Analysis of Debt
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Total Debt (Carrying Amount)
ConocoPhillips, balance sheet: debt
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Short-term debt | ||||||
| Long-term debt | ||||||
| Total debt, including finance leases (carrying amount) |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The company’s total debt, encompassing both short-term and long-term obligations including finance leases, exhibited fluctuations over the five-year period. An initial decrease was followed by increases in subsequent years, ultimately settling at a level moderately below the peak.
- Overall Trend
- Total debt decreased significantly from $19,934 million in 2021 to $16,643 million in 2022. This was followed by an increasing trend, reaching $24,324 million in 2024 before decreasing slightly to $23,444 million in 2025.
- Short-Term Debt
- Short-term debt demonstrated considerable volatility. It decreased substantially from $1,200 million in 2021 to $417 million in 2022, then increased to $1,074 million in 2023. Further modest increases were observed in 2024 and 2025, reaching $1,035 million and $1,020 million respectively, indicating relative stability in the most recent periods.
- Long-Term Debt
- Long-term debt constituted the majority of the company’s total debt. It decreased from $18,734 million in 2021 to $16,226 million in 2022. An upward trend then commenced, with long-term debt rising to $17,863 million in 2023 and continuing to $23,289 million in 2024. A slight decrease to $22,424 million was recorded in 2025.
- Composition of Total Debt
- Throughout the period, long-term debt consistently represented a significantly larger portion of the total debt compared to short-term debt. The relative proportion of short-term debt to total debt remained comparatively small, though it did increase as a percentage of the total in 2022 and 2023 due to the larger decrease in long-term debt during those years.
The increases in total debt observed in 2023 and 2024 were primarily driven by increases in long-term debt. The slight decrease in total debt in 2025 was attributable to a corresponding decrease in long-term debt.
Total Debt (Fair Value)
| Dec 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt, excluding finance leases | |
| Finance leases | |
| Total debt, including finance leases (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2025-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
ConocoPhillips, interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expensed | |||||||||||
| Interest capitalized | |||||||||||
| Interest incurred |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Interest expense exhibited a generally stable pattern over the five-year period, with fluctuations observed annually. Total interest incurred, which represents the sum of interest expensed and interest capitalized, demonstrated an overall increasing trend. A closer examination of the components reveals distinct patterns in both expensed and capitalized interest.
- Interest Expensed
- Interest expensed decreased from US$884 million in 2021 to US$780 million in 2023, representing a reduction of approximately 11.8%. A slight increase to US$783 million was noted in 2024, followed by a more substantial rise to US$855 million in 2025. This suggests a potential increase in borrowing costs or outstanding debt towards the end of the analyzed period.
- Interest Capitalized
- Interest capitalized showed a markedly different trend. Beginning at US$62 million in 2021, it decreased to US$58 million in 2022. However, a significant increase was observed in 2023, reaching US$153 million, and continued to rise substantially to US$248 million in 2024 and US$384 million in 2025. This increase in capitalized interest suggests a growing level of qualifying asset construction or development activities during these years, allowing for the deferral of interest costs.
- Total Interest Incurred
- Total interest incurred initially decreased from US$946 million in 2021 to US$863 million in 2022, mirroring the decline in interest expensed. However, from 2022 onwards, total interest incurred increased consistently, reaching US$1,239 million in 2025. This growth was driven primarily by the substantial rise in interest capitalization, partially offsetting the fluctuations in interest expensed. The overall upward trend indicates a growing total cost of borrowing, despite the initial decrease and the accounting treatment of capitalizing a portion of those costs.
The divergence between the trends in interest expensed and interest capitalized suggests a shift in the company’s financial activities. While immediate interest expense was relatively contained for a period, the increasing capitalization of interest points to potentially larger long-term investments and associated financing. Continued monitoring of these trends will be important to assess the long-term impact on profitability and financial leverage.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest incurred
= ÷ =
The interest coverage ratios demonstrate significant fluctuation over the five-year period. Both the standard interest coverage ratio and the adjusted interest coverage ratio, which incorporates capitalized interest, exhibited substantial increases initially, followed by declines.
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio, excluding capitalized interest, increased markedly from 15.38 in 2021 to 36.07 in 2022. This represents a more than doubling of the company’s ability to meet its interest obligations from earnings. However, this ratio then decreased to 21.88 in 2023, 18.46 in 2024, and further to 15.80 in 2025. While remaining above 15, the trend indicates a weakening capacity to cover interest expense as measured by earnings before interest and taxes.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which includes the effect of capitalized interest, mirrored the trend of the standard ratio. It rose from 14.37 in 2021 to 33.64 in 2022, a substantial improvement. Subsequent years saw declines to 18.29 in 2023, 14.02 in 2024, and 10.90 in 2025. The inclusion of capitalized interest results in lower coverage figures compared to the ratio excluding it, and the downward trend is more pronounced, suggesting a greater sensitivity to changes in earnings or interest expense when considering the full cost of borrowing.
- Comparative Trends
- The difference between the two ratios remained relatively consistent throughout the period, with the adjusted ratio consistently lower than the standard ratio by approximately 1 to 3 units. The parallel downward trends observed in both ratios suggest that the changes are driven by common factors, likely related to earnings performance and/or interest expense. The more significant decline in the adjusted ratio indicates that capitalized interest is becoming a more substantial factor in assessing the company’s ability to service its debt.
Overall, while the company demonstrated a strong ability to cover interest expense in 2022, the subsequent years reveal a consistent decline in both measures of interest coverage. Continued monitoring of these ratios is warranted to assess the sustainability of debt service capacity.