ConocoPhillips COP is an upstream energy player with operations spread across 14 countries. The company is primarily involved in the exploration and production of oil, natural gas liquids and natural gas, alongside LNG developments. ConocoPhillips’ operations in the U.S. Lower 48, where the company has built a high-quality, capital-efficient inventory, are expected to deliver significant value.
The commodity pricing scenario has changed significantly since the beginning of the year. Oil prices have risen from an average of $60 per barrel to more than $90 since the start of the war between the United States and Iran at the end of February. While the two countries are negotiating a deal, oil prices have not eased much and remain well above the pre-war levels.
Per the data from the U.S. Energy Information Administration, Brent crude is expected to average $114.60 per barrel in the second quarter, indicating that high oil prices are likely to persist through the first half of 2026. This is expected to provide ConocoPhillips, a major upstream player with a high-quality, low-cost supply base, with an extremely favorable earnings environment.
The company has highlighted that its priority for 2026 will be to deliver a combined year-over-year improvement of approximately $1 billion from reductions in capital spending and operating costs, while growing its upstream production. The combination of high crude oil prices and operational discipline is expected to boost COP’s earnings and free cash flow profile. This will enable the company to strengthen its balance sheet and enhance shareholder returns.
Other Energy Players Expected to Benefit From High Oil Prices
SM Energy SM and EOG Resources EOG are two upstream energy companies with oil-focused operations that are likely to benefit significantly from rising oil prices due to the geopolitical tensions in the Middle East.
SM Energy owns attractive oil and gas assets across the Permian Basin, Uinta Basin and Eagle Ford regions. The company’s merger with Civitas Resources, announced at the end of the third quarter of 2025, is expected to strengthen its earnings and cash flows. The combination of the two companies has created a high-quality portfolio of assets across highly productive U.S. shale basins, particularly weighted toward the Permian Basin. The company’s oil-focused operations in U.S. shale basins are expected to benefit from increased crude prices.
EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. In fact, the company boasts a multi-basin asset portfolio with as much as 12 billion barrels of oil equivalent resources. The company’s business is mainly focused on crude oil and condensates, which are expected to benefit from the favorable crude pricing environment.
COP’s Price Performance, Valuation & Estimates
Shares of COP have plunged 40.9% over the past year compared to the 33.4% growth of the industry.
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 6.55X. This is above the broader industry average of 5.47X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COP’s 2026 earnings has been revised upward over the past seven days.
Image Source: Zacks Investment Research
COP and SM currently sport a Zacks Rank #1 (Strong Buy), while EOG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
SeeWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ConocoPhillips (COP): Free Stock Analysis Report
EOG Resources, Inc. (EOG): Free Stock Analysis Report
SM Energy Company (SM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).