Q4 2023 ConocoPhillips Earnings Call

During the question and answer session. If you have a question. Please press star one one on your Touchtone phone.

I will now turn the call over to Phil Gresh, Vice President Investor Relations, Sir you may begin.

Thank you Liz and welcome everyone to our fourth quarter 2023 earnings conference call on.

On the call today are several members of the Conocophillips leadership team, including Ryan Lance Chairman and CEO, Tim Leach advisor to the CEO.

Bill Bullock Executive Vice President and Chief Financial Officer, Domenic, Maclin Executive Vice President of strategy sustainability and technology, Nick Oleds Executive Vice President of lower 48, Andy O'brien Senior Vice President of Global operations, Kirk Johnson Senior Vice President.

Lower 48 assets and operations and we will draw senior Vice President corporate planning and development.

Welcome to the fourth quarter 2023, clinical Phillips earnings Conference call.

Ryan It and Bill will kick it off with opening remarks, after which the team will be available for your questions.

Liz: My name is Liz and I'll be your operator for today's call.

Few quick reminders first along with today's release, we published supplemental financial materials and a slide presentation, which you can find on the Investor Relations website.

Liz: At this time all participants are in a listen only mode.

Later, we will conduct a question and answer session.

Liz: During the question and answer session. If you have a question. Please press star one one on your Touchtone phone.

Second during this call we will make forward looking statements based on current expectations.

Liz: I will now turn the call over to Phil Gresh, Vice President Investor Relations, Sir you may begin.

Actual results may differ due to factors noted in today's release.

And in our periodic SEC filings.

Phil M. Gresh: Thank you Liz and welcome everyone to our fourth quarter 2023 earnings conference call on.

We will make reference to some non-GAAP financial measures reconciliations to the nearest corresponding GAAP measure can be found in today's release and on our website and.

Phil M. Gresh: On the call today are several members of the Conocophillips leadership team, including Ryan Lance Chairman and CEO, Tim Leach advisor to the CEO.

And third when we move to Q&A. After the prepared remarks, we will be taking one question per caller with that I will turn it over to Ryan.

Bill Bullock Executive Vice President and Chief Financial Officer Domenic Macklin.

Thanks, Phil and thank you to everyone for joining our fourth quarter 2023 earnings conference call.

Speaker Change: Executive Vice President of strategy sustainability, and technology, Nick <unk> Executive Vice President of lower 48, Andy O'brien Senior Vice President of Global operations, Kirk Johnson Senior Vice President lower 48 assets and operations and will Giraud Senior Vice President corporate <unk>.

With another strong quarter for Conocophillips as the team continued to execute on its commitment to deliver returns to our shareholders.

Now stepping back and looking at 2023, Conocophillips demonstrated solid execution across all aspects of our triple mandate.

Learning and development.

Neil Mehta: Brian and Bill will kick it off with the opening remarks, after which the team will be available for your questions.

We reported record production and achieved several milestones across our global asset base.

And we delivered a preliminary reserve replacement ratio of 123% highlighting our ability to continue to replace reserves across our deep durable and diversified portfolio.

Neil Mehta: A few quick reminders.

Along with today's release, we published supplemental financial materials, and a slide presentation, which you can find on the Investor Relations website.

During this call we will make forward looking statements based on current expectations.

We're also progressing several key strategic initiatives.

Neil Mehta: Actual results may differ due to factors noted in today's release.

We advanced our global LNG strategy through expansion in Qatar.

Neil Mehta: And in our periodic SEC filings.

Arthur.

We will make reference to some non-GAAP financial measures reconciliations to the nearest corresponding GAAP measure can be found in today's release and on our website.

And several offtake and Regasification agreements.

<unk> the Wella project in Alaska and had been wrapping up construction this winter season.

We opportunistically acquired the remaining 50% of <unk> at an attractive price that fit our financial framework.

Third when we move to Q&A. After the prepared remarks, we will be taking one question per caller with that I will turn it over to Ryan.

We were able to accomplish all of this while delivering our returns focused value proposition to our shareholders.

Ryan: Thanks, Phil and thank you to everyone for joining our fourth quarter of 2023 earnings Conference call.

Speaker Change: It was another strong quarter for Conocophillips as the team continued to execute on its commitment to deliver returns to our shareholders.

We generated a trailing 12 month return on capital employed of 17% or 19% on a cash adjusted basis.

Ryan: Now stepping back and looking at 2023, Conocophillips demonstrated solid execution across all aspects of our triple mandate.

We also delivered on our plan to return of $11 billion of capital to our shareholders, which was well in excess of our greater than 30% annual through the cycle commitment.

Ryan: We reported record production, we have achieved several milestones across our global asset base.

Last spring, we further strengthened our <unk> emissions intensity targets to a 50% to 60% reduction from 2016 baseline.

Ryan: And we delivered a preliminary reserve replacement ratio of 123% highlighting our ability to continue to replace reserves.

And were recently awarded the gold standard pathway designation by the oil and gas initiative part methane partnership to point out.

Now looking ahead to 2024. This morning, we announced a plan to distribute 9 billion to shareholders. This year.

We also announced <unk> of <unk> 20 per share for the first quarter.

The remainder of our cash flow will be reinvested into the business as we continue to execute on our plan to grow earnings and cash flows as we outlined at our analyst and Investor meeting last year.

In conclusion, once again I'm proud of the accomplishments of the entire organization.

Our portfolio is well positioned to generate competitive returns and cash flow for decades to come.

Now, let me turn the call over to Bill to cover our fourth quarter performance and our 2024 guidance in more detail.

Thanks Ryan.

In the fourth quarter, we generated $2 40 per share and adjusted earnings.

We produced $1 902000 barrels of oil equivalent per day, representing 4% underlying growth year over year.

This was consistent with our full year 2023 underlying growth rate of 4% also.

Fourth quarter, lower 48 production averaged 1.086 million barrels of oil equivalent per day, which represented 9% underlying growth year over year.

We produced 750000 from the Permian 211000 from the Eagle Ford and 110000 from the Bakken.

Full year 2023 underlying growth for the lower 48 was roughly 8%.

Moving to cash flows.

Fourth quarter CFO was five 5 billion.

And this included the AP LNG distributions of $281 million.

Fourth quarter capital expenditures were $2 9 billion.

Which included $573 million for longer cycle projects.

Full year capital expenditures were $11 2 billion, which included $2 billion for longer cycle projects.

Now regarding returns of capital, we delivered $11 billion to shareholders in 2023.

For the fourth quarter, we returned $2 5 billion.

This was via a $1 1 billion in share buybacks and $1 4 billion in ordinary dividends and <unk> payments.

We ended the year with cash and short term investments of $6 9 billion as well as a $1 billion in long term investments.

Turning to guidance, we forecast 2024 production to be in a range of 191% to 195 million barrels of oil equivalent per day.

Underlying growth for the lower 48 was roughly 8%.

This translates to 2% to 4% underlying growth pro forma for acquisitions and dispositions.

Moving to cash flows.

Fourth quarter CFO was five 5 billion.

And this included the AP LNG distributions of $281 million.

We expect this gross growth to be well balanced between both lower 48 and international.

Fourth quarter capital expenditures were $2 9 billion.

Our full year forecast includes turnaround impacts of 25% to 30000 barrels per day, which is about 10000 higher than in 2023.

Which included $573 million for longer cycle projects.

Full year capital expenditures were $11 2 billion, which included $2 billion for longer cycle projects.

Now turnarounds are expected to be concentrated in the third quarter when surmount completes a one month turnaround and that turnaround occurs once every five years.

Now regarding returns of capital, we delivered $11 billion to shareholders in 2023.

For the first quarter production guidance is in a range of $1 88 to 192 million barrels of oil equivalent per day, or roughly 1% to 3% underlying growth.

For the fourth quarter, we returned $2 5 billion.

This was via a $1 1 billion in share buybacks and $1 $4 billion in ordinary dividends and <unk> payments.

Okay.

While the first quarter will have minimal turnarounds similar to the fourth quarter. It does include a 20000 barrel per day headwind from January weather impacts.

We ended the year with cash and short term investments of $6 9 billion as well as a $1 billion in long term investments.

Turning to guidance.

For AP LNG, we expect distributions of $400 million in the first quarter and $1 3 billion for the full year.

We forecast 2024 production to be in a range of 191% to 195 million barrels of oil equivalent per day.

Shifting to cost guidance.

This translates to 2% to 4% underlying growth pro forma for acquisitions and dispositions.

We see full year adjusted operating costs in a range of eight 9% to $9 1 billion.

We expect this gross growth to be well balanced between both lower 48 and international.

Representing essentially flat unit cost on a year over year basis.

Full year cash exploration expenses are expected to be $300 million to $400 million.

Our full year forecast includes turnaround impacts of $25 to 30000 barrels per day, which is about 10000 higher than in 2023.

And DD&A expense is expected to be in a range of nine 4% to $9 6 billion.

Now turnarounds are expected to be concentrated in the third quarter when surmount completes a one month turnaround.

Full year adjusted corporate segment net loss guidance is one to $1 1 billion.

And for taxes, we expect our effective corporate tax rate to be in that 36% to 37% range at strip prices and thats, excluding any one time items.

And that turnaround occurs once every five years.

For the first quarter production guidance is in a range of 188 to 192 million barrels of oil equivalent per day, or roughly 1% to 3% underlying growth.

And that's with an effective tax and effective cash tax rate in the 33% to 34% range.

While the first quarter will have minimal turnarounds similar to the fourth quarter. It does include a 20000 barrel per day headwind from January weather impacts.

For capital spending our full year guidance range is between 11% to $11 5 billion, which includes $200 million to $300 million of capitalized interest.

For <unk>, we expect distributions of $400 million in the first quarter and $1 3 billion for the full year.

Now on slide eight of the presentation, we provide a bridge from 2023 to 2024 with some of the key year over year variables most of which we've discussed on prior earnings calls.

Shifting to cost guidance.

We see full year adjusted operating costs in a range of eight 9% to $9 1 billion.

These include our expectation of 200 $300 million in deflation benefits, primarily in the lower 48.

Representing essentially flat unit costs on a year over year basis.

$200 million to $300 million of lower spending in Norway. Following the startup of our four subsea tieback projects and.

Full year cash exploration expenses are expected to be $300 million to $400 million.

And 500 $600 million and lower LNG spending mostly at Port Arthur.

DD&A expense is expected to be in a range of nine 4% to $9 6 billion.

These decreases were offset by $900 billion to $1 billion increased at Willow and a $100 million to $200 million increase in candidates account for the acquisition of the remaining 50% of <unk> and the addition of a second rig in the Montney.

Full year adjusted corporate segment net loss guidance is one to $1 1 billion.

And for taxes, we expect our effective corporate tax rate to be in that 36% to 37% range at strip prices and thats, excluding any one time items.

For Willow, we expect spending to be more heavily weighted to the first quarter and this was consistent with the normal timing of winter construction season.

And that's with an effective tax and effective cash tax rate in the 33% to 34% range.

And for Port Arthur we expect that our $400 million of equity contributions in 2024 will also be weighted towards the first half of the year.

For capital spending our full year guidance range is between 11% to $11 5 billion, which includes $200 million to $300 million of capitalized interest.

And as a result first quarter capex could be a bit above $3 billion.

Now on slide eight of the presentation, we provide a bridge from 2023 to 2024 with some of the key year over year variables most of which we've discussed on prior earnings calls.

So to wrap up we ended the year with another solid operational quarter.

We continue to deliver on our strategic initiatives across our deep durable and diverse portfolio.

These include our expectation of 200 $300 million in deflation benefits, primarily in the lower 48 to.

And we remain highly competitive on our shareholder distributions.

Now that concludes our prepared remarks, I'll turn it back over to the operator to start the Q&A.

$200 million to $300 million of lower spending in Norway. Following the startup of our four subsea tieback projects and.

Thank you we will now begin the question and answer session.

And 500 $600 million and lower LNG spending mostly at Port Arthur.

In the interest of time, we ask that you limit yourself to one question.

These decreases were offset by $900 billion to $1 billion increased at Willow and a $100 million to $200 million increase in candidates account for the acquisition of the remaining 50% of <unk> and the addition of a second rig in the Montney.

And you have a question. Please press star one on your Touchtone phone.

If you wish to be removed from the queue. Please press star one again.

If youre using a speakerphone you may need to pick up the handset first before pressing the numbers.

Once again, if you have a question. Please press star one on your Touchtone phone.

For Willow, we expect spending to be more heavily weighted to the first quarter and this was consistent with the normal timing of winter construction season.

Our first question comes from Neil Mehta.

And for Port Arthur we expect that our $400 million of equity contributions in 2024 will also be weighted towards the first half of the year.

With Goldman Sachs.

Thank you and good morning team Ryan I wanted to ask you about the lower 48 last year and you correctly predicted that many of us at that production was going to be up four to 500000 barrels a day.

Liz: And as a result first quarter capex could be a bit above $3 billion.

Liz: So to wrap up we ended the year with another solid operational quarter.

Wrong in the number ended up being closer to your number of eight to 900000 barrels a day. So as you think about exit to exit. This year. How are you thinking about U S oil production and tie that into your own lower 48 development plans. How are you thinking about prosecuting that acreage over the course of the year.

Liz: We continue to deliver on our strategic initiatives across our deep durable and diverse portfolio.

Phil M. Gresh: And we remain highly competitive on our shareholder distributions.

Speaker Change: Now that concludes our prepared remarks, I will turn it back over to the operator to start the Q&A.

Speaker Change: Thank you we will now begin the question and answer session.

Yes, thanks Neil.

We see a bit of.

Speaker Change: In the interest of time, we ask that you limit yourself to one question.

The acceleration in the growth rate coming from the U S.

Speaker Change: And you have a question. Please press star one on your Touchtone phone.

Driven by a number of factors around efficiency on the rig rates. So we would we would peg the grow but we're still growing in the lower 48, and we pegged that growth.

Speaker Change: If you wish to be removed from the queue. Please press star one one again.

Speaker Change: If youre using a speakerphone you may need to pick up the handset first before pressing the numbers.

Between.

300 to 500000 barrels of oil equivalent Thats total liquids.

Speaker Change: Once again, if you have a question. Please press star one on your Touchtone phone.

Yes, we still see some growth coming from the U S shale the lower 48, primarily driven in the out of the Permian.

Speaker Change: Our first question comes from Neil Mehta.

But.

Speaker Change: Yes.

More modest relative to last year's growth relative.

Neil Mehta: With Goldman Sachs.

Neil Mehta: Thank you and good morning team Ryan I wanted to ask you about the lower 48 last year, you correctly predicted that many of us at that production was going to be up four to 500000 barrels a day.

Relative to our expected lower 48.

We are in that.

Kind of same range low to single digit kind of growth rates coming out of that on pretty much similar activity level to what we entered into 2023. So we don't intend.

Neil Mehta: Wrong in the number ended up being closer to your number of eight to 900000 barrels a day. So as you think about exit to exit. This year. How are you thinking about the U S oil production and tie that into your own lower 48 development plans. How are you thinking about prosecuting that acreage over the course of the year.

At this time, we don't intend to be wrapping our program in the lower 48 and are coming into the year at a similar level to what we exited 2023.

Thanks, Brian.

Neil Mehta: Yes, thanks Neil.

Thank you.

Speaker Change: We see a bit of.

Our next question will come from the line of Doug Leggate with Bank of America. Your line is now open.

Speaker Change: The acceleration in the growth rate coming from the U S.

Ryan M. Lance: Driven by a number of factors around efficiency on the rig rates. So we would we would peg the growth, but we're still growing in the lower 48, and we pegged that growth.

Thank you good morning, everyone.

I guess either thanks.

Thanks, Ryan Ryan Ryan or Bill Im not sure who wants to take this one.

Ryan: Between.

So we would always interested to know how you see your portfolio breakeven evolving as it relates to.

Ryan: 300 to 500000 barrels of oil equivalent Thats total liquids.

Speaker Change: Yes, we still see some growth coming from the U S shale the lower 48, primarily driven in the.

Not so much current capital, but sustaining capital and what we're really trying to get to is the dividend breakeven not post dividend breakeven level.

Ryan: The Permian.

Ryan: But.

Ryan: More modest relative to last year's growth relative.

If I may and maybe as a part b to that I'm curious whether cash on the balance sheet.

Ryan: Relative to our expected lower 48.

Benefits or is a priority currently as it relates to how you think about cash returns and not dividend context, given that you are entering a period of elevated spending here for a couple of years.

Ryan: We're in that same range low to single digit kind of growth rates coming out of that on pretty much similar activity level to what we entered into 2023. So we don't.

Yes, Thanks, Doug.

Dominic rollout.

Ryan: At this time, we don't intend to be ramping our program in the lower 48 and are coming into the year at a similar level to what we exited 2023.

He can give you some specifics around the breakeven, but our mid cycle price.

Got it back I think it's pretty consistent with what we laid out at aim and I can let.

Dominic give you a few more details to to answer that question more specifically, yes. Good morning, Doug So maybe starting with our free cash flow breakeven I'd take you back to analyst meeting last April for our 10 year plan and at mid cycle prices, we highlighted our free cash flow breakeven averages about $35.

Speaker Change: Thanks, Brian.

Brian: Thank you.

Brian: Our next question will come from the line of Doug Leggate with Bank of America. Your line is now open.

Doug Leggate: Thank you and good morning, everyone.

Doug Leggate: I guess either thanks.

Doug Leggate: Thanks, Ryan, Brian, Brian or Bill Im not sure who wants to take this one.

<unk> not as higher through the first half of the plan as you mentioned as we have the sort of pre productive capital in the first half of the plan and then lower during the second half of that 10 year plan as those projects increasingly come on stream. So that's a free cash flow breakeven and then for our dividend you would add an additional eight to $9 on that right now.

Doug Leggate: So we would always interested to know how you see your portfolio breakeven evolving as it relates to.

Doug Leggate: Not so much current capital, but sustaining capital and what we're really trying to get to is the dividend breakeven not post dividend breakeven level.

Speaker Change: If I may and maybe as a part b to that I'm curious whether cash on the balance sheet.

So.

That's helpful and maybe on the on the cash on the balance sheet.

Doug Leggate: Benefits or as a priority currently as it relates to how you think about cash returns and not dividend context, given that you are entering a period of elevated spending here for a couple of years.

Yes, sure we are really happy with where we're at on the balance sheet right now Doug. So we exited the year with $6 $9 billion of cash and $1 billion worth of long term investments like I mentioned, our net debt to CFO ratio is in a really good spot we're at <unk> five.

Speaker Change: Yes, Thanks, Doug.

Dominic: Dominic rollout.

Dominic: He can give you some specifics around the breakeven, but our mid cycle price deck.

Turns and that's post surmount, so we're quite happy with where the balance sheet is at right now and.

Dominic: Dirk I think it's pretty consistent with what we laid out at aim and I can let.

Dominic: Dominic give you a few more details to to answer that question more specifically, yes. Good morning, Doug So maybe starting with a free cash flow breakeven I'd take you back to analyst meeting last April for our 10 year plan and at mid cycle prices, we highlighted our free cash flow breakeven averages about $35.

Having a strong balance sheet as a strategic asset for the company. We continue to view it as such and that's fundamentally one of the reasons why we feel really good about $9 billion of distributions this year.

Yes, maybe in light of a well.

Arguably a softer commodity price relative to where we started in 2023.

Dominic: <unk>.

Yes.

Dominic: Is higher through the first half of the plan as you mentioned as we have the sort of pre productive capital in the first half the plan and then lower during the second half of that 10 year plan as those projects increasingly come on stream. So that's a free cash flow breakeven and then for our dividend you would add an additional eight to $9 on that right now so.

Thank you.

Our next question will come from the line of Roger read with Wells Fargo. Your line is now open.

Yes, Thank you and good morning.

I guess I'd like to get your thoughts Brian on yes, good morning.

The M&A side, obviously, you did <unk> last year and there is still.

Speaker Change: That's helpful and maybe on the on the <unk>.

Dominic: Cash on the balance sheet.

Dominic: Yeah.

Transactions going on and just how you think about your cost of supply approach to anything on the acquisition front that's out there.

Speaker Change: Yes, sure we are really happy with where we're at on the balance sheet right now Doug. So we exited the year with $6 $9 billion of cash and $1 billion worth of long term investments like I mentioned are our net debt to CFO ratio is in a really good spot. We're at <unk> five turns and that's post surmount.

Lower 48 or elsewhere.

Yes, Roger I appreciate yes, there's obviously a lot of M&A activity going on it's not surprising in our business and we've said that all along that we think are.

Speaker Change: So we're quite happy with where the balance sheet is at right now and.

There's going to be more even yet to come as we as we think about the consolidation that's needed in the business.

Dominic: Having a strong balance sheet as a strategic asset for the company. We continue to view it as such and that's fundamentally one of the reasons why we feel really good about $9 billion of distributions this year.

Our approach hasn't changed our approaches.

When you think about cost of supply we think about the framework that we've laid out to the market over the last four five years, that's how we've executed some of our M&A activities. So again, it's got to fit that financial framework, how can we think about mid cycle price.

Dominic: Yes.

Dominic: Arguably a softer commodity price relative to where we started in 2023.

Dominic: Yeah.

Speaker Change: Thank you.

Roger D. Read: Our next question will come from the line of Roger read with Wells Fargo. Your line is now open.

It's got to make our 10 year plan better the plan that we outlined to the market.

Last year, we think is.

Roger D. Read: Yes, Thank you and good morning.

Pretty strong.

<unk>.

Roger: I guess I'd like to get your thoughts Brian on yes, good morning.

Underpinned by our low cost to supply a diverse asset base. So we got to see a way to make that plan better through any inorganic M&A and then finally, we havent see a way to make the asset better and Thats really dictated how we've approached.

Roger: The M&A side, obviously, you did <unk> last year and there is still.

Roger: Transactions going on and just how you think about your.

Roger: Your cost of supply approach to anything on the acquisition prospects out there.

M&A over the last number of years and I think as we think about it going forward that that approach is consistent.

Roger: Lower 48 or elsewhere.

Thank you.

Brian: Yes, Roger I appreciate yes, there's obviously a lot of M&A activity going on it's not surprising in our business and we've said that all along that we think.

Thank you.

Our next question will come from the line of <unk> Kumar with Mizuho. Your line is now open.

Speaker Change: There's going to be more even yet to come as we think about the consolidation that's needed in the business of our approach hasn't changed our approaches.

Good morning, guys and thanks for taking my question, Brian or Bill I don't know.

Who wants to take this one but.

Where do you see.

Roger: When you think about cost of supply we think about the framework that we've laid out to the market over the last four five years, that's how we've executed some of our M&A activities. So again, it's got to fit that financial framework, how can we think about mid cycle price.

Cash return target from $11 billion to $9 billion.

Last year it was very evenly distributed between the dividend.

It takes time available in the buyback.

How should we think about the mix across those three channels in 2024.

Roger: It's got to make our 10 year plan better the plan that we outlined to the market.

Yeah, so net.

First we think the most important thing continues to be the total quantum of distribution. That's what we focus on we think that that's what matters, most and we're really happy to start the year with an initial plan to returned $9 billion to shareholders.

Roger: Last year, we think is.

Roger: Pretty strong.

Roger: It's <unk>.

Roger: Underpinning by our low cost of supply diverse asset base. So we got to see a way to make that plan better through any inorganic M&A and then finally, we havent see a way to make the asset better and Thats really dictated how we've approached our Emma.

Now when it comes to mix, we look at a number of different factors in commodity prices, our own stock price and other considerations and so for 2024, you've seen that we've shifted our mix to be a bit more.

Roger: M&A over the last number of years and I think as we think about it going forward that that approach is consistent.

Weighted towards buybacks about 60% of our total plan distributions.

Speaker Change: Thank you.

Now that would put our buybacks essentially flat with with what we spent in 2023 at about 5354 1 billion.

Speaker Change: Thank you.

Ankur Kumar: Our next question will come from the line of <unk> Kumar with Mizuho. Your line is now open.

And Thats, where continue to like the value of our share so.

Vikram Kumar: Good morning, guys and thanks for taking my question, Brian or Bill.

Against that the total cash component represents about 40% of our expected distributions and Thats, what <unk> 20 per share on V rock and we think that represents a really solid mix of both cash and buybacks.

Vikram Kumar: I don't know who wants to take this one but.

Ankur Kumar: Where do you see.

Vikram Kumar: Cash return target from $11 billion to $9 billion.

Ankur Kumar: Last year it was very evenly distributed between the dividend both the fixed and the variable and the buyback how should we think about the mix across those three channels in 2024.

As we've always said <unk> provides a really flexible.

To achieve our distribution targets as prices adjust to the cycles continue to serve us well and balancing our mix.

Speaker Change: Yeah. So.

Speaker Change: First we think the most important thing continues to be the total quantum of distribution. That's what we focus on we think that that's what matters, most and we're really happy to start the year with an initial plan to returned 9 billion to shareholders.

Great. Thanks for the color.

Yes.

Thank you.

Our next question will come from the line of Lloyd Baron with Jefferies. Your line is now open.

Speaker Change: Now when it comes to mix, we looked at a number of different factors in commodity prices, our own stock price and other considerations and so for 2024, you've seen that we've shifted our mix to be a bit more weighted towards buybacks about 60% of our total plan.

Good afternoon, everyone.

And thanks for all the detail so far.

Brian I was hoping just to get your thoughts on the administration's LNG pause and then in particular Conoco's positioning.

And maybe whether it has any impact on your plans or your capital going forward.

Vikram Kumar: Distributions.

Vikram Kumar: That would put our buybacks essentially flat with with what we spent in 2023 at about five three years to $5 4 billion.

Yeah. Thanks, Lloyd I can chime in and maybe ask bill to add a few more details as well, but it's unfortunate.

Vikram Kumar: And Thats, where continue to like the value of our share so.

It's clearly.

More politically driven than fundamental but now I think we feel pretty good just makes us feel a little bit better about what we're doing on the LNG side because of what we do have do have permitted I think it's a.

Vikram Kumar: Against that the total cash component represents about 40% of our expected distributions and Thats, what <unk> 20 per share on <unk> and we think that represents a really solid mix of both cash and buybacks.

Our short sighted in the short term hopefully will be fixed in the long term I can bill can provide maybe a few more specifics around how we're thinking about.

Ankur Kumar: As we've always said <unk> provides a really flexible tool to achieve our distribution targets as prices adjust to the cycles continue to serve us well and balancing our mix.

Port Arthur Phase one phase two as we as we think about the implications of what was announced.

Sure Ryan.

Speaker Change: Great. Thanks for the color.

We're really pleased that port Arthur Phase one it's fully permitted it's got not only is free trade agreement permit, but it's non free trade agreement permit Scott and environmental permits in place. So we're.

Ankur Kumar: Yes.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Louis <unk> with Jefferies. Your line is now open.

We're quite pleased to be investing in port Arthur Phase one we think that actually what you are seeing right now makes that a more valuable and so it's a good fit in our portfolio and we're continuing to look at <unk>.

Louis: Good afternoon, everyone.

Louis: And thanks for all the detail so far.

Louis: Brian I was hoping just to get your thoughts on the administration's LNG pause and then in particular Conoco's positioning.

Developing a diversified portfolio of offtake, we remain interested in a number of LNG opportunities because we think the market is going to be strong for decades to come we're focusing on low cost supply low greenhouse gas intensity resources that meet that transition.

Louis: And maybe whether it has any impact on your your plans or your capital going forward.

Brian: Yeah. Thanks, Lloyd I can maybe ask bill to add a few more details as well, but it's unfortunate.

Pathway and you saw us last year announced $2 2 million tons up from Mpls Sodaro and in the fourth quarter, we signed 2 million tons off of Sempra as ACA project on the West Coast of Mexico for five years. So we're continuing to look for opportunities that really fit that framework.

Louis: It's clearly.

Louis: More politically driven than fundamental but now I think we feel pretty good just makes us feel a little bit better about what we're doing on the LNG side because of what we do have do have permitted I think it's a pressure.

William L. Bullock: Our short sighted in the short term hopefully will be fixed in the long term I can bill can provide maybe a few more specifics around how we're thinking about port Arthur phase one phase two as we as we think about the implications of what was announced.

Regarding your question on permitting right now Port Arthur is in a great spot.

Okay great.

So it doesn't change any plans going forward.

Ryan M. Lance: Sure Ryan.

It's not it's not impacting us right now.

William L. Bullock: We're really pleased that port Arthur Phase one it's fully permitted it's got not only is free trade agreement permit, but it's non free trade agreement permit it's got an environmental permits in place. So we're quite pleased to be investing in port Arthur Phase. One we think that actually what you are seeing right now makes that more valuable and so it's a <unk>.

Thank you.

Thank you.

Our next question will come from the line of John Royall with Jpmorgan.

Alright, Thanks for taking my question.

So my question is on Willow.

The sanction out of the way now.

William L. Bullock: Good fit in our portfolio and we're continuing to look at <unk>.

Even post sanction we've seen some news flow around lawsuits, which I assume.

William L. Bullock: Developing a diversified portfolio of uptake we remain interested in a number of LNG opportunities because we think the market is going to be strong for decades to come we're focusing on low cost supply low greenhouse gas intensity resources that meet that transition.

You have some confidence in as an organization that won't cause any delays, but maybe you can confirm that and then beyond that maybe we can just speak to if you can just speak to the construction plan for the year and whats youre, hoping to accomplish in terms of the progression of the build in 2004 specifically.

William L. Bullock: Pathway add up you saw us last year announced $2 2 million tons from Mpls sodaro and in the fourth quarter, We signed 2 million tons of Sampras ACA project on the West Coast of Mexico for five years. So we're continuing to look for opportunities that really fit that framework.

Hey, John This is Andy I can take that question.

So yes. It is it's pretty nice to also be at a point now where we can start talking about the project and not just to give you a legal update.

We will given your question I'll start with a bit of a legal update because as you mentioned, we had a favorite of positive activity in the fourth quarter on that front.

William L. Bullock: Regarding your question on permitting right now Port Arthur is in a great spot.

So just to sort of summarize where we are right now is that.

Speaker Change: Okay great.

Speaker Change: So it doesn't change any plans going forward.

And we were very pleased the bunker, Alaska District Court and the ninth circuit, allowing construction work to proceed on the north slope.

Speaker Change: It's not it's not impacting us right now.

Speaker Change: Thank you.

And then separately the Alaska District Court upheld the legality of the Rod issued by the BLM. So as you mentioned this is currently being appealed to the ninth circuit, but as we've said before we believe the BLM and the cooperating agencies conducted a really thorough process that satisfied all the legal requirements for them to grant approvals.

Speaker Change: Thank you.

William L. Bullock: Our next question will come from the line of John Royall with Jpmorgan.

John P. Herrlin: Alright, Thanks for taking my question.

John P. Herrlin: So my question is on Willow.

John P. Herrlin: The sanction out of the way now.

John P. Herrlin: Even post sanction we've seen some news flow around lawsuits, which I assume.

So these positive rulings gave us the certainty to make the decision.

John P. Herrlin: You have some confidence in as an organization that won't cause any delays, but maybe you can confirm that and then beyond that maybe we can just speak to if you can just speak to the construction plan for the year and what you're hoping to accomplish in terms of the progression of the build in 'twenty four specifically.

And then in terms of your second part of your question on no execution itself since taking the <unk>.

And we're really pleased with how quickly we ramped up the activity.

We're now into our second winter construction season on the north slope and mobilizing.

Mobilizing 200 workers right now who are going to be building gravel roads.

John P. Herrlin: Hey, John This is Andy I can take that question.

Andy O'brien: So yes. It is it's pretty nice to also be at a point now where we can start talking about the project and not just to give you a legal update.

Well pads for the facilities have beginning laying pipelines.

We're also making some pretty significant progress with our modular facility fabrications.

Andy O'brien: We will given your question I'll start with a bit of a legal update because as you mentioned, we had a favorite of positive activity in the fourth quarter on that front.

So we do expect 2020 for capital to be in the upper end of the previously communicated annual range of one to one $5 billion per year.

William L. Bullock: So just to sort of summarize where we are right now is that.

But our estimate for capital to first production remained unchanged at seven to seven 5 billion.

William L. Bullock: And we're very pleased that both the Alaska District Court and the ninth circuit, allowing construction work to proceed on the north slope.

Now just to give you a bit more color in terms of the progress. We're now at a point, where we have three quarters of the project scope under firm contract and expect to have 90% of that under contract by the end of 'twenty four.

William L. Bullock: And then separately the Alaska District Court upheld the legality of the Rod issued by the BLM. So as you mentioned this is currently being appealed to the ninth circuit, but as we've said before we believe the BLM and the cooperating agencies conducted a really thorough process. The satisfied all the legal requirements for them to grant approvals.

And all of those contracts that we've issued so far.

90% of our the lump sum or unit rate contracts.

And then these kind of contracts and we've agreed a price now as we have limited exposure to future inflation.

William L. Bullock: So these positive rulings gave us the certainty to make the decision.

William L. Bullock: And then in terms of your second part of your question on no execution itself since taking the <unk> and we're really pleased with how quickly we ramped up the activity.

So it's still very early but like with all major project is really important we got off to a fast start and we're really pleased that's exactly what we're doing with Willow just to wrap it up.

William L. Bullock: We're now into our second winter construction season on the north slope and.

It's great to see at this point and our team is in full execution mode and will focus on actually building Willa.

William L. Bullock: Mobilizing 200 workers right now are going to be building gravel roads gravel pads for the facilities have beginning laying pipelines.

Thank you.

Thank you.

William L. Bullock: We're also making some pretty significant progress without modular facility fabrications.

Our next question will come from the line of Neal Dingmann with <unk> Securities.

William L. Bullock: So we do expect 2020 for capital to be in the upper end of the previously communicated annual range of one to one $5 billion per year.

Your line is now open.

Good morning, Thanks for taking my question.

My question is more what kind of how you're thinking about production growth you certainly have laid out.

William L. Bullock: But our estimate for capital to first production remained unchanged at seven to seven 5 billion.

What I call it stable or flattish plan for the year for first quarter for the year.

William L. Bullock: Okay.

William L. Bullock: Now just to give you a bit more color in terms of the progress. We're now at a point, where we have three quarters of the project scope under firm contract and expect to have 90% of that under contract by the end of 'twenty four.

I guess kind of two questions around that one if you continue to be more efficient as you have been would you take those savings and ploughed back to the ground and boost production a bit more or would that or would those savings go back to the.

William L. Bullock: And all of those contracts that we've issued so far.

William L. Bullock: 90% of our the lump sum or unit rate contracts.

The shareholders in some fashion and then secondly, a couple of your large peers continue to be growing even a bit more than you in the Permian I was just wondering how you view starting from a Mac you positioned your responsibility and when it when it comes to production growth.

William L. Bullock: And then these kind of contracts and we've agreed a price now as we have limited exposure to future inflation.

William L. Bullock: So it's still very early but like with all major project is really important we got off to a fast start and we're really pleased that's exactly what we're doing with Willow just to wrap it up.

Danielle it's Dominic here I think.

William L. Bullock: It's great to see at this point and our team is in full execution mode and will focus on actually building Willa.

I mean first of all I think it's probably three questions there actually but I'll take the activity one.

We are holding our lower 48 activity flat this year versus last year, we like that we're still seeing some some modest growth there and we get we're really focused on efficiency.

Speaker Change: Thank you.

Speaker Change: Thank you.

William L. Bullock: Our next question will come from the line of Neal Dingmann with <unk> Securities. Your line is now open.

And so.

If we if we.

Neal Dingmann: Good morning, Thanks for taking my question.

If we did get more efficient and we felt there was some some capital headroom there I think I suspect that we would pretty much hold things flat because we're just so focused on efficiency, we don't want to swing up programs around it.

Neal Dingmann: My question is more what kind of how you're thinking about production growth you certainly have laid out.

Neal Dingmann: What I call it stable or flattish plan for the year for first quarter for the year.

In terms of the total growth rate in lumbar growth is an outcome of our plan, we're not chasing growth. It's really an outcome of our returns focused on returns and so we're pretty happy with that sort of modest level of growth is pretty consistent with what we said at aim.

Neal Dingmann: I guess kind of two questions around that one if you continue to be more efficient as you have been would you take those savings and cloud back to on the ground and boost production a bit more or would that or would those savings go back to.

In terms of the overall profile just to give you a bit of color on that and then Bill mentioned a lot of this in his prepared remarks, but we.

William L. Bullock: The shareholders in some fashion and then secondly, a couple of your large peers continue to be growing even a bit more than you in the Permian I was just wondering how you view starting from a macro position your responsibility and when it when it comes to production growth.

We do expect some of the underlying production in the range of 2% to 4% growth this year versus last year.

And the good thing about it is it we're seeing growth this year not just coming from the lower 48, but also from across our international portfolio. So it's nice to see the diversity of that portfolio coming through.

William L. Bullock: Danielle it's Dominic here I think.

Danielle: First of all I think it's probably three questions there actually I'll take that.

And then of course on top of that organic growth, we have the additional some on 50% interest on top of that.

Dominic: The activity one.

Dominic: We are holding our lower 48 activity flat this year versus last year, we like that we're still seeing some some modest growth there and we get we're really focused on efficiency.

In terms of the shape for the year fairly ratable year over year growth by quarter, except for Q1, we have the weather impacts Bill mentioned that about 20000 barrels a day, whether we will see in Q1 and then in Q3, we have a turnaround impacts.

William L. Bullock: So.

William L. Bullock: If we if we.

William L. Bullock: If we did get more efficient and we felt there was some some capital headroom there I think I suspect that we would pretty much hold things flat because we are just so focused on efficiency, we don't want to swing our programs around it.

We have about 25% to 30000 barrels a day of turnaround impacts this year most of that will be in the third quarter and.

William L. Bullock: In terms of the total growth rate in lumbar growth is an outcome of a plan we're not chasing growth. It's really an outcome of our returns focused on returns and so we're pretty happy with that sort of modest level of growth is pretty consistent with what we said at aim.

And that includes a sort a month long turnaround we have at <unk>, which occurs every five years. So.

But anyway.

But very pleased with just where the growth is coming from we are pleased with the level of growth.

We're pretty committed to keep the keep the program steady stable and focus on efficiency.

William L. Bullock: In terms of the overall profile just to give you a bit of color on that and then Bill mentioned a lot of this in his prepared remarks, but we.

Just to reiterate and we just don't want to lift we just don't want to whipsaw that the teams.

William L. Bullock: We do expect some of the underlying production in the range of 2% to 4% growth this year versus last year.

And Neil either up or down.

The constant pace of the execution and find that gets to get see efficiencies at a maximum gets our returns.

William L. Bullock: And the good thing about it is it we're seeing growth this year not just coming from the lower 48, but also from across our international portfolio. So it's nice to see the diversity of that portfolio coming through.

And maximize our returns.

It's great to hear that guys can make much more sense. Thank you so much.

William L. Bullock: And then of course on top of that organic growth, we have the additional some on 50% interest on top of that.

Thank you.

Our next question will come from the line of Josh Silverstein with UBS. Your line is now open.

William L. Bullock: In terms of the shape for the year fairly ratable year over year growth by quarter, except for Q1, we have the weather impacts Bill mentioned that about 20000 barrels a day, whether we will see in Q1 and then in Q3, we have a turnaround impacts.

Thanks, everybody. So I just wanted to touch on the Montney. This is one of the key growth areas that you had highlighted back in April last year.

William L. Bullock: We have about 25% to 30000 barrels a day of turnaround impacts this year most of that will be in the third quarter and.

The processing facilities started up in the back half of the year as well.

I know, it's 60% liquids, but how was the lower natural gas price environment change the way Youre thinking about development there.

William L. Bullock: And that includes a sort a month long turnaround we have at <unk>, which occurs every five years. So.

And along those same lines I know theres only a small uptick in.

William L. Bullock: But anyway.

William L. Bullock: But very pleased with just where the growth is coming from we are pleased with the level of growth.

Canadian spend for the year I figured that might be related to surmount more than this so.

Any help there would be great. Thanks.

William L. Bullock: I think we're pretty committed to keep the keep the program steady stable and focus on efficiency.

Yeah, Hi, this is Andy.

William L. Bullock: Yes, I just reiterated we just don't want to lift we just don't want to whipsaw that the teams.

Maybe just taking the first part of your question sort of the.

The natural gas.

William L. Bullock: Emil either up or down.

It really doesn't impact our <unk>.

And that's why it doesn't really impact.

William L. Bullock: Like the constant pace of the execution and find that gets to get see efficiencies at a maximum gets our returns.

Our long term development plans.

And then I'll.

So putting that in context sort of.

We know we have our positioning sentiment, where we actually are a user of natural gas. So.

William L. Bullock: And maximize our returns.

Speaker Change: It's great to hear that Guy.

Speaker Change: As Mort said, thank you so much.

That doesn't really change our montney development plans.

I think in terms of the progress we're making on Montney.

Speaker Change: Thank you.

William L. Bullock: Our next question will come from the line of Josh Silverstein with UBS. Your line is now open.

We are we we are going to be ramping this year. We've just started the.

The second rig and just to give you a sort of some context.

Josh Silverstein: Thanks, everybody. So I just wanted to touch on the Montney. This is one of the key growth areas that you had highlighted back in April last year.

The numbers here.

In.

Full year 'twenty three production was about 24000 barrels a day, we averaged 33000 barrels a day in the fourth quarter.

Josh Silverstein: You mentioned the processing facilities started up in the back half of the year as well.

And that said, we are expecting that to grow now throughout the year.

Josh Silverstein: I know, it's 60% liquids, but how is the lower natural gas price environment change the way Youre thinking about development there.

And then in terms of the Capex.

Josh Silverstein: And along those same lines I know theres only a small uptick in Canadian spend for the year I figured that might be related to surmount more than this so.

Modest growth Capex Youre seeing in Canada. It is a combination of additional equity we have in San Juan, but also adding the second rig at the Montney.

Speaker Change: Any help there would be great. Thanks.

Thanks, guys.

William L. Bullock: Yeah, Hi, this is Andy.

Andy O'brien: Maybe just taking the first part of your question sort of.

Thank you.

Andy O'brien: The natural gas.

Our next question will come from the line of Bob Brackett with Bernstein. Your line is now open.

Andy O'brien: Really doesn't impact.

William L. Bullock: And that's why it doesn't really impact.

William L. Bullock: Our long term development plans.

Good morning, I was looking at the Triple digit organic reserve replacement ratio and wondering some of the moving parts I'm kind of curious what impacted the sanctioning of Willow play on that.

William L. Bullock: And then also putting that in context sort of way.

William L. Bullock: We have a position in <unk>, where we actually are a user of natural gas so.

William L. Bullock: That doesn't really change our montney development plans.

Hey, Bob the dominant guess.

William L. Bullock: I think in terms of the progress we're making on Montney.

We're very pleased to see strong organic and total reserve replacement again this year.

William L. Bullock: We are we.

William L. Bullock: We are going to be ramping this year, we've just started.

William L. Bullock: The second rig and just to give you a sort of some context.

And we're seeing we've seen.

William L. Bullock: The numbers here.

Strong contributions from across the portfolio so on the organic side.

William L. Bullock: In full year 'twenty three production was about 24000 barrels a day, we averaged 33000 barrels a day in the fourth quarter.

First of all low 40 eights doing well.

With the advancement of our resource development plans, its organic replacement ratios well in excess of a 100%.

William L. Bullock: And that said, we are expecting that to grow now throughout the year.

William L. Bullock: And then in terms of the Capex.

We've got contributions from monthly.

William L. Bullock: Modest growth Capex Youre seeing in Canada. It is a combination of additional equity we have in semi but also adding the second rig at the Montney.

And then the Willow piece, yes, that's a really strategic piece for us.

So we know the way it works with bookings on major projects you have an initial booking and then you book as the project develops.

Speaker Change: Got it thanks guys.

That's normal so our initial booking was 160 about 160 million barrels on Willow. So that's what we build consumption and then as we develop the.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Bob Brackett with Bernstein. Your line is now open.

The development wells in the project, we will see that.

Bob Brackett: Good morning, I was looking at the Triple digit organic reserve replacement ratio and wondering some of the moving parts I'm kind of curious what impacted the sanctioning of Willow play on that.

<unk> approach towards a base case.

Is it reasonable estimate of 600 million barrels for Willow, So yeah, very strong there and of course.

On the total reserves in place and we add in the A&D and we get the benefit of about 200 million barrels of.

William L. Bullock: Yeah.

Speaker Change: Hey, Bob the dominant guess.

Speaker Change: We're very pleased to see strong organic and total reserve replacement again this year.

Resource that came with the reserves that came with the somewhat 50% acquisition. So again another year of strong total reserve replacement for us which is which.

Bob Brackett: And we're seeing we're seeing strong contributions from across the portfolio. So on the organic side.

Good.

Very clear thanks.

Bob Brackett: First of all low 48 doing well.

Thank you.

Speaker Change: With the advancement of our resource development plans, its organic replacement ratios well in excess of a 100%.

Our next question will come from the line of Sam Margolin with Wolfe Research. Your line is now open.

Speaker Change: We've got contributions from monthly.

Hi, Thanks for taking the question and thanks for all the detail today.

Speaker Change: And then the Willow piece, yes, that's a really strategic piece for us.

Maybe a follow up on lower 48 capital, there's some deflation that.

Speaker Change: So we know the way it works with bookings on major projects you have an initial booking and then you book as the project develops.

You've called out it seems like most of it right now is driven by consumables and commodities, but.

Speaker Change: That's normal so our initial booking was 160 about 160 million barrels on Willow. So thats, what we bill consumption and then as we develop the.

Ryan you mentioned activity levels overall have cooled significantly.

Over the course of the second half of 'twenty three and so I was wondering if you were where you think we are in and maybe the lifecycle of this lower 48 deflationary trend.

Speaker Change: The development wells in the project, we will see that.

Speaker Change: <unk> approach towards a base case.

Speaker Change: Is it reasonable estimate of 600 million barrels for Willow, So yeah, very strong there and of course.

And maybe if that presents some opportunities.

To term out.

Speaker Change: On the total reserves in place and we add in the A&D and we get the benefit of about 200 million barrels of.

Capacity.

And add even more visibility to the spending plan because as you as you mentioned youre not really going to move activity around.

Speaker Change: <unk> resources.

Speaker Change: The resource that came with the reserves that came with the somewhat 50% acquisition. So again another year of strong total reserve replacement for us which is good.

And different scenarios. Thank you.

Yes, Sam I can let Nick follow up on some of the details, but certainly we look at any opportunity to term out things when we when we when we see that opportunity and I think the.

Speaker Change: Very clear thanks.

Speaker Change: Thank you.

The service side of the business.

Speaker Change: Our next question will come from the line of Sam Margolin with Wolfe Research. Your line is now open.

<unk> Philips because our partners don't change and we have consistent execution.

Sam Margolin: Hi, Thanks for taking the question and thanks for all the detail today.

Consistent rig counts and Frac spreads and all the other support activity that goes with that.

Sam Margolin: Maybe a follow up on lower 48 capital.

The business and the deflation is kind of a tale of a couple of different areas in certain commodities of spend but I can let Nick.

Sam Margolin: There's some deflation that you.

Sam Margolin: You've called out it seems like most of it right now is driven by consumables and commodities, but.

And specific to the lower 48, there Sam.

Sam Margolin: Ryan you mentioned activity levels overall have cooled significantly.

Yes.

Like Ryan was mentioning again, you look at our activity level flat to 2023.

Sam Margolin: Over the course of the second half of 'twenty three and so I was wondering if you were where you think we are in and maybe the lifecycle of this lower 48 deflationary trend.

So stable rig stable frac crews and the teams are really just focusing on driving operating efficiency capital efficiency and then capturing that deflation as you mentioned as we showed in the prepared cap slides there.

Ryan M. Lance: And maybe if that presents some opportunities.

Ryan M. Lance: To term out capacity.

Posted and it's going to range across a number of spending categories. So we've got <unk>, we've got some proppant as well as rig horsepower, we'll look at all of the contracts across our vendors and see if we want to term up typically were looking at well the well pad to pad as far as rigs little longer term contracts on our.

Sam Margolin: Capacity.

Sam Margolin: And add even more visibility to the spending plan because as you as you mentioned youre not really going to move activity around.

Sam Margolin: And different scenarios. Thank you.

Speaker Change: Yes, Sam I can let Nick a follow up on some of the details, but certainly we look at any opportunity to term out things when we when we when we see that opportunity and I think.

On our Frac spreads, especially the E fracs, but the key thing for US is really just focusing on operating efficiency and capital efficiency with fee level loaded steady state program that we have in 2024.

Speaker Change: The service side of the business I think <unk> Philips because our partners don't change and we have consistent execution.

Nick: Consistent rig counts and Frac spreads and all the other support activity that goes with that.

Thanks, so much.

Okay.

Speaker Change: The business.

Thank you.

Speaker Change: The deflation is kind of a tale of a couple of different areas in certain commodities of spend but I can let Nick.

Our next question will come from the line of Ryan Todd with Piper Sandler Your line is now open.

Nick: And specific to the lower 48, there Sam.

Thanks, maybe if I.

Nick: Yes.

I could ask on <unk>.

Sam Margolin: Like Ryan was mentioning again, you look at our activity level flat to 2023.

A couple of other lower 48 assets the Eagle Ford production has been declining over the last few quarters.

Sam Margolin: Stable rigs stable Frac crews and the teams are really just focusing on driving operating efficiency capital efficiency and then capturing that deflation as you mentioned as we showed in the prepared slides there that we posted and it is going to range across a number of spending categories. So we've got <unk>, we've got some proppant.

23, what's the right way for us to think about direction of production there.

Is the goal to hold it flat or modestly declining to grow going forward and maybe the same question for the Bakken.

Yeah Ryan.

Just talk first on Eagle Ford when you look at Q3 to Q4, we had that 9% production drop.

Nick: As well as rig horsepower, we'll look at all of the contracts across our vendors and see if we want to term up typically were looking at well the well pad to pad as far as rigs a little longer term contracts on our on our frac spreads, especially the E fracs, but the.

That met our type curve expectations, there's no productivity issues or operational concerns there. It was a conscious decision as we looked at the second half of 2023 and as we've talked about the completion efficiencies are actually outpacing our drilling efficiency. So it's a good problem to have so it worked down through.

Nick: The key thing for US is really just focusing on operating efficiency and capital efficiency with fee level loaded steady state program that we have in 2024.

Kind of are working level of Ducks and decided in the second half of 2023 to take a what I call an operational Frac gap.

Speaker Change: Thanks, so much.

Speaker Change: Okay.

So we built some ducks in that period of time, and then reinstated late 2023, the frac crews so truly intentional really good performance from the Eagle Ford going forward.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Ryan Todd with Piper Sandler Your line is now open.

Ryan Todd: Thanks, maybe.

Ryan Todd: If I could ask on <unk>.

Bakken very similar we've had some production records you think about a legacy asset like the Bakken and we are hitting 110000 barrels equivalent per day, we've got a long a level of inventory, we will have a steady program up there as well.

Ryan Todd: The lower 48 assets the Eagle Ford production has been declining over the last few quarters.

Ryan Todd: In 2023, what's the right way for us to think about direction of production there.

Speaker Change: Is the goal to hold it flat or modestly declining to grow going forward and maybe the same question for the Bakken.

Great. Thank you.

Thank you.

Speaker Change: Yeah Ryan.

Our next question will come from the line of.

Ryan M. Lance: Talk first on Eagle Ford when you look at Q3 to Q4, we had that 9% production drop.

Alastair Syme with Citi.

Your line is now open.

Ryan M. Lance: Is that met our type curve expectations, there's no productivity issues or operational concerns there. It was a conscious decision as we looked at the second half of 2023 and as we've talked about the completion efficiencies are actually outpacing our drilling efficiency. So it's a good problem to have so it worked down through kind of.

Hi.

I just wanted to return to the questions that people circling around a little bit on the Permian.

You've mentioned supply chain costs.

So to wrap it up with efficiency because.

And I guess last April you presented these cost to supply numbers.

<unk> includes some forward assumptions about cost inefficiencies. So I just wanted to get a sense of where you think you stand relative to those assumptions.

Ryan M. Lance: Our working level of Ducks and decided on the second half of 2023 to take a what I call an operational Frac gap.

Moving up to almost all billings when your cost of supply.

Ryan M. Lance: So we built some ducks in that period of time, and then reinstated late 2023, the frac crews so truly intentional really good performance from the Eagle Ford going forward.

Okay.

Yeah.

Yes, I'll first talk about just the overall efficiency assumptions that we have and what we're seeing out in the field to remind you on both D&C and we continue to see us.

Ryan M. Lance: Bakken very similar we've hit some production records you think about our legacy asset like the Bakken and we're hitting 110000 barrels equivalent per day, we've got a long level of inventory, we will have a steady program up there as well.

Step changes in both the drilling side as well as the completion side, probably differential on the completion efficiencies as I just mentioned related to Eagle Ford and we're leveraging all of the different kind of a suite of opportunities to improve those frac efficiencies in drilling efficiency I'll just mention a few.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

And the key thing here is that we're continuing to see improvement kind of quarter to quarter year to year and that manifests itself into essentially a 10% to 15% improvement in our pumping hours per day year to year, a couple of items that we have out there we continue deploy Simon frac.

Speaker Change: Our next question will come from the line of Alastair Syme with Citi. Your line is now open.

Speaker Change: Hi.

Alastair R. Syme: Just wanted to return to the questions people circling around a little bit on the Permian, you've mentioned supply chain costs and.

Across the board, but also Super Zipper down in Eagle Ford, We've had really good success of this particular application, where we can hook up for example on a four well pad will hook up all the wells and we have any operational downtime, we can quickly move from well to well and have high pumping hours and therefore more.

Alastair R. Syme: So to wrap it up with efficiency because he.

Alastair R. Syme: And I guess last April you presented these cost of supply numbers.

Alastair R. Syme: That includes some flawed assumptions about cost inefficiencies. So I just wanted to get a sense of where you think you stand relative to those assumptions.

Alastair R. Syme: Permian moving up for almost all boys on your cost of supply.

Stages per day, so that's been really successful on the we also remote Frac I've mentioned that before seeing good success in that where we don't have the mobe and demo the frac spreads. So we can move on to pad two pad three without more demoing. It and then finally I'll just pivot to the drilling side we've deployed.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Yes, I'll first talk about just the overall efficiency assumptions that we have and what we're seeing out in the field to remind you on both D&C and we continue to see.

Speaker Change: Step changes in both the drilling side as well as the completion side, probably differential on the completion efficiencies as I just mentioned related to Eagle Ford.

That real time drilling intelligence group out in the Permian, We've got the entire rig fleet that we're monitoring $24 seven where we can optimize the plan.

Alastair R. Syme: And we're leveraging all of the different kind of suite of opportunities to improve those frac efficiencies in drilling efficiency I'll just mention a few.

We can troubleshoot and we can steer the wells and we're seeing really promising results, 10% improvement in rate of penetration. There. So combined through all of that we are seeing improvement in those efficiencies and again, 10% to 15% improvement in pump hours per day as I mentioned on the completion side.

Alastair R. Syme: And the key thing here is that we're continuing to see improvement kind of quarter to quarter year to year and that manifests itself into essentially a 10% to 15% improvement in our pumping hours per day year to year, a couple of items that we have out there we continue deploy Simon frac.

Alastair R. Syme: Across the board, but also Super Zipper down in Eagle Ford, We've had really good success of this particular application, where we can hook up for example on a four well pad will hook up all the wells and we have any operational downtime, we can quickly move from well to well and have high pumping hours and therefore.

Thank you.

Our next question will come from the line of Paul Cheng with Scotiabank. Your line is now open.

Thank you good morning, guys.

Huh I bought maybe as Paul feel or maybe it's for Brian.

Alastair R. Syme: More stages per day, so that's been really successful on the.

Brian you have said that the industry, we need more consolidation and you have proved in the past that you are not shining doing Yorkshire.

Alastair R. Syme: We also remote Frac I've mentioned that before seeing good success in that where we don't have the mobe and demoed. The frac spreads. So we can move on to pad two pad three without <unk> demo begin and then finally I'll just pivot to the drilling side, we've deployed that real time drilling intelligence group out in the Permian.

All right. Thank you.

When you're looking at your bonds today how.

Much you're willing to put on that.

How much are you willing to stretch your balance sheet.

On that standpoint, given notice of my team.

Alastair R. Syme: The entire rig fleet that we're monitoring $24 seven or we can optimize the plan.

Yes, Adam Boy Reso or anything that you can share some of that that.

Alastair R. Syme: We can troubleshoot and we can steer the wells and were seeing really promising results, 10% improvement in rate of penetration. There. So combined through all of that we are seeing improvement in those efficiencies and again, 10% to 15% improvement in pump hours per day as I mentioned on the completion side.

We get some better understanding and from a Pos standpoint in my opinion of the distributions for this year.

Yeah. Thanks, among what that it will fluctuate based on commodity prices you that vessel with and your current assumption. Thank you.

Alastair R. Syme: Yeah.

Yes, Kevin.

Second a couple there Paul but let me start with the last throw out in first.

Speaker Change: Thank you.

The 9 billion as we've said in our release was a starting point, we recognize the commodity prices are pretty volatile both up and down.

Alastair R. Syme: Our next question will come from the line of Paul Cheng with Scotiabank. Your line is now open.

Paul Y. Cheng: Alright, Thank you hi, good morning, guys.

We've seen wty approaching 16, we've seen at or approaching $80 or so.

Paul Y. Cheng: I thought maybe as Paul feel or maybe it's for Brian.

So let me give you the $9 billion as a <unk>.

Paul Y. Cheng: Brian you have said that the industry, we need more consolidation and you have proved in.

Starting point.

Folks are feeling pretty comfortable that were well above our mid cycle price were well above our 30% commitment to return capital to the shareholders and again look at our history. So you should feel comfortable that we will adjust it so starting point for us and we'll see how the commodity prices go through the through the remainder of the year.

Paul Y. Cheng: The part that you are not shy in doing your share.

Speaker Change: All right. Thank you.

Paul Y. Cheng: When youre looking at your bonds today how.

Brian: Much you're willing to put on that or how much are you willing to stretch your balance sheet.

Alastair R. Syme: From that standpoint, given notice of my team.

Speaker Change: Yes, they had mumbling reso or anything that you can share. So that these are we get some better understanding and from a bottoms up standpoint in my opinion of the distributions for this year.

On the second part look.

We can set the balance sheet to be a pretty significant asset inside the company. We're we.

We will maintain an a credit rating with the balance sheet strong for the company.

We've got you know.

Speaker Change: Is that a fixed amount or that it will fluctuate based on commodity prices either better or worse than your current assumptions. Thank you.

$2 five net net that turned to cash so we like where the balance sheet is that and it gives us the cushion in these volatile commodity price to go with a return on the money that we're spending and setting both to grow the company organically and the distribution level that we're starting with at the $9 billion.

Alastair R. Syme: Yes.

Speaker Change: Good a couple there Paul but let me start with the last throw out in first.

Speaker Change: The $9 billion as we said in our release as a starting point.

Well again on the M&A side Paul.

Speaker Change: We recognize the commodity prices are pretty volatile both up and down.

It's really what kind of what kind of opportunities present themselves that have to shut our financial framework.

Alastair R. Syme: We've seen very Ti approaching 16, we've seen it.

Alastair R. Syme: <unk> so.

They fit our framework and they are something that we can make better makes our 10 year plan better we've been willing to execute those.

Speaker Change: How big do you view, the $9 billion as a starting point and you know.

Speaker Change: Should we feel pretty comfortable that were well above our mid cycle price were well above our 30% commitment to return capital to the shareholders.

But we'll look at the way we execute those at a kind of a case by case basis survival refunded with some debt, but it made sense for that particular asset to do that.

Alastair R. Syme: Again look at our history. So you should feel comfortable that we will adjust it so starting point for us and we'll see how the commodity prices go through the through the remainder of the year.

We've got other reviews, you've used cash and.

Are there other means to fund the acquisition, so it's pretty hard to say.

Alastair R. Syme: Yeah.

Depending on any opportunities that present themselves, what we might do.

Speaker Change: On the second part look.

Speaker Change: We can put the balance sheet to be a pretty significant asset inside the company, where we will maintain an a credit rating with the balance sheet is strong for the company.

Ryan just a maximum that you're willing to at ease on a single transaction.

Speaker Change: Got.

Speaker Change: Two five net debt turn to cash so we like where the balance sheet is that and it gives us the cushion in these volatile commodity price to be able to return the money that we're spending and setting both to grow the company organically and the distribution level that we're starting with at the $9 billion.

Don't have a.

It depends on the circumstance.

Paul I don't.

We're not going to stress the balance sheet.

So we're not we've worked hard to get the balance sheet, where it's at today.

We're not I'm not interested in going back to where we were seven eight years ago on the balance sheet.

Speaker Change: We will again be on the M&A side Paul.

Okay. Thank you.

Paul: It's really what kind of what kind of opportunities present themselves that have to shut our financial framework.

Thank you.

Our next question will come from the line of.

Speaker Change: They fit our framework and they are something that we can make better makes our 10 year plan better we've been willing to execute those in.

Leo Mariani with Ross and Kim Your line is now open.

Yes, hi, guys.

Speaker Change: But we'll look at the way we execute those on a case by case basis survival refunded with some debt, but it made sense for that particular asset to do that.

You talked about having some pretty decent international growth this year well above the.

Lower 48, which obviously a nice contributor as well it sounded like some of Thats coming from the Montney in Canada can you maybe just detail some of the other international growth that Youre seeing I imagine there could be some chunkier projects that might be coming online. During the year is there any color on that would be helpful.

Speaker Change: We've got other reviews, you've used cash and.

Speaker Change: Are there other means to fund the acquisition, so it's pretty hard to say.

Speaker Change: Depending on any opportunities that present themselves, what we might do.

Yeah.

Speaker Change: Ryan, Yes, a maximum that you're willing to add based on a single transaction.

Yes, Sean this is Andy I can take that question.

We actually discussed this one in a bit of detail on our last quarterly call and Youre right. We do have some good momentum on the Alaska and international projects, but just to give you a feel about where they're coming from across the portfolio sort of in Norway. We achieved first production ahead of schedule in three of the four subsea tie backs in the fourth one is expected to come online as planned in.

Speaker Change: Don't have a.

Ryan: It depends on the circumstance.

Ryan: Paul.

Ryan: We're not going to stress the balance sheet.

Ryan: So we're not we've worked hard to get the balance sheet, where it's at today.

The second quarter.

In China now.

Ryan: We're not I'm not interested in going back to where we were seven eight years ago on the balance sheet.

Our partner brought the first Bohai phase <unk> platform online in October and then the second one came on in December.

Speaker Change: Okay. Thank you.

Also in December we achieved first oil from pad 267, and seven months and we expect to gradually ramp that up over the coming months.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of.

Speaker Change: Leo Mariani with Ralph and Dan Your line is now open.

And as I previously discussed in Montney, the start to the Cps to ready it allowed us to start ramping production that.

Leo Mariani: Yes, hi, guys.

Leo Mariani: You talked about having some pretty decent international growth this year well above the.

In the third quarter, and we expect to see growth in 2024 in the Montney from the Cps II and also the second rig so we're really happy with sort of.

Leo Mariani: Lower 48, which obviously a nice contributor as well it sounded like some of Thats coming from the Montney in Canada can you maybe just detail some of the other international growth that Youre seeing I imagine there could be some chunkier project that might be coming online. During the year is there any color on that would be helpful.

The spread we have across the last one international with where the growth is coming from and I think as we said in the.

Are there questions.

AI is going to be providing a significant part of.

Leo Mariani: Yes, Sean this is Andy I can take that question.

The total company growth this year.

Andy O'brien: <unk> actually discussed this went on a bit of detail on our last quarterly call and Youre right. We do have some good momentum on the Alaskan international projects, but just to give you a feel about where they are coming from across the portfolio sort of in Norway. We achieved first production ahead of schedule in three of the four subsea tie backs in the fourth one is expected to come online as planned in.

Thank you.

Thank you we have no further questions at this time.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.

Leo Mariani: The second quarter.

Leo Mariani: In China now.

Leo Mariani: Our partner brought the first Bohai phase four B platform online in October and then the second one came on in December.

Leo Mariani: Also in December we achieved first oil from pad to six 7% and seven months.

Leo Mariani: We expect to gradually ramp that up over the coming months.

And as I previously discussed in Montney, the start of the Cps II, where it allowed us to start ramping production that.

Leo Mariani: In the third quarter, and we expect to see growth in 2024 in the Montney from the Cps II and also the second rig so we're really happy with sort of.

The spread we have across Alaska and international with where the growth is coming from and I think as we said in the earlier.

Leo Mariani: Are there questions.

Leo Mariani: AI is going to be providing a significant part of the.

Leo Mariani: Total company growth this year.

Speaker Change: Thank you.

Speaker Change: Thank you we have no further questions at this time.

Speaker Change: Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating.

Speaker Change: May now disconnect.

Speaker Change: Yeah.

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Speaker Change: Welcome to the fourth quarter 2023, Conocophillips earnings Conference call.

Liz: My name is Liz and I will be your operator for today's call.