ConocoPhillips has made significant progress in improving its asset portfolio and reducing costs to boost returns and cash flow. Its dividend is sustainable at USD 50/bbl oil. Recent asset sales allow for share buybacks and meaningful debt reduction. Near-term upside for the shares is driven by ongoing operating momentum, strong cash flow, and balance sheet clean-up.
We expect that oil demand should pick up as travel restrictions ease starting in June, while supply should be curbed by OPEC+ and non-OPEC production cuts in 2H. Interestingly, the top 15 producers account for 77% of the global production, while the 15 top consumers absorb 69% of the global demand.