Q1 2024 ConocoPhillips Earnings Call

Liz: Welcome to the first quarter 2024 ConocoPhillips earnings conference call. My name is Liz, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 1 on your touchtone phone. I will now turn the call over to Philip Gresh, Vice President, Investor Relations. Sir, you may begin.

Welcome to the first quarter 2020 for Conocophillips earnings Conference call. My name is Liz and I will be your operator for today's call.

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

Liz: Later, we will conduct a question and answer session.

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

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

Philip Gresh: Thank you, Liz, and welcome everyone to our first quarter 2024 Earnings Conference call. On the call today, we have several members of the ConocoPhillips leadership team, including Ryan Lance, Chairman and CEO, Tim Leach, Advisor to the CEO, Bill Bullock, Executive Vice President and Chief Financial Officer, Andy O'Brien, Senior Vice President of Strategy, Commercial Sustainability, and Technology, Nick Olds, Executive Vice President of Lower 48, and Kirk Johnson, Senior Vice President of Global Operations. Ryan and Bill will kick it off with opening remarks, after which the team will be available for your questions. Two quick reminders.

Philip Gresh: Thank you Liz and welcome everyone to our first quarter 2024 earnings conference call.

Philip Gresh: On the call today, we have several members they thought the philipps leadership team, including Ryan Lance Chairman and CEO, Tim Leach advisor to the CEO, Philip Bullock Executive Vice President and Chief Financial Officer, Andy O'brien, Senior Vice President of strategy commercial sustainability and technology.

Philip Gresh: Nick <unk> executive Vice President of lower 48, and Kirk Johnson Senior Vice President of global operations.

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

Philip Gresh: First, along with today's release, we publish supplemental financial materials and a slide presentation, which you can find on the Investor Relations website. Second, during this call, we will make forward-looking statements based on current expectations. Actual results may differ due to factors noted in today's release and in our periodic SEC filing. We will make reference to some non-GAAP financial measures. Reconciliations to the nearest corresponding GAAP measure can be found in today's release and on our website.

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

Philip Gresh: During this call we will make forward looking statements based on current expectations actual results may differ due to factors noted in today's release and in our periodic SEC filings.

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

Philip Gresh: And third, of course, when we move to Q&A, we will be taking one question per call. So with that, I will turn it over to Ryan. Thanks, Phil.

Philip Gresh: And third of course, when we move to Q&A, we will be taking one question per call. So with that I'll turn it over to Ryan.

Ryan M. Lance: Thanks, Phil, and thank you to everyone for joining our first quarter 2024 earnings conference call. It was another solid quarter of focused execution across the portfolio on our strategic plan. Starting with our international project, we continue to ramp up production at Surmont Pad 267 in Canada, Bohai Bay 4B in China, and three subsea dive acts in Norway.

Ryan: Thanks, Phil and thank you to everyone for joining our first quarter 'twenty 'twenty four earnings conference call.

Ryan M. Lance: It was another solid quarter of focused execution across the portfolio our strategic player.

Ryan M. Lance: Starting with our international projects, we continue to ramp up production at surmount pad 267 in Canada.

Ryan M. Lance: Boy Bay for for being China, and three subsea tie backs in Norway.

Ryan M. Lance: And we expect to start up the fourth subsea tieback in Norway in the next month. In Canada, at Motney, production reached a new record level following the startup of the second central processing facility, leading to over 20% growth versus the fourth quarter. Shifting to our other projects, we are wrapping up a successful first major winter construction season at Willow this week, and Module Fabrication is going according to plan. As we build out our LNG portfolio, our Qatar and Port Arthur projects are also progressing well.

Ryan M. Lance: And we expect to start up a fourth subsea tieback in Norway in the next month.

Ryan M. Lance: In Canada, Montney production reached a new record level following the startup of the second central processing facility, leading to over 20% growth versus the fourth quarter.

Ryan M. Lance: Shifting to our other projects, we are wrapping up a successful first major winter construction season at Willow This week.

Ryan M. Lance: Our module fabrication is going according to plan.

Ryan M. Lance: As we build out our LNG portfolio, our Qatar in Port Arthur projects are also progressing well.

Ryan M. Lance: Moving to the lower 48, our primary focus remains on capital efficient growth, as we continue to improve efficiency in drilling and completion. For 2024, we still expect to deliver low single-digit production growth at flat activity levels with lower capital spending versus 2023. Moving to the return of capital. We remain on track to distribute at least $9 billion to shareholders this year. And we announced a VROC of 20 cents per share for the second quarter, consistent with our guidance of a 60-40 split between buybacks and cash distributions for the year.

Ryan M. Lance: Moving to the lower 48, our primary focus remains on capital efficient growth.

Ryan M. Lance: As we continue to improve efficiency in drilling and completions.

Ryan M. Lance: For 'twenty 'twenty four we still expect to deliver low single digit production growth at flat activity levels with lower capital spending versus 2023.

Ryan M. Lance: Shifting to return of capital.

Ryan M. Lance: We remain on track to distribute at least 9 billion to shareholders. This year.

Ryan M. Lance: And we announced a <unk> 20 per share for the second quarter consistent with our guidance of a 60 40 split between buybacks and cash distributions for the year.

Ryan M. Lance: To wrap up, it was a solid start to the year. We are on track with the full year guidance that we laid out back in February, which anticipates well-balanced growth across our global portfolio. And, as we discussed at our analyst and investor meeting last year, we continue to invest in our deep, durable, and diverse asset base, which will drive significant cash flows and shareholder distributions over the course of our 10-year plan. Now, I turn the call over to Bill to cover our first quarter performance and 2024 guidance in more detail.

Ryan M. Lance: To wrap up it was a solid start to the year.

Bill: We are on track with our full year guidance that we laid out back in February, which anticipates, a well balanced growth across our global portfolio.

Bill: And as we discussed at our analyst and Investor meeting last year, we continue to invest in our deep durable and diverse asset base, which will drive significant cash flows and shareholder distributions over the course of our 10 year plan.

Ryan M. Lance: Now, let me turn the call over to Bill to cover our first quarter performance and 2020 guidance in more detail.

Bill: Thanks Ryan.

William L. Bullock: In the first quarter, we generated $2.03 per share in adjusted earnings. Additionally, we produced 1,902,000 barrels of oil equivalent per day, representing 2% underlying growth year over year. Lower 48 production averaged 1,046,000 barrels of oil equivalent per day, with 736,000 in the Permian, 197,000 in the Eagleford, and 96,000 in the Balkans. However, this included a 25,000 barrel per day headwind from weather, which impacted lower 4D production by about 2%, and was slightly higher than the 20,000 barrel per day guidance provided on the fourth quarter call.

Bill: In the first quarter, we generated $2 <unk> per share and adjusted earnings.

William L. Bullock: We produced 1.902 million barrels of oil equivalent per day, representing 2% underlying growth year over year.

William L. Bullock: Lower 48 production averaged $1 46000 barrels of oil equivalent per day with 736000 in the Permian 197000 of the Eagle Ford and 96000 in the Bakken.

William L. Bullock: Now this included a 25000 barrel per day headwind from weather, which impacted lower 48 production by about 2% and was slightly higher than the 20000 barrel per day guidance provided on the fourth quarter call.

William L. Bullock: As a result, lower 48 underlying growth was roughly 1% year over year. Now for the rest of the company, Alaska International Production averaged 856,000 barrels of oil equivalent per day, representing roughly 4% underlying growth year over year, excluding the Sermon Acquisition Effect. And this really highlights the benefit of our diversified global portfolio.

William L. Bullock: As a result, lower 48 underlying growth was up 1% year over year.

William L. Bullock: Now for the rest of the company Alaska International production averaged 856000 barrels of oil equivalent per day, representing roughly 4% underlying growth year over year, excluding the <unk> acquisition effects.

William L. Bullock: And this really highlights the benefit of our diversified global portfolio.

William L. Bullock: Moving to cash flows, first quarter CFO was $5.1 billion, which included APLNG distributions of $521 million. Capital expenditures were $2.9 billion, and debt retirement payments were $500 million, and this was partially offset by proceeds of $200 million from the disposition of non-core assets.

William L. Bullock: Moving to cash flows first quarter CFO was $5 1 billion, which included AP LNG distributions of $521 million.

William L. Bullock: Capital expenditures were $2 9 billion.

William L. Bullock: Debt retirement payments for $500 million and this was partially offset by proceeds of $200 million from disposition of non core assets.

William L. Bullock: And we returned $2.2 billion to shareholders in the quarter, including $1.3 billion in buybacks and $900 million in ordinary dividends and VROC payments. We ended the quarter with cash and short-term investments of $6.3 billion and $1.1 billion in longer-term liquid investments. Burnett Guidance: We've maintained our full year production outlook of 1.91 to 1.95 million barrels of oil equivalent per day, which translates to 2 to 4% underlying growth. And for the second quarter, we expect production to be in a range of 1.91 to 1.95 million barrels of oil per day.

William L. Bullock: And we returned $2 $2 billion to shareholders in the quarter, including $1 3 billion in buybacks and 900 million in ordinary dividends and <unk> payments.

William L. Bullock: We ended the quarter with cash and short term investments of $6 3 billion and $1 1 billion in longer term liquid investments.

William L. Bullock: Turning to guidance.

William L. Bullock: We've maintained our full year production outlook of $1 91 to $1 95 million barrels of oil equivalent per day.

William L. Bullock: Which translates to 2% to 4% underlying growth.

William L. Bullock: Also, this represents a similar two to 4% year over year underlying growth. Our full year turnaround forecast is 30,000 barrels per day. This includes 25,000 barrels per day of turnarounds in the second quarter, primarily in Alaska, Norway, and Qatar, and 90,000 barrels per day for the third quarter.

William L. Bullock: And for the second quarter, we expect production to be in a range of 191 to 195 million barrels a day equivalent.

William L. Bullock: So which represents a similar 2% to 4% year over year underlying growth.

William L. Bullock: Our full year turnaround forecast is 30000 barrels per day.

William L. Bullock: This includes 25000 barrels per day of turnarounds in the second quarter, primarily in Alaska, Norway in Qatar and 90000 barrels per day for the third quarter as.

William L. Bullock: As we mentioned on the last earnings call. The heavy third quarter maintenance was driven by a once every five year turnaround at <unk>.

William L. Bullock: And, as we mentioned on the last earnings call, the heavy third quarter maintenance is driven by our once every five-year turnaround at Surmont. For CAFX, our full-year guidance remains $11 to $11.5 billion, with a greater weight to the first half of the year. Now, this is due to the $400 million of equity contributions at Port Arthur LNG that are almost entirely in the first half of the year, as we discussed on the last call.

William L. Bullock: For Capex, our full year guidance remains 11 to $11 5 billion.

William L. Bullock: With a greater weight to the first half of the year. Now this is due to the $400 million of equity contributions at Port Arthur LNG that are almost entirely in the first half of the year as we discussed on our last call.

William L. Bullock: For APL&G, we expect $300 million in distributions in the second quarter with no change to your guidance of $1.3 billion. And finally, for the second quarter, we're forecasting a $600 million working capital outflow related to tax payments and timing in the U.S. and Norway.

William L. Bullock: For AP LNG, we expect $300 million of distributions in the second quarter with no change to full year guidance of $1 3 billion.

William L. Bullock: And finally for the second quarter, we're forecasting a $600 million working capital outflow related to tax payments.

William L. Bullock: And timing in the U S and Norway.

William L. Bullock: All other Foyer guidance items are unchanged. So we continue to deliver on our strategic initiatives. We remain focused on executing our plan for 2024, and we're committed to staying highly competitive in our shareholder distribution. That concludes our prepared remarks. I'll now turn it back over to the operator to start the Q&A.

William L. Bullock: All other full year guidance items are unchanged.

William L. Bullock: So we continue to deliver on our strategic initiatives.

William L. Bullock: We remain focused on executing our plan for 2024, and we are committed to staying highly competitive on our shareholder distributions.

William L. Bullock: That concludes our prepared remarks, I'll now turn it back over to the operator to start the Q&A.

Operator: Thank you. We will now begin the question and answer session. In the interest of time, we ask that you limit yourself to one question.

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

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

Operator: If you have a question, please press star 1 on your touchtone phone. If you wish to be removed from the queue, please press star 11 again. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star 1 1 on your touchtone phone. Our first question comes from a line Devin McDermott from Morgan Stanley. Your line is now open.

Operator: We have a question. Please press star one on your Touchtone phone.

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

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

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

Devin J. McDermott: Our first question comes from the line of Devin Mcdermott from Morgan Stanley. Your line is now open.

Devin J. McDermott: Oh, Hey, good morning, Thanks for taking my question I wanted to ask about Alaska. You noted that you just completed the first are arguably the first winter construction season for the Willow project I was wondering if you could give us a little bit more detail on what was completed this past winter how it went versus plan and as we look ahead, where some of the next key milestones we should be focused on.

Devin J. McDermott: For the project.

Kirk L. Johnson: Hi Devin, this is Kirk. Good morning.

Devin J. McDermott: Hi, Devin this is Kurt good morning.

Kirk L. Johnson: Yeah, so we had a really strong start to project execution here on Willow this year. We're actively closing out here this week, actually, our first major winter construction season on the North Slope, where we were able to successfully mobilize over 1,200 workers and were able to successfully build out seven miles of gravel road, 30 miles of gravel paths, and 30 acres of gravel paths for future facilities. We've successfully constructed all of the pipelines that we planned for this winter season.

Devin J. McDermott: So we had a really strong start to project execution here on Willow. This year, we're actively closing out here. This week actually our first major winter construction season on the north slope.

Kirk L. Johnson: Where we were able to successfully mobilized over 200 workers.

Kirk L. Johnson: And were able to successfully build out seven miles of gravel road.

Kirk L. Johnson: 30 miles of gravel.

Kirk L. Johnson: Paths.

Kirk L. Johnson: 30 acres of gravel pads for future facilities.

Kirk L. Johnson: <unk> successfully constructed all of the pipelines that we planned for this winter season.

Kirk L. Johnson: Certainly, in addition, module fabrication has continued to progress really well here this winter and this spring, and we're expecting to be ready to transport the first of those modules to the North Slope here on schedule by midyear, which is the Willow Operations Center. We still expect to be in the range of $1.5 billion here for 2024, and the progress that we're making here this year gives us confidence to keep our estimate on total capital to first production as being unchanged, so we're still in that $7 to $7.5 billion range.

Kirk L. Johnson: Certainly in addition module fabrication has continued to cross really well here. This winter and this spring and we're expecting to be ready to transport. The first of those modules to the north slope here on schedule here mid year, which is the Willow operation Center.

Kirk L. Johnson: We still expect to be in the range of $1 5 billion here for 2024, and the progress we're making here this year.

Kirk L. Johnson: It gives us confidence to keep our estimate on total capital to first production.

Kirk L. Johnson: It is being remaining unchanged. So we're still in that 7% to $7 $5 billion range and again, that's underpinned not just by the progress that we're making here on construction.

Kirk L. Johnson: And again, that underpins not just the progress that we're making here on construction here this year, both on the North Slope and off-site module fabrication, but we continue to make some really strong progress on our contractual scope. We've landed three-quarters of our total project scope here to date, and we have an expectation that we could be upwards of 90% of our total scope contracted here by year-end. And so as we look forward here for the remainder of the year, obviously, we're going to continue off-site module fabrication for production facilities, and then we'll continue to ramp up both procurement and certainly prepare for the follow-on winter construction season.

Kirk L. Johnson: Here this year, both on the north slope and Ralph sight module fabrication, but we continue to make some really strong progress on our on our contractual scope. We've we've landed three quarters of our total project scope.

Kirk L. Johnson: Here to date, and we have an expectation that we could be upwards of 90% of our total scope contracted here by year end.

Kirk L. Johnson: And so as we look forward here for the remainder of the year, obviously, we're going to continue Offsite module fabrication.

Kirk L. Johnson: Production facilities, and we will continue to ramp up both procurement and certainly prepare for the fall on winter construction season. So again, great progress here on the Willow project this year and putting us in a really strong position. We do this we do these projects.

Kirk L. Johnson: So again, great progress here on the Willow Project this year and putting us in a really strong position. You know, we do this a lot in Alaska, and it's great to see the teams making the progress they are here yet again this year.

Kirk L. Johnson: In Alaska, and it's great to see the teams, making the progress they are here yet again this year.

Operator: One moment for our next question. Our next question comes from the line of Neal Mehta with Goldman Sachs. Your line is now open.

Speaker Change: One moment for our next question.

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

Neil Singhvi Mehta: Good morning team. I wanted to spend some time talking about the return of capital, and you know it is notable in the release you talk about at least $9 billion. So just your framework for thinking about what the right level of return on capital is. It is early in the year, oil prices have been volatile, gas But certainly, you have a terrific balance sheet and have the capacity to raise that number. So, I love your perspective.

Neil Singhvi Mehta: Good morning team.

Neil Singhvi Mehta: I wanted to spend some time talking about return of capital and you know it is.

Neil Singhvi Mehta: Notable in the release you talk about at least $9 billion. So is this your framework for thinking about what the right level of return of capital. It is early in the year oil prices have been volatile oil and gas prices have been weak, but certainly a terrific balance sheet and have the capacity to raise that number itself.

Neil Singhvi Mehta: Your perspective on that.

Ryan M. Lance: Yeah, thanks, Neil. No, I think we wanted to message you, look, we believe we're in good shape with the 9 billion that we described early in the year. I think you should look at a reasonable percentage of our cash flow through the first quarter of this year, similar to what we've done in years past. We recognize that the price that we're experiencing today is well above our mid-cycle, so our investors should expect well above 30% of our cash flow going back to them.

Speaker Change: Yeah. Thanks, Neal No I think we bought our divestments you know look we bought.

Ryan M. Lance: We believe we're in good shape with the 9 billion that we described earlier in the year.

Ryan M. Lance: Look it's a reasonable percentage of our cash flow through the first quarter of this year similar to what we've done in years past, we recognize that the.

Ryan M. Lance: The price that were experienced today is well above our mid cycle. So our investors should expect well above 30% of our cash flow going back to them.

Ryan M. Lance: We're monitoring kind of the volatility, as you mentioned, Neil, and again, it's not just sort of in WTI or Brent benchmarks. It's in all the marks, NGL, LNG, and natural gas as well, so it's a function where we just want to see some durability in some of the prices, see where they end the year, and you can expect to get a fair percentage of our cash flow returned to our shareholders like we've done over the last number of years. One moment for our next question. Our next question comes from the line of Lloyd Byrne with Jeffreys. Your line is now open.

Ryan M. Lance: We're monitoring kind of the volatility as you mentioned Neil.

Francis Lloyd Byrne: And again, it's not just sort of an <unk> Brent markers, it's in all the markers NGL LNG.

Francis Lloyd Byrne: Thats for gas as well so it's a function where just quanta see some durability to some of the prices see where they end the year and you can expect to get a fair percentage of our cash flow return back to our shareholders like we've done over the over the last number of years.

Operator: One moment for our next question. Our next question comes from the line of Lloyd Byrne with Jeffreys. Your line is now open.

Francis Lloyd Byrne: One moment for our next question.

Ryan M. Lance: Yeah, thanks, Lloyd. I can, Bill. Bill's got some information there that he can share. I think you're right. We've been thinking about this for the last number of years trying to build out an LNG strategy and to complement what we're doing on the commercial side with the gas that we move around the lower 48 to expose ourselves to some of the ARBs that are open even today. So I can let Bill add a little bit more color to that. Yeah, sure. Good morning, Lloyd.

Francis Lloyd Byrne: Our next question comes from the line of Lloyd Burn with Jefferies. Your line is now open.

Bill: Hey, guys Ryan good morning.

Bill: Can you just comment strategically on the Permian gas and just kind of how you see that playing out you guys had been really proactive in.

Bill: Integrating some of that gas and and looking forward, but any target levels, you have and maybe just how you're thinking about some of those differentials.

Bill: Yeah, Thanks, Lloyd I can.

Ryan M. Lance: Bill <unk> got some information there that he can share I think you are right we are.

Bill: We've been thinking about this for the last number of years trying to build out a good LNG strategy.

Ryan M. Lance: To complement what we're doing on the commercial side the gas that we move around the lower 48 to expose ourselves to some of the arms that are open even even today. So I can let bill add a little bit more color to that.

William L. Bullock: So, as we talked about in the past, we have – we ship to multiple markets. We've got transport capacity to the Gulf. We've got transport capacity to the West Coast. We're very supportive of off-take capacity from the Permian Basin.

William L. Bullock: Yes, sure. Good morning, Lloyd.

Bill: Yes, sure good morning Lloyd.

Bill: So as we talked about in the past that we.

Bill: We have we shipped to multiple markets, we've got transport capacity to the Gulf. We've got transport capacity of West Coast, We're very supportive of offtake capacity from the Permian Basin and the fact that we do have some firm capacity on the upcoming Matterhorn pipeline, but a sizable portion of our volume also is exposed to prices and in basin pricing.

William L. Bullock: In fact, we do have some firm capacity on the upcoming Matterhorn pipeline, but a sizable portion of our volume also is exposed to prices and in-basin pricing. We don't disclose what percentage moves to each location for commercial reasons, but a really good way to think about the company's realizations is as a percentage of capture of first-of-month Henry Hub pricing; that's what we show. First quarter, we were about 70% realizations. That was a little bit higher than fourth quarter, so we were in a good position.

William L. Bullock: Don't disclose.

William L. Bullock: What percentage moves to each location for commercial reasons.

William L. Bullock: But a really good really to think about the company's realizations is as a percentage of capture of first of month, Henry hub price and Thats, what we show.

William L. Bullock: First quarter, we were about 70% realizations I was a little bit higher than fourth quarter. So in a good position.

William L. Bullock: Obviously, the Permian Basin has got some transitory issues right now with gas pricing. You're starting to see pricing go negative towards the end of the first quarter and as we go into the second quarter. I think everyone's expecting to see a lot of volatility this year. We certainly expect realization in the second quarter to be particularly low, but these are transitory.

William L. Bullock: And obviously the Permian Basin. This has got some transitory issues right now with gas pricing.

William L. Bullock: So I would say pricing go negative.

William L. Bullock: Towards the end of the first quarter as we go into the second quarter. So I think everyone is expecting to see a lot of volatility. This year, we certainly expect realizations second quarter to be particularly low but these are transitory.

William L. Bullock: As we come out the back of the year with takeaway capacity, we expect that to return to more normal levels. As you know, we've got a very sophisticated gas marketing organization. We're moving several multiples of our equity production, so our flow assurance is very good for the company, and we've got access to competitive market pricing. And that flow insurance is really important because we don't routinely flare, and we want to be able to continue to produce because, you know, we've got strong return profiles in the permit, primarily driven by oil.

William L. Bullock: And as we come out the back of the year with takeaway capacity, we expect that to return to more normal levels and as you noted.

William L. Bullock: We've got a very.

William L. Bullock: Sophisticated gas marketing organization, we're moving several multiples of our equity production. So our flow assurance is very good for the company.

William L. Bullock: And we've got access to competitive market pricing and that flow insurance really as important picks up we don't routinely flare and we want to be able to continue to produce.

William L. Bullock: It makes up.

William L. Bullock: We've got strong return profiles in the Permian, primarily driven by oil.

Operator: One moment for our next question. Our next question comes from the line of Scott Hanold with RBC Capital Markets. Your line is now open. Yeah, thanks.

William L. Bullock: One moment for our next question.

Operator: Our next question comes from the line of Scott Hanold with RBC capital markets. Your line is now open.

Scott Michael Hanold: Yes. Thanks.

Scott Michael Hanold: To take a look at lower 48 activity, obviously <unk> is down a little bit just because of the weather, but can you give us some color on on.

Scott Michael Hanold: How you see that progressing through the year.

Scott Michael Hanold: Should we see a nice bounce back in <unk> and then.

Scott Michael Hanold: That steady kind of slow single digit kind of rise through the course of the rest of this year.

Nicholas G. Olds: Yeah, well, good morning. This is Nick Scott.

Scott Michael Hanold: Yes. Good morning. This is Scott.

Scott Michael Hanold: I will take us through kind of the Permian update lower 48, what we see.

Scott Michael Hanold: You noted there we had the headwinds of weather downtime as bill referenced in his prepared remarks.

Scott Michael Hanold: If you look at that we would have you exclude whether we'd have about 3% year over year.

Scott Michael Hanold: Of growth there and additionally, remember we took the operational Frac gap that Eagle Ford.

Scott Michael Hanold: Second half of 2023, so we had some impact in Q1, there because of wells coming online kind of the second half of the Q1 time period.

Nicholas G. Olds: Now, maybe I'll take you through kind of the Permian update and the lower 48. What we see, as you noted there, we had the headwinds of weather downtime, as Bill referenced in his prepared remarks. You know, as we look at that, we would have you exclude weather, and we'd have about 3% year over year of growth there. And additionally, remember, we took the operational frack gap at Eagleford in the second half of 2023.

Nicholas G. Olds: Overall for Permian.

Nicholas G. Olds: We're very focused on just driving efficient.

Nicholas G. Olds: Operations out there, we've got flat activity with rigs and Frac crews, we may bump up quarter to quarter I'd also mentioned that on.

Nicholas G. Olds: On the first half of our development plan out in the Permian is really focused on the Delaware.

Nicholas G. Olds: And then we'll pivot to on the second half more oil weighted towards the Midland Basin, where we've got some of our larger pad projects and some three mile laterals coming online.

Nicholas G. Olds: So we had some impact in Q1 there because of wells coming online kind of in the second half of the Q1 time period. Overall, for Permian, we're very focused on just driving efficient operations out there. We've got flat activity with rigs and frack crews; we may, you know, bump it up quarter to quarter. I'd also mention that the first half of our development plan out in the Permian is really focused on Delaware.

Nicholas G. Olds: And then we'll pivot to the second half more oil weighted towards the Midland Basin, where we've got some of our larger pad projects and some three mile laterals coming online. Again, Scott, the teams are just, again, laser focused on capital efficiency, both on drilling completions. We see good results from the combination of, for example, SimulFRAC and RemoteFRAC.

Nicholas G. Olds: Again.

Nicholas G. Olds: Scott the teams are just again laser focused on capital efficiency.

Nicholas G. Olds: Both on drilling and completions, we see good results from the combination of for example, simulcast <unk> and remote Frac. So we continue to see those efficiency improvements on the operating side for Fracs and then on the drilling side I think we've mentioned several times, we've got a real time drilling intelligence group out there.

Nicholas G. Olds: So we continue to see those efficiency improvements on the operating side for FRACs. And then on the drilling side, as I've mentioned several times, we've got a real-time drilling intelligence group out there monitoring the rigs 24-7. So that's really seeing promise as well. So on the efficiency front, we're seeing that roll through. If you look back as far as taking into account the weather that Bill mentioned 25,000 barrels per day and also accounting for the impact of the Eagleford FRAC gap, you can look at 1Q kind of being the low point for year-round production.

Nicholas G. Olds: Monitoring the rigs 24, seven so that that's really seeing promise as well so on the efficiency front, we're seeing that roll through.

Nicholas G. Olds: If you look back.

Nicholas G. Olds: As far as taking into account the weather that Bill had mentioned on 25000 barrels equivalent per day and also accounting for the impact of the Eagle Ford Frac App.

Nicholas G. Olds: You can look at <unk> kind of being the low point for the year.

Nicholas G. Olds: We'll see progressively higher production, kind of Q2, Q3, Q4. And again, we've got some larger pad projects coming on in the second half of the year in the Midland Basin, so an increasingly favorable trajectory on production. All in, as we talked about before, the plan that we laid out was low single digits of growth in that 2-4% range.

Nicholas G. Olds: Around production, we will see progressively higher production kind of Q2, Q3, Q4 and again, we've got some larger pad projects coming on in the second half of the year in the Midland Basin, So increasingly favorable trajectory on production all in as we talked about before that the plan that we laid out was.

Nicholas G. Olds: Low single digits of growth in that 2% to 4% range.

Operator: One moment for our next question. Our next question comes from the line of Betty Jones with Barclays. Your line is now open.

Speaker Change: One moment for our next question.

Operator: Our next question comes from the line of Danielle <unk> with Barclays. Your line is now open.

Betty Jones: All right, thank you for taking my question and setting that up for me really well, because I want to follow up on the Permian and then the efficiency gains that you guys are seeing where we are hearing from other operators about significant efficiencies from EFRAX and longer laterals. I would just love to get more color on what you guys are seeing and how that's tracking versus the corporate plan. And importantly, how that's getting translated into the capital efficiency that you're seeing in the base and volatility plans. Thanks.

Betty Jones: Alright, Thank you for taking my question.

Betty Jones: And we can set that up for me really well because I wanted to follow up on the Permian and then the efficiency gains that you guys are seeing.

Betty Jones: We are we are hearing from other operators significant inefficiencies from <unk>.

Betty Jones: Fracs and longer laterals.

Betty Jones: Just love to get more color on.

Betty Jones: What you guys are seeing and how that's tracking versus the corporate plan and importantly, how that's getting translated into the capital efficiency.

Betty Jones: In the basin volatility.

Betty Jones: Okay.

Nicholas G. Olds: Yep. Well, good.

Betty Jones: Yes.

Betty Jones: Let's start on some of the longer laterals I talked a little about previously.

Nicholas G. Olds: Operating efficiency on the Frac spreads and drilling.

Nicholas G. Olds: Our teams are very focused on long lateral development.

Nicholas G. Olds: As we go forward as a reminder for the group on the phone if you look at our Permian inventory 80% of the.

Nicholas G. Olds: Laterals are one five miles or greater and we've got 60% two miles or greater if you look specifically at 2024 again, 80% of the wells are one five miles or greater and about 20% are three mile laterals and we've got as I mentioned before we got some of those longer laterals coming online in the second half of this year.

Nicholas G. Olds: Well, let's start on some of the longer laterals I talked a little about previously on the operating efficiency of the frack spreads and drilling. Again, our teams are very focused on long lateral development. As we go forward, as a reminder for the group on the phone, if you look at our Permian inventory, you know, 80% of the laterals are 1.5 miles or greater, and we've got 60% 2 miles or greater. If you look specifically at 2024, again, 80% of the wells are 1.5 miles or greater, and about 20% are 3 mile laterals. And we've got, as I mentioned before, some of those longer laterals coming online in the second half of this year.

Nicholas G. Olds: Year.

Nicholas G. Olds: We see up to that 30% to 40% improvement on costs. Despite when you move from a one mile lateral to a three mile lateral so we're seeing those efficiency improvements out there.

Nicholas G. Olds: We see up to that 30 to 40% improvement in cost supply when you move from a 1 mile lateral to a 3 mile lateral. So we're seeing those efficiency improvements out there. Maybe just staying on the drilling side, specifically in the Midland Basin. We've had some recent success there, where we have had internal record wells. We look from spud to rig release, so very favorable performance over the last three months. We continue to see that on the drilling side.

Nicholas G. Olds: Just staying on the drilling side, specifically in the Midland Basin. We've had some recent success there where we've had internal record wells, we look from spud to rig release, so very favorable performance over the last three months and continue to see that on the drilling side.

Nicholas G. Olds: And the bottom line is that it does translate as we focus in on more feet per day, more stages per day, more pumping hours per day. We've seen that 10 to 15 percent improvement in pumping hours from 2022 to 2033. That all translates to improved capital efficiency and, therefore, lowers your cost of supply. So it's very encouraging across all fronts.

Nicholas G. Olds: And in the bottom line is it does translate once we focus in on more feet per day more stages per day more pumping hours per day, and we've seen that 10% to 15% improvement in pumping hours from 2022 to 23, three that all translate to improved capital efficiency and therefore lowering your cost supply.

Nicholas G. Olds: So it's very encouraging.

Nicholas G. Olds: Cross all fronts.

Nicholas G. Olds: Yeah.

Operator: A moment for our next question. Our next question comes from the line of Roger Read with Wells Fargo. Your line is now open.

Speaker Change: I'm only for our next question.

Roger David Read: Yeah, thanks, Roger. I'll take a shot and maybe let Andy chime in a little bit as well.

Roger David Read: Our next question comes from the line of Roger read with Wells Fargo. Your line is now open.

Roger David Read: Yes, thanks, good morning.

Roger David Read: Maybe Ryan just to get your updated thoughts on the global LNG market, you've obviously got.

Roger David Read: A pretty good footprint, you're expanding it here just how youre thinking about it over the next let's say two to three years as some of these newer projects come online.

Roger David Read: Thanks Roger.

Roger David Read: Sure maybe let Andy.

Roger David Read: We have a little bit as well, but as I said earlier I think we.

Ryan M. Lance: But, as I said earlier, I think we certainly stepped back a few years ago and wanted to continue to grow our LNG exposure in that position. We know the markets, we have our own technology, we know the business quite well, and we do have a strategic intent to continue to try to grow that. And it's really participating in all facets of it. It's the production side here in North America, in Qatar, in Australia, being in the liquefaction side here in North America and elsewhere, having ships and being in the regas potential as well.

Ryan M. Lance: Certainly step back a few years ago and wanted to continue to grow our LNG exposure of that position we know the markets.

Ryan M. Lance: We have our own technology, we know the business quite well and we do have a strategic intent to continue to try to grow that and it's really participated all assets or all facets of its the product production side here in North America in Qatar and in Australia being.

Ryan M. Lance: Being in the in the liquefaction side here in North America have elsewhere.

Ryan M. Lance: So trying to grow that integrated business as well, even at sort of the lower Henry Hub prices you see today, the ARB is still open to making money and making a decent rate of return as you move some of that LNG to Europe and to Asia. And it's a long-term business that we're interested in. So I can let Andy chime in on a few more specifics as well.

Ryan M. Lance: Having ships and being able to re guests potential as well. So we're trying to grow that integrated business as well even at sort of lower Henry hub prices you see today. The arb is still open.

Ryan M. Lance: To make money and make a decent rate of return as you move some of that LNG to Europe into Asia and its a long term business that we're interested in so I can let Andy talk me about a few more specifics as well yeah. Thanks, Brian and thanks, Roger for the question I think this is a bit of our business I don't think is.

Andrew M. OBrien: A few more specifics as well. Yeah. Thanks, Ryan.

Andrew M. OBrien: And thanks, Roger, for the question. I think this, you know, this is a bit of our business that I don't think is completely understood. So it might be helpful if I just put some of the details around it.

Andy: Completely understood as it might be helpful. If I, just put sort of some of the some of the details around it.

Andrew M. OBrien: You know, as Ryan said, if you go back all the way to 2022, we increased our ownership on the resource side by taking more equity in APLNG. And then we've also participated in two Qatari expansion projects. I think where you were specifically going with your question was really more from the commercial perspective.

Andy: As Brian said.

Andrew M. OBrien: If you go back all the way to 2022, we increased our ownership on the resort side with the taking more equity in AP LNG and then we've also participated in the two Qatari expansion projects.

Andrew M. OBrien: So I think what you are specifically going with your question was on.

Andrew M. OBrien: Really more from a commercial perspective.

Andrew M. OBrien: So on the Gulf Coast, we've secured 5 MTPA of offtake from Port Arthur, and we also have a 30% equity interest there. We've also secured offtake on the West Coast of Mexico with 2.2 MTPA of Saguaro LNG, and that one is pending FID, and 0.2 MTPA of offtake for five years starting in 2025 from ECHA Phase 1. So all in, our offtake in North America is about 7.4 MTPA, pending the FIDA at Saguaro.

Andrew M. OBrien: So on the Gulf Coast, we executed five M tpa uptake from put out there.

Andrew M. OBrien: And we also have a 30% equity interest that we've also secured offtake on the west coast of Mexico with $2 two MTA from Saguaro LNG, how that one is pending.

Andrew M. OBrien: And 0.2 MTA of uptake for five years, starting in 2025 from Echo phase one.

Andrew M. OBrien: So all in all have taken North America about seven four MTA pending the <unk>.

Andrew M. OBrien: And switching to the regas side of things, we now have 4.5 MTPA secured in Europe, and this includes 2.8 MTPA capacity at German LNG. Now up to two of those will support our LNG SPAs with Qatar, and we also have 1.7 MTA of re-gas capacity at the gate terminal in the Netherlands. So over the near term, our focus is on continuing to invest in the regas opportunities, and over the longer term, maybe think about 10 to 15 MTPA as a good range of off-take capacities to think about.

Andrew M. OBrien: And switching to the re gas side of things. We now have four five MTA secured in Europe.

Andrew M. OBrien: This includes $2 $2 eight MTA.

Andrew M. OBrien: At the gym in LNG now up to two of that will support our LNG sba's with Qatar.

Andrew M. OBrien: And we also have $1 seven MTA of re gas capacity at the gate 10, one in the Netherlands.

Andrew M. OBrien: So over the near term all focuses on continuing to later in the re gas opportunities and over the longer term, maybe think about 10% to 15 MTA is a good range of offtake capacity to think about this.

Andrew M. OBrien: This will allow us to achieve the full benefits of scale across our organization. I do want to be clear, this is an offshoot ambition. We don't feel that we have to take on additional liquid action capital. So, for competitive reasons, we don't get into the specifics of where we're actually developing offtake and regas right now. But needless to say, you know, that's something that's front of mind for us. So I know that was a lot of detail, but hopefully that helps everyone sort of just frame up sort of the moving parts we have going on in the LNG business.

Andrew M. OBrien: This will allow us to achieve the full benefits of scale across our organization do.

Andrew M. OBrien: Do you want to be clear. This is an offtake ambition, we don't feel that we have to take on additional additional liquefaction capital.

Andrew M. OBrien: So for competitive reasons, we don't get into the specifics of where we're actually developing off taken recaps right now, but needless to say thats something Thats <unk>.

Andrew M. OBrien: Front of mind for us So I know that was a lot of detail, but hopefully that helps everyone. So theyre just frame up sort of the moving parts, we have going on on the LNG business.

Speaker Change: One moment for our next question.

Operator: One moment for our next question. Our next question comes from the line of Nitin Kumar with Mizuho. Your line is now open.

Andrew M. OBrien: Our next question comes from the line of <unk> Kumar with Mizuho. Your line is now open.

Nitin Kumar: Hi, good afternoon, and thanks for taking my question. Ryan, there have been some news reports saying that, you know, linking you to a potential bid on the FITCO refining assets. There were also some articles in Reuters saying that you were considering the sale of part of your equity interest in LNG. I'm not going to ask you to comment on specific transactions, but as you look at the portfolio today and the evolving macroeconomic outlook, are there opportunities for portfolio optimization? And maybe even comment on a few of them.

Nitin Kumar: Hi, good afternoon, and thanks for taking my question.

Nitin Kumar: Ryan there's been some news reports, saying that.

Nitin Kumar: Linking you to a potential bid on the citgo refining assets.

Nitin Kumar: It's also some articles and Reuters, saying that you are considering the sale of.

Nitin Kumar: Part of your equity interest in LNG.

Nitin Kumar: I'm not going to ask you to comment on specific transactions, but as you look at the portfolio today and the evolving macroeconomic outlook.

Nitin Kumar: Other opportunities for portfolio optimization, and maybe comment on a few of them.

Ryan M. Lance: Yeah, thanks. First, kind of on Citgo, we're watching that process. Look, we're a creditor in that process. So we're owed quite a bit of money by the Venezuelans. So we're watching that process pretty closely. Look, I'm not trying, we're not trying to become an integrated refining major with, you know, refinery in our portfolio.

Ryan: Yes, Thanks Ben.

Ryan M. Lance: Let's say first kind of on the citgo are watching that process look we're a creditor in that process. So we're quite a bit of money by the.

Ryan M. Lance: Venezuela, and so we're watching that process pretty closely look I'm not trying we're not trying to become our integrated refining major with.

Ryan M. Lance: No.

Ryan M. Lance: Finding in our portfolio. This is a way to protect what's what's the company and the credit that.

Ryan M. Lance: We have against the Venezuelan government. So we're watching that and following that process pretty closely but that's to get the money that they owe us for the judgments that are that we have against the Venezuelan government for the fixed for operation of our assets.

Ryan M. Lance: This is a way to protect what's owed the company and the credit that we have against the Venezuelan government. So we're watching that and following that process pretty closely. But that's to get the money that they owe us for the judgments that we have against the Venezuelan government for the expropriation of our assets.

Ryan M. Lance: But we're always we're always optimizing the portfolio I think in the.

Ryan M. Lance: Look, we're always, we're always optimizing the portfolio. I think, on the last call, Andy mentioned the acquisition of some APL&G interest a couple of years ago. We secured the full interest at Surmont here last year. So we're always looking at opportunities that make the company better. And those are two great opportunities that came along at the right time, and we're in the right place to add to the portfolio.

Ryan M. Lance: What I will call Andy mentioned the.

Ryan M. Lance: The acquisition of some AP LNG interest a couple of years ago, we secured the full interest at surmount to here in the last year or so we're always looking at opportunities that make the company better and those are two great opportunities that came along at the right time and we're in the right place to add to the portfolio, we think about the.

Ryan M. Lance: <unk> side, who sold assets over the last couple of years when they don't compete in the portfolio to our cost of supplier thresholds then the team knows what they do either improve or moves out of the portfolio and we will do that so we don't have any major large disposition programs that were we're thinking about inside the company. We just do that as a normal course.

Ryan M. Lance: We think about the disposition side; we've sold assets over the last couple of years; when they don't compete in the portfolio at our cost of supply thresholds, then the team knows that they need to improve, or they move out of the portfolio. And we do that constantly.

Ryan M. Lance: <unk> business just to improve the company.

Ryan M. Lance: With regard to Port Arthur look we've had some inbounds on the equity interest that we have and we're taking a look at that trying to understand is it.

Ryan M. Lance: Whats right for the company going forward.

Ryan M. Lance: As Andy mentioned in the last question look we're not we don't necessarily need to be an equity owner of these things we wanted to port Arthur to launch the project in phase one so we did that but we're not married to that if the right opportunity comes along so we continue to look at those opportunities at all we are in the market every day.

Ryan M. Lance: We're trading in the market and we're looking at the market and doing doing things that we think make the company better.

Speaker Change: One moment for our next question.

Ryan M. Lance: We don't have any major large disposition programs that we're thinking about inside the company; we just do that as a normal course of business, just to improve the company. With regard to Port Arthur, look, we've had some inbounds on the equity interest that we have. And we're taking a look at that, trying to understand what's right for the company going forward. As Andy mentioned in the last question, we don't necessarily need to be an equity owner in these things. We wanted to at Port Arthur to launch the project in phase one.

Ryan M. Lance: Our next question comes from the line of Paul Cheng with Scotiabank. Your line is now open hey.

Operator: A moment for our next question. Our next question comes from the line of Paul Cheng with Scotiabank. Your line is now open. Hey guys.

Ryan M. Lance: So we did that, but we're not married to it if the right opportunity comes along. So we continue to look at those opportunities at all. We're in the market every day. And we're trading in the market, and we're looking at the market, and doing things that we think make the company better.

Ryan M. Lance: Guys good morning.

Speaker Change: Good morning.

Ryan M. Lance: Yes.

Ryan M. Lance: AI USA Westwood in many other sectors, but we haven't had that.

Ryan M. Lance: Talking much about that but one of the largest.

Ryan M. Lance: Oil service companies.

Ryan M. Lance: Conference call just.

Ryan M. Lance: Talk about how the revenue will be up because thats a lot of interest on their call about using the AI that we can improve the EUR and well put activities you guys and it's always on the cutting edge and John to improve.

Ryan M. Lance: That was all spec into shale.

Speaker Change: Can you tell us that.

Ryan M. Lance: It being opened me optimistic or that within the next two or three point, yes exactly.

Ryan M. Lance: Yes, it's going to help you dramatically improve.

Ryan M. Lance: Well productivity or that this is we need much longer time, maybe at some point it will happen.

Paul Cheng: Hey guys, good morning.

Ryan M. Lance: Yeah. Thanks, Paul look I think AI is going to be it's going to.

Unknown Executive: AI is a buzzword in many other sectors, but we haven't heard the producers talking much about that. But one of the largest oil services companies on their conference call just talked about how they believe their revenue will be up because there's a lot of interest in their product using AI that will improve the EUR and well productivity. You guys are always on the cutting edge and trying to improve on those aspects of the show.

Unknown Executive: Revolutionize a lot of things in our industry other industries around the world as well I think Nick in his response to a previous question talked about some of the things we're doing on the digital space with the big the the automation in some of our what we're trying to improve prove our company improve our operating efficiency I can't comment.

Unknown Executive: Sure.

Unknown Executive: But somebody else said on their conference call I think it's going to have an impact on the business I think it goes to things like learning curve and its pace look if we can help optimize and improve our learning curve and get digitized and understanding the application of all of this deep machine learning to our company, but I think there's going to be.

Unknown Executive: Can you tell us that? Is it being overly optimistic or that within the next two or three years, or three or four years, you actually think AI is going to help you dramatically improve your EUR or well productivity, or that this is really much longer term, maybe at some point it will happen?

Unknown Executive: Have an impact.

Unknown Executive: Think about it as acceleration of a learning curve. So it's the pace the pace in which we can optimize and get better and get more efficient as a company and it cuts across the whole company. It's not just sort of the technical and the operating side of the company, but it's the back office and.

Unknown Executive: In other places, but the challenge is going to be getting this.

Unknown Executive: His deep machine learning and the <unk>.

Unknown Executive: The supply to an enterprise like Conocophillips enterprise, it's all around the world.

Unknown Executive: How do you get out of the retail space and into the large enterprise space, where you have a lot of data a lot of data a lot of it.

Unknown Executive: <unk> data a lot of a lot of machine learning data, but you have to combine them together.

Unknown Executive: See some of that efficiency, so, yes, it's going to happen.

Ryan M. Lance: Yeah, thanks, Paul. Look, I think AI is going to revolutionize a lot of things in our industry and other industries around the world as well. I think Nick, in his response to a previous question, talked about some of the things we're doing in the digital space with automation and some of what we're trying to improve, improve our company, improve our operating efficiency. I can't comment on what somebody else said on their conference call.

Ryan M. Lance: I think it's going to have an impact on business. I think it goes to things like the learning curve and its pace. Like if we can help optimize and improve our learning curve and get digitized and understand the application of all this deep machine learning to our company, I think it is going to have an impact. And I think about it as acceleration of the learning curve. So it's the pace.

Ryan M. Lance: It's the pace at which we can optimize and get better and become more efficient as a company. And it cuts across the whole company. It's not just sort of the technical and the operating side of the company, but it's the back office and other places. The challenge is going to be getting this deep machine learning and this supply to an enterprise like ConocoPhillips, enterprises all around the world. How do you get out of the retail space and into the large enterprise space where you have a lot of data, a lot of data, a lot of visual data, a lot of So yeah, it's going to improve us. It's going to make us better. We got to get everybody in the company embracing kind of what we're doing in this AI space.

Unknown Executive: So it is going to make us better we got to get everybody in the company embracing kind of what we're doing in this.

Ryan M. Lance: AI space.

Operator: One moment for our next question. Our next question comes from the line of Ryan Todd with Piper Sandler. Your line is now open.

Speaker Change: One moment for our next question.

Operator: Our next question comes from the line of Ryan Todd with Piper Sandler Your line is now open.

Ryan M. Todd: Thanks, maybe, um... Maybe just to follow up on some of your LNG conversations from earlier. You clearly talked about there's still work ongoing on the commercial and marketing side and building out some of those kind of things. Is there still an appetite to add on the supply side? You know, Qatar announced another LNG expansion in Northfield West. Is that the type of thing you'd be interested in more of that in the portfolio, or more supply-side LNG within the portfolio?

Ryan M. Todd: Thanks, maybe.

Ryan M. Todd: Maybe just to follow up on some of your <unk>.

Ryan M. Todd: LNG conversations from from earlier.

Ryan M. Todd: You've clearly talked about there is still work ongoing on the commercial and marketing side and building out some of those kind of thing.

Ryan M. Todd: Is there still.

Ryan M. Todd: Appetite to to add on the supply side.

Ryan M. Todd: <unk> announced another LNG expansion the north field West is that the type of thing you'd be interested in more of that in the portfolio or more supply side LNG within the portfolio.

Ryan M. Todd: And then are you seeing.

Ryan M. Todd: And then are you seeing signs, we've heard some complaints from others about signs of cost inflation on global LNG projects. What are you seeing? As you look at the development of your LNG? local faction trends across the portfolio right now in terms of cost.

Ryan M. Todd: <unk>, we've seen ive heard some complaints from others about about signs of cost inflation on global LNG projects. What are you seeing as you look at the development of.

Ryan M. Todd: Your LNG.

Ryan M. Todd: Liquefaction trends across the portfolio right now in terms of contemplation.

Ryan M. Lance: Yeah, thanks, Ryan. I think Andy outlined sort of our ambition to hit, you know, 10 to 15 million tons, but you add up the volumes that Andy talked about, and it doesn't reach that kind of a level. So do we have an ambition to grow some more in this space? Absolutely, we do want to make sure we're in the right spots with the right kinds of opportunities. And certainly, North America is a great spot, both on the Gulf Coast and on the West Coast.

Ryan M. Todd: Yeah.

Speaker Change: Thanks, Ryan I think.

Ryan M. Lance: Hey, Jeremy outlined sort of our ambition to hit 10 to 15 million.

Ryan M. Lance: Tons and you add up the volumes that Andy talked about and it doesn't reach that kind of a level. So do we have an ambition to grow some more of this stays absolutely. We do want to make sure. We're in the right spots with the right kinds of opportunity and certainly North America is a great spot both on the Gulf Coast The West Coast. If there is some.

Ryan M. Lance: Good opportunities, it's about having the best liquefaction fees its about the better the better projects that.

Ryan M. Lance: If there are some good opportunities, it's about having the best liquefaction fees, it's about the better projects that we see out there. I think when it comes to Qatar, we've demonstrated that we have a couple of interests in a couple of trains there, NFE and NFS. And if they put more out there, the terms are acceptable and competitive. We're certainly interested in expanding that relationship with Qatar down the road. We'll have to see when they make their decision on what they want to do with any future expansions out of the North Field. But our relationships are strong, and our participation is strong. I think you're in some of those areas.

Ryan M. Lance: What we see out there I think.

Ryan M. Lance: So when it comes to Qatar, we've demonstrated where we've landed a couple of interesting a couple of trains there and if you're an NFS and if people have more out there. The terms are acceptable and competitive we're certainly interested in expanding that relationship with it start out down the road, we will have to see when when.

Ryan M. Lance: They make their decision on what they want to do with any future expansions out of the north field, but our relationships are strong and our participate participation is strong.

Ryan M. Lance: I think you're in some of those areas. We're seeing the execution of port Arthur is going pretty well, we don't have any any any concerns about inflation or what what's happening there and certainly watched the market in terms of the liquefaction spend that we have or what future may come, but we're pretty comfortable with it we're getting into these projects.

Ryan M. Lance: We're seeing the execution of Port Arthur going pretty well. We don't have any concerns about inflation or what's happening there. We certainly watch the market in terms of the liquefaction spend that we have or what the future may bring, but we're pretty comfortable with it. We're getting into these projects because they're competitive in the portfolio and they fulfill a strategic long-term vision that we have for the company.

Ryan M. Lance: Because they are competitive in the portfolio and they are filling a strategic long term vision that we have for the company.

Operator: One moment for our next question. Our next question comes from a line from Neal Dingmann with Truist Securities. Your line is now open. Good morning, everyone. Thanks.

Speaker Change: One moment for our next question.

Operator: Our next question comes from the line of Neal Dingmann with <unk> Securities. Your line is now open.

Neal David Dingmann: Morning, guys. Thanks for the time. My question is around your lower 48 marketing associated realized prices. Specifically, you all suggest on slide six that your permanent differentials remain maybe a little bit pressured. I'm just wondering, are there any changes you can make on the marketing side to continue to stabilize and improve this? You know, I know you've materially done this, of course, since you bought the Contra assets versus, you know, what they sort of just accepted at Wellhead. So I'm just wondering, are there further improvements or things that you could potentially do on the marketing side to see even more improvement in realization?

Neal David Dingmann: Good morning, guys. Thanks for the time.

Neal David Dingmann: Questions on <unk>.

Neal David Dingmann: Around your lower 48 market and associated realized prices.

Neal David Dingmann: Specifically you all suggest on slide six that your Permian differentials remained maybe a little bit pressured I'm just wondering.

Neal David Dingmann: Are there any changes you can make on the marketing side to continue to stabilize and improve this.

Neal David Dingmann: I know you've materially done this of course since you bought the concho assets versus what they sort of just accepted that wellhead. So I'm. Just wondering are there further improvements or things that you potentially could do on the marketing side to even see even more improvement on the realizations.

William L. Bullock: Yeah, Neil, this is Bill. You know, as we talked about, we have offtake capacity both on the West Coast and the Gulf Coast, and we're interested in additional takeaway capacity on Matterhorn, like I talked about. So we're constantly looking for ways of optimizing that portfolio. You know, our commercial organization is in the market daily; we do orders of magnitude on that production.

Neal David Dingmann: Yes, Neal this is bill.

Neal David Dingmann: As we talked about.

William L. Bullock: We have offtake capacity, both to west coast and the Gulf Coast.

William L. Bullock: And we are interested in additional takeaway capacity on Matterhorn like I talked about.

William L. Bullock: We are constantly looking for ways of optimizing that portfolio.

William L. Bullock: So we really have a good sense of where volumes are moving and what rates are going. And, you know, so I think that, You know, the improvement in margins. And as you're looking at that, that's really going to come down to getting additional takeaway capacity coming out of Permian. And, you know, as we've gone into the second quarter, you've had some maintenance going on there with El Paso and a couple other pipelines and a couple of outages. That's putting pressure on WAHA pricing, I think everybody's been seeing that. That'll likely clear through the system here as we go through this quarter.

William L. Bullock: Our commercial organization is in the market daily we're doing orders of magnitude on that production. So we really have a good sense of where volumes are moving and what rates are going and.

William L. Bullock: So I think that.

William L. Bullock: But the real relief doesn't come until you get additional takeaway capacity here towards the third quarter, with Matterhorn coming along. At that point in time, I would expect that you're going to see more normal differentials, and you're going to see a return for our portfolio at some more than about 80% of Henry Hub capture across the portfolio. So I think it's a transitory type thing that you're seeing until you get additional pipeline capacity built. And so I think the important thing here again is that flow assurance matters at a point in time when you're constrained in a basin. And we've got excellent flow assurance given our commercial capabilities.

William L. Bullock: The improvement on our margins and as you are looking at that that's really going to come down to getting.

William L. Bullock: Getting additional takeaway capacity coming out of Permian.

William L. Bullock: As we've gone into the second quarter, you've had some maintenance going on there with the El Paso and a couple of other pipelines on a couple of outages is putting pressure on <unk> pricing I think everybody has been saying that that will likely clear through the system here as we go through this quarter, but the real relief doesn't come until you get additional takeaway capacity here towards <unk>.

William L. Bullock: Third quarter with Matterhorn coming along.

William L. Bullock: At that point in time, I would expect that youre going to see more normal differentials and youre going to see a return for our portfolio.

William L. Bullock: More than 80% of capture.

William L. Bullock: Of.

William L. Bullock: Henry hub across the portfolio.

William L. Bullock: So I think it's a transitory type thing that youre seeing until you get additional pipeline capacity built and so I think the important thing here again is that flow assurance matters at a point in time, where you're constrained in a basin and we've got excellent flow assurance given our commercial capabilities.

William L. Bullock: A moment for our next question. Our next question comes from Bob Brackett with Bernstein. Your line is now open. Good morning.

Speaker Change: One moment for our next question.

William L. Bullock: Our next question comes from Bob Brackett.

Robert Alan Brackett: With Bernstein. Your line is now open.

Operator: Good morning. In the prepared remarks, you mentioned the new pad at Surmont 267. I recall under the old operating structure, the partner wasn't that eager about new capital and new technology. Clearly, now you control the pace. Can you talk about that pad? How different is it technologically from some of the older pads, and what are you seeing in early results? Hi, Bob. This is Kirk.

Robert Alan Brackett: Good morning in the prepared remarks, you mentioned, the new patent ceremony, $2 67, and I recall under the old operating structure. The partner wasn't that eager about new capital and new technology. Clearly now you control. The pace can you talk about that pad how different is it technologically than some of the older.

Kirk: Pads, what are you seeing early results.

Kirk L. Johnson: Yeah, first, I'll probably just start out by saying our operational performance this past year has been really strong, and that's important having come through the acquisition of our remaining 50% interest in that asset. And, and of course, we brought on that new pad, certainly, as you've heard from us before, first team on 267, it started earlier this year, and then we achieved first oil in December, and we've been seeing a really steady, strong ramp on pad 267.

Operator: Yeah, Hi, Bob This is Kirk.

Kirk: First ill, probably just start out by saying our operational performance. This past year has been really strong and thats important haven't come through.

Kirk L. Johnson: The acquisition of the remaining 50% interest in that asset.

Kirk L. Johnson: And of course, we brought on that new pad certainly as you've heard from us before first steam.

Kirk L. Johnson: 267 had started earlier this year.

Kirk L. Johnson: And then we achieve first oil in December and we've been seeing a really steady strong ramp on pad 267, having started that in December here through first quarter.

Kirk L. Johnson: Having started that in December here through first quarter production for first quarters up 3MBOE, we really have just seen 267 start to grow. And we expect that to continue to offset the decline, especially when we normalize that for the third quarter turnaround that we have coming up. Bob, you've also heard from us in the past; we spoke of the fact that we intend to add about a new pad about every 12 to 18 months, about every year.

Kirk L. Johnson: Production for first quarter is up.

Kirk L. Johnson: <unk> and <unk>.

Kirk L. Johnson: Really have just seen 267 and start to grow and we expect that to continue to offset decline, especially when we normalize that for the third quarter turnaround that we have coming up.

Kirk L. Johnson: Bob you've also heard from us in the past we've spoken to the fact that we intend to add about a new pad.

Kirk L. Johnson: Every 12 to 18 months about every year.

Kirk L. Johnson: And we just continue to find new efficiencies and new opportunities as we bring that pad online. It's really performing well against our expectations. You know, the team spent a lot of time, as we've done a lot of infill work, mitigating base field decline. We've experimented with a number of technologies around our liners. And we have prospects of drilling longer laterals here in the future as well. So expect to hear more from us on this front, but certainly, pad 267 is coming in strong. And I'm really just pleased with how this is shaping up and our ability to continue to grow the asset here in the future, having control of it.

Kirk L. Johnson: And we just continue to find new efficiencies and new opportunities as we bring the pad online it's really performing against our expectations. The team has spent a lot of time as we've done a lot of infill work.

Kirk L. Johnson: Mitigating based field decline, we've experimented with a number of technologies around our liners and and we have prospects of drilling longer laterals here in the future as well so.

Kirk L. Johnson: Expect to hear more from us on this front, but certainly Pat to 67 is coming in strong.

Kirk L. Johnson: And really just pleased with how this is how this is shaping up and our ability to continue to grow the asset here in the future, having having control of it.

Operator: One moment for our next question. Our next question comes from the line of Alastair Syme with Citi. Your line is now open. Yeah, thanks.

Speaker Change: One moment for our next question.

Operator: Our next question comes from the line of Alastair Syme with Citi. Your line is now open.

Alastair Roderick Syme: Yes, thanks, very much good morning, everyone.

Alastair Roderick Syme: But just again a question to the lower gas prices.

Alastair Roderick Syme: Sure I understand whether you're making any.

Alastair Roderick Syme: We had some changes to your capital program I'm thinking both the Permian and even for the year.

Alastair Roderick Syme: Given the low prices will surely be impacting on.

Alastair Roderick Syme: While near term cash flow.

Alastair Roderick Syme: Thank you.

Alastair Roderick Syme: Yeah, Alastair, no, we're not making any capital allocation decisions. It's all driven by the liquid side of the business. I think, as Bill articulated, you know, we need more takeaway capacity out of the Permian to get the Waha prices back up. And we're advantaged a bit because we have El Paso volumes we can take to the West Coast. They've been in a bit of a turnaround as well, and there are some maintenance activities going on that pipeline.

Operator: Yes.

Alastair Roderick Syme: No were not making any capital allocation decisions, it's all driven by the liquid side of the business I think as bill as Bill articulated.

Alastair Roderick Syme: We need more takeaway capacity out of the Permian.

Alastair Roderick Syme: To get the prices back up.

Alastair Roderick Syme: We're advantaged a bit because we have el Paso volumes. So we can take to the west coast. There they have been in a bit of a turnaround as well and some maintenance activities going on that pipeline. So there is a dynamic happening in the basin that is impacting volatile prices.

Alastair Roderick Syme: So there's a dynamic happening in the basin that is impacting Waha prices. So again, as Bill said, you know, getting your gas is pretty important. So you don't go flare because we're not going to routinely flare gas. We've made that commitment. So having the takeaway is really, really important in these periods of time. And then having the flexibility with your commercial team; we know where we can get a premium price, and we're after that every single day.

Alastair Roderick Syme: So again as Bill said getting evacuating your gas is pretty important. So you don't go flare because we're not going to routinely flare gas we've made that commitment so having the <unk>.

Alastair Roderick Syme: Takeaway is really really important in these periods of time and then having the flexibility with your commercial team, we know where we can get a premium price and.

Alastair Roderick Syme: We're after that every single day.

Operator: One moment for our next question. Our next question comes from the line of Kevin MacCurdy with Pickering Energy Partners.

Speaker Change: One moment for our next question.

Andrew M. OBrien: Yeah, hi, this is Andy. Yeah, I can take that question. It's a pretty simple answer.

Kevin Moreland MacCurdy: Our next question comes from the line of Kevin Mccarty Pickering Energy partners.

Kevin Moreland MacCurdy: Your line is now hey, good morning.

Kevin Moreland MacCurdy: Hey, good morning. Thank you for taking my question I wanted to ask on the first quarter capital and trajectory. If I remember correctly, you had soft guided to over $3 billion of capital for the first quarter, but you came in lower at $2 9 billion can you bridge that gap for US and is this lower capex as a result of just timing or is there anything structural that could carry forward.

Kevin Moreland MacCurdy: Thank you.

Andrew M. OBrien: As you said, we came in at 2.9 for the quarter, which was slightly less than our guidance. That slight underspend was a result of some Willow capital shifting from the first quarter into April. So if you'll excuse the timing, our capital spend came in in accordance with our expectations. Now, as you look ahead to the second quarter, capital is expected to be slightly higher than the first quarter, driven by PALNG and the willow timing.

Andrew M. OBrien: Yes, Hi, this is Andy I can take that question, it's a pretty simple answer as you said, we came in at $2 nine for the quarter, which was slightly less than our guidance.

Andrew M. OBrien: I understand was a result of some without capital shifting from the first quarter into April. So if you excuse me that timing capital spend came in in accordance with our expectations. As you look ahead to the second quarter capital is expected to be slightly higher than the first quarter, driven by <unk> LNG and the window timing.

Andrew M. OBrien: And then as you look forward into the second half, capital is expected to be lower in the second half than in the first half, primarily due to the $400 million of Port Arthur LNG equity capital spend that rolls off as we go into project financing.

Andrew M. OBrien: And then as you look forward into the second half of the.

Andrew M. OBrien: <unk> is expected to be lower and lower than in the second half than the first half primarily due to the $400 million of <unk>.

Andrew M. OBrien: Port Arthur LNG equity capital spend that rolls off as we go into project financing.

Operator: One moment for our next question. Our next question comes from the line of Leo Mariani with Rosk MKM. Your line is now open.

Speaker Change: One moment for our next question.

Operator: Yes.

Operator: Our next question comes from the line of Leo Mariani with Roth Kim Ann Your line is now open.

Leo Paul Mariani: I was hoping you could speak a little bit more to the expected trajectory of your Eagle Ford volumes. I know you had kind of the frack holiday a bit, which kind of impacted volumes in the last couple quarters. I know they've been kind of trickling down here. I guess, is that over? Do you have more of a normal activity cadence? And should we start seeing growth in those volumes as we roll into the second quarter and the second half of the year?

Leo Paul Mariani: I was hoping you could speak a little bit more to the expected trajectory of your Eagle Ford volumes. I know you had kind of the frac holiday a bit which kind of impacted volumes in the last couple of quarters I know they've been kind of trickling down here.

Leo Paul Mariani: Is that over or do you have more of a normal activity cadence and should we start seeing growth in those volumes as you roll into the second quarter in the second half of the year.

Nicholas G. Olds: Yeah, Leo, you know, with this for the group, again, we did take that frack gap, as you just mentioned, in the second half of 2023, that impacted 4Q, as did it impact the first quarter of this year, because the wells coming online after we reinstated that frack crew came online kind of in the second half of this last quarter. So we're not really going to see that until you hit 2Q.

Speaker Change: Yes Leo.

Leo Paul Mariani: With this for the group again, we did take that Frac gap as you just mentioned in the second half of 2023 that impacted <unk> is also it impacted the first quarter of this year because the wells coming online after re reinstated that Frac crew came online kind of the second half of the this last quarter. So we're not really.

Nicholas G. Olds: See that until you hit <unk>.

Nicholas G. Olds: Again, we took that frac gap because of just the strong.

Nicholas G. Olds: Operating efficiencies that we're seeing in the fracs versus the drilling side as we apply the different technologies out there. So that's a good thing.

Nicholas G. Olds: Again, we closed that frack gap because of just the strong operating efficiency that we're seeing in the fracks versus the drilling side as we apply the different technologies out there. So that's a good thing. Looking ahead just to 2Q and beyond, we expect to see higher production from the previous two quarters as we bring those wells online and reinstate that frack gap. So this is all in line with our full year guidance and is consistent with the production growth that we laid out. Again, that's low single digits in that 2 to 4% range.

Nicholas G. Olds: Looking ahead to <unk> and beyond we expect to see higher production from the previous two quarters as we bring those wells online and had reinstated that frac cap. So this is all in line with our full year guidance. It is consistent with the production growth that we laid out again this low single digits in that 2% to 4% range.

Operator: We have no further questions at this time. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: We have no further questions at this time.

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

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