ConocoPhillips (COP) is expected to deliver a solid operational performance in Q1, with attention shifting to how the company navigates weaker oil prices while advancing its financial targets following the Marathon Oil acquisition, UBS Securities said in an earnings preview.

The firm projects adjusted earnings of $2.06 per share for the quarter, broadly in line with consensus, and sees production volumes of 2.361 million barrels of oil equivalent per day, within the company's guidance range despite some weather-related disruptions in US oil-producing regions than anticipated.

Capital expenditures for the quarter are projected at $3.6 billion, front-loaded due to winter construction activity at the Willow project in Alaska. UBS highlighted that the ramp-up in long-cycle projects like Willow is expected to drive visible free cash flow growth starting next year, well ahead of the expected 2029 cash flow peak.

UBS also emphasized that ConocoPhillips remains well-positioned in the current environment, supported by a low-cost resource base, strong balance sheet, and deep North American portfolio. The firm sees the company's long-cycle project pipeline as a key driver of cash flow growth through the decade.

Despite the recent pullback in oil prices, UBS expects ConocoPhillips to maintain its $10 billion return of capital target for 2025.

UBS estimates ConocoPhillips will need to cover a cash shortfall to meet its capital return goal, but expects the company to do so through announced asset sales and its strong year-end cash position. This would allow ConocoPhillips to meet its return targets, repay upcoming debt maturities, and maintain a solid cash balance heading into 2026.

UBS reduced its price target on ConocoPhillips to $111 from $116 and reiterated its buy rating.

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