ConocoPhillips targets US$1 billion cost cut in 2026 after quarterly profit miss

Signage is displayed at a Conoco gas station in Peoria, Illinois, U.S. ConocoPhillips Co. is expected to report quarterly earnings on Thursday, July 26, 2018.

ConocoPhillips said on Thursday it aims to cut capital and operating costs by US$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.

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 per cent 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.

Oil prices squeezed by oversupply

ConocoPhillips said its average realized price dropped 19 per cent 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 per cent lower than a year earlier, as concerns about oversupply and tariffs outweighed geopolitical risks.

Quarterly production rose 6.3 per cent 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 US$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; Editing by Shilpi Majumdar and Sriraj Kalluvila)