ConocoPhillips (COP) is an "attractive long-term option" for oil due to its robust balance sheet, high-quality and long-duration assets, and visible organic free cash flow growth over the coming years, RBC Capital Markets said.

The company continues to execute well, with solid operational performance and reduced capital spending that hasn't impacted production capacity. RBC said in a note Thursday that its discussions with ConocoPhillips indicated that capital cuts were globally distributed and targeted non-essential or deferrable items.

In the near term, management's lack of overt reaffirmation of its $10 billion minimum shareholder return target has drawn market attention. Still, the company maintains its base commitment of returning at least 30% of CFO to shareholders. The firm said the focus now appears to be shifting toward a more flexible payout ratio closer to 45%, in line with recent years.

The firm noted that recent market volatility and anticipated working capital drawdowns have contributed to this strategic pivot, offering increased flexibility even if it introduces more variability. RBC also highlighted that the Qatar NFE project remains on track for first LNG by mid-2026, marking a key future free cash flow milestone.

RBC maintained the company's stock rating at outperform and reduced the price target to $115 from $120.

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