ConocoPhillips (COP) Q3 2025: Production Rises, but Profits Fall

ConocoPhillips (COP), a major player in the global oil and gas exploration and production (E&P) sector, recently released its financial results for the third quarter of 2025. In this post, we'll dive into the numbers from their latest 10-Q filing to understand the company's performance and strategic direction.

More Production, Less Profit

At first glance, ConocoPhillips' third quarter presents a mixed picture. The company's total revenues and other income rose to $15.5 billion, a healthy increase from $13.6 billion in the same period last year. However, despite bringing in more money, net income fell to $1.7 billion from $2.1 billion a year ago. This resulted in diluted earnings per share of $1.38, down from $1.76 in Q3 2024.

So, why the disconnect between higher revenue and lower profit? The answer lies in rising costs and falling prices. A look at the company's expenses reveals significant year-over-year increases in key areas:

• Purchased commodities: Increased to $5.9 billion from $4.7 billion.
• Production and operating expenses: Rose to $2.6 billion from $2.3 billion.
• Depreciation, Depletion, and Amortization (DD&A): Climbed to $2.9 billion from $2.4 billion. DD&A is a non-cash expense that reflects the cost of producing oil and gas reserves and using up equipment over time.

The following flow diagram visualizes how the company's quarterly revenue is distributed across its various costs and expenses, ultimately leading to its net income.

The Price and Volume Story

The core of ConocoPhillips' Q3 story is a classic tale of volume versus price. The company's production volumes saw a massive jump, primarily driven by the integration of assets from the Marathon Oil acquisition, which closed in late 2024.

• Total Production: Surged to 2,399 thousand barrels of oil equivalent per day (MBOED), up from 1,917 MBOED in Q3 2024. The Lower 48 segment, which includes key U.S. shale plays, was a major contributor, with its production growing from 1,147 MBOED to 1,528 MBOED.

However, this impressive production growth was met with market headwinds. The company’s total average realized price per barrel of oil equivalent (BOE) fell 14% to $46.44, down from $54.18 in the third quarter of 2024. In short, ConocoPhillips is successfully producing and selling much more product, but it's getting paid less for each unit, while the cost to extract it has gone up.

Strategic Portfolio Management and Shareholder Returns

Amidst this challenging price environment, ConocoPhillips is actively managing its asset portfolio and prioritizing returns to shareholders. The company has made significant progress on its plan to divest non-core assets, having already closed or announced over $3 billion in dispositions in 2025. It expects to close another $0.5 billion sale of non-core Lower 48 assets in the fourth quarter.

This focus on capital discipline is directly benefiting shareholders. In the third quarter alone, the company distributed over $2.2 billion through a combination of $1.3 billion in share repurchases and $1.0 billion in dividends. Furthermore, ConocoPhillips announced an 8% increase to its quarterly ordinary dividend, signaling confidence in its long-term cash flow generation.

The Takeaway

ConocoPhillips' third-quarter results highlight a company in transition, successfully scaling up its production after a major acquisition. While lower commodity prices have dampened the immediate impact on the bottom line, the company's commitment to divesting non-essential assets and boosting shareholder returns demonstrates a clear and disciplined strategy. The key challenge ahead will be managing its cost base effectively to convert its higher production volumes into stronger profitability, regardless of the direction energy prices take.