- Strong Marathon Integration ConocoPhillips identified over $1 billion in additional cost reductions and margin improvements post-acquisition, on top of $1 billion in initial synergies.
- Free Cash Flow Growth Projected $7 billion increase in free cash flow by 2029, doubling the current consensus, driven by LNG and Alaska projects.
- Asset Disposition Progress Raised total disposition target to $5 billion, with $2.5 billion already sold; 40,000 barrels/day of Anadarko Basin assets in process.
- Tax Efficiency Anticipates $500 million incremental deferred tax benefit in 2025, with a 2024 effective tax rate of mid-30s.
- Capital Discipline Maintains 2024 capital spending and operating cost guidance ranges, with 45% of full-year CFO allocated to shareholder returns.
Integration and Cost Savings
The integration of Marathon Oil assets is complete, with outperformance against the acquisition case. The company has identified over $1 billion of additional cost reduction and margin enhancement opportunities, on top of the $1 billion of Marathon synergies already expected. As Nick Olds noted, "We've increased our estimated resource adds from 2 billion to 2.5 billion barrels, with a doubling of resource estimates in the Permian."
Free Cash Flow Inflection
Free cash flow inflection is expected to be driven by major projects in LNG and Alaska, with a $7 billion increase expected by 2029, doubling the consensus free cash flow expectation for the entire company this year. The company remains focused on delivering strong returns on and of capital through the cycles, with a differentiated long-term value proposition.
Valuation
With a P/E Ratio of 12.9, P/B Ratio of 1.8, and Dividend Yield of 3.32%, the stock appears reasonably valued. The company's ROIC of 7.59% and ROE of 14.92% suggest that it is generating strong returns on its capital. The Net Debt / EBITDA of 0.73 indicates a manageable debt position.