Q4 2023 APA Corp Earnings Call

February 22, 2024

Petersburg orientation, there will be a question and answer session.

To ask a question during the session you will need to press star one one on your telephone.

You will then hear an automated message advising your hand is raised.

To withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your Speaker today, Gary Clark Vice President Investor Relations. Please go ahead.

Good morning, and thank you for joining us on a P. A corporation's fourth quarter and year end 2023 financial and operational results conference call.

We will begin the call with an overview by CEO John Christmann.

Steve Riney, President and CFO will then provide further color on our results and outlook.

Also on the call and available to answer questions are Dave <unk> Executive Vice President of development, Tracy Henderson Executive Vice President of exploration and Clay branches executive Vice President of operations.

Our prepared remarks will be about 15 minutes in length with the remainder of the hour allotted for Q&A in conjunction with yesterday's press release I Hope you've had the opportunity to review, our financial and operational supplement which can be found on our investor Relations website at Investor Dot Corp Dot com.

Please note that we may discuss certain non-GAAP financial measures a reconciliation of the differences between these measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.

[music].

Consistent with previous reporting practices adjusted production numbers cited in today's call are adjusted to exclude Noncontrolling interest in Egypt, and Egypt tax barrels.

I'd like to remind everyone that today's discussion will contain forward looking estimates.

Assumptions based on our current views and reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discuss on today's call.

A full disclaimer is located with the supplemental information on our website.

Also please note that the forward guidance, we provided with our fourth quarter results reflects our outlook for API Corporation on a standalone basis, only and does not incorporate pro forma effects of the pending column petroleum acquisition and.

And with that I will turn the call over to John.

Good morning, and thank you for joining us.

On the call today I will review our key accomplishments in 2023.

On our fourth quarter performance.

And provide an overview of our 2024 plans and objectives.

HCA has a long standing strategic framework for managing our business that emphasizes investing capital with a focus on long term full cycle returns.

Pursuing moderate sustainable production growth.

Strengthening the balance sheet to underpin significant cash returns to shareholders.

Responsibly managing costs, including right sizing the organization commensurate with lower activity levels.

Growing inventory, both organically through existing play expansion and new area exploration and more recently building scale, and we're adding inventory inorganically through acquisitions such as Cowen.

We are patiently employed this strategy through periods of considerable price volatility and our approach going forward will remain unchanged.

Looking at <unk> results, there were a number of highlights in 2023.

The more notable achievements include on the whole delivering on all of our production and financial metrics very close to original guidance.

Egypt gross oil production lagged expectations for most of the year, but this was offset by continued strong performance from our Permian.

Free cash flow generation of nearly $1 billion, 66% of which was returned to shareholders.

We repurchased $329 million of common stock and paid $308 million in dividends.

Adjusted oil production increased 4% from the fourth quarter 2022 to the fourth quarter of 2023.

Driven by Midland and Delaware production, which was up in excess of 20% over the same time period.

We successfully appraised the software Cora and crab Daegu discoveries on block 58 in Suriname.

<unk>, an estimated 700 million barrels of recoverable oil resource.

On the ESG front, we now have implemented more than 70% of the projects necessary to achieve our 2022 goal of eliminating 1 million tons of annual Cotwo equivalent emissions by the end of this year.

Additionally, we replaced were converted more than 2000 nomadic devices in the United States during 2023, which aligns with our priority to reduce methane emissions across our operations.

And lastly, I want to recognize our operation teams for delivering the lowest recordable incident rate since we began tracking and reporting this metric.

Yeah.

Uh huh.

We highly value this commitment to safety and excellence and thank you for your continued diligence on this front.

Okay.

Good day, and thank you for standing by.

Speaker Change: Welcome to the a P H corporations fourth quarter and full year 2023 results conference call.

Moving to fourth quarter results upstream capital investment of $520 million was slightly above guidance as we spent $27 million on the initial phase of our winter exploration program in Alaska. The U S delivered another strong quarter with oil production in line with guidance.

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

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised.

Up 12% compared to the fourth quarter last year.

Speaker Change: To withdraw your question. Please press star one again.

Throughout 2023, or five rig drilling program was highly efficient meeting or exceeding all key performance metrics.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Gary Clark Vice President Investor Relations. Please go ahead.

Similarly, well connections and well performance were in line with or better than expectations.

Speaker Change: Okay.

Our Midland and Delaware Basin teams are driving outstanding results and we expect that will continue this year.

In the North sea production for the quarter was below guidance due to unplanned compression downtime.

Beryl Alpha and forties during the month of December.

And in Egypt, adjusted production exceeded guidance, primarily due to higher natural gas production and the positive impact of lower oil prices on volumes within the PSC construct.

Gross oil production, however was lower than expected for a few reasons.

For several quarters now we have been working through some activity delays and scheduling constraints associated with limited available workover rig capacity in Egypt.

In addition to routine well maintenance and uphold re completions. We also utilized workover rigs for completing many of our new drill wells.

With the increased size and improving efficiency of our drilling program the demand for Workover rigs to complete new wells has exceeded expectations.

This meant the workover rigs, we're doing fewer re completions than planned and our workover backlog increased throughout the year.

Thus, while production from the new wells was a bit better than expectations, Egypt gross oil volumes fell behind as we cannot adequately support the re completion and workover programs.

Compounding. This we also experienced a number of early life failures on new electrical submersible pumps known as ESP.

During 2023, we had nine new wells impacted by early ESP failures.

Two of which occurred in the fourth quarter on high volume wells.

We have traced this problem to one manufacturing facility and the situation is in the process of being Remediated.

In 2024, we will gear down the Egypt drilling program, a bit which will free up workover rig capacity to reduce the workover and re completion backlog I will say more about the effects of this 2020 for activity in a few minutes.

Turning now to our 2024 outlook given.

Given the potential for a flat to lower price environment. This year, we have established an activity plan and budget based on $70 W. T.

$75 Brent.

We continue to diligently manage overhead and operating costs and we are reducing our total capital investment to less than $2 billion.

This includes approximately $100 million of investment for exploration activities and $50 million for feed work and potential long lead items in Suriname.

This year's budget will redirect capital to the Permian basin, resulting in reduced Egypt drilling program, which I mentioned earlier.

The outcome of this investment profile should be relatively flat year over year, adjusted oil and natural gas production, but lower NGL volumes, given our current plans to reject ethane.

As in 2023, we expect robust Permian oil production growth to roughly offset production declines in the north sea, while Egypt adjusted production remains relatively flat.

In the U S. Total volumes will be up about 2% on a BOE basis. Despite our current plan to reject ethane for the entirety of 2024.

We also project a strong finish to the year with U S oil production up more than 10% in the fourth quarter of 24 compared to the fourth quarter of 'twenty three.

This growth will be driven by the Midland and Delaware basins, where we expect to achieve our goal of returning oil production to pre COVID-19 levels by year end.

In Egypt, we anticipate that our moderated pace of drilling will result in a gross oil production decline. However, adjusted production should remain relatively flat year over year, primarily due to lower oil price expectations and the moderating effects of the PSC.

And in the North Sea.

With our significant reduction in capital investment prompted by the energy profits Levy, we anticipate a roughly 20% year over year production decrease. This includes the effect of a lengthy planned maintenance turnaround that will impact both second and third quarter volumes.

Before closing I'd like to take a minute to highlight our performance in the Permian and provide some thoughts on our pending acquisition of catalog petroleum.

For several years now Apa's Permian operations have been hitting on all cylinders and exceeding oil production guidance, we have delivered continuous improvement in well productivity and capital efficiency and we expect this to continue in 2024.

Since 2019, we have invested considerable time and technical resources and optimizing our drilling economics in the Permian basin and the results have been excellent our Midland Basin, well productivity has moved up into the top quartile producers as measured by third party analysts and we continue to <unk>.

Improved Delaware basin productivity measures each year.

The <unk> acquisition, we announced in early January will bring scale to our Delaware position and balance to our overall Permian asset base, making it fairly evenly weighted between the Midland and the Delaware upon closing <unk>.

While Cowen has experienced operational and productivity challenges in the past more recently they have begun to make good progress towards demonstrating the upside potential of their acreage.

By leveraging <unk> technical capabilities and work processes across the calendar acreage, we expect to further build on their progress most notably in the areas of capital productivity from well spacing target zone selection, Frac design and drilling completion and infrastructure efficiencies when.

When we first announced the acquisition, we assigned only $55 million to operational synergies and improvements. However, we are confident that there is substantial upside to this number.

While the transaction is accretive on cost synergies alone the big win win for shareholders of both companies will be the integration of the assets into a larger Permian platform and the technical optimization capital allocation process knowledge and discipline that API brings to the table we.

We look forward to updating our 2024 U S guidance upon completion of the transaction.

In closing, we are managing the business with a clear and consistent strategy adhering to our discipline and delivering on our commitments and financial objectives. In the last three years, we have reduced outstanding bond debt by $3 2 billion.

And repurchased $2 6 billion or.

Our 20% of our shares outstanding.

Our Permian basin in Egypt operations are delivering a high level of free cash flow along with moderate oil growth in aggregate.

We have progressed, a large scale exploration and appraisal program in Suriname to feed study and we believe this will drive high margin oil production beginning in the 2028 timeframe.

And more recently, we have further expanded our exploration portfolio with large scale opportunities in Alaska and offshore Uruguay.

While the industry may experience, some near term commodity price weakness, we maintain a constructive medium and long term outlook. Accordingly, we will continue to invest a measured amount of capital at a differential longer term exploration opportunities.

And lastly, we remain fully committed to returning at least 60% of our free cash flow to shareholders through our base dividend and share buybacks and with that I will turn the call over to Steve Riney.

Thank you John.

Good morning.

For the fourth quarter under generally accepted accounting principles.

Reported consolidated net income of $1 8 billion or $5 78 per diluted common share.

As usual. These results include items that are outside of core earnings. The most significant of which was a $1 $6 billion increase in net income related to the partial release of the valuation allowance on our deferred tax asset.

This was offset by a 167 million after tax increase in the estimated net remaining decommissioning obligation for the old field with assets in the Gulf of Mexico.

Excluding these and other smaller items adjusted net income for the fourth quarter was $352 million or.

Or $1 15 per share.

Free cash flow was $292 million in the quarter through dividends and share repurchases. We returned 68% of this amount to shareholders during the quarter.

But our current plan to reject ethane for the entirety of 2024.

And as John noted for the full year, we returned 66% of free cash flow.

We also project a strong finish to the year with U S oil production up more than 10% in the fourth quarter of 24 compared to the fourth quarter of 'twenty three.

Please refer to Apa's published definition of free cash flow for.

Or any reconciliation needs.

G&A expense for the quarter was $75 million.

This growth will be driven by the Midland and Delaware basins, where we expect to achieve our goal of returning oil production to pre COVID-19 levels by year end.

This was significantly below guidance, mostly due to the decrease in the share price and the mark to market impact on previously accrued share based compensation.

In the fourth quarter, our Cheniere gas sales contract contributed free cash flow and pretax net income.

$74 million.

Which was below guidance as LNG margins over Houston ship channel narrowed through the quarter.

And in the North Sea.

Turning to 2024, John already discussed our capital and production guidance.

Ill just touch on a few other items of note.

Based on recent strip prices. We currently anticipate our cheniere contract will contribute cash flow of about $100 million for the full year and third party marketing income related to our gas transport obligations will be roughly breakeven.

Before closing I'd like to take a minute to highlight our performance in the Permian and provide some thoughts on our pending acquisition of catalog petroleum.

In the Gulf of Mexico are remaining field wood related decommissioning exposure is now $815 million.

This is net of remaining security and anticipated future cash flows from the producing properties.

These decommissioning costs are estimated to be incurred over the next 10 to 15 years and in 2024 will amount to around $60 million.

Finally, we are preparing for the closing of the <unk> acquisition with a joint integration team working through plans for day, one and beyond.

John already indicated our confidence in meeting or exceeding our $55 million goal for annual operational synergies.

Proved Delaware basin productivity measures each year.

We are equally focused on the transition of G&A activities and the refinancing of the Cowen debt.

At this time, we still expect the some of the G&A and financing synergies will meet or exceed our goal of $95 million on an annualized basis.

While Cowen has experienced operational and productivity challenges in the past more recently they have begun to make good progress towards demonstrating the upside potential of their acreage.

The majority of the G&A synergies are expected to be realized on a run rate basis. Shortly after closing with a small portion requiring a transition period, which may take up to a few months.

By leveraging Apis technical capabilities and work processes across the calendar acreage, we expect to further build on their progress most notably in the areas of capital productivity from well spacing target zone selection, Frac design and drilling completion and infrastructure efficiencies when.

The financing synergies will be realized within a few days of closing with the refinancing of the <unk> that planned and ready to be put into effect.

We noted at the time of the acquisition announcement at the assumption of <unk> debt would increase our leverage metrics slightly.

This has had no adverse impact on our discussions with the rating agencies, nor on their published outlooks.

When we first announced the acquisition, we assigned only $55 million to operational synergies and improvements. However, we are confident that there is substantial upside to this number.

We continue to target a triple b rating or the equivalent thereof, with all three agencies.

For this reason we remain focused on further debt reduction, which will be achieved through the application of cash flow and possible asset divestments.

And with that I will turn the call over to the operator for Q&A.

Thank you.

As a reminder to ask a question. Please press star one on your telephone.

We look forward to updating our 2024 U S guidance upon completion of the transaction.

Wait for your name to be announced.

To withdraw your question. Please press star one again.

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

Please standby, while we compile the Q&A roster.

Okay.

And repurchased $2 6 billion or.

Our 20% of our shares outstanding.

Our first question comes from Doug Leggate with Bank of America. Your line is now open.

Our Permian basin in Egypt operations are delivering a high level of free cash flow along with moderate oil growth in aggregate.

Thank you Sir.

We have progressed, a large scale exploration and appraisal program in Suriname to feed study and we believe this will drive high margin oil production beginning in the 2028 timeframe.

John Good morning, Steve.

What was interesting to hear the operator titles.

Well I'll take that.

Good morning, Doug.

Good morning, John Egypt.

And more recently, we have further expanded our exploration portfolio with large scale opportunities in Alaska and offshore Uruguay.

It sounds like you've identified the issue.

Can you give us some idea as to what the forward <unk>.

Resolution is then when can you anticipate that.

Yes piece should be.

Sounds like a really simple issue to solve but now you've identified I mean, why would you not get by clinical trajectory. Once this is resolved I guess, that's what I'm really trying to figure out what do you see as the go forward outlook. Thank.

Take your timeline for year five year whatever.

And when do you anticipate is turning around.

60% of our free cash flow to shareholders through our base dividend and share buybacks and with that I will turn the call over to Steve Riney.

Yes, Doug.

First start off and say that ESPN was kind of a second factor in kind of piled on.

Thank you John.

The underlying factor is just the ratio of the workover rigs to the drilling rigs.

Good morning.

For the fourth quarter under generally accepted accounting principles.

These arent just normal <expletive> units. These are good sized workover rigs.

Reported consolidated net income of $1 8 billion or $5 78 per diluted common share.

And if you go back historically, we've usually run close to two to three X the workover rigs to the drilling rig count.

As we've said we use these workover rigs to complete new wells to perform the rig completions, Andrew the Workovers in our ratio really has been just slightly over one and so we're ratcheting back kind of gearing down the rig program, we're still going to around 13% to 15 rigs. So it's not a major.

This was offset by a 167 million after tax increase in the estimated net remaining decommissioning obligation for the old field with assets in the Gulf of Mexico.

<unk> reduction, but we want to get the Workover work down we've got a very large asset base, there and it's important that we're getting to the key workovers in the re completions that underpin those decline rates and so.

Excluding these and other smaller items adjusted net income for the fourth quarter was $352 million or.

There's no reason to keep drilling more wells quicker and piling more ducks into the system right. Now is just not the most efficient use of capital given the workover rigs.

Our $1 15 per share.

Free cash flow was $292 million in the quarter through dividends and share repurchases. We returned 68% of this amount to shareholders during the quarter.

On the sub pumps Youre exactly right. These were the higher rates.

Bumps that we needed as we brought on nine big Wells last year.

And as John noted for the full year, we returned 66% of free cash flow.

There was a problem with the manufacturing we have identified that and we are in the process of fixing that so that will get straightened out and is being addressed right now.

Please refer to Apa's published.

Definition of free cash flow for any reconciliation needs.

G&A expense for the quarter was $75 million.

But it's really more a function of trying to balance the workover rigs and the number of wells, we're drilling with the drilling rigs.

This was significantly below guidance, mostly due to the decrease in the share price and the mark to market impact on previously accrued share based compensation.

On a go forward basis to kind of get into equilibrium to make sure we're <unk>.

Invest in the capital wisely and efficiently and getting the most out of it. So once we work that down I mean, I would say today, we estimate we've got close to 13000 barrels a day, that's offline that needs to be worked over.

In the fourth quarter, our Cheniere gas sales contract contributed free cash flow and pretax net income.

$74 million.

Which was below guidance as LNG margins over Houston ship channel narrowed through the quarter.

We usually run around 5000 barrels a day, so theres about 8000 barrels a day there we need to work down and it's going to take a number of workovers and projects to do that so we're on it.

Turning to 2024, John already discussed our capital and production guidance.

I will just touch on a few other items of note.

Once we get into a good equilibrium point, then we can re visit the rig count.

A later date.

And on the medium term production outlook can you touch on that.

We're just going to guide to flat.

Adjusted production net production for Egypt for now.

In the Gulf of Mexico are remaining field wood related decommissioning exposure is now $815 million.

Okay, we'll watch that.

I'm kind of torn as political I wanted to ask about calling but I don't imagine we're going to get much more from that today. So I would like to ask crazy maybe.

This is net of remaining security and anticipated future cash flows from the producing properties.

How about the exploration program.

These decommissioning costs are estimated to be incurred over the next 10 to 15 years and in 2024 will amount to around $60 million.

We only have to look back at some of your peers on what exploration dates for their portfolios on that seems towards exploration never gets.

Until until.

Finally, we are preparing for the closing of the Cowen acquisition with a joint integration team working through plans for day, one and beyond.

Until you've got something to show for it.

So characterize formerly please how you see the risk profile, Alaska, specifically I believe is near field exploration Youre going to have three wells this quarter I guess so.

John already indicated our confidence in meeting or exceeding our $55 million goal for annual operational synergies.

You'd already halfway through those wells what are you seeing currently how would you how would you characterize the risk profile of your backlog.

We are equally focused on the transition of G&A activities and the refinancing of the Cowen debt.

Yes, I mean I'll stop in just a few things on Alaska, Doug and then I'll hand, it over to Tracy but.

At this time, we still expect the some of the G&A and financing synergies will meet or exceed our goal of $95 million on an annualized basis.

One large under explored area.

In the supplement today, it's 275000 acres on state lands.

A majority of the G&A synergies are expected to be realized on a run rate basis. Shortly after closing with a small portion requiring a transition period, which may take up to a few months.

It is highly perspective for what's become a proven play.

And Tracey can get into some details.

The minute, we are planning to drill three wells this winter.

The financing synergies will be realized within a few days of closing with the refinancing of the <unk> that planned and ready to be put into effect.

We are very close to spud the first well so.

So we're not halfway through any of them at this point, but.

It's going to get fund here pretty fast so <unk> I'll, let you talk a little bit more about the program.

We noted at the time of the acquisition announcement at the assumption of <unk> debt would increase our leverage metrics slightly.

Sure.

This has had no adverse impact on our discussions with the rating agencies, nor on their published outlooks.

Carry on from what John has mentioned about the exploration program first and then just give a couple of comments I think on your initial question around.

We continue to target a triple b rating or the equivalent thereof, with all three agencies.

A little more insight under the program as John said in Alaska.

For this reason we remain focused on further debt reduction, which will be achieved through the application of cash flow and possible asset divestments.

And position that sits between crude obey and an <unk> in the broking place that we've entered into an area, where we have analogs. There that have worked but are looking and exploring in an area where that particular play has not really been explored for.

And with that I will turn the call over to the operator for Q&A.

Thank you.

As a reminder to ask a question. Please press star one on your telephone.

So we're testing in a region, where players has worked in an under explored region Asia said, we're drilling three wells this season.

Wait for your name to be announced.

To withdraw your question. Please press star one one again.

All of those will spud in Q1, and it will come back with an update on that once we've completed this season's drilling program.

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

Speaker Change: Please standby, while we compile the Q&A roster.

In terms of just the portfolio. If you look at we talk a lot about.

Speaker Change: Okay.

Play diversification and portfolio diversification and I think what youre seeing us build is optionality optionality both in risk with some areas that are more proven.

Speaker Change: Our first question comes from Doug Leggate with Bank of America. Your line is now open.

With some areas that are going to be more exploration base like the Uruguayan license licenses that we entered last year and so what we're really seeking to do is build a portfolio that will give us play diversity.

Doug Leggate: Thank you.

Doug Leggate: John Good morning, and Steve its.

Speaker Change: What was interesting to hear the operator titles.

Gary T. Clark: Well I'll take that.

<unk> types of plays onshore offshore and with risk through time, both in near term Optionality like we're seeing in Alaska and longer term oxygen optionality like we're seeing in Uruguay.

Gary T. Clark: Good morning, Doug.

Gary T. Clark: Good morning, John Egypt.

Speaker Change: It sounds like you've identified the issue.

Speaker Change: Can you give us some idea as to what the forward <unk>.

Speaker Change: Resolution is then when can you anticipate that.

So more to come on Alaska in the near term later this year.

Speaker Change: Yes piece should be.

Speaker Change: Sounds like a really simple issue to solve but now you've identified I mean, why would you not get back on a growth trajectory. Once this is resolved I guess, that's what I'm really trying to figure out what do you see as the go forward outlook. Thank.

And Doug one more thing on your first question, we're limited in Egypt with the number of Workover rigs that are in country. So you are not in the U S. Where you can just go pick up workover rigs in Poland units.

Speaker Change: Take your timeline for year five year whatever.

We're dealing with are constrained resource there and so we have to kind of gear around that at this point.

Speaker Change: And when do you anticipate is turning around.

Speaker Change: Yes, Doug.

Speaker Change: First start off and say that ESPN was kind of a second factor in kind of piled on.

Yes.

Yeah.

Thank you.

For our next question.

Speaker Change: The underlying factor is just the ratio of the workover rigs to the drilling rigs.

Okay.

Our next question comes from Neal Dingmann with true Securities. Your line is now open.

Speaker Change: These arent just normal <expletive> units. These are good sized workover rigs.

Speaker Change: And if you go back historically, we've usually run close to two to three X the workover rigs to the drilling rig count.

Speaker Change: As we've said we use these workover rigs to complete new wells to perform the rig completions, Andrew the Workovers in our ratio really has been just slightly over one and so we're ratcheting back kind of gearing down the rig program, we're still going to around 13% to 15 rigs. So it's not a major.

Neil Your line is open please check your mute button.

Hello can you hear me.

Yes.

My first question also on Egypt, specifically, well I understand.

Definitely discussed and understand the need for the activity change in the region. John can you just speak a little bit about what youre seeing on the recent well performance and productivity there versus last year. It seems to still be quite good with some love to hear more color on that.

Speaker Change: <unk> reduction, but we want to get the Workover count worked down we've got a very large asset base, there and it's important that we're getting to the key workovers in the re completions that underpin those decline rates and so.

Yes, Neal the 'twenty two 'twenty three program really performed in line as expected so the new wells were good.

Speaker Change: There's no reason to keep drilling more wells quicker and piling more ducks into the system right. Now is just not the most efficient use of capital given the workover rigs.

We even had some what I'll call some really high success in the Baroness area, where we had the potential to bring on some high impact wells.

We just ran into some challenges on the ESP. So program has been good.

Speaker Change: On the sub pumps Youre exactly right. These were the high rates up.

And the new well program is in line so.

Speaker Change: Bumps that we needed as we brought on nine big Wells last year.

It's all about getting the balance together and just ratcheted back a little bit until we can go faster at a later date.

Speaker Change: There was a problem with the manufacturing we have identified that and we are in the process of fixing that so that will get straightened out and is being addressed right now.

No that makes sense and then second question just on the pardon me while I appreciate it's still not having yet the pro forma Kellen gads wondered are you able to say anything about just sort of broader decisions. If you would just simply add the D&C.

Speaker Change: It's really more a function of trying to balance the workover rigs and the number of wells, we're drilling with the drilling rigs.

Speaker Change: On a go forward basis to kind of get into equilibrium to make sure we're <unk>.

Of your activity with theirs.

Wondering maybe it's too early for that and wondered if it is too early for that could you may be instead, just talk about the cadence how we should think about the existing activity. There this year.

Speaker Change: Invest in the capital wisely and efficiently and getting the most out of it. So once we work that down I mean, I would say today, we estimate we've got close to 13000 barrels a day, that's offline that needs to be worked over.

Yes.

As we sit today, we're limited on the company the company interaction. We have we both companies have integration teams that are set up on the transition side and so we're working through that and as you clear certain hurdles. We can start to interact more but at this point, we're working towards having a very smooth closing and transition.

Speaker Change: We usually run around 5000 barrels a day, so theres about 8000 barrels a day there we need to work down and it's going to take a number of workovers and projects to do that so we're on it.

Speaker Change: Once we get into a good equilibrium point, then we can re visit the rig count.

And we really believe that should take place sometime in the second quarter.

Speaker Change: At a later date.

Speaker Change: And on the medium term production outlook can you touch on that.

When you look at our operations, we will be running six rigs Permian this year, they're running five and well start out with those 11 rigs and we're very comfortable.

Speaker Change: We're just going to guide to flat.

Speaker Change: Adjusted production net production for Egypt for now.

Speaker Change: Okay, we'll watch that.

Running that those 11 rigs and really look forward to being able to integrate the cowen assets into our workflow in our schedules and so forth, but thats going to take a little bit of time so.

Speaker Change: I'm kind of torn as to vertical I want I wanted to ask about calling but I don't imagine we're going to get much more from that today. So I would like to ask <unk> maybe.

As you know we've been delivering outstanding results.

Speaker Change: What about the exploration program.

Speaker Change: We only have to look back at some of your peers on what exploration dates for their portfolios on that seems towards exploration never gets outlook until.

We're anxious to.

To jump on the Delaware assets. In addition to what we're doing in the Delaware and our.

Our Midland Basin.

Speaker Change: So you've got something to show for it so characterize forming please how you see the risk profile.

Thank you one moment for our next question.

Speaker Change: Alaska, specifically I believe is near field exploration youre going to have three wells this quarter I guess, so what I'm.

Speaker Change: I'm, assuming you'd already halfway through those wells what are you seeing currently how would you how would you characterize the risk profile of your backlog.

Our next question comes from Bob Brackett with Bernstein Research. Your line is now open.

Speaker Change: Yes, I mean I'll stop in just a few things on Alaska, Doug and then I'll hand, it over to Tracy but.

Speaker Change: One large under explored area.

Bob Your line is open.

Alright, I think thats for Bob Brackett.

Speaker Change: As we put in the supplement today, it's 275000 acres on state lands.

Yes, Bob Youre good to go.

Tracy: It is highly perspective for what's become a proven play.

Excellent following up with Alaska kind of a two part question around setting expectations of what you are trying to deal with this program and when you might be finished in time in terms of what youre trying to do it looks like this is.

Speaker Change: And Tracey can get into some details into that in a minute. We are planning to drill three wells. This winter.

Tracey: We are very close to spud the first well.

Tracey: So we're not halfway through any of them at this point, but.

Stratigraphic test more than anything it may be a VSP to get some seismic control and it looks like you guys have to kind of be done and off the ice.

Tracey: It's going to get fund here pretty fast so <unk> I'll, let you talk a little bit more about the program.

Speaker Change: Sure.

Tracey: Carry on from what John has mentioned about the exploration program first and then just give a couple of comments I think on your initial question around.

End of April.

Therefore, you might have some results by then is that fair.

Yeah, Doug as you know Youre limited on the winter window and.

Speaker Change: A little more insight under the program I think as John said in Alaska.

We are getting ready to get started with the first well and we will actually have three rigs.

Speaker Change: It's a position that sits between crude obey and Anwar in the broking place that we've entered into an area, where we have analogs. There that have worked but are looking and exploring in an area where that particular play has not really been explored for.

Drilling kind of simultaneously pretty quickly so we do anticipate being able to get three wells down.

Higher to breakout.

And these are stratigraphic tests.

Speaker Change: So we're testing in a region where players. It has worked in an under explored region Asia said, we're drilling three wells this season.

Yes.

You've got <unk> Tracy can say, a few words, but <unk> got good seismic control.

Speaker Change: All of those will spud in Q1, and it will come back with an update on that once we've completed this season's drilling program.

They're fully supported so we feel good about them, but it is exploration.

Speaker Change: In terms of just the portfolio. If you look at we talk a lot about.

Great. Thanks.

Speaker Change: Play diversification and portfolio diversification and I think what youre seeing us build is optionality optionality both in risk with some areas that are more proven.

Thank you one moment for our next question.

Speaker Change: Some areas that are going to be more exploration base like the Uruguayan license licenses that we entered last year and so what we're really seeking to do is build a portfolio that will give us play diversity.

Our next question comes from Charles Meade with Johnson Rice. Your line is now open.

Okay.

Good morning, John to you, Steve Tracy and the rest of the team there.

Speaker Change: <unk> types of plays onshore offshore and with risk through time, both in near term Optionality like we're seeing in Alaska and longer term oxygen optionality like we're seeing in Uruguay.

John My first question I wanted to.

Picked up right, where you kind of left off I think on one of the first questions about Egypt, saying that.

More workover rigs was not is not an option that you're limited there is that.

Speaker Change: So more to come on Alaska in the near term later this year.

Is there a timeframe for that in other words I understand you might not be able to get one in three months, but maybe in 12 months you could get a couple more workover rigs. So is that a possibility and then and then the other the other aspect of that as you look to try to Debottleneck. Your system is there a possibility of that.

Speaker Change: And Doug one more thing on your first question, we're limited in Egypt with the number of Workover rigs that are in country. So you are not in the U S. Where you can just go pick up workover rigs in Poland units.

Speaker Change: We're dealing with are constrained resource there and so we have to kind of gear around that at this point.

You could bring in some wireline or coil tubing too.

Speaker Change: Yes.

Offload some of the work.

Speaker Change: Yeah.

Items on your Workover rigs.

Speaker Change: Thank you for our next question.

Yeah, Charles I'd, just say first of all short term there is not any real options and obviously.

Speaker Change: Okay.

Speaker Change: Our next question comes from Neal Dingmann with true Securities. Your line is now open.

Those are there are several avenues and things, we've explored and been exploring but.

Getting equipment into a country like Egypt takes time and so.

So at this point, we don't have any real near term.

Neal Dingmann: Neil Your line is open please check your mute button.

No options and it's something we'd be happy to talk about later, if we find a solution, but right now we're just we're limited to the 20 workover rigs that we currently have.

Neal Dingmann: Hello can you hear me.

Speaker Change: Yes.

Speaker Change: Okay.

Neal Dingmann: My first question also on Egypt, specifically, well I understand.

Speaker Change: Definitely discussed and understand the need for the activity change in the region. John can you just speak a little bit about what youre seeing on the recent well performance and productivity there versus last year it seems to still be.

Got it got it.

I appreciate it and then.

Back to Alaska.

I saw I read that one of your partners there referred to to the prospects that youre going to test. This is Peter look alikes.

Speaker Change: Right Good would love to hear more color on that.

John: Yes, Neal the 'twenty two 'twenty three program really performed in line or as expected. So the new wells were good.

<unk> being the the Santos development that went in in 'twenty. Two so I guess I'm curious would you agree with that characterization and for those of US who are just coming up to speed and learning about this can you offer some details on what if you agree. It is a peak that the prospects of Pico look alikes what that.

John: Even had some what I'll call some really high success in the Baroness area, where we had the potential to bring on some high impact wells we.

Neal Dingmann: We just ran into some challenges on the ESP. So program has been good and the new well program is in line. So.

Means.

Sure Tracy Thanks, Charles I'll weigh in on that one yes, I would agree with that we're really looking at more play types like Pico and Willow versus at <unk> Bay, and we're exploring that and that is part of the brookie in play that we're exploring it for but we're going to be exploring for it in a younger sequence, but it's but it.

John: It's all about getting the balance together and just ratcheted back a little bit until we can go faster at a later date.

Speaker Change: No that makes sense and then second question just on the pardon me while I appreciate it's still not having yet the pro forma calendar <unk> are you able to say anything about just sort of broader decisions. If you would just simply add the D&C.

Absolutely sort of the same geologic model and set up that we expect to see.

John: Of your activity with their reserve.

John: Just wondering maybe it's too early for that I'm wondering if it is too early for that could you maybe instead of just talk about the cadence how we should think about the existing activity. There this year.

Basically just a bit further east and its been explored for on the other side, a pretty pretty low base. So we would agree with that.

John: Yes.

John: As we sit today, we're limited on the company the company interaction. We have we both companies have integration teams that are set up on the transition side and so we're working through that and as you clear certain hurdles. We can start to interact more but at this point, we are working towards having a very smooth closing and transition.

Thank you one moment for our next question.

Our next question comes from Paul Cheng with Scotiabank. Your line is now open.

Hi, good morning.

John and chasing it.

And I apologize.

If we can go back to Alaska.

John: And we really believe that should take place sometime in the second quarter.

Let's assume that the program if successful.

John: When you look at our operations, we will be running six rigs Permian this year, they're running five and well start out with those 11 rigs and we're very comfortable.

What's the next step and what kind of infrastructure you need to put on in order for that to be able to grow and one at that time in Ireland.

John: Running that those 11 rigs and really look forward to being able to integrate the cowen assets into our workflow in our schedules and so forth, but thats going to take a little bit of time so.

Yes first of all Paul Thanks for the question.

I'll just say we're in the exploration phase at this point, so we've done a lot of scoping.

John: As you know we've been delivering outstanding results and we are.

It's onshore at state lands, so things can move a little quicker than federal there.

John: <unk> two.

John: To jump on the Delaware assets. In addition to what we're doing in the Delaware and.

Youre close to a big pipeline capacity, but.

Let's let's work through the exploration phase.

John: The Midland Basin.

Speaker Change: Thank you one moment for our next question.

See what we find and then go from there at a later date, so but we're excited about it.

But can you maybe that shared that <unk> infrastructure would be neat.

John: Our next question comes from Bob Brackett with Bernstein Research. Your line is now open.

Successful.

Well a lot of that will hinge on these are three separate.

Tests of similar play concepts and a lot of that would just hand, John what we felt so.

At this point, we're purely in an exploration phase.

Bob Brackett: Bobby Your line is open.

We'll just have to come back and give you some characterization.

John: Alright, I think thats for Bob Brackett.

If we have the success there that we hope we have.

Bob Brackett: Yes, Bob you're good to go.

Okay.

Bob Brackett: Excellent following up with Alaska kind of a two part question around setting expectations of what you are trying to deal with this program and when you might be finished in time in terms of what youre trying to do it looks like this is.

On E J.

I will just queue at that John is the work of a liquidity issue.

Happen something happened in the country and that what used to be available no longer available or that you need for the whirlpool right Jess.

Bob Brackett: Stratigraphic test more than anything it may be a VSP to get some seismic control and it looks like you guys have to kind of be done and off the ice end of April and therefore, you might have some results by then is that fair.

Yes.

Increased substantially last year and if that's the case then that's something that's happening in the west Alpha that led to that.

Yes, I would just say historically, we were running if you go back to pre modernization, we are running five drilling rigs and 12 workover rigs.

Speaker Change: Yeah, Doug as you know Youre limited on the winter window and.

Speaker Change: We are getting ready to get started with the first well and we will actually have three rigs.

We took the rig count up more than three X 215 to 18, and we were only able to take the work over rig count up to 'twenty. So we could only double that when we tripled.

Speaker Change: Drilling kind of simultaneously pretty quickly so we do anticipate being able to get three wells down.

Speaker Change: Prior to breakout.

The drilling set and so initially it wasn't a major problem because we were trying to get the efficiencies lined out on the drilling side, but as we got the efficiencies lined out on the drilling side.

Speaker Change: And these are stratigraphic tests.

Speaker Change: Yes.

Speaker Change: <unk> got <unk> Tracy can say, a few words, but <unk> got good seismic control.

The workover rigs that are required to complete the drilling wells and ultimately we've got to make sure we're managing the base.

Speaker Change: They're fully supported so we feel good about them, but it is exploration.

So it's just it's it's a new phenomenon.

Tracy: Great. Thanks.

It is something that ultimately longer term, we're going to need more workover equipment in country and Theres just not a good short term fix to that.

Speaker Change: Thank you one moment for our next question.

Thank you one moment for our next question.

Speaker Change: Our next question comes from Charles Meade with Johnson Rice. Your line is now open.

Our next question comes from Neil Mehta with Goldman Sachs. Your line is now open.

Charles Meade: Good morning, John to you, Steve Tracy and the rest of the team there.

Yes, good morning, John and team first.

Charles Meade: John My first question I wanted to.

First question I had was I'm sorry, maybe you could step back John Big picture talk about where we stand here and we know it we get the peds study that youre working through and you're targeting <unk> in 2024, but what are you focused on as it relates to to Suriname and any update as it relates to that project.

Charles Meade: Picked up right, where you kind of left off I think on one of the first questions about Egypt, saying that.

Charles Meade: More workover rigs was was not is not an option that you're limited there is that a is there a timeframe for that in other words I understand you might not be able to get one in three months, but maybe in 12 months you could get a couple more workover rigs. So is that a possibility and then and then the other.

No.

First of all thanks for the question Secondly, that's exactly where we sit today, we're working with total there in feed study.

Charles Meade: The other aspect of that is.

We kind of lay that timeline out there that we anticipate.

Charles Meade: Look at try to Debottleneck your system is there a possibility that.

Oh before year end.

Speaker Change: You could bring in some wireline or coil tubing too.

<unk> 24, which is this year, which is great news.

And as of right now, we would say first oil and 28, but I can tell you.

Speaker Change: Offload some of that.

Speaker Change: Items on your Workover rigs.

Speaker Change: Yeah, Charles I'd, just say first of all you know short term there is not any real options and obviously.

Our partner and us are working hard to try to accelerate those timelines, but.

Where we are at this point. So we remain excited we do see additional exploration potential in block 58.

Speaker Change: You know those are there are several avenues and things, we've explored and been exploring but.

Charles Meade: Getting our equipment into a country like Egypt takes time and so.

Right now we've kind of got most of the attention on the.

Move in the first development project forward.

Charles Meade: So at this point, we don't have any real near term.

Charles Meade: No options and it's something we'd be happy to talk about later, if we find a solution, but right now we're just we're limited to the 20 workover rigs that we currently have.

Thanks, Shannon and then the follow up we haven't really talked in Q&A about the U S production profile over the course of the year, just maybe talk about.

Your Permian plans it sounds like it can be a little bit back half weighted with strong growth exit to exit so just.

Speaker Change: Got it got it.

Speaker Change: I appreciate it and then.

Speaker Change: Back to Alaska.

Any thoughts on Permian oil and in navigating the weakness obviously in local gas prices there too.

Speaker Change: I saw I read that one of your partners there referred to to the prospects that youre going to test. This is Peter look alikes.

Now we've had a number a good run of years of really outperformance of the Permian.

Speaker Change: <unk> being the the Santos development that went in in 'twenty. Two so I guess I'm curious would you agree with that characterization and for those of US who are just coming up to speed and learning about this can you offer some details on what if you agree. It is a peak that the prospects of Pico look alikes, but what that means.

When you run in five to six rigs, which is what we've done then it becomes very pad dominated in terms of your timing and your sequences and yes. We don't have a number of very many wells coming on early this year things are kind of second and third quarter are back.

And with the way the schedule works and so youll see strong Permian growth on the oil side.

Speaker Change: Sure Tracy Thanks, Charles I'll weigh in on that one yes, I would agree with that we're really looking at more play types like picker and Willow versus at <unk> Bay, and we're exploring that and that is part of the brookie in play that we're exploring it for but we're going to be exploring for it in a younger.

We're anticipating up 10% Q4, 'twenty for over 23, and that's going to more than offset the decline in the in the North sea. So.

<unk> continues to be the <unk> underpin our backbone and we're going to continue to lean on Permian.

Speaker Change: Once but it's but it's absolutely sort of the same geologic model and set up that we expect to see.

Thank you one moment for our next question.

Speaker Change: Basically just a bit further east and its been explored for on the other side a pretty preto base. So we would agree with that.

Our next question comes from.

Arun <unk> with Jpmorgan Securities. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Yes, good morning, gentlemen, I wanted to first.

If you could talk about.

The payment situation in Egypt, we did see a.

Speaker Change: Our next question comes from Paul Cheng with Scotiabank. Your line is now open.

An improvement in the working capital situation in the quarter.

Paul Cheng: Hi, good morning.

Paul Cheng: John and chasing it.

But Steve maybe you could provide an update on where you stand in terms of.

Paul Cheng: And I apologize.

Paul Cheng: If we can go back to Alaska.

And how the collection trends have been with the <unk>.

Paul Cheng: And that's assume yet the program if successful.

The Egyptian government.

Yes Arun.

Paul Cheng: What's the next step and what kind of infrastructure you need to put on in order for that to be able to grow and one at that time in Ireland.

As you know we've.

We've talked about this a number of times seems every quarter.

We have a we have a very active and constructive working relationship with Egypt, but it does require that ongoing.

Speaker Change: Yes first of all Paul Thanks for the question.

Ongoing conversation and work of the of the of the issue.

Speaker Change: I'll just say we're in the exploration phase at this point, so we've done a lot of scoping.

Fourth quarter, we ended fourth quarter with our lowest quarter and past due receivables for the year from <unk> and so we continue to make progress they've come down through the year they kind of peaked.

Speaker Change: It's onshore at state lands, so things can move a little quicker than federal there.

Paul Cheng: No you are close to a big pipeline capacity, but.

Paul Cheng: Let's let's work through the exploration phase.

Paul Cheng: See what we find and then go from there at a later date, so but we're excited about it.

In early second quarter today.

We're about 25% to 30% below.

Speaker Change: But can you maybe that shared that <unk> infrastructure would be neat.

Where we were at that peak level. So they are still elevated past due receivables still elevated from a GPC, but they're lower and trending in the right direction have been pretty much through the whole year.

Speaker Change: Yes.

Speaker Change: Paul.

Paul Cheng: Well a lot of that will hinge on these are three separate.

Paul Cheng: Tests of similar play concepts and a lot of that would just hinge on what we felt so.

Great to hear.

My follow up is.

Speaker Change: At this point, we're purely in an exploration phase.

I Wonder if you could go to slide 30 in the deck.

Paul Cheng: We'll just have to come back and give you some characterization.

And just talk about.

I want to understand a little bit.

Paul Cheng: If we have the success there that we hope we have.

More about the abandonment.

Cost impact to cash flow.

Paul Cheng: Okay.

Paul Cheng: On E J.

Costs incurred for the year were $979 million.

E J: I just curious that John is the web Olga availability issue.

Total upstream cap capital is $5 20, most of the Delta is just the arrow and.

E J: Happen something happened in the country and that what used to be available no longer available or that you need for the whirlpool right Jess.

And <unk> did you all have an outflow for that call it $347 million for arrow.

Paul Cheng: Yes.

Paul Cheng: Increased substantially last year and if that's the case then yes, that's something bad happening in the west Sofa that led to that.

And is $60 million.

Let you mentioned in 2020 for maybe a good run rate for the next several years.

So youre talking about the arrow for field would yes, sir.

Speaker Change: Yes, I would just say historically, we were running if you go back to pre modernization, we are running five drilling rigs and 12 workover rigs.

Okay.

That does not go through the the capital program there.

Speaker Change: We took the rig count up more than three X 215 to 18, and we were only able to take the work over rig count up to 'twenty. So we could only double that when we tripled.

Theres a booked liability.

On the on the decommissioning obligation there.

And so it doesn't go through the capital program that doesn't show up as capital expenditure.

Paul Cheng: The drilling set and so initially it wasn't a major problem because we were trying to get the efficiencies lined out on the drilling side, but as we got the efficiencies lined out on the drilling side you know the workover rigs that are required to complete the drilling wells and ultimately we've got to make sure we're managing the base.

Right, so, but I'm looking at the costs incurred which are over $979 million in the quarter.

Are there any outflows associated or maybe you could quantify the magnitude of outflows, but arrow in 2023.

Yes can we maybe we can just take that offline instead of reconciling through group here.

Paul Cheng: So it's just it's it's a new phenomena.

Paul Cheng: It is something that ultimately longer term, we're going to need more workover equipment in country and Theres just not a good short term fix to that.

I'll work with Gary to get back in touch with you. We can work through I just want to make sure. We understand the question. Okay fair enough. Thanks, Thanks, Steve.

Speaker Change: Thank you one moment for our next question.

Thank you one moment for our next question.

Speaker Change: Our next question comes from Neil Mehta with Goldman Sachs. Your line is now open.

Neil Singhvi Mehta: Yes, good morning, John and team.

Our next question comes from Leo Mariani with Ross.

Neil Singhvi Mehta: First question I had was I'm sorry, maybe you could step back John Big picture talk about where we stand here and we know it we get the peds study that you're working through and you're targeting <unk> in 2024, but what are you focused on as it relates to to Suriname and any update as it relates to that project.

Your line is now open.

I just wanted to kind of get back to the exploration discussion here just one.

Wanted to see if you guys could provide a little bit more color on kind of the risk profile in Alaska I mean do you see these wells as kind of one and two shot kind of one in five just anything you could do to quantify some of the risk profile would be helpful. And then on just block 53 in Suriname. It looks like you relinquished most of that block just any update on the thinking there.

Speaker Change: No.

Speaker Change: First of all thanks for the question Secondly, that's exactly where we sit today, we're working with total there in feed study.

Speaker Change: We kind of lay that timeline out there that we anticipate.

<unk>.

Speaker Change: You know before year end.

Yes Leo.

I'll jump to start off first I think we've been pretty clear that we see more exploration upside remaining in block 58 versus <unk> 53, and so you know it was an easy answer to go ahead, and let 53 go.

Speaker Change: <unk> 24, which is this year, which is great news and then as of right now we would say first oil and 28, but I can tell you you know.

Speaker Change: Our partner and us are working hard to try to accelerate those timelines, but.

Speaker Change: Where we are at this point. So we remain excited we do see additional exploration potential in block 58.

When you look at the.

Our risk profile at Alaska.

These are our three D and amplitude supported but you are going to be this is a step out in an area, where there's risk associated with it. So yes, I am not going to give you a number on a ratio, but it is exploration.

Speaker Change: Right now we've kind of got most of the attention on the.

Speaker Change: Move in the first development project forward.

Speaker Change: Thanks, Shannon and then the follow up we haven't really talked in Q&A about the U S production profile over the course of the year, just maybe talk about.

We're taking we're going to drill three wells.

They are risky, but theyre high reward so and <unk> anything you want to add to that.

Speaker Change: Your Permian plans it sounds like it can be a little bit back half weighted with strong growth exit to exit so just.

I will just comment I think on a little on both pieces, which is the block 53 exit.

Speaker Change: Any thoughts on Permian oil and in navigating the weakness obviously in local gas prices there too.

We saw and we mentioned on the previous calls that we really saw the prospecting and block 58.

Speaker Change: Now we've had a number a good run of years of really outperformance of the Permian.

Being more perspective than what we saw in block 53, so what youre seeing with that exit really is the strategic portfolio management and continuous high grading of the portfolio, where we saw more prospectively, both in block 58, and and other opportunities that we had in front of us and I would just echo what John said on Alaska.

Speaker Change: When you run in five to six rigs, which is what we've done then it becomes very pad dominated in terms of your timing and your sequences and yes. We don't have a number of very many wells coming on early this year things are kind of second and third quarter are back weighted with the way the schedule works and so youll see strong Permian growth on.

We have a range because these are exploration prospects that have risk associated with them, but.

Speaker Change: The oil side.

Speaker Change: We're anticipating up 10% Q4 'twenty for over 23.

But clearly what.

Interested us in the block is that we do see materiality with these prospects that we felt warranted exploration.

Speaker Change: And that's going to more than offset the decline in the in the North sea. So.

Speaker Change: <unk> continues to be the <unk> underpin our backbone and we're going to continue to lean on Permian.

Okay Thats helpful and I just wanted to follow up on some of the comments that you guys made here just want to make sure I understood. This did I hear a comment that.

Speaker Change: Thank you one moment for our next question.

They might be adjusting his head count a little bit downward in response to some of the lower activity levels I know clearly that once you guys any Greg Cowan Im sure Youll have to take a fresh look at the whole organization, but did I hear that right that perhaps you think that maybe you might put some of the AP head count here at some point.

Speaker Change: Our next question comes from.

Speaker Change: Arun <unk> with Jpmorgan Securities. Your line is now open.

Arun: Yes, good morning, gentlemen, I wanted to first.

Others say, we're always looking to rightsize the organization with activity levels I think the comment in the in.

Arun: If you could talk about.

Arun: The payment situation in Egypt, we did see a.

In the prepared remarks was that we find ourselves in a much lower price environment.

Arun: An improvement in the working capital situation in the quarter.

Arun: But Steve maybe you could provide an update on where you stand in terms of.

We're always willing to reduce activity and associated staff, if we need to do so but we have gone through an exercise in the north sea as we're kind of right sizing for late life.

Arun: And how the collection trends have been with the <unk>.

Arun: The Egyptian government.

Steve: Yeah Arun.

And so we have gone through some steps there.

Steve: As you know we've.

Steve: We've talked about this a number of times seems every quarter.

But we are quite frankly, very excited about integrating the cowen assets.

Speaker Change: We have a we have a very active and constructive working relationship with Egypt, but it does require that ongoing.

And you know promos into the organization and we do see some synergies there but activity.

Steve: Ongoing conversation and work of the of the of the issue.

Activity levels are still going to be strong.

And relatively close to where we were last year.

Steve: Fourth quarter, we ended fourth quarter with our lowest quarter and past due receivables for the year from <unk> and so we continue to make progress they've come down through the year they kind of peaked.

Thank you.

I'm showing no further questions at this time I would.

I'd now like to turn it back to John Christmann.

CEO for closing remarks.

Yes, yes. Thank you.

We have chosen to reduce our capital this year and maintain roughly flat production given the potential for a lower commodity price environment, while still funding our strategic initiatives.

Steve: In early second quarter today.

Steve: We're about 25% to 30% below.

Steve: Where we were at that peak level. So they are still elevated past due receivables still elevated from a GPC, but they're lower and trending in the right direction have been pretty much through the whole year.

We have intentionally directed more capital towards the Permian, which is performing at an extremely high level and we look forward to integrating the cowen assets into our Permian operations as well.

Speaker Change: Great to hear.

Speaker Change: And Steve My follow up is I Wonder if you could go to slide 30 in the deck.

And lastly, we will keep you up to date on our progress in Suriname at our other exploration plays.

Steve: And just talk about.

Speaker Change: I understand a little bit of a bit more about the abandonment.

Operator.

This concludes today's conference call.

Steve: Cost impact to cash flow.

Thank you for participating you may now disconnect.

Speaker Change: Costs incurred for the year were $979 million.

Speaker Change: Total upstream cap capital is $5 20, most of the Delta is just the arrow. So in <unk> did you all have an outflow for that call it $347 million for arrow.

Speaker Change: And is $60 million.

Speaker Change: Let you mentioned in 2020 for maybe a good run rate for the next several years.

Speaker Change: So youre talking about the arrow for field would yes, sir.

Speaker Change: Okay.

Speaker Change: That does not go through the the capital program there.

Speaker Change: Theres a booked liability.

Speaker Change: On the on the decommissioning obligation there.

Speaker Change: And so it doesn't go through the capital program that doesn't show up as capital expenditure.

Speaker Change: Right, so, but I'm looking at the costs incurred which are over $979 million in the quarter.

Speaker Change: Are there any outflows associated or maybe you could quantify the magnitude of outflows, but arrow in 2023.

Speaker Change: Yes can we maybe we can just take that offline instead of reconciling to the group here.

Speaker Change: I'll work with Gary to get back in touch with you. We can work through I just want to make sure. We understand the question. Okay fair enough. Thanks, Thanks, Steve.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Leo Mariani with Ross.

Leo Mariani: Your line is now open.

Leo Mariani: I just wanted to kind of get back to the exploration discussion here just one.

Leo Mariani: Wanted to see if you guys could provide a little bit more color on kind of the risk profile in Alaska I mean do you see these wells as kind of one and two shot kind of one in five just anything you can do to quantify some of the risk profile would be helpful. And then on just block 53 in Suriname. It looks like you've relinquished most of that block just any update on the thinking there.

Leo Mariani: <unk>.

Speaker Change: Yes Leo.

Leo Mariani: I'll jump to start off first I think we've been pretty clear that we see more exploration upside remaining in block 58 versus <unk> 53, and so you know it was uneasy answer to go ahead, and let 53 go.

Leo Mariani: When you look at the.

Leo Mariani: The risk profile on Alaska.

Leo Mariani: These are our three D and amplitude supported but you are going to be at this is a step out in an area, where there's risk associated with it so I'm not going to give you a number on a ratio, but it is exploration.

Leo Mariani: We're taking we're going to drill three wells.

Leo Mariani: They are risky, but theyre high reward so and no attrition anything you want to add to that.

Speaker Change: Yes, I'll just comment I think on a little on both pieces, which is the block 53 exit.

Speaker Change: We saw and we mentioned on the previous calls.

Speaker Change: We really saw the prospecting and block 58.

Speaker Change: As being more perspective than what we saw in block 53, So what youre seeing with that exit really is the strategic portfolio management and continuous high grading of the portfolio, where we saw more prospectively built in block 58, and and other opportunities that we had in front of us and I would just echo what John said on Alaska and theirs.

Speaker Change: We have a range because these are exploration prospects that have risk associated with them, but clearly what interested us in the block is that we do see materiality with these prospects that we felt warranted exploration.

Speaker Change: Okay. That's helpful and I just wanted to follow up on some of the comments that you guys made here just want to make sure I understood. This.

Speaker Change: Your comment that EPA might be adjusting his head count a little bit downward in response to some of the lower activity levels I know clearly that once you guys any Greg Cowan I'm sure you'll have to take a fresh look at the whole organization, but did I hear that right that perhaps you think that maybe you might put some of the AP head count here at some point.

Speaker Change: Others say, we're always looking to rightsize the organization with activity levels I think the comment in the.

Speaker Change: In the prepared remarks was that we find ourselves in a much lower price environment.

Speaker Change: We're always willing to reduce activity and associated staff, if we need to do so but we have gone through an exercise in the north sea as we're kind of right sizing for late life.

Speaker Change: And so we have gone through some steps there.

Speaker Change: But we are quite frankly, very excited about integrating the cowen assets.

Speaker Change: And you know promos into the organization and we do see some synergies there but activity.

Speaker Change: Activity levels are still going to be strong.

Speaker Change: And relatively close to where we were last year.

Speaker Change: Thank you.

Speaker Change: I'm showing no further questions at this time.

Speaker Change: I'd now like to turn it back to John Christmann.

John J. Christmann: CEO for closing remarks.

John J. Christmann: Yes, yes. Thank you.

John J. Christmann: We have chosen to reduce our capital this year and maintain roughly flat production given the potential for a lower commodity price environment, while still funding our strategic initiatives.

John J. Christmann: We have intentionally directed more capital towards the Permian, which is performing at an extremely high level.

John J. Christmann: And we look forward to integrating the cowen assets into our Permian operations as well.

John J. Christmann: And lastly, we will keep you up to date on our progress in Suriname at our other exploration plays.

John J. Christmann: Operator.

Speaker Change: This concludes today's conference call.

Speaker Change: Thank you for participating you may now disconnect.

Speaker Change: [music].

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