ConocoPhillips Q2 2026: EPS Doubles to $3.23 on $104 Brent
Almost all of ConocoPhillips' second-quarter earnings surge came from price rather than volume: realized prices rose 36% per barrel of oil equivalent while production fell 6%, and net income nearly doubled to $3,931 million from $1,971 million. Adjusted earnings of $3.24 per share cleared the roughly $2.96 consensus, and the shares rose on the print. The genuinely structural piece is smaller but more durable — production and operating expenses fell 7.3% in the first half even as revenue climbed 14.4%, evidence that the cost-reduction program announced in late 2025 is landing.
What makes the quarter worth reading carefully is the source of the price. Brent averaged $104.52 against $67.82 a year earlier, driven by Middle East supply disruptions that began in the first quarter and persisted through the second, rather than by demand strength. That price reaches the income statement almost unbuffered: the company discloses no open crude derivative positions at all — its only outstanding commodity exposures at June 30 were short natural gas positions of 43 BCF fixed-price and 23 BCF basis — and it applies the normal-purchase-normal-sale exception to eligible crude contracts. Oil therefore sells into the spot deck with no hedge gains to give back and, equally, no hedge floor to cushion a reversal. For an E&P sitting near the top of a supply-shock-driven cycle, the question is not whether the quarter was good but how much of it is repeatable. All figures below are drawn from the company's Form 10-Q for the quarter ended June 30, 2026, unless otherwise noted.
1. Consolidated Balance Sheet
1-1. Major Asset Items
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 6,497 | 6,574 | +1.2% |
| Short-term investments | 484 | 1,118 | +131.0% |
| Accounts and notes receivable, net | 5,813 | 6,957 | +19.7% |
| Inventories | 1,873 | 1,879 | +0.3% |
| Prepaid expenses and other current assets | 865 | 2,667 | +208.3% |
| Net properties, plants and equipment | 93,239 | 91,248 | -2.1% |
| Investments and long-term receivables | 10,185 | 10,345 | +1.6% |
| Total assets | 121,939 | 124,261 | +1.9% |
The 208% jump in prepaid expenses and other current assets is not a working-capital deterioration — it is a reclassification. In the second quarter ConocoPhillips agreed to sell noncore Lower 48 interests for approximately $1.7 billion against a net carrying value of roughly $1.5 billion, comprised primarily of PP&E, and that disposal group moved into the prepaid line under held-for-sale criteria. The transactions closed in the third quarter, and in doing so completed a $5 billion disposition target the company had announced in the third quarter of 2025 — reached ahead of schedule. This single reclassification also explains most of the 2.1% decline in net PP&E despite first-half capital expenditures of $5,972 million running slightly ahead of depreciation, depletion and amortization of $5,889 million. Accumulated DD&A rose $5,570 million to $95,966 million, now equal to 105% of the net book value that remains — a reminder that under US GAAP historical-cost rules, a long-lived reserve base carries at cost less depletion and cannot be revalued upward, so the balance sheet likely understates asset value at $104 Brent.
