Investing.com -- ConocoPhillips (NYSE:COP) is the top oil stock to watch in 2025, Jefferies analysts said in a note Sunday.

Analysts highlight ConocoPhillips' advantageous asset duration, scale, and diversified portfolio, particularly noting its strong presence in the Permian Basin and the recent addition of assets through the Marathon Oil Corporation (NYSE:MRO) merger.

Moreover, the growth projects like the Willow project in Alaska and Surmont in Canada, as well as integrated gas-to-LNG initiatives, are expected “boost production and earnings when they come online in 2026+,” analysts led by Lloyd Byrne added.

Jefferies’s team believes that the market is currently underestimating ConocoPhillips' free cash flow (FCF) yield, due to a misjudgment of the company's maintenance capital expenditures.

The firm estimates that the capital required to maintain a production level of 1.20 million barrels of oil per day (mmbopd) is around $10.25 billion, contrary to the market's expectation of more than $12.0 billion. This lower capital requirement is expected to result in an approximately 11% FCF yield, based on current oil and gas prices.

Analysts also reflected on the estimated growth capital for ConocoPhillips' key projects. In the Permian Basin, around $900 million is estimated for growth capital, with a total of about $4.1 billion needed to maintain production at approximately 450 mmbopd.

The Montney project in Canada is projected to require a new processing facility biennially to support a 25% compound liquids growth over the next five years, with near-term drilling and completion (D&C) growth spending of $100 million and an additional $150 million for facilities.

For the Willow project, Jefferies forecasts an average run rate of $1.15 billion from 2026 to 2028 to achieve 200 mmbopd of growth.

Jefferies values ConocoPhillips at approximately 5.9 times the enterprise value to EBITDA (EV/EBITDA) multiple relative to its 2027 EBITDA estimate, resulting in the firm’s price target on the stock of $146.

The firm also identified several catalysts that could positively impact the stock, including “1) clearer capital trajectory post 2025; 2) higher MRO synergies; 3) additional announcements of coring up of Permian acreage; and 4) base dividend increase.”

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