Can ConocoPhillips' Strategic Divestments Support Long-Term Growth?
COP follows a rigorous process of reviewing all assets within its portfolio annually to identify assets that would compete for capital in the long run. For assets that fail to meet these criteria, the company takes time to assess whether technological or operational changes can help the case. Otherwise, such assets are earmarked for divestment.
The company's recent announcement regarding the $1.3 billion sale of its Anadarko Basin assets underscores COP's disciplined approach toward high-grading its asset portfolio. The Anadarko Basin asset sale would allow the company to accelerate value realization from its non-core assets and optimize its portfolio in the U.S. Lower 48. Combined with the sale of other non-core Permian assets, the transaction has taken COP a step ahead of its asset-sales target for the year. The company has finalized asset divestitures worth more than $2.5 billion within nine months of closing its acquisition of Marathon Oil. Furthermore, ConocoPhillips has extended its target to reach $5 billion in asset sales by the end of 2026.
COP prioritizes divestment of non-core assets while focusing on high-quality, low-cost assets with low breakeven costs. The sale of non-core assets enhances capital efficiency for the firm while allowing it to reinvest the returns toward high-margin basins.
BP and Phillips 66's Focus on Portfolio Optimization
BP plc BP and Phillips 66 PSX are two other global energy firms focused on offloading non-core assets to improve shareholder returns and operational efficiency.
BP is selling non-core assets to streamline its operations to lower its debt burden and generate higher shareholder returns. In 2025, the British energy giant anticipates generating $3 billion to $4 billion from divestments and other proceeds. In the second quarter of 2025, the company generated $1.4 billion in divestment and other proceeds.
Phillips 66 is pursuing a strategy focused on divesting assets outside its core operations, aiming to reallocate the proceeds to more strategic priorities like enhancing shareholder returns. This approach is evident in Phillips 66's announcement of the sale of its non-operated equity interest in the Gulf Coast Express pipeline for $853 million. Furthermore, the company announced the sale of a 65% interest in its Germany and Austria retail business in May 2025.
COP's Price Performance, Valuation & Estimates
Shares of COP have plunged 14% over the past year against the 20.6% decline of the industry.
From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.28x. This is below the broader industry average of 10.65x.
The Zacks Consensus Estimate for COP's 2025 earnings has been revised upward over the past seven days.
Image Source: Zacks Investment Research
COP, BP and PSX currently carry a Zacks Rank #3 (Hold), each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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