I'll research ConocoPhillips before writing the preview. Let me gather recent earnings materials, filings, and news in parallel.I have data through 2026Q1. Let me read the most recent earnings materials (2026Q1 release + call) and the prior 2025Q2 release for context, plus recent news.Now let me get recent news, stock price performance, and the year-ago comparison quarter context.Let me pull the year-ago Q2 2025 release for comparison and search for consensus estimates plus recent oil-price context.I have what I need. Let me quickly compute a few performance stats, then write.Now I have everything I need to write the preview.
This is the quarter where ConocoPhillips' deliberately unhedged, oil- and LNG-levered portfolio collides with the biggest geopolitical oil shock in years. The company gave up its Qatar production but stands to capture the full price windfall — so the debate for investors is less "will the numbers be big" and more "how sustainable is the macro, and what will COP do with the cash?"
The reporting period sits squarely inside the fallout from the U.S.–Israel conflict with Iran that began in February 2026 and effectively closed the Strait of Hormuz for months. Management's own read of the market on the Q1 call was stark: for about 2 months roughly 10 million barrels a day of production was offline, with the brunt of the supply shortfall being absorbed by refinery run cuts and demand curtailments. They went further, downgrading their view of global oil demand to flat year-over-year with more risk to the downside if the conflict persists, and flagging that the floor probably has to come up relative to the pre-conflict mid-cycle WTI call of about $65.
The read-through from peers who have already reported is unambiguous — this was a blowout quarter for the industry: - Chevron reported a quarterly record of $12.1 billion, and ExxonMobil's $14.5 billion nearly doubled last year's second-quarter profit amid the Iran war. - Refiners were the biggest beneficiaries: Phillips 66 reported a nearly fourfold jump in profit as the Middle East conflict boosted U.S. refining margins, with net income of $3.85 billion — its strongest quarterly profit since 2022 — and adjusted EPS of $9.41 versus $7.44 consensus. - On the E&P side, the pure-play comp is instructive: Diamondback lifted its production outlook and reported surging profit, with its CEO saying record draws from global inventories have "structurally raised the floor for oil prices compared to pre-conflict prices," though the timing of eventual supply normalization is impossible to predict.
The wrinkle heading into the print: the macro may be starting to turn. Just yesterday, Iran said it reached a 60-day temporary agreement with Oman to resume shipping through the Strait of Hormuz, with inbound traffic through Iranian waters and outbound through Omani waters. That, combined with COP's shares selling off ~4–5% over the last three sessions, suggests the market is beginning to price in normalization. Listen for how Ryan Lance and Andy O'Brien frame the "new equilibrium" mid-cycle price — that framing matters more for the stock than the Q2 headline.
Direction of travel: earnings up sharply YoY on price, volumes down. The year-ago comparison is soft — in Q2 2025 COP reported EPS of $1.56 and adjusted EPS of $1.42, generated CFO of $4.7 billion, and realized $45.77 per BOE, 19% lower than the prior year. With Brent-linked realizations dramatically higher this quarter, adjusted earnings and CFO should show a large step-up.
But production was pre-guided lower. Management deliberately pulled Qatar out of the numbers: second-quarter production is expected to be 2.185 to 2.215 MMBOED, versus 2,391 MBOED delivered in Q2 2025. Two moving parts to keep straight: - Qatar/N3 shut-in. The single producing asset in Qatar is N3, roughly 80,000 barrels of oil equivalent per day last year — about 3% of total company production and very similar on total CFO — with the remainder of the global portfolio largely unaffected. - Surmont royalties. Higher oil prices trigger a step-up in royalty rates, a ~15 MBOED annual drag.
Realized price is where the leverage shows. COP has intentionally stayed unhedged. About 40% of crude volume is linked to Alaska or international price markers, split roughly evenly, with the international barrels mainly linked to Dated Brent — and Dated has been trading at a premium to ICE. One nuance to expect management to reiterate: earnings flow through first, but cash comes in with a lag of a month or so, and there are timing mismatches between cash and earnings that take a month or two to line up. So a very strong earnings number may not be fully matched by cash yet.
COP's framework is well established: delivering top-quartile S&P 500 dividend growth, protecting the investment-grade balance sheet, returning significant CFO to shareholders off the top (averaging ~45% over the past decade), and only then evaluating disciplined reinvestment for growth. For 2026 specifically, the company reiterated its objective to return 45% of CFO to shareholders this year.
Here's the tension: 45% of a much bigger CFO number = a much bigger absolute return of capital. In Q1, COP distributed $2.0 billion, including $1.0 billion of buybacks and $1.0 billion of dividends. Management telegraphed more buyback ahead — Ryan Lance said Q1 repurchases were a bit light and that you'll probably see them buying more in the second quarter.
Watch for the buyback-at-the-top-of-the-cycle debate to resurface. On the Q1 call, Wolfe's Doug Leggate pressed exactly this point, and Lance's answer is the key philosophy: they think about buybacks on a dollar-cost-average basis and won't cling steadfast to a fixed rate, but they do want to hit the 45% and keep the dividend affordable and growable without letting it become an outsized portion of cash flow at mid-cycle prices. Given the pullback in the shares over the past week, aggressive repurchases here would arguably be better-timed than the market feared.
The dividend is likely to be raised again — COP declared a Q2 ordinary dividend of $0.84 per share, and a Q3 declaration is due with this release.
(a) Will they raise capex further? Q1 already nudged it up: 2026 capital was raised to $12–12.5 billion, including incremental Permian activity. The rationale was operational, not a price bet — a ~$250 million increase to add a Permian rig to keep pace with completion efficiencies and to fund higher non-operated (OBO) spend as partners ballot more wells, maintaining operational continuity into 2027. With prices now higher for longer, expect scrutiny on whether the short-cycle response builds further and how it sets up 2027 volumes.
(b) Will they finally cut the operating-cost guide? COP has been running ahead of plan. Full-year opex guidance of $10.2 billion (a $400 million reduction from 2025) was unchanged, with management confident of hitting the full $1 billion run-rate savings by year-end but wanting more time before revisiting guidance. After a second strong quarter, a formal reduction here would be a clean, high-quality positive.
(c) When does Qatar come back into guidance? COP excluded it deliberately: management stressed this is not a call on when the conflict resolves, just a transparent framework to model underlying performance. Given the fresh Strait-of-Hormuz reopening deal, updated commentary on N3 restart timing and the NFE/NFS construction schedule will move the out-year model.
Beyond the quarter, COP wants the story anchored on portfolio quality and a visible free-cash-flow inflection: - On track to deliver a previously announced $7 billion free cash flow inflection by 2029, driven by cost reductions, LNG projects and Willow. - Willow (Alaska): the winter construction season was successful with the project reaching 50% completion, and management pointed to a successful four-well exploration program — the largest winter season since 2020 — that found hydrocarbons and supports keeping Willow full, with early oil expected in 2029. - LNG: the commercial LNG strategy is progressing well, with the first 5 million tons from Port Arthur Phase 1 placed predominantly into Europe, Port Arthur first LNG expected in 2027, and management arguing the market has undergone a structural tightening. - Portfolio pruning: a $5 billion divestiture program with $3 billion already done, a Permian data room open for noncore packages, but management insisting they won't be schedule-driven and won't sell below full value.
Implication: A big Q2 beat is arguably already expected given the peer read-throughs. The stock's reaction likely hinges on (1) the size and pace of buybacks, (2) whether the opex guide finally comes down, and (3) management's framing of the post-conflict mid-cycle oil price. If Lance/O'Brien signal a durably higher floor and lean into repurchases on the pullback, that's the bull case. If commentary leans toward normalization and they hold capital return steady, the "sell-the-news" risk is real.
| Metric | Q2 2025 (a) | Q1 2026 (a) | Q2 2026 (guide/watch) |
|---|---|---|---|
| Production (MBOED) | 2,391 | 2,309 | 2,185–2,215 (ex-Qatar) |
| Adjusted EPS | $1.42 | $1.89 | ↑ sharply YoY on price |
| CFO | $4.7B | $5.4B | ↑ on Brent leverage |
| Realized price ($/BOE) | $45.77 | $50.36 | key upside driver |
| Return of capital | $2.2B | $2.0B | watch buyback pace |
| Dividend/qtr | $0.78 | $0.84 | Q3 declaration due |
Full-year 2026 framework to watch: production 2.295–2.325 MMBOED · capex $12–12.5B · opex $10.2B · ~45% of CFO returned to shareholders.
Bottom line: Expect a headline-strong quarter — that part is nearly baked in by the macro and by peer results. The alpha in this report is in the guidance and capital-allocation choices: a lower opex guide, an aggressive buyback into the recent dip, and a credible "higher-for-longer floor" narrative would reinforce the differentiated FCF-growth thesis into 2029; a cautious, normalization-oriented tone risks a "sell the news" fade given the stock's still-elevated (if off-peak) level.
Note: figures and commentary above are drawn from COP's Q1 2026 and Q2 2025 disclosures, peer earnings, and news through Aug 5, 2026; consensus estimates for the quarter were not available in the sources reviewed.