For ConocoPhillips, capital discipline in the Lower 48 isn’t about doing less — it’s about getting structurally more out of every dollar invested. On the Q4 2025 earnings call, management was explicit: cost reduction is being driven by well design, longer laterals, and execution efficiency, not by pulling back activity.
The result is a Lower 48 portfolio that delivers more production for less capital, with savings that management repeatedly described as durable, repeatable, and structural.
More Production for Less Capital — By Design
Andrew O’Brien framed the Lower 48 as a capital-efficiency engine, not a growth-at-any-cost machine:
“In the Lower 48, once again, we expect to deliver more production for less capital as we continue to benefit from the highest quality asset base in the sector.”
That distinction matters. COP is not relying on price cycles or temporary activity cuts. Instead, capital discipline is being embedded directly into how wells are designed, drilled, and completed.
Efficiency Gains Are Real — and Still Compounding
Operationally, COP pointed to material drilling and completion gains:
“In 2025, we improved our drilling and completion efficiencies by more than 15%.”
Those gains aren’t expected to stall.
“We expect our capital efficiency improvements to continue in 2026, again driven by strong well productivity, ongoing D&C excellence and further increases in our longer lateral developments.”
The playbook is familiar but now fully industrialized:
- Faster cycle times
- Fewer days per well
- More footage drilled per rig
- Standardized completions designs
Longer Laterals: The Single Most Powerful Cost Lever
If there was one message management drove home, it was this: longer laterals are a structural cost reducer.
Kirk Johnson was unusually specific about the economics:
“If we go from a 1-mile to a 2-mile lateral, we improve the cost of supply about 25%. But if we go to 3 or 4 miles, we add another 10% to 15% cost of supply reduction.”
That’s not marginal optimization — it’s a step-change in well economics.
Just as important is how quickly COP has shifted its inventory:
“In 2023, about 60% of our Permian future well inventory was 2 miles or greater. Today, that’s 80%, and in the 2026 program, 90% of those wells are 2 miles or greater.”
Once acreage is cored up and laterals are extended, those savings persist across future development, making them fundamentally different from short-term cost cutting.
Acreage Core-Ups Enable the Engineering
Longer laterals don’t happen by accident. COP tied capital discipline directly to portfolio work:
“We continue to do strategic trades on an ongoing basis to increase our lateral lengths… and that drives our capital efficiency.”
Those trades reduce fragmentation, unlock better well placement, and enable repeatable factory development — the foundation of sustainable cost control.
Lower Capital, Steady Output
Efficiency gains are now large enough to show up directly in guidance:
“2026 capital spend guidance of about $12 billion is down about $600 million year-on-year due to significant capital efficiency gains in the Lower 48.”
This is not production deferral. It’s efficiency offsetting decline and growth simultaneously.
Activity Cadence: Steady, Factory-Style Development
ConocoPhillips U.S. Wells Drilled — Grouped by Activity Month
Activity Month Wells Drilled Jan 2025 30 Feb 2025 39 Mar 2025 40 Apr 2025 52 May 2025 35 Jun 2025 35 Jul 2025 45 Aug 2025 28 Sep 2025 27 Oct 2025 36 Nov 2025 35 Dec 2025 36 Jan 2026* 40
Takeaways
- April 2025 marked peak activity, but volatility is low overall
- March–July shows a consistent development cadence
- January 2026 activity likely reflects late-December spuds
This is a factory model, not a boom-bust program.
Basin Exposure: Capital Concentrated Where It Works
Wells Drilled by Basin / Play
Basin / Play Wells Permian Basin 239 Williston (Bakken) 110 DJ Basin 95 Gulf of Mexico 16 Haynesville 3 Other / Unmapped 15
Mapping Logic
- Permian: Midland, Eddy, Lea, Culberson, Upton, Reeves
- Williston (Bakken): Williams, Mountrail, McKenzie
- DJ Basin: Weld
- Gulf of Mexico: Walker Ridge, Mississippi Canyon, Garden Banks, Ship Shoal
- Haynesville: Panola
The capital is clearly flowing to long-life, repeatable development inventory.
Rig Concentration Confirms the Efficiency Model
Top Contractor & Rig Combinations by Basin
Permian Basin
| Rank | Contractor & Rig | Wells |
|---|---|---|
| 1 | Patterson 814 | 32 |
| 2 | Patterson 289 | 29 |
Takeaway: Heavy Patterson concentration → standardized execution.
Williston (Bakken)
| Rank | Contractor & Rig | Wells |
|---|---|---|
| 1 | Nabors X10 | 30 |
| 2 | Nabors X28 | 28 |
Takeaway: High-utilization Nabors rigs driving repeatability.
DJ Basin
| Rank | Contractor & Rig | Wells |
|---|---|---|
| 1 | H&P 517 | 50 |
| 2 | True 41 | 45 |
Takeaway: Tight two-rig system — classic efficiency-first development.
Gulf of Mexico
| Rank | Contractor & Rig | Wells |
|---|---|---|
| 1 | Enterprise 351 | 4 |
| 2 | Nabors MODS 400 | 4 |
Bottom Line: Capital Efficiency Beats Rig Count
COP made it clear that rig count is no longer the KPI that matters:
“We’re the clear leader when it comes to bottom-line results, capital efficiency, the amount of oil we recover for every dollar of capital we invest.”
Executive takeaway:
ConocoPhillips’ Lower 48 capital discipline is being achieved through:
- +15% D&C efficiency gains
- Longer laterals and cored-up acreage
- Higher productivity per foot
- Operational standardization
- Portfolio optimization — not activity cuts
That’s why management keeps calling these savings structural. They don’t depend on oil price, rig count, or timing. They’re engineered into the system.
