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What: After bottoming out and then rebounding earlier this year, oil took a turn for the worse in July, slumping about 20% to below $50 per barrel. That was enough to fuel much of the 16% decline in ConocoPhillips' (NYSE:COP) stock price last month. Also not helping matters was the fact that ConocoPhillips' earnings, which were announced toward the end of the month, showed just how deep the weak oil market is impacting the company's profitability.

So what: The price of oil has a huge impact on ConocoPhillips bottom line. That was abundantly clear last quarter as the company's adjusted earnings plunged to just $81 million, or $0.07 per share, which was a significant drop from the $2 billion, or $1.61 per share, the company earned in the year-ago quarter. While the company's meager earnings did beat the consensus estimate by $0.03 per share, the resumption of the downturn in crude prices has investors worried that its profitability will erode further for the balance of the year.

To combat the weakness in the oil price ConocoPhillips is working to cut its costs, which actually fell 11% year over year. Meanwhile, capital expenditures also continue to fall as the company sliced another $500 million off of its planned spend for 2015, bringing the total to $11 billion. Both will enable the company to produce as much oil as before but for less money, thereby improving margins and returns. 

Now what: Those positives aside, the company continues to brace itself "for a period of lower, more volatile prices," according to CEO Ryan Lance. That volatility was evident in July as crude retrenched into another bear market, which has continued through the early days of August. That being said, the company has a very solid balance sheet and is making significant progress on costs both, which has it well positioned to manage through the downturn and come out of the other side an even stronger company.

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.