ConocoPhillips' (COP) better-than-expected Q1 earnings were mainly driven by stronger-than-forecast production volumes, UBS Securities said.

The company reported adjusted Q1 earnings of $2.09 per diluted share, above UBS and Street estimates of $2.06 and $2.05, respectively. UBS attributed the beat primarily to production, which came in at 2.389 million barrels of oil equivalent per day, above both UBS and consensus expectations, and the high end of company guidance.

While cash flow per share missed forecasts due to deferred tax headwinds, operating costs came in below expectations. Q1 capital expenditures were also lower than forecast, totaling $3.4 billion versus UBS's estimate of $3.6 billion.

Despite $1.3 billion in non-core asset sales and a $450 million cut to full-year capital spending guidance, ConocoPhillips maintained its 2025 production target of 2.34 to 2.38 million boepd. UBS said this reflects improved operational efficiency and cited ongoing progress on the integration of Marathon Oil and related cost synergies.

Capital returns in Q1 totaled $2.5 billion, including $1.5 billion in share repurchases, slightly below UBS's $1.6 billion buyback estimate. UBS views the update as positive overall, highlighting the company's diversified asset base, cost discipline, and long-cycle growth potential from projects like Willow and LNG.

UBS has a buy rating and $111 price target on the stock.

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