |
| Year 3 ✦ | Stage 1 | $6.30B | $4.69B | $17.08B |
| Year 4 ✦ | Stage 1 | $6.50B | $4.39B | $21.48B |
| Year 5 ✦ | Stage 1 | $6.80B | $4.17B | $25.64B |
| Year 6 | Stage 2 | $6.66B | $3.70B | $29.34B |
| Year 7 | Stage 2 | $6.53B | $3.29B | $32.63B |
| Year 8 | Stage 2 | $6.40B | $2.92B | $35.55B |
| Year 9 | Stage 2 | $6.27B | $2.60B | $38.15B |
| Year 10 | Stage 2 | $6.15B | $2.31B | $40.45B |
| Terminal | — | TV=$75.5B | PV(TV)=$28.3B (41% of EV) | EV=$68.8B |
| Intrinsic Value | — | — | EV $68.8B − Net Debt → Equity / Shares | $42 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.30%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $75.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $28.3B). Enterprise Value = PV of FCFs ($40.5B) + PV of TV ($28.3B) = $68.8B. Subtracting net debt gives equity value of $51.8B, divided by shares outstanding = $42 per share.
Base Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $9.20B | $8.46B | $8.46B |
| Year 2 ✦ | Stage 1 | $9.50B | $8.03B | $16.48B |
| Year 3 ✦ | Stage 1 | $9.80B | $7.61B | $24.09B |
| Year 4 ✦ | Stage 1 | $10.20B | $7.28B | $31.37B |
| Year 5 ✦ | Stage 1 | $10.50B | $6.89B | $38.26B |
| Year 6 | Stage 2 | $10.71B | $6.46B | $44.71B |
| Year 7 | Stage 2 | $10.92B | $6.05B | $50.77B |
| Year 8 | Stage 2 | $11.14B | $5.67B | $56.44B |
| Year 9 | Stage 2 | $11.37B | $5.32B | $61.76B |
| Year 10 | Stage 2 | $11.59B | $4.99B | $66.75B |
| Terminal | — | TV=$188.6B | PV(TV)=$81.1B (55% of EV) | EV=$147.9B |
| Intrinsic Value | — | — | EV $147.9B − Net Debt → Equity / Shares | $107 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.80%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $188.6B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $81.1B). Enterprise Value = PV of FCFs ($66.7B) + PV of TV ($81.1B) = $147.9B. Subtracting net debt gives equity value of $131.0B, divided by shares outstanding = $107 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 5.0% | Stage 2: 3.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $10.50B | $9.74B | $9.74B |
| Year 2 ✦ | Stage 1 | $11.50B | $9.90B | $19.64B |
| Year 3 ✦ | Stage 1 | $12.50B | $9.98B | $29.61B |
| Year 4 ✦ | Stage 1 | $13.50B | $10.00B | $39.61B |
| Year 5 ✦ | Stage 1 | $14.50B | $9.96B | $49.57B |
| Year 6 | Stage 2 | $15.01B | $9.56B | $59.13B |
| Year 7 | Stage 2 | $15.53B | $9.18B | $68.32B |
| Year 8 | Stage 2 | $16.08B | $8.82B | $77.13B |
| Year 9 | Stage 2 | $16.64B | $8.46B | $85.60B |
| Year 10 | Stage 2 | $17.22B | $8.13B | $93.72B |
| Terminal | — | TV=$369.5B | PV(TV)=$174.4B (65% of EV) | EV=$268.1B |
| Intrinsic Value | — | — | EV $268.1B − Net Debt → Equity / Shares | $206 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.80%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $369.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $174.4B). Enterprise Value = PV of FCFs ($93.7B) + PV of TV ($174.4B) = $268.1B. Subtracting net debt gives equity value of $251.1B, divided by shares outstanding = $206 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.8% | $141 | $152 | $164 | $180 | $201 |
| 7.3% | $128 | $136 | $146 | $158 | $173 |
| 7.8% | $116 | $123 | $131 | $140 | $152 |
| 8.3% | $107 | $112 | $119 | $126 | $135 |
| 8.8% | $98 | $103 | $108 | $114 | $121 |
| 9.3% | $91 | $95 | $99 | $104 | $110 |
| 9.8% | $85 | $88 | $92 | $96 | $100 |
| 10.3% | $79 | $82 | $85 | $88 | $92 |
| 10.8% | $74 | $76 | $79 | $82 | $85 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E | EV/EBITDA | Div Yield | FCF Yield | Note |
|---|---|---|---|---|---|
| COP (current) | 19.9x | 7.7x | 2.7% | 4.7% | Largest indie E&P; above consensus PT |
| COP (5yr avg) | ~12x | ~5.5x | ~3% | ~7% | Trading above own historical avg |
| EOG Resources | 11.5x | 5.8x | 2.5% | 6.2% | Permian/Eagle Ford; lower cost |
| DVN (Devon) | 8.5x | 4.2x | 3.8% | 8.5% | Lower 48 pure-play; variable div model |
| HES (Hess) | 50x | 12x | 1.5% | 2.0% | Being acquired by Chevron; Guyana exposure |
| PXD/XOM (post-acq) | 14x | 6.5x | 3.2% | 5.5% | ExxonMobil (acquired Pioneer); integrated |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $3.360 |
| Current Yield | 2.67% |
| Consecutive Growth Years | 1 |
| 1-yr DPS CAGR | +3.9% |
| 3-yr DPS CAGR | +2.6% |
| 5-yr DPS CAGR | +13.9% |
| 10-yr DPS CAGR | +8.0% |
| Payout Ratio (DPS/EPS) | 52.9% |
| FCF Payout Ratio | 56.6% |
| Sustainability Verdict | ✅ Safe |
COP's $3.36/yr regular dividend is well-covered at a 53% EPS payout ratio and 57% FCF payout. Even at $55 WTI, COP's low breakeven ensures the regular dividend is sustainable. COP previously paid variable/special dividends of $0.20-$1.40/qtr (2022-2023), but reduced these post-Marathon acquisition to preserve cash for debt paydown and integration. The regular dividend was increased 8% in Q3 2025 (from $0.78 to $0.84/qtr). Buybacks ($5B+/yr) are the primary capital return mechanism. The regular dividend is Safe; variable dividends are discretionary and oil-price dependent.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $6.07 | — | — | — | Actual |
| 2022 | $14.57 | — | — | — | Actual |
| 2023 | $9.06 | — | — | — | Actual |
| 2024 | $7.81 | — | — | — | Actual |
| 2025 | $6.35 | — | — | — | Actual |
| 2026 | $2.60 | $4.93 | $7.56 | 30 | Estimate |
| 2027 | $4.06 | $6.60 | $10.24 | 27 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $45.8B | — | — | — | Actual |
| 2022 | $78.5B | — | — | — | Actual |
| 2023 | $56.1B | — | — | — | Actual |
| 2024 | $54.7B | — | — | — | Actual |
| 2025 | $58.9B | — | — | — | Actual |
| 2026 | $51.1B | $58.0B | $71.1B | 22 | Estimate |
| 2027 | $50.9B | $60.5B | $69.2B | 19 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Ryan Todd | Piper Sandler | Buy | $154 | +22.2% |
| Josh Silverstein | UBS | Strong Buy | $144 | +14.3% |
| Nitin Kumar | Mizuho | Buy | $136 | +7.9% |
| Alastair Syme | Citigroup | Strong Buy | $135 | +7.1% |
| Betty Jiang | Barclays | Buy | $128 | +1.6% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $1.02 vs $1.08 | $-0.06 ❌ | $14.8B vs $15.2B | $-0.4B ❌ | Marathon integration ahead of schedule |
| Q3 2025 | $1.61 vs $1.43 | +$0.18 ✅ | $15.4B vs $14.8B | +$0.6B ✅ | N/A |
| Q2 2025 | $1.42 vs $1.36 | +$0.06 ✅ | $14.9B vs $14.6B | +$0.3B ✅ | Raised production outlook |
| Q1 2025 | $1.30 vs $1.25 | +$0.05 ✅ | $13.8B vs $13.7B | +$0.1B ✅ | N/A |
💡 Investment Thesis
- Lowest-Cost Independent E&P: COP's sub-$40/bbl breakeven means the company generates positive FCF at virtually any oil price above $40. In a $70-80 WTI environment, COP produces $9-10B+ annual FCF — a staggering ~7% FCF yield at current market cap. This cost advantage is structural, driven by the quality of the resource base.
- Marathon Oil Synergies: The $22.5B Marathon Oil acquisition adds ~390k boe/d of production (primarily Eagle Ford, Bakken) at a low cost. COP targets $500M/yr in run-rate synergies by 2027 from G&A reduction, procurement efficiencies, and well-cost optimization. Early integration results are tracking ahead of plan.
- Capital Return Machine: COP has returned over $50B to shareholders since 2016 via dividends ($3.36/yr, 2.7% yield) and aggressive buybacks (shares from 1,328M to 1,220M). The company targets returning >30% of CFO annually, with buybacks as the primary mechanism. Share retirement of ~3-4%/yr amplifies per-share growth.
- Willow Project Upside: Alaska's Willow project (final investment decision 2023) is expected to produce up to 180,000 boe/d at peak, adding significant low-cost production volume by 2029-2030. This is not fully priced into consensus estimates.
- Key Risk — Oil Price Dependence: Despite low costs, COP's FCF and share price are fundamentally tied to oil/gas prices. A sustained move to $55-60 WTI would reduce FCF by 30-40% and compress the stock to $80-90. The stock is currently above the $118 analyst consensus PT, suggesting limited near-term upside unless oil prices stay elevated.
⚖️ DCF Verdict: Hold — ConocoPhillips (COP)
Current price: $126.02 | Analyst Avg PT: $118.05
$42
🔴 Bear
$107
📊 Base
$206
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$99 | Begin position |
| Tier 2 — Add | ≤$75 | Add on weakness |
| Tier 3 — Full | ≤$45 | Full allocation |
| Sell Alert | ≥$175 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Hold at current prices with a Base DCF target of ~$116. COP at $126 trades 7% above analyst consensus PT ($118) and 9% above our Base IV. While the long-term thesis (low-cost producer, capital returns, Willow upside) is compelling, the near-term risk/reward is unfavorable at these levels — the stock is at its 52-week high and pricing in $75+ WTI indefinitely.
Do not initiate new positions above $120. Accumulate below $105 (near Bear/Base midpoint). Strong buy below $85 (Bear case / sub-$60 WTI). The 2.7% dividend yield and buyback program provide modest total return while waiting for a better entry. COP is a hold-for-income name at current prices, not a new-money opportunity.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base & Normalization | FY2025 FCF $7.2B depressed by Marathon Oil integration capex and lower Q4 realizations. FY2024 pre-Marathon FCF was $8.0B. Normalized FCF of $9.5B reflects: (1) full-year Marathon Oil contribution (~$2-3B incremental FCF), (2) $500M/yr synergies by 2027, (3) declining integration capex. At mid-cycle $75 WTI, $9.5B is conservative. |
| WACC — Beta Adjustment | Raw Finnhub beta 0.27 is clearly wrong for an E&P company — COP's stock is highly sensitive to oil/gas prices. Revenue swung from $45.8B (2021) to $78.5B (2022) to $58.9B (2025). Adjusted to beta=1.0 (standard for large-cap diversified E&P). Ke=9.80%, WACC=8.80% after quality adjustment for COP's best-in-class cost structure. |
| Stock Above Consensus | COP at $126 trades 7% above analyst consensus PT $118 — unusual for an E&P. This gap reflects the market pricing in: (1) higher-for-longer oil thesis, (2) Marathon synergy upside, (3) Willow production growth not yet in estimates. Our Base IV of ~$116 aligns with consensus, implying limited upside on fundamental assumptions. |
| Marathon Oil Integration | COP acquired Marathon Oil for $22.5B (closed Nov 2024), adding 390k boe/d and premier Eagle Ford/Bakken acreage. Integration is ahead of schedule per Q4 2025 guidance. Target: $500M/yr run-rate synergies. Debt increased from $18.9B to $23.4B for the deal — leverage is elevated but manageable at 1.05× Debt/EBITDA. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.