BAKU, Azerbaijan, November 14. Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) and senior unsecured ratings of ConocoPhillips (COP), ConocoPhillips Company, and Polar Tankers, Inc. at 'A', maintaining a Stable Outlook.
According to Fitch, ConocoPhillips' ratings reflect its leading position in terms of size and scale among peers, diversified low-cost portfolio, conservative financial policy, low production decline rate and growing free cash flow (FCF).
Offsetting considerations include somewhat elevated capital expenditure (capex), exposure to cost inflation, limited business model integration and a policy of high distributions to shareholders.
Fitch also affirmed the Short-Term IDR and commercial paper (CP) programs for ConocoPhillips Company at 'F1+'. The agency affirmed and withdrew the Long-Term IDR of Marathon Oil Corp. at 'A', as the rating is no longer considered relevant to its coverage.
"With 3Q26 production of approximately 2.1 million barrels of oil equivalent per day (boepd, 2.3 million including equity affiliates), COP is the largest independent exploration and production (E&P) in North America," Fitch said.
The agency noted that the company's size and scale have benefited from mergers and acquisitions and growth projects in recent years, including the Marathon Oil and Concho acquisitions, a 50% stake in Surmont oil sands, future Alaska expansion and multiple LNG facility expansions in Qatar, APLNG and Port Arthur LNG.
"Size is generally favorable for E&Ps, as larger companies tend to have more liquidity options in a downturn, including asset sales. COP's blended portfolio decline rate is below peer averages," Fitch said.
The agency also highlighted ConocoPhillips' geographic and basin diversification in upstream operations, including its positions in the Permian, Eagle Ford and Bakken, Alaska, Canada, Norway, China, Malaysia and Libya, as well as its growing international LNG portfolio.
However, the company's concentration in the US remains relatively high, accounting for 79% of consolidated production. Fitch also noted that ConocoPhillips lacks diversification into non-upstream businesses such as refining, chemicals and midstream operations, which are present among larger, higher-rated integrated energy peers.
LNG disruptions and production outlook
Fitch noted that the conflict involving Iran disrupted ConocoPhillips' Qatari LNG assets, prompting the company to lower its 2026 production guidance by 20,000 boepd when the conflict first erupted.
Qatar accounted for around 4% of ConocoPhillips' total production in 2025, primarily through QatarEnergy LNG (N)3, in which COP has a stake equivalent to 2.34 million tonnes per annum (MTPA).
"While uncertainty remains over when the conflict will be resolved, COP is a diversified LNG producer with 13 MTPA of LNG offtake, most of which is outside of Qatar and should benefit from conflict-related price disruptions," Fitch said.
The agency added that the company's North Field East and North Field South LNG expansion projects are progressing on schedule and are expected to come online in 2027 and 2028, respectively.
Free cash flow and shareholder distributions
ConocoPhillips expects a significant increase in free cash flow over the next several years. According to Fitch, management forecasts FCF of $7 billion by 2029, assuming an oil price of $70 per barrel (WTI) and Henry Hub natural gas prices of $4 per million British thermal units.
This increase is expected to be driven by several projects, including Alaska, Qatari LNG, other LNG offtake agreements, and higher production in the Permian and Surmont, alongside slowing capital expenditure following the completion of major projects.
Based on these factors, ConocoPhillips expects its reinvestment rate to decline from the low 60% range to below 50% by the 2030s and its pre-dividend FCF breakeven to fall to the low $30s per barrel of oil equivalent (boe), compared with the mid-$40s currently.
Fitch also noted the company's policy of returning 45% of cash from operations to shareholders through share buybacks and common and variable dividends, with a minimum payout of 30%.
For the nine months ended September 30, 2026, ConocoPhillips spent just under $8.5 billion on shareholder distributions and announced an 11% increase in its common dividend in the fourth quarter of 2026. Share buybacks amounted to $2.4 billion in the third quarter and are expected to increase further in the fourth quarter.
"Fitch recognizes the long-term risks associated with a high payout strategy, including timing risk around cash outflows as it relates to future downturns. However, Fitch believes the company's low-cost position offsets these risks," the agency said.
