ConocoPhillips Plans $1 Billion Cost Cuts in 2026 as Oil Prices Weigh on Earnings
ConocoPhillips is tightening capital and operating spending after missing fourth-quarter profit estimates, as weaker oil prices pressure earnings across the sector. The company outlined its cost-cutting plan alongside production and shareholder return targets.
(Reuters) — ConocoPhillips 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, the company said on Feb. 5.
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.
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," said RBC Capital Markets analyst Scott Hanold.
Shares of the company were down 2.1% in morning trading.
Oil Prices Squeezed by Oversupply
ConocoPhillips said its average realized price dropped 19% to $42.46 per barrel of oil equivalent in the quarter, a decline only partially offset by higher production volumes and tighter cost controls.
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 Houston-based 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 Dec. 31, compared with analysts' average estimate of $1.11, according to data compiled by LSEG.