Q4 2023 Occidental Petroleum Corp Earnings Call

Operator: 23 Earnings Conference Call All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. [inaudible] To submit your question, please press star then 2.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Operator: Please note, this event is being recorded. I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead. Thank you, Gary. Good afternoon, everyone.

Please note this event is being recorded.

I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead.

Jordan Tanner: Thank you Gary.

Jordan Tanner: Afternoon, everyone and thank you for participating and Occidental's fourth quarter 2023 earnings conference call.

Jordan Tanner: And thank you for participating in Occidental's fourth quarter 2023 earnings conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer, and Sunil Mathew, Senior Vice President and Chief Financial Officer.

Jordan Tanner: On the call with US today are Vicki <unk>, President and Chief Executive Officer, Sunil Matthew Senior Vice President and Chief Financial Officer, Richard Jackson, President operations U S onshore resources and carbon management.

Jordan Tanner: Richard Jackson, President of Operations, U.S. Onshore Resources, and Carbon Management, and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations. This afternoon, we will refer to slides available on the investor section of our website. The presentation includes a cautionary statement on slide 2 regarding forward-looking statements that will be made on the call this afternoon. We'll also reference a few non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in the schedules for earnings release and on our website.

Jordan Tanner: And Ken Dillon, Senior Vice President and President International oil and gas operations.

Jordan Tanner: This afternoon, we will refurbish slides are available on the investors section of our website.

Jordan Tanner: Our presentation includes a cautionary statement on slide two regarding forward looking statements will be made on the call. This afternoon.

Jordan Tanner: Well also referenced a few non-GAAP financial measures today reconciliations to the nearest corresponding GAAP measure can be found in the schedules for our earnings release and on our website.

Jordan Tanner: I'll now I'll turn the call over to Vicki.

Vicki A. Hollub: I'll now turn the call over to Jordan. Thank you, Jordan, and good afternoon, everyone. 2023 was a great year for us, thanks to the performance of all of our teams in Oxford. I'm going to start by discussing our financial performance, operational excellence, and our strategic advancements for 2023. Then I'll review our capital plans for 2024. These continue to position us to deliver sustainable and growing returns for our shareholders through our premier asset portfolio, advanced technology, and robust commercial runway. First, I'll begin by reviewing our financial performance in 2023.

Vicki: Thank you Jordan and good afternoon, everyone.

Vicki: 2023 was a great year for us thanks to the performance of all of our teams and oxy.

Vicki: I'm going to start by discussing our financial performance operational excellence and our strategic advancements in 2023.

Vicki: I'll review, our capital plans for 2024.

Vicki: Continue to position us to deliver sustainable and growing returns for our shareholders.

Vicki: Our premier asset portfolio advanced technology and robust commercial runway.

Vicki: First I'll begin by reviewing our financial performance in 2023.

Vicki A. Hollub: Last year, our talented and committed teams across the company applied advanced technical expertise, operating skills, leading-edge technologies, and innovation to our exceptional portfolio, and they delivered results. $5.5 billion in free cash flow, which enabled us to pay $600 million in common dividends, repurchase $1.8 billion of common shares, and redeem $1.5 billion of preferred shares while also investing $6.2 billion back into the business. Next, I'll comment on our operational excellence in 2023. Last year, our production in our global oil and gas business exceeded the midpoint of our original four-year production guidance by 43,000 BOE per day. This was driven by record new well productivity rates across our domestic assets in Delaware, Midland, and D.J. basins and internationally by record production from Block 9 in Oman.

Vicki: Last year, our talented and committed teams across the company applied advanced technical expertise operating skills, leading edge technologies and innovation to our exceptional portfolio.

Vicki: And they delivered results $5.5 billion in free cash flow, which enabled us to pay $600 million of common dividend.

Vicki: We repurchased $1.8 billion of common shares and redeem $1.5 billion.

Vicki: Bird chairs.

Vicki: And definitely investing $6 $2 billion back into the business.

Next I'll comment on our operational excellence in 2020 three.

Vicki: Last year, our production there in our global oil and gas business exceeded the midpoint of our original full year production guidance by 43000 daily per day.

Vicki: This was driven by record new well productivity rates across our domestic assets in the Delaware, Midland and DJ basins and internationally by record production from block nine in Oman and in <unk>.

Vicki A. Hollub: In addition, we safely completed the expansion of the Alhazen plant in the UAE, which also delivered record annual production. Despite negative price revisions, well-performance across our portfolio enabled us to achieve an all-in reserves replacement ratio of 137% in 2023 and a three-year average ratio of 183%. Our track record from prior years of consistently replacing produced barrels continues, and at an F&D cost that is below our current DDNA rate.

Vicki: Vision, we safely completed the expansion of the husband plant and the UAE, which also delivered record annual production.

Vicki: Despite negative price revisions well performance across our portfolio enabled us to achieve an all in reserves replacement ratio of 137% in 2023.

Vicki: On a three year average ratio of 183%.

Vicki: Our track record from prior years of consistently replacing produced barrels continues and that would definitely be a cost that is below our current DD&A rate.

Vicki: After this year in 2023 worldwide proved reserves increased to four point.

Vicki A. Hollub: Up his year in 2023, worldwide proved reserves increased to four points. $0 billion BOE from $3.8 billion BOE in 2022. Oxygen performed exceptionally well in 2023. It exceeded guidance and achieved $1.5 billion in pre-tax income for the third time in its history, due largely to lower energy costs and an efficient planned turnaround at our Ingleside plant, even as product markets softened compared to 2022. In addition, construction on Stratos, our first direct air capture facility, is progressing on schedule to be commercially operational in mid-2025.

Vicki: Zero.

Vicki: <unk> from $3 8 million BLA in 2022.

Vicki: I'll take him performed exceptionally well in 2023 and exceeded guidance and achieved $1 $5 billion in pre tax income for the third time in its history.

Vicki: Largely to lower energy costs, and an efficient plant turnaround at our ingleside plant, even if potash markets soften compared to 2022.

Vicki: In addition, construction Australia is our first direct air capture facility is progressing on schedule to be commercially operational in mid 2025.

Vicki A. Hollub: The fourth quarter of 2023 was an exciting way to conclude a successful year. In oil and gas, we delivered our highest quarterly production in over three years and outperformed the midpoint of our production guidance, despite a third-party interruption in the Gulf of Mexico. Iraqi business performed well in the fourth quarter.

The fourth quarter of 2023 was an exciting way to conclude a successful year in.

Vicki: In oil and gas, we delivered our highest quarterly production in over three years and to outperform the midpoint of our production guidance. Despite a third party interruption in the Gulf of Mexico.

Vicki: Our Rockies business outperformed in the fourth quarter, that's consistent with its year long trend.

Vicki A. Hollub: That's consistent with its yearlong trend, and innovative artificial lift technology continued to maximize base production. Well-designed optimization in the CJ Basin that we presented in our second quarter earnings call contributed to a 32% productivity improvement from 2022. We also continued to deliver robust well performance in the Permian Basin, where our Delaware teams drove results to the high end of the Permian's fourth quarter production guidance. Our top spot well, which we also discussed in our second quarter earnings call, continued its strong performance trajectory and delivered the highest six-month cumulative production of any horizontal well ever in the New Mexico-Delaware Basin. In fact, OPSIA has drilled eight of the top ten horizontal wells of all time across the entire Delaware Basin based on this production metric. And three of those wells came online last year.

Vicki: Innovative artificial lift technology continued to maximize based production.

Vicki: Well design optimization and the D. J basin that we presented in our second quarter earnings call contributed to a 32% productivity improvement from 'twenty to 'twenty two.

Vicki: We also continued to deliver robust well performance in the Permian Basin, where our Delaware teams drove results to the high end of the Permian fourth quarter production guidance.

Vicki: Top spot well, which we also discussed in our second quarter earnings call continued its strong performance trajectory and delivered the highest six month cumulative production of any horizontal well ever in the new Mexico, Delaware Basin in fact, I'll see Israel eight of the top 10 horizontal wells of all time across the entire Delaware based on this.

Vicki: Production metrics and three of those wells came online last year.

Vicki A. Hollub: Since mid-2022, our teams outperformed the Delaware Basin industry average 12-month cumulative oil production by nearly 50 percent. [inaudible] A significant portion of the 2024 Delaware program will develop the same horizon as the record top spot well, further south in the Texas Delaware Basin. Our teams continue to deliver success with a couple of notable appraisal wells in the second Bonespring and third Bonespring lines. These wells drove incredibly early volumes and accordingly secured additional capital in our 2024 Delaware program. Our appraisal programs are positioning us for success by adding horizons in the Delaware Basin and moving Tier 2 and Tier 3 wells to Tier 1. But we're also improving our current Tier 1 intervals, for example, with our top spot well.

Vicki: Since mid 2022 our teams outperformed the Delaware basin. The industry average 12 month cumulative oil production by nearly 50%.

Vicki: Teen aims to extend our leadership in the new Mexico, Delaware Basin. This year.

Vicki: A significant portion of the 'twenty 'twenty four Delaware program will develop the same horizon as you record top spot well.

Vicki: Further south in the Texas, Delaware Basin.

Vicki: Our teams continued to deliver success with a couple of notable appraisal wells in the second bone spring and third bone spring line.

Vicki: These wells drove incredibly early time volumes and accordingly secured additional capital in our 'twenty 'twenty four Delaware program.

Vicki: Our appraisal programs are positioning us for success by adding horizons in the Delaware basin, and moving tier two and tier three wells to tier one but.

Vicki: But we're also improving our current tier one internet intervals for example, with our top spot well.

Vicki: Outside of the Delaware Basin, we're also making strides in some of the basins that we expect will begin to play a more consequential role.

Vicki A. Hollub: Outside the Delaware Basin, we're also making strides in some of the basins that we expect will begin to play a more consequential role. In the Midland Basin, for example, technical excellence, including the basin's leading Barnett Wells, drove a one-year cumulative improvement in well productivity of over 30% compared to the prior year. In the Powder River Basin, OxyCenter was the booming state's initial production and early cumulative production pad record of 1.5 million barrels of oil produced in only about seven months.

Vicki: In the Midland Basin Technical excellence, including the basin, leading Barnett wells drove a one year cumulative improvement in well productivity of over 30%.

Compared to the prior year.

Vicki: In the Powder River Basin Oxy said it was booming state initial.

Vicki: Actual production in early cumulative production pad record of 1.5 million barrels of oil produced in only about seven months.

Vicki A. Hollub: As we highlighted, our Uncommissioned Technical Teams continue to expand and improve inventory across all of the U.S. onshore basins. While our subsurface modeling, innovative well designs, and enhanced artificial lift technology have driven improvements in well recovery, new well designs have also resulted in record drilling times for both two- and three-mile Texas Delaware Basin laterals. Similarly, in the Powder River Basin, our teams drilled an average of 1,650 feet per day, and we drilled a 10,000-foot well in only 11 days, both achieving Oxy-basin records.

Vicki: As we highlighted our unconventional technical teams continue to expand.

Vicki: And improved inventory across all of U S onshore basins.

Well, our subsurface modeling innovative well designs and enhanced artificial lift technology has driven improvements in well recovery new well designs have also resulted in record drilling times for both two and three mild Texas, Delaware Basin laterals.

Similarly in the powder River basin, our teams drilled an average 1650 feet per day, and we drilled a 10000 foot well and only 11 days, both achieving oxy based on records.

Vicki: Our successes are not limited to our onshore U S portfolio and the deepwater Gulf of Mexico were continuing to leverage technology to drive even stronger production results.

Vicki A. Hollub: Our successes are not limited to our onshore U.S. portfolio. In the deepwater Gulf of Mexico, we are continuing to leverage technology to drive even stronger production results, and our CEPSE pumping system on the K2 field achieved first lift four months ahead of schedule. This is Oxy's first deployment of this technology in deep water.

Vicki: Our subsea pumping system on the K two field achieved first lift four months ahead of schedule. This is oxy is first appointment of this technology in deepwater.

Vicki A. Hollub: We expect it to unlock future production enhancement opportunities and longer-distance subsea tieback. Next, I'll shift to discussing how we advanced our strategy last year. In 2023, we upgraded our oil and gas portfolio, launched the expansion of our OxyChem battleground facility, and announced strategic commercial transactions that we expect will deliver sustainable, multi-year value to our shareholders. These steps strengthened our portfolio and made it unique in our industry. We have high quality, short cycle, high return oil and gas shale development in the U.S., along with conventional, lower decline oil and gas development in the Permian EOR, Nagam, Oman, Algeria, and Abu Dhabi.

Vicki: We expect to unlock future production enhancement opportunities in longer distance subsea tie backs.

Speaker Change: Next I'll shift to discussing how we advanced our strategy last year.

Speaker Change: In 2023, we high graded our oil and gas portfolio launch the expansion of Oxycodone battleground facility and announced strategic commercial transactions that we expect will deliver sustainable multiyear value to our shareholders.

Speaker Change: These steps strengthened our portfolio and make it unique in our industry.

Speaker Change: We have high quality short cycle high return oil and gas shale development in the U S along with conventional Laura declining oil and gas development in Permian, EUR gum, Oman, Algeria, and Abu Dhabi.

Vicki A. Hollub: These developments are complemented by our strong and stable cash flow from our chemicals business and the cash flow and carbon reduction we expect our low-carbon ventures to provide in the future. In addition to upgrading our oil and gas portfolio through organic development and appraisal work last year, we also announced the strategic acquisition of CrownLock, which will add high-margin, low-break-even inventory while increasing free cash flow for a diluted share. The incremental cash flow will support our cash flow priority of delivering a sustainable and growing dividend along with deleveraging and share repurchases after reducing the principal debt to $15 billion. We are working constructively with the FTC in its review of the transaction and expect to receive regulatory approval and close in the second half of this year.

These developments are complemented by our strong and stable cash flow from our chemicals business and the cash flow and carbon reduction we expect our low carbon ventures to provide in the future.

Speaker Change: In addition to high grading, our oil and gas portfolio through organic development and appraisal work last year. We also announced the strategic acquisition of Crown block, which will add high margin low breakeven inventory, while the increasing free cash flow.

Speaker Change: So to chair.

Speaker Change: The incremental cash flow will support our cash flow priority in delivering a sustainable and growing dividend along with deleveraging and share repurchases after reducing the principal debt to $15 billion.

Speaker Change: We are working constructively with the FTC in its review of the transaction and expect to receive regulatory approval and close in the second half of this year.

Vicki A. Hollub: The capital plan we will review in a moment excludes Crown Rock because we'll continue to operate as two separate companies until we obtain regulatory approval and close the acquisition. In our LLCB business, we completed many pivotal transactions that provided technology advancement, third-party capital, revenue certainty, and commercial optionality. We closed the acquisition of Direct Air Capture Technology innovator Carbon Engineering last quarter.

The capital plan legal review in a moment excludes crowd and rock because we'll continue to operate as two separate companies until we obtain regulatory approval and close the acquisition.

Speaker Change: And our LCD business, we completed many pivotal transactions that provided technology Advancement third party capital revenue certainty and commercial Optionality.

Speaker Change: We closed the acquisition of direct air capture technology innovative carbon engineering last quarter.

Vicki A. Hollub: This was a landmark achievement in our direct air capture development path. We're excited also about our Stratus joint venture with BlackRock, which we believe demonstrates the DAC is becoming an investable asset for world-class financial institutions. In addition, our teams signed on several more flagship carbon dioxide removal credits. Now, I'd like to reiterate our cash flow priorities and discuss our capital plans for 2024. On our December call, we discussed how we will focus on our cash flow and shareholder return priorities in 2024, including dividend growth, debt reduction, and the capital allocation program that generates strong free cash flow throughout the commodity cycle. As we discussed regarding Crown Rock, we intend to complete at least four and a half billion dollars in debt repayments for both pro forma cash flow and proceeds from a divestiture program. We intend to prioritize debt reduction until we achieve a principal debt balance of $15 billion or below, including repaying debt as it matures.

Speaker Change: This was a landmark achievement.

Speaker Change: Direct air capture development path.

Speaker Change: We're excited also about our strat is joint venture with Blackrock, which we believe demonstrates the DAC is becoming an investable asset a world class financial institutions and.

Speaker Change: In addition, our teams signed on several more flagship carbon dioxide removal credit customers.

Speaker Change: Now I'd like to reiterate our cash flow priorities and discuss our capital plans for 2024.

Speaker Change: On our December call, we discussed how we will focus on our cash flow and shareholder return priorities in 2024 on dividend growth debt reduction and our capital allocation program that generates strong free cash flow throughout the commodity cycle.

Speaker Change: As we discussed regarding Crown rock, we intend to complete at least four and a half million dollars in debt repayments from both pro forma cash flow and proceeds from the divestiture program.

Speaker Change: We intend to prioritize debt reduction until we achieve a principal debt balance of $15 billion or below including repaying debt as it matures.

Vicki A. Hollub: As a result of the acquisition, we expect to strengthen our balance sheet, improve our resilience in lower commodity price environments, and free up cash from interest payments to support future sustainable dividend growth and shareholder purchasing. Every year, we design our capital plans to support our strategic initiatives via projects that maximize our returns and best position Oxy to deliver long-term and resilient returns to our shareholders. Our 2024 capital plan continues a bifurcated investment approach that balances short-cycle, high-margin investments with measured, longer-cycle cash-flow growth investments. In 2024, we plan to invest $5.8 to $6 billion in our energy and chemicals business, resulting in slightly less capital for our unconventional assets this year. However, we expect our unconventional assets to return more cash to the business, and we continue to expect year-over-year production growth and continued success across our premier unconventional portfolio, including some of the emerging horizons.

As a result of the acquisition, we expect to strengthen our balance sheet improve our resilience in lower commodity price environments and free up cash from interest payments to support future.

Speaker Change: Annabelle dividend growth in chicken purchases.

Speaker Change: Every year, but he's on our capital plans to support our strategic initiatives, they're projects that Matt X Mas, our returns and best position us to deliver long term and resilient returns to our shareholders.

Speaker Change: 2024 capital plan continues a bifurcated the investment approach that balances short cycle high margin investments measured longer cycle cash flow growth investments.

In 2024 weeks and plan to invest five $8 billion to $6 billion in our energy and chemicals businesses, resulting in slightly less capital for our unconventional assets. This year. However.

Speaker Change: However, we expect our unconventional assets to return more cash to the business and we continue to expect year over year production growth and continued success.

Speaker Change: Oh, sorry premiere.

Speaker Change: You mentioned portfolio, including some of the emerging horizons.

Vicki A. Hollub: We intend to complement our unconventional exposure with increases to our mid-cycle investments, including lower-declined conventional reservoirs, which are expected to drive longer-cycle cash flow resilience. Our 2024 Mid-Cycle Capital Investments will position us to continue the exciting projects that we started last year. Investments in OxyChem are expected to increase this year as progress continues on the battleground expansion and the plant enhancement project.

Speaker Change: We intend to complement our unconventional exposure with increases to our mid cycle investments, including lower decline conventional reservoirs, which are expected to drive longer cycle cash flow resiliency.

Our 2024 mid cycle capital investments will position us to continue the exciting projects that we started last year.

Speaker Change: MS Inaki Oxy Kim are expected to increase this year as progress continues on the battleground expansion and enhancement project.

Vicki A. Hollub: We also added a second drill ship in the Gulf of Mexico to support what we believe could become a future-growth asset ROC. Lower Decline Oil Production from our Enhanced Oil Recovery, or EOR, is an important part of our long-term strategy. This year, we're investing in gas processing expansions for our premium UR business that support longer-term growth in many of our core CO2 fields. Our EOR business will continue to be a key part of our future oil and gas development as we believe that carbon dioxide captured by direct air capture facilities is a sustainable way to develop the two billion barrels of potentially recoverable oil remaining in our Permian EOR operations. In our emerging low-carbon businesses, much of Oxy's planned $600 million 2024 investment will be directed to Stratos. We have also allocated capital to continue preparations for a second direct air capture and sequestration hub in South Texas, along with subsurface and well-permitting investments needed at our Gulf Coast sequestration hub. Capital received from financial partners for our LCD businesses will add to our $600 million investment.

Speaker Change: We also added a second drillship in the Gulf of Mexico to support what we believe could become future growth asset for oxy.

Speaker Change: Laura decline oil production from our enhanced oil recovery or E O R.

Speaker Change: It's an important part of our long term strategy. This year, we're investing in gas processing expansions for our Permian EUR business, that's important longer term growth in many of our core C O Tusa bills.

Speaker Change: Our yard business will continue to be a key part of our future oil and gas development as we believe that carbon dioxide captured by direct air capture facilities is this sustainable way to the best of the 2 billion barrels are potentially recoverable oil remaining in our Permian EUR operations.

Speaker Change: Now our emerging low carbon businesses much of boxes plan $600 million 'twenty 'twenty four investment will be directed to stratus.

Speaker Change: We have also allocated capital to continue preparations for a second direct air capture and sequestration holiday in South, Texas, along with subsurface and well permitting investments needed at our Gulf Coast sequestration hubs.

Speaker Change: Capital received from financial partners for our LCB businesses will add to our 600 million dollar investment.

Speaker Change: This includes capital contributions from our joint venture partner Blackrock for Stratus.

Blackrock investment totaled $100 million in 2023, and we expect that figure will increase in 2024.

Sunil Mathew: This includes capital contributions from our joint venture partner BlackRock for Stratos. BlackRock's investment totaled $100 million in 2023, and we expect that figure will increase in 2024. We're making great progress towards advancing our net zero pathway as we develop direct air capture and other exciting technologies. We see tremendous potential in LCB to increase Oxy's cash flow resilience and generate solid long-term returns for our shareholders. I'll now turn the call over to Sunil for a review of our fourth quarter financial results and 2024 guidance. Thank you, Vicki.

Speaker Change: We're making great progress toward advancing our net zero pathway as we develop direct air capture another exciting technologies.

Speaker Change: See tremendous potential in LCB to increase oxy cash flow resilience and generate solid long term.

Speaker Change: Returns for our shareholders.

Speaker Change: I'll now turn the call over to Sunil for a review of our fourth quarter financial results and 2020 for guidance.

Sunil Matthew: Thank you Ricky I will begin today by reviewing our fourth quarter results, we announced an adjusted profit of 74 cents per diluted share.

Sunil Matthew: Reported profit of dollar and eight cents per diluted share with the difference between adjusted and reported profit.

Sunil Matthew: Really driven by the after tax for fair value gain related to the acquisition of carbon engineering.

Sunil Mathew: I will begin today by reviewing our fourth quarter results. We announced an adjusted profit of $0.74 per diluted share and a reported profit of $1.08 per diluted share, with the difference between adjusted and reported profit primarily driven by the after-tax fair value gain related to the acquisition of carbon engineering. Our teams exceeded the midpoint of guidance across all three business segments during the fourth quarter, and we delivered outstanding operational performance. Higher than expected production in our domestic onshore and international assets enabled us to overcome production losses caused by an unplanned third-party outage in the eastern Gulf of Mexico. This outage led to a lower-than-expected company-wide oil cut and higher-than-anticipated domestic operating costs for BOE.

Sunil Matthew: Our teams exceeded the midpoint of guidance across all three business segments during the fourth quarter and we delivered outstanding.

Sunil Matthew: The operational performance.

Sunil Matthew: Higher than expected production in our domestic onshore and international assets enabled us to overcome production losses.

By an unplanned third party outages in the eastern Gulf of Mexico.

Sunil Matthew: This outage led to a lower than expected company wide oil cut and the higher than anticipated domestic operating cost per Boe.

It is also expected to impact production into early next month and is reflected in the guidance that I've assumed colo.

Sunil Matthew: We had a positive working capital change primarily due to receipt of the environmental remediation settlement.

Sunil Matthew: Timing of semi annual interest payments on debt and decreases in commodity prices.

Sunil Matthew: We exited the quarter with over one $4 billion of unrestricted cash.

Sunil Mathew: It is also expected to impact production into early next month and is reflected in the guidance that I will soon cover. We had a positive working capital change, primarily due to receipt of the environmental remediation settlement, signing of semi-annual interest payments on debt, and decreases in commodity prices. We exited the quarter with over $1.4 billion of unrestricted cash. Turning now to guidance for last month. Oxy and Crown Rock each received a request from the FTC for additional information related to the acquisition.

Speaker Change: Turning now to guidance.

Speaker Change: Last month.

Speaker Change: He groaned rock each received a request from the FTC or additional information related to the acquisition.

Speaker Change: The FTC's requests for additional information will impact the timing of closing, which we expect to occur in the second half of the year.

Speaker Change: <unk> will receive the benefit of drone drugs activity between the January one 'twenty 'twenty four transaction ethic debate and close subject to customary purchase price adjustments.

Speaker Change: Additionally, the issuance of senior unsecured notes on being off the fully committed $4 7 billion term loans and termination of the existing bridge loan facility are expected to be aligned with the transactions closing.

Sunil Mathew: The FTC's request for additional information will impact the timing of closing, which we expect to occur in the second half of the year. Oxy will receive the benefit of Crown Rocks activity between the January 1, 2024 transaction effective date and close, subject to customer repurchase price adjustment. Additionally, the issuance of senior unsecured notes, funding of the fully committed $4.7 billion term loans, and termination of the existing bridge loan facility are expected to be aligned with the transaction's close. In 2024, we expect full-year production to average 1.25 million BOE per day, representing low single-digit growth from 2023, with the Rockies and Alosun Driving Production Group. As Vicki mentioned, well-designed and operational expertise drove production outperformance in the Rockies last. We anticipate that these results will continue in 2024, with a steadier run rate of wells coming online compared to the first quarter of last year when we recently ramped up brick activity. Permian production is expected to remain largely flat, with Permian unconventional capital decreasing by approximately 10% compared to the prior year.

Speaker Change: In 'twenty to 'twenty four we expect full year production to average 125 million Boe per day.

Speaker Change: Low single digit growth from 'twenty to 'twenty, three with the Rockies, although some driving production growth as we mentioned.

Speaker Change: Well design and operational expertise drove production outperformance in the Rockies last year.

Speaker Change: We anticipate that these results will continue in 2020 full with the studio run rate of wells coming online compared to the first quarter of last year. When we have recently ramped up rig activity.

Speaker Change: Permian production is expected to remain largely flat.

Speaker Change: Bobby in unconventional capital.

Creasing by approximately 10% compared to the prior year.

Speaker Change: Internationally, we anticipate continued higher production at our lucid following last year's plant expansion.

Speaker Change: Total company production guidance in the first quarter reflects a low point for 2024 with a significant step up expected in the remainder of the year next.

Speaker Change: The expected first quarter decrease in production is primarily driven by the relatively low activity levels and working interest in the Permian basin in last year's fourth quarter.

Sunil Mathew: Internationally, we anticipate continued higher production at Hull Olsen following last year's plant expansion. Total company production guidance for the first quarter reflects a low point for 2024 with a significant step-up expected for the remainder of the year. The expected first quarter decrease in production is primarily driven by the relatively lower activity levels and working interest in the Permian Basin in last year's fourth quarter.

Speaker Change: January winter storm impacts of approximately 8000 Boe per day, and our domestic onshore assets.

Annual plant maintenance at Dolphin, and the Gulf of Mexico, unplanned down time event.

Speaker Change: Domestic operating costs on a Boe basis in 'twenty 'twenty four I expect it to decrease due to reduced maintenance in the Gulf of Mexico, and improve lifting costs in the DJ basin.

Speaker Change: Moving on to chemicals in 2023, Oh C. Chem generated pre tax income nearly matching its second highest ever.

Sunil Mathew: January winter storm impacts of approximately 8,000 BOE per day on our domestic onshore assets, annual plant maintenance at Dolphin, and the Gulf of Mexico unplanned downtime. Domestic operating costs on a BOE basis in 2024 are expected to decrease due to reduced maintenance in the Gulf of Mexico and improved lifting costs in the DJ basin. Moving on to chemicals, in 2023, OxyChem generated pre-tax income nearly matching its second highest year ever.

Speaker Change: This year, we are guiding to a midpoint of $1.1 billion of pre tax income.

Speaker Change: The full year guidance as close to the fourth best year ever for the chemicals segment, despite potential challenging market conditions.

Speaker Change: We expect that our first quarter Oxy camera Soc will be largely flat from the.

Sunil Mathew: This year, we are guiding to a midpoint of $1.1 billion of pre-tax income. This year's full year guidance is close to the 4th best year ever for the chemical sector. Despite potentially challenging market conditions, we expect that our first quarter oxychem results will be largely flat from the prior quarter. Our guidance for Q1 reflects the combination of PVC price erosion largely associated with contract adjustments in Q4 and typical seasonal subdued demand for both PVC and caustic and export pricing pressure on caustic from China.

Speaker Change: Prior quarter.

Our guidance for Q1 reflects the combination of PVC price erosion largely associated with contract adjustments in Q4.

Speaker Change: Because seasonal subdued demand in both PVC and caustic.

Speaker Change: Export pricing pressure on caustic from China.

Speaker Change: Our guidance assumes that in Q1, we have reached the bottom of the cycle with more stabilized prices.

Speaker Change: I would like to close today by looking beyond 2020 full to highlight several catalysts that we expect will enhance our financial trajectory in the coming years.

Sunil Mathew: Our guidance assumes that in Q1, we have reached the bottom of the cycle with more stabilized prices. I would like to close today by looking beyond 2024 to highlight several catalysts that we expect will enhance our financial trajectory in the coming years. Our midstream business is well positioned to benefit from a reduction in crude oil transportation rates from the Permian to the Gulf Coast by the end of the third quarter of 2025. We expect annualized savings from these rate reductions of $300 to $400 million, with approximately 40% of the savings starting in 2025 and the full annual savings anticipated in 2026.

Speaker Change: Our midstream business is well positioned to benefit from a reduction in crude oil transportation groups from the Permian to the Gulf coast by the end of the third quarter of 2025.

Speaker Change: We expect annualized savings from these reproductions of $300 million to $400 million with approximately 40% of the three weeks starting in 2025 and the full annual savings anticipated in 2026.

Speaker Change: The oxy give battleground Atlanta announcement projects are expected to generate incremental benefits to EBITDA of $300 million to $400 million.

Speaker Change: Once complete.

Speaker Change: In combination these improvements to midstream and chemicals I expected to deliver an incremental annualized run rate EBITDA of $600 million to $800 million.

Sunil Mathew: The Oxdecay Battleground and Plant Enhancement Project are expected to generate incremental benefits to EBITDA of $300 to $400 million per year once complete. In combination, these improvements to midstream and chemicals are expected to deliver an incremental annualized run rate EBITDA of $600 to $800 billion. As Vicki discussed, we also expect the planned mid-cycle investments in conventional Gulf of Mexico and Permian EOR assets to provide cash flow resiliency through lower decline conventional production. As we continue to execute on high-grading our premier portfolio, we are committed to meeting our deleveraging targets that I outlined in December, and I believe that a strengthened balance sheet and Oxy's premium portfolio will enable future increases to our common dividend and rebalance Our teams are focused on extending Oxy's track record of operational excellence and solid execution on our path to delivering growing and sustainable shareholder returns over the long term. I will now turn the call back over to Vicki.

Speaker Change: As we discussed.

Speaker Change: We also expect the planned mid cycle investments in a car and when shall Gulf of Mexico, and Permian you off assets to provide cash flow resiliency through lower decline conventional production.

Speaker Change: As we continued to execute on high grading our premier portfolio. We are committed to meeting our deleveraging targets that I outlined in December.

Speaker Change: Believe that.

Our strengthened balance sheet and Oxleas premium portfolio will enable future increases to our common dividend and rebalance enterprise value in favor of our common shareholders.

Our teams are focused on extending oxy his track record of operational excellence and solid execution.

Speaker Change: Our path to delivering growing and sustainable shareholder returns over the long term I will now turn the call back over to Vicki.

Thank you Sunil.

Vicki: Turning 23 was a significant year for oxy on both operational and commercial fronts.

Vicki: Our teams skillfully navigated through those dynamics now I want to recognize our employees ingenuity and hard work and their efforts generated the exciting achievements, we covered today as well as the great progress that is underway to position us for a successful 2024.

Vicki A. Hollub: Thank you, Sunil. 2023 was a significant year for Oxy on both operational and commercial fronts. Our teams skillfully navigated through the dynamics, and I want to recognize our employees' ingenuity and hard work. Their efforts generated the exciting achievements we covered today, as well as the great progress that is underway to position us for a successful 2024. With that, we'd like to open the call for questions. Jordan mentioned earlier that Richard Jackson and Ken Dillon are also on the call, and they will participate in the Q&A session. We will now take your calls. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Speaker Change: With that we'd like to open the call for questions Jordan mentioned earlier, Richard Jackson in Kansas and there also on the call and they will participate in the Q&A session.

Well now take your calls.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Please limit questions to one primary question and one follow up if you have further questions you may reenter the question queue.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question is from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Singhvi Mehta: Thank you so much and Vicki great to hear from Yeah. My My question is just really around deleveraging and save me you talked about this in the opening comments, but just talk about.

Neil Singhvi Mehta: To ask your question, please press star then 2. Please limit questions to one primary question and one follow-up. If you have further questions, you may re-enter the question. At this time, we will pause momentarily to assemble our roster. The first question is from Neal Mehta with Goldman Sachs; please go ahead. Thank you so much, and Vicki, great to hear from you.

Neil Singhvi Mehta: The path to getting the balance sheet to where you want to be post the crown rock acquisition, and how you see the asset sale market.

Neil Singhvi Mehta: Playing out here.

Neil Singhvi Mehta: In enabling you to get that debt that Laura Thank you.

Neil Singhvi Mehta: Well as you noted.

Vicki A. Hollub: My question is just really around deleveraging, and so you talked about this in the opening comments, but just talk about the path to getting the balance sheet to where you want it to be post the Crown Rock acquisition, and how are you seeing the asset sale market playing out here and enabling you to get that debt lower? Well, as you notice, by virtue of all the M&A that's happening, there's a lot of appetite for companies to try to get into the Permian. And we do have properties in the Permian that are not core to us but could be core to others. And some of it is just where they're placed in the Permian geographically and how they're not as cored up as some of our key areas.

Neil Singhvi Mehta: By virtue of all the M&A, that's happening, there's and there's a lot of appetite for companies to try to get into the Permian and we do have properties in the Permian that are not core to us that could be core to others and some just where they are placed in the Permian geographically and how there are not as core it up is it some.

Neil Singhvi Mehta: Our key areas. So the divestitures I believe will go well well, we won't do though as we've decided not to make any divestitures until we close the Crown rock acquisition and then we'll we'll start a proactive process on more aggressively at that point.

Speaker Change: That's great. Thank you. Thank you and then on the Gulf of Mexico. The Q1 guide of 170 115, but the balance of the year $1 33 to 141 I'm guessing a lot of that's around the pipeline outage can you just give us a sense of what are the gating factors to get get the that asset back online and how we should be thinking about the case.

Vicki A. Hollub: So the divestitures, I believe, will go well. What we won't do, though, is we've decided not to make any divestitures until we close the Crown Rock acquisition, and then we'll start a proactive process more aggressively at that point. That's great, Vicki.

Speaker Change: Production over the course of the year.

Speaker Change: Yeah, we're leaving they they updates on that to the to the operator, and so we're not making any comments on that because where we're giving them a room to get their business done with respect to the rest of the year. We expect the rest of the year to continue on as normal.

Vicki A. Hollub: And then on the Gulf of Mexico, the Q1 guide of 107 to 115, but the balance of the year 133 to 141. I'm guessing a lot of that's around the pipeline outage. Can you just give us a sense of, you know, what are the gating factors to get that asset back online and how we should be thinking about the cadence of production over the course of? Yeah, we're leaving the updates on that to the operator. And so we're not making any comments on that because we're giving them room to get their business done.

Speaker Change: And we expect that when we're back up and running we may get a little bit of flush production.

Speaker Change: From that and we'll have hopefully or our target date for getting back up and online is pretty close to what was you said you have anything to add.

Speaker Change: Hi, it's Ken here, maybe I can add a couple of things so weird.

Kenneth Dillon: Pretty good about the date for example, we're sending ours.

Vicki A. Hollub: With respect to the rest of the year, we expect the rest of the year to continue on as normal. And we expect that when we're back up and running, we may get a little bit of flush production from that. And we'll hopefully have our target date for getting back up and online is pretty close to what we said. Anything to add? Hi, it's Ken here.

Kenneth Dillon: Specialists startup crews offshore tomorrow.

Kenneth Dillon: <unk>.

Kenneth Dillon: Well it is for full operations I think that gives you a feel for where we are in the process. The plants are in great shape, our operations crews in parallel with the outage.

Kenneth Dillon: Those are through 'twenty 'twenty four talking about guidance and also completed our enhancement projects for the year as well so.

Kenneth Dillon: Maybe I can add a couple of things. So we're feeling pretty good about the date. And, for example, we're sending our specialist startup crews offshore tomorrow to finish lining out the facilities for full operations. I think that gives you a feel for where we are in the process. The plants are in great shape.

Kenneth Dillon: Avoiding outages in 'twenty 'twenty four it gives us a really good shot so where we're looking forward to it.

Speaker Change: Thank you.

Speaker Change: Yeah.

Kenneth Dillon: Our operations crews, in parallel with the outage, carried out our full 2024 turnarounds and also completed our enhancement projects for the year as well. So, avoiding outages in 2024 gives us a really good shot, so we're looking forward to it. Thank you.

Speaker Change: Thank you appreciate it Neil that was timed very well spent they made use of all of them. All the time that they had to do things that we needed to do.

Speaker Change: The next question is from Doug Leggate with Bank of America. Please go ahead.

Hi, Thanks, good morning, everyone.

Vicki A. Hollub: Thank you. I appreciate it, Neal. That was time very well spent.

Doug Leggate: The number of Scott So shrinking Ken it's great to hear you on the on the call clinical places retirement, so thanks, Ricky for forgetting one as well.

Douglas George Blyth Leggate: They made use of all the time that they had to do things that we needed to do. The next question is from Douglas Leggate with Bank of America. Please go ahead. I have a couple of questions, if I may. I guess the first one is, I hate to do it, but I want to come back. I realize you don't want to give it a lot of detail, but I'm going to frame it like this: When you bought Anadarko and you were trying to de-lever, I seem to recall you had about 25 different packages that were for sale.

Doug Leggate: So I have a couple of questions. If I may I guess, the first one is I hate to do it but I wanted to come back on the disposal question.

Doug Leggate: I realize you don't want to give a lot of detail, but I want to frame it like this one.

Doug Leggate: When he was born on a dark when you were trying to Delever I seem to recall you had about 25 different packages.

Doug Leggate: We're for sale and of course, he he ended up not having to do hardly any of those I think it was about a dozen or something like that.

Douglas George Blyth Leggate: And, of course, he ended up not having to do hardly any of those. I think it was about a dozen or something like that. It seems to me that you've got a lot of things that you've already scrubbed. So my question is, can you give us some color on whether there is significant cash flow that would come along? Well, depending on what actually is divested, we can't really give you an estimate of what that is today. Some things are changing in terms of what we're looking at. So I think that it would be very difficult to put the number out there at this point. But is it significant? Would you consider it material cut?

Speaker Change: So it seems to me that you've got a lot of things that you've already scrubbed. So my question is can you give us some color as to whether there is significant cash flow that would come along with the range of four $5 billion to $6 billion without being specific on assets. Once you saw the associated free cash flow number.

Speaker Change: Well, depending on on what actually is divested them. We cant really give you an estimate of that what that is today and some things are changing in terms of what we're looking at them. So I think that it would be very difficult to put a number out there at this point.

Speaker Change: Is it mix is it significant would you consider it material.

Speaker Change: Vicki.

Vicki: Anything that's material, we wouldn't likely do were trying to minimize the cash flow sold a.

Vicki A. Hollub: Anything that's material we wouldn't likely do. We're trying to minimize the cash flows sold to ensure that we can maintain our cash flow. With that said, there will be some cash flow going because it's hard to sell any assets out here that we haven't already at least done appraisal work on to generate some cash flow. Thank you.

Vicki: To ensure that we can maintaining our cash flow, but that said there will be some cashflow going.

Vicki: Because it's hard to sell any assets out here that we haven't already at least on appraisal work on to generate some cash flow.

Speaker Change: Okay. Thank you my follow up is on sustaining capital you've stepped up a little bit to $3 9 billion.

Douglas George Blyth Leggate: My follow-up question is on sustaining capital. You've stepped it up a little bit to $3.9 billion. But what we're trying to figure out is this year's growth is about 2%, Spending $6.5 billion, of which $1 billion is for battleground and dying. This gets you to about five and a half billion, so what I'm trying to figure out... The growth rate of 2% seems to correlate with growth spending of about one and a half billion dollars. It seems the ratio just seems a bit off. Can you help me understand?

Speaker Change: The way, we what we were trying to figure out is this year's growth is about 2%.

Speaker Change: Spending six 5 billion of which $1 billion bottle of ground.

Speaker Change: Doc, which gets you to about five and a half billion. So what I'm trying to figure out is.

Speaker Change: The growth rate of 2% seems to correlate with growth spending.

Speaker Change: About one $5 billion. It seems the ratio would just seems a bit off can you help me understand how are you.

Vicki A. Hollub: How I Should Have Ended, So if you look at what we've said we'll spend on oil and gas is $4.8 to $5 in 2024, that part of that will be spent on. As we mentioned, some of the mid-cycle projects that generate oil production at a later date, like for example, the Permian-Eowar, investing in that would generate oil and gas production from that in about the third year after we start it. So that will be a bit delayed.

Speaker Change: I should think about that.

Speaker Change: So if you look at our what we said we will spend in oil and gas is a 4.8 to five.

Speaker Change: And in 2024.

Speaker Change: That part of that will be spent on.

As we mentioned some of the mid cycle projects that generate well production at a later date.

Speaker Change: For example, the Permian AOR.

Investing in that would generate the oil and gas production from that isn't about the the third year.

Speaker Change: After we started so that will be a bit delayed Gulf of Mexico. Some of those are also preparing us for the future. So the mid cycle.

Vicki A. Hollub: Gulf of Mexico, some of those are also preparing us for the future. So the mid-cycle investments will not impact this year's production. The potentially 2.2% increase will be based on the spending of 4.9%, if you use the mid-cycle price, less than 4.80%. And then when you look at what's being spent on our oil and gas operations minus that amount, you still have some of that going on for facilities. I think it speaks well to what the teams have done with respect to productivity and getting more out of the wells that we can actually spend less than half that billion that you mentioned on oil and gas activities. And then some of that will be for facilities. So we're actually getting a 2% growth rate from some of what we've developed in 2023, slowing over to 2024, and then the high productivity that we're getting out of our development. Great answer, Vicki; you stole the most capital efficient portfolio by a mile. I know it is really exciting what the teams have done, and thank you for the questions. The next question is from John Royall with J.P. Morgan. Please go ahead. Hi, good afternoon.

Speaker Change: <unk> will not impact this year's.

Production.

Potentially to point, a 2% increase and will be based on the spending of the 4.9. If you use the mid cycle price less that 480, and then when you look at what's being spent and our oil and gas operations minus that amount.

Speaker Change: You still have some of that going four facilities I think it speaks well to what the teams have done with respect to productivity and getting more out of the wells that we can actually spend let's really.

Speaker Change: Less than half that 1 billion that you mentioned on oil and gas activities and then some of that will be for facilities.

Speaker Change: So we're actually getting a 2% same with rate from some of what we've developed in 'twenty two 'twenty three.

Speaker Change: Flowing over to you in 2024.

Speaker Change: And then the high productivity that we're getting out of our development.

Speaker Change: It's a great answer Vicki you still the most capital efficient portfolio by miles. So thank you so much for the answer.

Vicki: I know it is really exciting what the teams have done and thank you for the question.

Vicki: The next question is from John Royall with Jpmorgan. Please go ahead.

John Royall: Hi, good afternoon. Thanks for taking my question. So my first question is on midstream or I think one area that surprised us a bit with the full year, our midstream guide you.

John Macalister Royall: Thanks for taking my question. So my first question is on midstream. I think one area that surprised us a bit was the full-year midstream guide. You gave some good color in the slides, kind of bridging from 4Q to 1Q.

John Royall: You gave some good color in the slides kind of bridging from <unk> to <unk>, but just thinking about bridging the full year, how would you characterize the moving pieces from full year 'twenty three to four year 'twenty four and then maybe what do you. What do you think the midstream business can do structurally kind of under mid cycle conditions, you know excess 300 to 400 million savings.

John Macalister Royall: But just thinking about bridging the full year, how would you characterize the moving pieces from full year 23 to full year 24? And then maybe what do you think the midstream business can do structurally, kind of under mid-cycle conditions, you know, the excess 300 to 400 million savings you've spoken about? Yeah, hi.

John Royall: You've spoken about.

Speaker Change: Yeah, Hi, so one of the main drivers for the relatively lower guidance for this year is our assumption on the spread for the gas transportation contracts. So last year, we captured several gas transportation.

Sunil Mathew: So one of the main drivers for the relatively lower guidance for this year is an assumption on the spread for the gas transportation contract. So last year, you know, we captured several gas transportation capacity optimization opportunities, for example, when the cold weather event occurred on the West Coast in the first quarter. So obviously, we cannot predict these events.

Speaker Change: <unk> kept our capacity optimization opportunities for example, when the cold weather event occurred and the rest goes in the first quarter.

Speaker Change: So obviously, we cannot predict these events so our guidance assumes compressed gas transport transportation spreads, but went up market does present itself. We are well positioned to capture these opportunities. So that is one of the main factors. The other one is an Allison we have assumed a lower sulfur pricing for <unk> 24 compared to last year.

Sunil Mathew: So our guidance assumes compressed gas transportation. But when the market does present itself, we are well positioned to capture these opportunities. So that is one of the main factors. The other one is Alusin. We have assumed a lower self-pricing for 2024 compared to last year. Now, sulfur prices are at a near-term low of around $70 per ton, and that is primarily due to weak Asian fertilizer demand and also the sale of built-up sulfur inventories by major regional producers.

No sulfur prices are about the near term the law of around $70 per tonne and that was primarily due to weak <unk>.

Fertilizer demand and also sale of a built up some inventories by major regional producers.

Sunil Mathew: But based on the market trends, we think, you know, we see a potential improvement in prices during the second half from demand pickup and also the unwinding of the sulfur. And the last thing I would say is, you know, we think this is sort of a low point in terms of midstream income. You know, we have assumed a narrow spread for gas transportation for this year and starting next year. We are also going to start getting the benefit of the two transportation contracts expiring, like I mentioned in my prepared remarks. So, you know, looking forward, you know, the next three or four years, you should see a significant uplift in our midstream. Great. Thanks for the color, Sunil.

Speaker Change: Based on the market trends, we think you know.

See a potential improvement in prices during the second half.

From demand pick up and also unwinding unwinding of the self employed.

Speaker Change: Inventory.

Speaker Change: And the last thing I'll say is we think this is sort of the low point in terms of the midstream income.

Speaker Change: We have assumed a narrow spread for the gas transportation for this year and starting next year. We're also going to start getting the benefit of the two new transportation contracts expiring like I mentioned in my prepared remarks so.

Speaker Change: Looking forward the next three or four years, you should see a significant uplift in our midstream.

Speaker Change: Great. Thanks for the color scenario and then.

Speaker Change: Just hoping for a little bit of detail on the.

Speaker Change: 700 million V O E or additions to reserves.

Speaker Change: Pretty big number.

Speaker Change: Especially when considering you're adding an acquisition this year.

John Macalister Royall: And then maybe just hoping for a little bit of detail on the 700 million BOE of additions to reserves. It's a pretty big number, especially when considering you're adding an acquisition this year. So maybe just some color on the sources of those additions and where they're coming from.

Speaker Change: Maybe just some color on the sources of those additions and and where they're coming from.

Speaker Change: Yeah.

Speaker Change: I think the bulk of the additions for from our Permian resources business.

Speaker Change: I think the I think just essentially most of it was a we had some revisions from productivity improvements in other areas that the bulk was from Permian EMR work I think Richard if you look at your a reserve replacement ratio just for onshore that was.

Richard A. Jackson: I think the bulk of the additions were from our Permian Resources business. I think the, I think just essentially most of it was, we had some revisions from productivity improvements in other areas, but the bulk was from Permian EOR, where I think Richard if you look at your reserve replacement ratio just for onshore, that was pretty significant. Yeah, I mean, just to add to that, I mean, obviously, the focus, while near term, some of these highlights that we're putting in on the primary benches that But some of the highlights we've been trying to put on the call are some of these secondary benches that are becoming more prevalent in our program.

Richard A. Jackson: Pretty significant.

Yeah, Let me just add to that I mean, obviously the focus while near term. Some of these highlights that we're putting in on the primary benches that we have been developing driving the outperformance on production, but some of the highlights we've been trying to put it in the call are some of the secondary benches that are becoming more prevalent in our in our.

Richard A. Jackson: Program. If you look at some of those highlights of the second bone spring or the <unk>.

Richard A. Jackson: <unk> Spring line you look at that Delaware chart that we've got are on Q production highlighting the year on year performance of the Delaware those secondary benches are outperforming our 2023 average and so those as we delineate and develop more of those that's really driving that reserve and reserves in the in the young <unk>.

Richard A. Jackson: If you look at some of those highlights, so that second bone spring or the bone spring line, you look at that Delaware chart that we've got on QM production, highlighting the year-on-year performance in the Delaware, those secondary benches are outperforming our 2023 average. And so those, as we delineate and develop more of those, that's really driving those reserves in the unconventional. EOR continues to do well.

Richard A. Jackson: <unk> continues to do well I'm talking in more detail.

Richard A. Jackson: There's interest, but some of the some of the projects they have going on there to increase capacity in some of our gas processing facilities like in the us and Seminole, which I think we highlighted.

Vicki A. Hollub: I'll talk in more detail if there's interest, but some of the projects they have going on there to increase capacity in some of our gas processing facilities, like in Seminole, which I think we highlighted. These are also giving us near-term, we call it operability, or it's really the reliability of that production. So some of that incremental investment this year is driving, say, a couple of thousand barrels a day of improved base production, but that's also providing capacity to develop some of those low development cost barrels that Vicki noted, as we're able to bring this CO2 for the future. So that's sort of how we're thinking about the reserve story, and it plays out in near-term outperformance, but in the long term, it picks it up on reserves as well.

Richard A. Jackson: These are also given us near term.

Richard A. Jackson: We call it Operability your room to really the reliability of that production. So some of that incremental investment.

Richard A. Jackson: Year is driving.

Richard A. Jackson: A couple of thousand barrels a day of improve our base production, but that's also providing capacity to develop some of those low development cost barrels that Vicki noted as we're able to bring on this seal to for the future. So that's sort of how we're thinking about the reserve story and it plays.

Richard A. Jackson: Out in the near term outperformance, but but the long term is picking it up on reserves as well.

Vicki A. Hollub: And I would add the other place where we did add significant reserves was Algeria as a result of the team's work to get all the 18 contracts merged into one and then extended. So that was great work done by the Algerian team to add reserves there. But the thing I'm most proud of is while the bulk of the reserves came from those two sources, the Permian and Algerian, and a little bit from the DJ, every business unit we have increased reserves except for Al-Hosin, where we had already booked quite a bit of reserves because of the modeling work done there to get that estimate more refined. Thank you. The next question is from David Deckelbaum with T.D. Cowan.

Richard A. Jackson: They are the other place where we did add significant reserves as Algeria as a result of the team's work to do you get all the 18 contracts merged into one and then extended so that was great work done by the Algeria team to add reserves, there, but the thing I'm most proud of as well as the bulk of the reserves came from those two sources.

Richard A. Jackson: The Permian and Algeria.

Richard A. Jackson: And a little bit from the D. J every business unit, we have increased reserves, except for altos, and where we had already booked quite a bit of reserves because of the modeling work on there to get that estimate more refined.

Thank you.

Speaker Change: Is that your question excuse me. The next question is from David Deco Baum with TD Cowen. Please go ahead.

David Adam Deckelbaum: Please go ahead. Good afternoon. Thanks for taking my questions today. I just wanted to follow up a little bit. I wanted to follow up a little bit on that prior conversation around EOR. You know, I guess this is being built out in conjunction with some of the anticipated volumes coming from Stratos. You know, can you give us a sense of what sort of capacity in terms of production relative to where you're at today you're intending to build out or, to put it another way, how large do you anticipate the growth rate to be out of the EOR production base over the next 5 to 10 years? I would say that over the next five to 10 years, it's going to be a significant part of our portfolio development.

Speaker Change: Good afternoon, and thanks for taking my questions today.

Speaker Change: I just wanted to follow up a little bit.

Speaker Change: Just wanted to follow up a little bit just on the prior conversation around EUR.

Speaker Change: I guess this is being built out in conjunction with some of the anticipated volumes coming from.

Speaker Change: From Stratos you.

Speaker Change: You know can you give us a sense what sort of capacity in terms of production relative to where you're at today, you're you're you're intending to build outs are or I guess on another way.

How large do you anticipate the growth rate to be out of the EUR production base over the next five to 10 years.

Speaker Change: I would tell you that over the next five to 10 years, its going to be a significant part of our portfolio in development. We had 2 billion barrels of resources remaining to be developed and believe we believe that as a result of our direct air capture facilities that we ultimately will bill too to get C. O two out of the atmosphere is.

David Adam Deckelbaum: We have two billion barrels of resources remaining to be developed, and we believe that as a result of our direct air capture facilities that we will ultimately build to get CO2 out of the atmosphere, they're going to be the most sustainable barrels in the world. It's going to be a resource that the world needs to get to lead. 30 or 40% of oil in conventional reservoirs and 90% of oil in shale reservoirs is just not acceptable.

Going to be the most sustainable barrels in the world and it's gonna be a resource that the world needs to to get to leave.

Speaker Change: 30, or 40% of oil and conventional reservoirs and 90% of oil and shale reservoirs is just not acceptable and for the United States to continue our energy independence AOR is going to have to be a part of the equation. Ultimately we're getting way ahead of the game here to be sure that that were ready.

Vicki A. Hollub: And for the United States to continue its energy independence, EOR is going to have to be a part of the equation ultimately. We're getting way ahead of the game here to be sure that we're ready because we do believe that the climate transition would not be affordable for the world without EOR being able to produce net zero carbon barrels of oil. So this is a huge part of our strategy and important not only to our shareholders, who love value, but to the U.S. and ultimately to other parts of the world. And for the nearer term, a forecast on what we can do, Richard has some data on that. Yeah, perfect. I'll tie that. I mean, one of the best ones...

Speaker Change: Because we do believe that the climate transition, but not be affordable for the world without AOR being able to produce a net zero carbon barrels of oil. So this is a huge part of our strategy and important not only to our shareholders value.

Speaker Change: Back to the U S and ultimately to other parts of the world and for the near term.

Speaker Change: Our forecast on what we can do Richard has some data on that yes, perfect I'll tie that I mean, one of the.

Richard A. Jackson: The attributes we really like around the EOR production that we talk about a lot are the lower decline. And so as we came through the last several years, especially through the downturn with lower commodity prices, you know, being able to have that flat, flatter decline, less than 5% was able to help us maintain a lot of free cash flow. We really started restoration of some of that development last year. And, you know, this year as we go forward, we'll have about 60 wells that we'll bring online, which will add about 4,000 barrels a day of new well production. But the benefit of this EOR, and we talked about mid-cycle, that doubles next year and triples in the third year. So you really hit your peak production of around 12,000 barrels a day based on that investment today, three years from now.

Attributes really like around your production that we talk about a lot is the lower decline.

Richard A. Jackson: As we came through the last several years with especially through the downturn with lower commodity prices being able to have that flat flatter decline less than 5% was able to help us maintain a lot of free cash flow. We really started restoration of some of that development last year and you know this.

Each year as we go forward.

Richard A. Jackson: Have about 60 wells that we'll bring online which will add about 4000 barrels a day of new well production, but the benefit of this or you are and we talked about mid cycle that.

Richard A. Jackson: That double.

Richard A. Jackson: Next year in triples in the third year. So you really hit your peak production of around 12000 barrels a day based on that investment to date three years from now the other thing I mentioned, shortly but I'll just provide a little more color there.

Richard A. Jackson: The other thing I mentioned briefly, but just to provide a little more color, you know, the Seminole gas plant expansion, that's about $85 million a day that we'll add in terms of capacity for about $40 million. You know, again, this year we'll expect a couple of thousand barrels a day that we'll add to our base production. So if you think about a, you know, a kind of cash investment intensity or capital intensity, that's a competitive business we've got in the portfolio. But what it does, to Vicky's point, you know, is we're able to bring on, you know, our CO2, anthropogenic CO2 for the future.

Richard A. Jackson: Seminal gas plant and an expansion that's about 85 million a day.

It will add in terms of capacity for about $40 million again. This year, we will expect a couple of thousand barrels a day that will add.

Richard A. Jackson: In our base production. So you can think about.

Richard A. Jackson: Kind of a cash investment intensity.

Richard A. Jackson: Our capital intensity, that's that's as competitive as we got in the portfolio, but what it does to vicky's point as we're able to bring on.

Richard A. Jackson: C O two anthropogenic C O two for the future. These are very.

Richard A. Jackson: Good return projects there'll be very competitive in our portfolio, especially given the lower lower decline and so when we look at just that seminal.

Richard A. Jackson: These are very, you know, good return projects. They'll be very competitive in our portfolio, especially given the lower, lower decline. And so when we look at just that Seminole, you know, as we look 24 to 28, that's, you know, another 15 to 20,000 barrels a day type opportunity for minimal capital. And so, within sort of the range of capital that we're spending this year on EOR, we're building those sort of wedges with a great opportunity to do more as we bring on more CO2. So hopefully, that helps tie the short and long.

Richard A. Jackson: As we look 24 to 2028, that's you know say another 15 to 20000 barrels a day type opportunity for minimal capital and so within sort of the range of capital that we're spending this year and EUR. We're building go sort of wedges with great opportunity to do more as we bring on.

Richard A. Jackson: More C O two so hopefully that helps Todd the shorten wall.

Speaker Change: I appreciate the details Richard maybe.

Speaker Change: Maybe just sticking with the theme of as a follow up just I think you talked a little bit about some spending is in the budget. This year for the second dock facility I guess in Cleburne is that any part of that sort of progression excuse me, it's still contingent on conversations with the D O N E.

Vicki A. Hollub: I appreciate the details, Richard. Maybe just sticking with the theme as a follow-up, just I think you talked a little bit about some spending in the budget this year for the second deck facility, I guess, in Kleberg. Is any part of that sort of progression still contingent on conversations with the DOE?

Speaker Change: Are you expecting a resolution around finality of funding and grants this year.

Speaker Change: The discussions with the daily are continuing and going quite well.

Vicki A. Hollub: And are you expecting a resolution around the finality of funding and grants this year? The discussions with the DOE are continuing and are going quite well. That where we see timing at the start of the front end engineering and design will be dependent on the completion of some of those discussions, and then the discussions will continue beyond that on getting prepared for the start of construction. But there is a timeline there that we're working through. Maybe just a couple of details I'll add since you asked the question about that.

That wherever we see timing at the start of the.

Speaker Change: Engineering and design will be dependent on the completion of some of those discussions and then the discussions will continue beyond that on getting prepared for the start of construction.

Speaker Change: But there is a timeline there that we're working through.

Speaker Change: Maybe just a couple of details I'll add since you asked the question on that maybe a lot of that spend is continuing to build out the subsurface capability.

Speaker Change: For that C. O two obviously director captures the anchor for the King Ranch area, but we continue to.

Vicki A. Hollub: I mean, a lot of that spend is continuing to build out the subsurface capability for that CO2. Obviously, direct air capture is an anchor for, you know, the King Ranch area, but we continue to work on our other Gulf Coast tubs. You know, we've submitted eight Class VI applications and are expected to submit another 10 this year.

Work on our other Gulf Coast hubs, we submitted eight class six and are expected to submit another 10. This year. So just kind of given the scale of what those that type of work has been going there. So.

Speaker Change: Going really well I'm really pleased.

Roger David Read: So, just kind of giving you a scale of what that type of work has been going on there. So, it's going really well, really pleased, you know, with the development work on that end. And then, obviously, carbon engineering. We've been getting to work more and more with and are really happy with the progress that is going on through R&D to project work with Ken that will fulfill that development work. Thank you both. The next question is from Roger Read with Wells Fargo Securities. Please go ahead. Yeah, thanks. Good afternoon, I'd like to come back.

Speaker Change: You know with with the development work on Dine in and then obviously carbon engineering.

Speaker Change: We've been getting to work more and more with and are really happy with the progress that is going through R&D to project work with Ken.

Speaker Change: And that will fulfill that that development work.

Speaker Change: Thank you both.

The next question is from Roger read with Wells Fargo Securities. Please go ahead.

Roger Read: Yeah. Thanks, good afternoon.

Roger Read: Hum.

Roger Read: So I'd like to come back.

Roger Read: Two things. Please vickie first one on the Crown rock if there's anything you can kind of offer us on.

Roger David Read: Two things, please, Vicki. First one on the crown rock, if there's anything you can kind of offer us on what the FTC is asking you for in a second request. And I'll just sort of preface by saying that with some of the more integrated companies, the concern of concentration, I'm a little more surprised and a more upstream oriented company. So anything you can help us with there? Some of our teams felt like they'd asked for everything.

Roger Read: What the FTC is asking you for a second request and I'll, just sort of preface with understand with some of the more integrated companies their concern of concentration I'm a little more surprised in a more upstream oriented company. So anything you can help us with there.

Vickie: Well some of our chain felt like they'd asked for everything [laughter].

Vicki A. Hollub: But I can tell you that our teams are working diligently to work with the team at the FTC to get them all the answers that they need. So we're progressing and, as we said, hope to be able to close in the second half of this year. So they asked for the moon and everything else, huh? I didn't, well, I didn't see the moon on there, but we're not done yet.

Vickie: But I can tell you where our teams are working diligently to to work with the team at that Kathy I have to say to get them all of the answers that they need. So it's we're progressing and look to them as we said being able to close in the.

Vickie: Second half of this year.

So they asked for the Moon and everything else.

Speaker Change: I did well I didn't say the moon on there, but we're.

Speaker Change: We're not done yet.

Roger David Read: Fair enough. All right. The other question I had in terms of capital efficiencies is obviously coming through in the Permian, the regular, let's call it still modest growth there. But you're increasing the growth rate during 2024 for the Rockies and other parts of it. When we had the follow-up calls yesterday, they said part of it was, you know, build in some mid-cycle businesses, maybe some somewhat lower-decline businesses. I was just wondering, from a corporate structure point of view, how do you make the decision on where to allocate the growth capital here?

Speaker Change: Fair enough all right the.

Speaker Change: The other question I had in terms of the capital efficiencies are obviously coming through in the Permian.

Speaker Change: The revlon or let's call it still modest growth there.

Speaker Change: But you're increasing the growth rate during 2024 for the Rockies and other part of it when we had the follow up calls yesterday, you said part of it was built in some mid cycle businesses, maybe some somewhat lower decline businesses. I was just wondering from a corporate structure, how you make the decision on where to allocate.

Speaker Change: The growth capital here like wide lean more into the.

Vicki A. Hollub: Like, why lean more into the Rockies and the ELR rather than the Permian when we're, you know, kind of all conditioned to thinking of the Permian as, you know, among the best returns in the business, and obviously, the performance you've been delivering at the wellhead kind of says, well, why not more capital in the Permian rather than these other options? Well, when you look at it on a corporate level, what we're really trying to do is balance our investments over time so that we can have a sustainable, growing dividend. And we've got this unique balance that I think makes it, for us, different from many other companies, and we want to take full advantage of it. And I want to let Richard and Sunil chime in on their views on this, because this is a critical part of what differentiates us. Yeah, no, Roger, I appreciate the opportunity.

Speaker Change: The Rockies and the E O R rather than the Permian worry you know kind of all conditioned to thinking of the Permian as well.

Speaker Change: Among the best returns in the business and obviously the performance you've been delivering at the wellhead says well why not more capital in the Permian rather than each other opportunities.

Speaker Change: So when you look at it on a corporate level, what we're really trying to do is balance our investments over time that so that we can have a sustainable growing dividend.

Speaker Change: And it and we've got this unique balance that that I think makes it I for us different than many other companies and we want to take full advantage of it and no one else that Richard and then Sunil.

Chime in on their views on it because this is a this is a critical part of what differentiates us yes.

Speaker Change: No Roger appreciate opportunity I mean, obviously, we're putting together short term with long term in mind and you know the crown rock.

Richard A. Jackson: I mean, obviously, we're putting together short-term plans with the long-term in mind. And, you know, the crown rock acquisition provides a lot of growth. And we've talked about the positive attributes of that being a more mature unconventional development, with a high margin 35% decline, it immediately adds, you can think about it from a growth standpoint, a really nice growth wedge this year, both from a free cash flow basis, but also from the client base. The Rockies, I'll just pick on one point there: about 40% of that capital in the Rockies this year has to do with drilled You know, sort of the cadence of the activity levels; we had resumed activity last year, got ahead on the drilling, and then this year was really beginning to complete a lot of those wells.

Acquisition provides a lot of growth and we've talked about the positive attributes of that being a more mature unconventional development with high margin, 35% decline in immediately adds you can think about it from a growth standpoint, a really nice growth wedge. This year, both from a free cash flow basis, but also declined.

Speaker Change: This is the Rockies I'll just pick on one one point there you know about 40% of that.

Speaker Change: Capital in the Rockies. This year has to do with drilled uncompleted wells that carried in from last year.

Speaker Change: The sort of the cadence of that activity levels. We had resumed activity last year got ahead on the drilling and then dish if you're really beginning to complete a lot of those wells. So from a capital intensity standpoint, that's very very low when you look at what we're spending for the amount of production.

Richard A. Jackson: So, from a capital intensity standpoint, that's very, very low when you look at what we're spending for the amount of production that we're able to add there. Obviously, we have high margins in the Rockies, we have royalties, there's other things that drive very competitive returns there. And so, that duck count, you know, just as a data point, will kind of go from, say, mid-60s, kind of the fourth quarter last year, to more like mid-30s as we balance. And that's allowing us to then actually pull back about a half of a net rig in the Rockies to more of a sustainable activity level. So, just a little color on the Rockies so we don't read too much into just one year, but maybe Sunil can then pick that up and talk, you know, kind of across the company.

Speaker Change: That we're able to add there obviously.

Speaker Change: Obviously that we have high margins in the Rockies, we have royalties or other things that drive very competitive.

Our returns there.

Speaker Change: So you bet that DUC count you know just as a data point will kind of go from say mid Sixty's kind of the fourth quarter of last year to more like mid Thirty's as we balance and that's allowing US to then actually pulled back about half of our net rig in the Rockies to more of a sustainable activity levels.

Speaker Change: Just a little color on the Rockies. So we don't read too much into just just one year, but maybe some of the old can then pick that up talk you know kind of across the company.

Speaker Change: Yeah. So when we think about our capital allocation in the oil and gas segment. What are you trying to do is we're trying to balance between margin base decline and capital flexibility. So if you start with cash margin with <unk>.

Sunil Mathew: Yeah, so when we think about, you know, capital allocation in the oil and gas segment, what we're trying to do is we're trying to balance between margin-based decline and capital flexibility. So if you start with cash margin, we start with the US unconventional with high margins and high returns. And, you know, based on everything I've heard so far, it's getting better each year. And then you have the Gulf of Mexico, which has one of the highest cash margins in our portfolio. And if you look on an incremental basis, it's even higher because a large part of the operating cost is fixed, and then we have international assets, which are mostly production sharing, where we get a higher share of production at a lower price. And this helps mitigate some of the commodity price risk and protect the overall cash margin. So that is from a margin point of view.

Speaker Change: Start with the U S unconventional with high margin high returns.

Speaker Change: You know based on everything so far is getting better each year.

Speaker Change: And then you have Gulf of Mexico, which is one of the highest cash margins in our portfolio and if you look on the increment incremental basis.

Even higher because a large part of the operating cost is fixed.

Speaker Change: And then international assets, which are mostly production Charlotte.

Speaker Change: But we get a higher share of production at lower prices and this helps mitigate some of the commodity price risk and protect the overall cash margin. So that is from our module partners and when you think about base decline. So today, our production approximately 60% of our production is unconventional and with Crown broke.

Speaker Change: It is going to get to around 65%. So what we're trying to do is balance between the short cycle I am decline unconventional and then the mid cycle shallower declines conventional investments.

But maybe you are like Richard said, that's one of the lowest base decline in our portfolio. So if you look at that.

Speaker Change: Typically you are project, we get to the peak production by the third year and the peak production is almost three times.

Sunil Mathew: Then when you think about base decline, so today, approximately 60% of our production is unconventional. And with ground rock, it's going to get to around 65%. So what we are trying to do is balance between the short cycle, high decline, unconventional, and then the mid cycle, shallower decline, conventional investment, and Permian UR, like Richard said, as one of the lowest basic lines in our portfolio. So if you look at a typical Permian UR project, we get to peak production by the third year, and peak production is almost three times the first year production. And then after that, it is shallow.

Speaker Change: Trustee of production and then after that it is a shallow decline.

Speaker Change: So what this does is it helps manage our overall corporate decline, which helps with the sustaining capital and which ultimately helps us to breakeven.

Speaker Change: And the third part of it is capital flexibility. So if you look at our Capex even for this year I don't say that 75% of upstream capex.

Speaker Change: U S onshore.

Speaker Change: We have flexibility to change activity, depending on the macro conditions.

Speaker Change: If you look back in 2020 and U S. Onshore, we have about 30% of the rigs that we plan to operate this year. So we were able to ramp up quickly and efficiently and we can do this.

Speaker Change: The macro demand stuff. So these are the three attributes that we look at when we look at oil and gas.

Sunil Mathew: So what this does is it helps manage our overall corporate decline, which helps with sustaining capital and, ultimately, helps with breakeven. And the third part of it is capital flexibility. So if you look at our CapEx, even for this year, around 75% of upstream CapEx is U.S. onshore, where we have the flexibility to change activity depending on the macro conditions. So, for example, if you look back in 2020, in US onshore, we had about 30% of the rigs that we plan to operate this year. So we were able to ramp up quickly and efficiently, and we can do this if the macro demands it. So these are the three attributes that we look at when we look at oil and gas capital allocation.

Speaker Change: Capital allocation so to summarize what I would say is we have a diverse portfolio of both conventional and unconventional assets.

Speaker Change: Manage our base decline, while also maximizing our returns and also providing the flexibility to respond to different macro conditions.

Speaker Change: That was very thorough thank you.

Speaker Change: The next question is from Neal Dingmann with true of Securities. Please go ahead.

Neal Dingmann: Thanks for the time they can team my first question Vicki is on the D. J and I'm just wondering could you remind me where you all sit I think in good shape, but just wondering where you all sit on total permits pertaining tutor D. J D and C plan and then while early are you all concerned about the saw some latest potential proposed Colorado bills.

Vicki: Yes, I'll pass that to Richard.

Roger David Read: So to summarize, what I would say is we have a diverse portfolio of both conventional and unconventional assets that helps manage our base decline while also maximizing our returns and also providing the flexibility to respond to different macro conditions. That was very thorough. Thank you. The next question is from Neal Dingmann with Truist Securities. Please go ahead.

Richard A. Jackson: Yeah, I think just from a permit standpoint, it's been very productive over the last couple of years, we stand today about.

Richard A. Jackson: A little over a.

Richard A. Jackson: The rig year, or one and a half times kind of our current activity.

Richard A. Jackson: But in the last six months, we've gotten 155.

Richard A. Jackson: Through in the next 12 months, we expect another 169, so there's some big ones that we've been working through kind of from a larger package standpoint that have gone really well.

Neal David Dingmann: Thanks for the time, Vicki and team. My first question, Vicki, is about the DJ. I'm just wondering, could you remind me where you sit?

Richard A. Jackson: That team there.

Speaker Change: Hope this helps kind of second part of your question, we continue to drop.

Speaker Change: Things that are important to do the communities in the state around emissions.

Vicki A. Hollub: I think we're in good shape, but just wondering where y'all sit on total permits pertaining to your DJ DNC plan? And then, while early, are y'all concerned about the SOSM latest potential proposed Colorado bill? Yeah, I'll pass that to Richard.

Speaker Change: Our safety programs are very good we've worked on consolidating facilities and doing things around transportation to make it easier and so a lot of those things have been.

Speaker Change: Really the positive things, we've been able to add into these these permit or development plans around the permits that we've received very positive comments on so so we're we're continuing on again, we're sort of hitting more stable sustainable activity up there and we feel like we're as good a position as we have been in it.

Richard A. Jackson: Yeah, I think just from a permit standpoint, it's been very productive over the last couple of years. We stand today about a, you know, a little over a rig year or one and a half times the current activity. But in the last six months, we've gotten 155 through, and in the next 12 months, we expect another 169.

Long time in terms of permit outflow.

Speaker Change: That's very helpful. Richard then just a follow up on shareholder return and M&A I'm, just wondering I assume now that the preferred redemptions would now not ensure until late 'twenty. Five so is it fair to assume that you know when you were looking at the crowd rock acquisition that the fact, you've factored in that any crowd rock incremental production of free cash flow would more than <unk>.

Richard A. Jackson: So there's some big ones that we've been working through kind of from a larger package standpoint that have gone really well, you know, that team there, and I hope this helps the kind of second part of your question. We continue to drop things that are important to the communities and the state around emissions. Our safety programs are very good.

Speaker Change: Offset any mitigated payments now for another year or so.

Richard A. Jackson: Yes, that's all the they figured on that that the Crown rock does that acquisition once we get that back down to $15 billion, that's going to be a key part of helping US then to start the resumption of a more.

Richard A. Jackson: We've worked on consolidating facilities and doing things around transportation to make it easier. And so a lot of those things have been really positive things we've been able to add to these permits or development plans around the permits that, you know, we've received very positive comments on. So, we're continuing on again, we're sort of hitting more stable, sustainable activity up there, and we feel like we're in as good a position as we have been in a long time in terms of permits. Very helpful, Richard. Then just a follow up on charitable return in M&A. I'm just wondering if there are any that the preferred redemptions would now not incur until late 25.

Richard A. Jackson: Robust share repurchase program of both the common and ultimately the preferred.

Speaker Change: Great point, Thanks Vicki.

Vicki: Thank you.

Vicki: The next question is from Josh Silverstein with UBS. Please go ahead.

Yeah. Thanks, Good morning, I was going to ask on kind of some of our topic. There now that the sales are pushed out and you don't have the term loan coming into just yet is the the shareholder return profile just the base dividends this year and that kind of support that you get into that 15 billion dollar debt.

Vicki A. Hollub: So is it fair to assume that, you know, when you were looking at the Crown Rock acquisition, that the fact you factored in that any Crown Rock incremental production or free cash flow would more than offset any mitigated payments now for another year or so? Yes, that's what we figured on that. But the Crown Rock does that acquisition.

Vicki: That number a bit faster.

Speaker Change: No actually.

Speaker Change: We would were getting accumulate cash flow as we continue to work toward closing the crown Rob deal because a part of our cash flow will be used to pay.

Speaker Change: Pay down both the term loan and our debt maturities that are coming so cash flow, but it would not be used for share repurchases until we get to the point, where we've achieved those goals.

Vicki A. Hollub: Once we get our debt back down to $15 billion, that's going to be a key part of helping us then to start the resumption of a more robust share repurchase program of both the common and ultimately the preferred. Great point. Thanks, Vicki. Thank you for watching this video, and I will see you in the next video.

Speaker Change: Got it and then I saw that the the battleground project was pushed out to 2026.

Speaker Change: You could just go through any sort of the drivers of the extra time that was needed and.

Joshua Ian Silverstein: The next question is from Josh Silverstein with UBS. Please go ahead. Yeah, thanks. Good morning.

Speaker Change: And what the status of the other plant enhancement projects look like and maybe what the the split of that $350 million EBITDA uplift was like kind of between battleground in the other projects.

Vicki A. Hollub: I was gonna ask about a kind of similar topic there now that the asset sales are pushed out and you don't have the term loan coming in just yet. Is the shareholder return profile just the base dividends this year and that kind of supports you get into that $15 billion debt number a bit faster? No, actually.

Speaker Change: I think you know there's there's the projects there are were pushed out a bit just like many other things because of supply chain.

Speaker Change: Issues, and and also dealing a little bit with inflation.

Joshua Ian Silverstein: We would We're going to accumulate cash flow as we continue to work toward closing the Crown Rock deal because a part of the cash flow will be used to help pay down both the term loan and our debt maturities that are coming. So cash flow would not be used for share repurchases until we get to the point where we've achieved those goals.

Speaker Change: But those projects we started.

Speaker Change: And those are and progress and going well at this point and so I'd like to say that though the the importance.

Speaker Change: Windows cashless come on from the plan enhancement projects, where are you starting to see our cash flow from those projects and then the actual cash flow that will save from the battleground.

Joshua Ian Silverstein: And then I thought that the battleground project was pushed out to 2026. If you could just go through any sort of the drivers of the extra time that was needed, and what the status of the other plant enhancement projects looks like, and maybe what the split of that $350 million EBITDA uplift was like kind of between Battleground and the other projects. Thanks.

Speaker Change: Pension wont be until the second half of 2026.

Speaker Change: Adding thing about all of this is that.

Speaker Change: When you add the oxy Chem projects, which will deliver the three to 400 billion. The full uplift by the second half of 'twenty six that's both the plant enhancement projects and the expansion.

Speaker Change: Got that and you combine that with what Sunil and talked about earlier, where we have a.

Vicki A. Hollub: I think, you know, the projects there were pushed out a bit, just like many other things because of supply chain issues and also dealing a little bit with inflation. But those projects we started, and those are in progress, and going well at this point. So I'd like to say that, though, the importance of when those cash flows come on from the plant enhancement projects, we're already starting to see cash flow from those projects. But the actual cash flow that we'll see from the battleground expansion won't be until the second half of twenty twenty six.

Speaker Change: 400 million dollar reduction in our mid cycle, all contract prices and our 2025, we will see the full up with that and in 2026 as well and so when you combine those along with the one point the $1 billion that we expect are sending in a W. T I price.

Speaker Change: $70.

Puts us in 2020 six.

Speaker Change: One seven.

Speaker Change: Billion incremental cash at least potentially more than that so to be able to get to a point, where and just a little over two years, where we had some.

Vicki A. Hollub: But the exciting thing about all of this is that when you add the OxyCAN projects, which will deliver the three to four hundred billion, the full uplift by the second half of twenty six, that's both the plant enhancement projects and the expansion. So we've got that, and you combine that with what Sunil had talked about earlier, where we have a four hundred million dollar reduction in our mid cycle contract prices in twenty, twenty five, and we'll see the full uplift of that in twenty, twenty six as well. And so when you combine those along with the one point, the one billion dollars that we expect, assuming a WTI price of seventy dollars, that puts us in twenty, twenty-six with one point seven billion in incremental cash, at least potentially more than that.

Speaker Change: These projects and cost reduction, we are $1 $7 billion better in terms of cash flow, that's pretty significant for us and something that we're really looking forward to and excited about.

Speaker Change: Great. Thanks Vikki.

Speaker Change: Your next question is from Michael <unk> with Stephens. Please go ahead.

Yes Hello.

Michael: I appreciate all the detail you gave on the decision to direct more capital this year to mid cycle investments wanted to ask specifically about the Gulf of Mexico, which is part of that.

Michael: Back in December you were planning on just the two drillships so wanted.

I wanted to see what changed your thinking there to add a third drillship.

Michael: Especially given that services there seem to be tighter than they are onshore was it just part of this whole.

Michael: Mid cycle invest.

Vicki A. Hollub: So to be able to get to a point where, in just a little over two years, through these projects and cost reduction, we are one point seven billion dollars better in terms of cash flow. That's pretty significant for us and something that we're really looking forward to and excited about. Great. Thanks, Vicki. The next question is from Michael Scialla with Stevens. Please go ahead. Yeah, hello.

Michael: Investment thesis or is there something else can you talk about specifically, what you're seeing there that that third drillship will be targeting.

Michael: Targeting.

Michael: And in terms of Drillships were only planning on two drillships this year.

Michael: In terms of Gollum over all of them are plays into the portfolio and last time I mentioned, our gum 2.0 project.

Michael: Based on the amount, we're carrying out a detailed reservoir characterization work and can see significant upside potential in the gourmet offsets.

Michael Stephen Scialla: I appreciate all the detail you gave on the decision to direct more capital this year to mid-cycle investments. I wanted to ask specifically about the Gulf of Mexico, which is part of that. Back in December, you were planning on just the two drill ships.

Michael: Mentioned waterflood stimulation of the Horizontals artificial lifting subsea pumping, which is already operational for us.

Michael: If I talked a little bit about water injection.

Michael: Now when you already operate fields with original oil in place numbers of billions of barrels, adding water injection is a really economical way of increasing recovery factors on high margin low development cost boggles.

Kenneth Dillon: So, wanted to see what change you're thinking there to add a third drill ship, and especially given that services there seem to be tighter than they are on shore. Was it just part of this whole mid-cycle investment thesis, or is there something else? And can you talk about specifically what you're seeing there that that third drill ship will be targeting? And in terms of drills, we're only planning on two drill ships this year.

Michael: Typical improvements in recovery and appropriate reservoirs can be between 10 and 16% while also significantly reducing declined so it plays into the things that Richard was talking about it and you are.

Michael: Scale of these developments in the very low well costs lead to good returns analogs have been highly successful in golf.

Kenneth Dillon: In terms of GOM overall and how it plays into the portfolio, the last time I mentioned our GOM 2.0 project. Based on that, we're carrying out detailed reservoir characterization work and can see significant upside potential in the GOM assets. I mentioned water floods, stimulation, horizontals, artificial lift, and subseed pumping, which is already operational for us. If I talk a little bit about water injection, when you already operate fields with original oil in place numbers of billions of barrels, adding water injection is a really economical way of increasing recovery factors on high margin, low development cost barrels. Typical improvements in recovery in appropriate reservoirs can be between 10 and 16% while also significantly reducing decline. So this plays into the things that Richard was talking about in EOR. The scale of these developments and the very low development costs lead to good returns.

Michael: As you know we're world leaders in these technologies, we do them in every country that we operate in and domestic is the foundation of who we are.

Michael: I'd also like to highlight the Ob and seismic activity that we've done since 2020.

Michael: But that's really helped define these targets the scale off of them and it's just this thing and the well planning and well locations that we're working on at the moment.

Michael: So I think we see almost a portfolio.

Michael: With great Optionality to grow using the existing infrastructure that we have in place.

Michael: Also the technology skills would be half across the entire company.

Michael: Okay.

Speaker Change: Answers your question.

Yeah. It does I appreciate that Ken and I don't know what the on your cramps.

Kenneth Dillon: Analogues have been highly successful in GOM. As you know, we're world leaders in these technologies. We use them in every country that we operate in.

Speaker Change: Iraq acquisition call you mentioned I think Richard mentioned a pilot.

Speaker Change: <unk> been working on the Midland Basin for a couple of years I was just wondering if there's any plans to expand.

Kenneth Dillon: And domestic is the foundation of who we are. I'd also like to highlight the OBN seismic activity that we have done since 2020. But that's really helped define these targets, the scale of them, and it's assisting in the well planning and well locations that we're working on at the moment. I think we see GOM as a portfolio now with great optionality to grow using the existing infrastructure that we have in place, but also the technology skills that we have across the entire company. I hope that answers your question. Yeah, it does.

Speaker Change: You are in in the Midland in the near term and did that have any bearing on your decision with the Crown block acquisition.

The Crown rock acquisition stood on its own in terms of quality and how it fit within our portfolio in the Midland Basin and made that that asset are stronger, but the the four pilots that we conducted in the Midland Basin, where our.

Speaker Change: Our South Curtis Ranch was not too far from some of those assets. So we do believe that the Midland basin is going to be one of the areas that we would target in a big way with a an enhanced oil recovery development, that's in choosing anthropogenic or atmosphere, but we're also doing the same thing in the Delaware Basin now.

Kenneth Dillon: Appreciate that, Ken. And I know in the, on your Crown Rock acquisition call, you mentioned, I think Richard mentioned, your pilot, you, have been working on the Midland Basin for a couple of years. I just wonder if there are any plans to expand EOR in the Midland in the near term, and did that have any bearing on your decision with the Crown Rock acquisition? The Crown Rock acquisition stood on its own in terms of quality and how it fit within our portfolio in the Midland Basin and made that asset stronger. But the four pilots that we conducted in the Midland Basin were on the South Curtis Ranch, which is not too far from some of those assets. So we do believe that the Midland Basin is going to be one of the areas that we would target in a big way with an enhanced oil recovery development that uses anthropogenic or atmospheric. But we're also doing the same thing in the Delaware Basin now. We have a pilot going on there that will help us to potentially look at that as another place to develop, ultimately. So we have both options.

Speaker Change: We have a pilot going on there that will help us to potentially.

Speaker Change: I look at that as another place to to develop ultimately so we have both options.

Speaker Change: Pretty good thank you.

Speaker Change: This kidney excuse me in the interest of time. This concludes our question and answer session I would like to turn the conference back over to Vicki Holt for any closing remarks.

Vicki Holt: Just like to say thank you all for participating in our call today have a good day.

Vicki Holt: Yeah.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Vicki Holt: [music].

Michael Stephen Scialla: Very good. Thank you. In the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Vicki Hollub for any closing remarks. I'd just like to say thank you all for participating in our call today. Have a good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you for watching!