Q1 2024 Occidental Petroleum Corp Earnings Call

Operator: Good afternoon, and welcome to Occidental's first quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to Occidental's first quarter 'twenty 'twenty four earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Jordan Tanner: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Jordan.

Jordan Tanner: <unk> Vice President of Investor Relations. Please go ahead.

Jordan Tanner: Thank you drew good afternoon, everyone and thank you for participating and Occidental's first quarter 2024 earnings conference call.

Jordan Tanner: Thank you, Drew. Good afternoon, everyone.

Jordan Tanner: And thank you for participating in Occidental's first quarter 2024 earnings conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer. Sunil Mathew, Senior Vice President and Chief Financial Officer. Richard Jackson, President of Operations, U.S. Onshore Resources and Carbon Management, and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations.

Jordan Tanner: On the call with us today are Vicki all of them.

Jordan Tanner: President and Chief Executive Officer Suni.

Jordan Tanner: So Neal Matthew Senior Vice President and Chief Financial Officer, Richard Jackson, President operations U S onshore resources in carbon management.

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

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

Jordan Tanner: This afternoon, we will refer to slides available on the investor section of our website. The presentation includes a cautionary statement on slide two regarding four forward-looking statements that will be made on the call this afternoon. We will also reference a few non-GAAP financial measures today. Reconciliations to the nearest corresponding gap measure can be found in the schedules to our earnings release and on our website.

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

Jordan Tanner: You also referenced a few non-GAAP financial measures today.

Jordan Tanner: Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website.

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

Jordan Tanner: Thank you Jordan and good afternoon, everyone.

Vicki A. Hollub: Thank you, Jordan, and good afternoon, everyone. I'm pleased to report on a strong start to 2024 driven by our persistent focus on operational execution. As we will detail in today's call, our oil and gas business delivered robust production results, essentially offsetting an extended third-party outage, while our midstream and OxyChem businesses outperformed our first quarter guidance. Today, I'll start by discussing our first quarter performance, including highlighting our Delaware appraisal success and its contribution to Permian's development runway. Then I'll discuss what's on the horizon for Oxy and how these initiatives are expected to generate significant value for our shareholders.

Vicki A. Hollub: I'm pleased to report on our strong start to 2024, driven by our persistent focus on operational execution.

Vicki A. Hollub: I believe we'll detail on today's call are oil and gas business delivered robust production results essentially offsetting an extended third party outage, our midstream and I've taken businesses outperformed our first quarter guidance.

Vicki A. Hollub: I'll start by discussing our first quarter performance, including King highlighting our Delaware appraisal success and its contribution to Permian development runway.

Vicki A. Hollub: Then I'll discuss what's on the horizon for Oxy and how these initiatives are expected to generate significant value for our shareholders.

Vicki A. Hollub: Operational excellence is fundamental to everything we do at Oxy, and our capabilities were evident during the first quarter as our teams generated over $2.4 billion in operating cash flow before working capital. Though the third-party outage in the eastern Gulf of Mexico made it a challenging start to the year, our teams delivered excellent performance in all areas of our portfolio. We concluded the first quarter by approximating the midpoint of our production guidance, and we restarted production from our Gulf of Mexico platforms affected by the outage in mid-April.

Vicki A. Hollub: Operational excellence is fundamental to everything we do at oxy and our capabilities were evident during the first quarter as our teams generated over $2 $4 billion in operating cash flow before working capital.

Vicki A. Hollub: So the third party outage in the eastern Gulf of Mexico made it a challenging start to the year. Our teams delivered excellent performance in all areas of our portfolio.

Vicki A. Hollub: We concluded the first quarter by approximating the midpoint of our production guidance and we restarted production from our Gulf of Mexico platforms affected by the outage in mid April.

Vicki A. Hollub: Taking a closer look at our production results, the first quarter benefited from strong new well performance in the Permian Basin and the Rockies, overcoming the impact of winter weather early in the year. In the Permian, we exceeded the midpoint of our production guidance due in part to better than expected secondary bench performance in the Delaware Basin. Our Delaware teams are achieving impressive performance by results by applying the same proprietary subsurface workflows that have generated remarkable success in our primary benches and applying that to secondary benches.

Vicki A. Hollub: Taking a closer look at our production results. The first quarter benefited from strong new well performance in the Permian basin and the Rockies.

Vicki A. Hollub: Coming to the impact of winter weather early in the year.

Vicki A. Hollub: In the Permian, we exceeded the midpoint of our production guidance due in part to better than expected secondary bench performance in the Delaware Basin.

Vicki A. Hollub: Our Delaware teams are achieving impressive performance by result performance yourselves by applying the same proprietary subsurface workflows that have generated remarkable success in our primary benches and applying that to secondary benches.

Vicki A. Hollub: Through the utilization of fit-for-purpose, well-designed, and reservoir characterization expertise, performance in our secondary benches is nearly matching Oxy's record-setting 2023 program average. Not only that, first year cumulative production from Oxy's 2023 secondary wells exceeds the Delaware industry average for all horizontal wells for the same period by more than 30 percent. We are driving financial returns for our shareholders by improving our ability to high-grade our near-term inventory and by extending our runway of Tier 1 locations. Meanwhile, the use of our existing infrastructure yields meaningful capital efficiency. We expect these efficiency benefits to become more impactful as secondary benches become a more substantial part of our development program.

Vicki A. Hollub: Through utilization of fit for purpose well design in reservoir characterization expertise performance at our secondary benches is nearly matching our record setting 2023 program average.

Vicki A. Hollub: Only that first year cumulative production from Oxy is 'twenty two 'twenty three secondary well exceeds the Delaware industry average for all horizontal wells for the same period by more than 30%.

Vicki A. Hollub: We are driving financial returns for our shareholders by improving our ability to high grade our near term inventory and by extending our runway of tier one locations.

Vicki A. Hollub: Meanwhile, use of our existing infrastructure.

Vicki A. Hollub: Meaningful capital efficiencies.

Vicki A. Hollub: We expect these efficiency benefits to become more impactful and secondary benches become a more substantial part of our double up the program.

Vicki A. Hollub: Our Rockies assets outperformed the high end of our first quarter production guidance, partly driven by strong new well performance in the DJ base. Better production, Uptime, and higher than expected outside operating volume. And then, internationally, we achieved record gross daily production in Oman North, driven by new well performance and production uptake.

Vicki A. Hollub: Our Rockies assets outperformed the high end of our first quarter production guidance, partly driven by strong new well performance in the D J basin.

Vicki A. Hollub: Better production uptime.

Vicki A. Hollub: Higher than expected outside operated volumes.

Vicki A. Hollub: And then internationally, we achieved record gross daily production in Oman, North driven by new well performance and production uptime.

Vicki A. Hollub: Our teams continue to improve capital efficiency through a combination of innovative well design, exceptional execution, proactive supply chain, and Management Practice. In the DJ and Powder River basins, our teams optimized casing and submitting plans, completion stage design, and profit utilization. These fit-for-purpose well design enhancements resulted in tangible first quarter well cost reductions of between $700,000 and $1 million per well, compared to the first half of last year.

Vicki A. Hollub: Our teams continue to improve capital efficiency through a combination of innovative well designed exceptional execution proactive supply chain.

Vicki A. Hollub: And management practices.

Vicki A. Hollub: In the DJ and powder River basins, our teams optimized casing and cementing plans completion stage design and proppant utilization.

Vicki A. Hollub: Fit for purpose well design enhancements resulted in tangible first quarter, well cost reductions of between $700000 and $1 million per well.

Vicki A. Hollub: To the first half of last year.

Vicki A. Hollub: We're also starting to see cost reduction progress in the Delaware Basin. Our continuous drive for improvement not only leads to innovations that increase operational efficiencies, but in many instances, we're also able to reduce emissions and advance progress toward our net zero goals. I'm proud of our team's involvement in another oil and gas industry first, the deployment of a fully electric well service rig. Oxy and AXIS Energy Services deployed the first-of-its-kind rig into our Permian Basin operation.

Vicki A. Hollub: We're also starting to see cost reduction progress in the Delaware Basin.

Vicki A. Hollub: Our continuous drive for improvement not only leads to innovation and increased operational efficiencies, but in many instances, we're also able to reduce emissions and advanced progress toward our net zero goals.

Vicki A. Hollub: I'm proud of our team's involvement in another oil and gas industry first the deployment of the fully electric well service rig.

Vicki A. Hollub: Oxy and excess energy services deployed the first of its kind rig and do what our Permian basin operations.

Vicki A. Hollub: Expanding electrification is integral to OxyStrategy because it increases operational efficiency, generates cost savings, improves safety, and helps reduce our emissions. Our midstream business significantly outperformed the high end of our guidance for the first quarter. Our performance was partly driven by gas marketing optimization across our portfolio, where our teams captured value in regional pricing disparities. However, warmer-than-expected weather, combined with various third-party midstream infrastructure maintenance, resulted in disjointed prices in some regions.

Vicki A. Hollub: Spending electrification is integral to oxy strategy, because it increases operational efficiency generates cost savings improved safety and helps reduce our emissions.

Vicki A. Hollub: Our midstream business significantly apart.

Vicki A. Hollub: The high end of our guidance for the first quarter.

Vicki A. Hollub: Performance was partly driven by gas marketing optimization across our portfolio, where our teams captured value in regional pricing disparities.

Vicki A. Hollub: However, the unexpected weather combined with various third party midstream infrastructure maintenance resulted in disjointed prices in some regions.

Vicki A. Hollub: Midstream's first quarter performance demonstrates how our teams realized value from these pricing abnormalities by leveraging Oxy's rich market intelligence along with our product storage and transportation portfolio. Looking back over multiple quarters, our marketing teams have frequently demonstrated the ability to outperform, with our transportation optimization capabilities playing a major role. Over the longer term, we anticipate similar marketing opportunities, but we generally exclude those opportunities from our guidance because of the difficulty in predicting events that will occur.

Vicki A. Hollub: Midstream first quarter performance demonstrates how our teams realized value from these pricing abnormalities are leveraging oxy is rich market intelligence, along with our product storage and transportation portfolio.

Vicki A. Hollub: Looking back over multiple quarters, our marketing teams are frequently demonstrated the ability to outperform with our trash truck transportation optimization capabilities, playing a major role.

Vicki A. Hollub: Over the longer term, we anticipate similar marketing opportunities, but we generally execute it's really those opportunities from a guidance because of the difficulty in predicting is that occurred.

Vicki A. Hollub: Not only does our midstream business provide us with flow assurance for our marketed products, but it also offers great diversification during periods of commodity price volatility, as we saw in early 2024. Along with being one of the top performers for the products it manufactures, OxyChem is a consistent cash flow diversifier within our business, due in part to its renowned focus on operational efficiency. During the first quarter, OxyChem benefited from improved demand for its marketed products, including PVC and vinyl chloride, as well as lower ethylene costs.

Vicki A. Hollub: Not only does our midstream business provide us with flow assurance for our marketed products. It also offers great diversification during periods of commodity price volatility as we saw in early 2024.

Vicki A. Hollub: Along with being one of the top performers for the products that manufacturers oxy canvass, the consistent cash flow diversify or within our business due in part to it is for now and focus on operational efficiency.

Vicki A. Hollub: During the first quarter, obviously, Ken benefited from improved demand from our marketed products, including PVC and vital chloride as well as lower ethylene costs.

Vicki A. Hollub: This performance demonstrates how our diversified asset portfolio is well positioned to deliver financial results for our shareholders throughout the commodity cycle. In prior calls, we have reiterated our drive to increase value for our investors on an absolute and per share basis through cash flow and earnings growth. Today, I'd like to provide an update on the specific projects that we mentioned in our last quarterly call. Some aspects of the OxyChem plant enhancement projects are complete, but there's more to be done, including the battleground project where the team held a groundbreaking ceremony on April 4th to kick off the site work. Employees, contractors, community partners, city leaders, and elected officials attended in support of the project.

Vicki A. Hollub: This performance demonstrates how our diversified asset portfolio is well positioned to deliver financial results for our shareholders throughout the commodity cycle.

Vicki A. Hollub: In prior calls we have reiterated our drive to increase value for our investors on an absolute and per share basis.

Vicki A. Hollub: Cash flow and earnings growth today, I'd like to provide an update on the specific projects that we mentioned in our last quarterly call.

Vicki A. Hollub: The completion of the OxyChem projects and reductions in crude oil and transportation rates from the Permian to the Gulf Coast are expected to deliver incremental cash flow of approximately $725 million per year. In our midstream business, we expect that our ownership stake in Western Midstream, or WES, will also enhance our financial results. In February, WES announced an increase of over 50% to their distribution.

Vicki A. Hollub: Some aspects of the Oxycodone planting had enhancement projects are complete, but there's more to be done, including the battleground project, where the team held a ground breaking ceremony on April 4th.

Vicki A. Hollub: It kicked off the site work.

Vicki A. Hollub: Employees contractors community partners City leaders and elected officials attended in support of the project.

Vicki A. Hollub: The completion of the Oxy Chem projects and reductions in crude oil and transportation rates from the Permian to the Gulf Coast are expected to deliver incremental cash flow of approximately $725 million per year.

Vicki A. Hollub: In our midstream business, we expect that ownership our ownership stake in western midstream or west.

Vicki A. Hollub: We'll also enhance our financial results in February with announced an increase of over 50% of their distribution.

Vicki A. Hollub: Based on the current distribution, we anticipate that West will contribute over $240 million of additional cash flow per year to Occidental Petroleum Corp. Additionally, we intend to increase free cash flow by repaying debt as it matures. Repayment of existing debt maturities through 2026 will result in approximately $180 million of annualized incremental cash flow from interest savings that can then be applied to further strengthen our balance sheet. Overall, we expect more than $1 billion of cash flow improvements that are independent of commodity cycles. That figure does not include our oil and gas business, which is also poised for continued financial success.

Vicki A. Hollub: Based on the current distribution, we anticipate the west will contribute over $240 million of additional cash flow per year to oxy.

Vicki A. Hollub: Additionally, we intend to increase free cash flow by repaying debt as it matures.

Vicki A. Hollub: The repayment of existing debt maturities through 2026 will result in approximately $180 million of annualized incremental cash flow from interest savings that can then be applied to further strengthen our balance sheet.

Vicki A. Hollub: Overall, we expect more than $1 billion of cash flow improvements that are independent of commodity cycles.

Vicki A. Hollub: That figure does not include our oil and gas business, which is also poised for continued financial success.

Vicki A. Hollub: As most of you know, at the end of last year, we entered into an agreement to strategically enhance our Midland Basin portfolio through the acquisition of Crown Rock. The free cash flow accretion and portfolio high grading to be enabled by the Crown Rock acquisition are expected to provide the potential for equity appreciation and acceleration of our shareholder return priorities, and our low carbon ventures businesses, we expect to generate cash flow detached from oil and gas price volatility and further strengthen Oxy's cash flow resilience.

Vicki A. Hollub: As most of you know at the end of last year, we entered into an agreement to strategically enhance our Midland basin portfolio with the acquisition of Crown rock.

Vicki A. Hollub: Free cash flow accretion and portfolio high grading to be enabled by the crowded rock acquisition are expected to provide the potential for equity appreciation and acceleration of our share shareholder return priorities.

Vicki A. Hollub: And our low carbon ventures businesses, we expect to generate cash flow detached from oil and gas price volatility and further strengthen hawks these cash flow resiliency.

Vicki A. Hollub: Construction of our first direct air capture plant, STRATOS, is advancing on schedule, and during the first quarter, we were pleased to announce a multitude of carbon dioxide removal credit agreements with customers across a variety of sectors. Throughout Oxy's portfolio, we are focused on expanding resilient cash flow and enhancing shareholder value for decades to come. I will now hand the call over to Sunil, who will cover our financial results and guidance.

Vicki A. Hollub: Construction of our first direct air capture plant stretches is advancing on schedule and during the first quarter. We were pleased to announce the multitude of carbon dioxide removal credit agreements with customers across a variety of sectors.

Sunil: Oxy portfolio, we are focused on expanding resilient cash flow and enhancing shareholder value for decades to come.

Vicki A. Hollub: I will now hand, the call over to Sunil who will cover our financial results and guidance.

Sunil: Thank you Ricky the first quarter of 'twenty 'twenty four we generated an adjusted profit of 63 cents per diluted share and our reported profit of 75 cents per diluted share the.

Sunil Mathew: Thank you, Vicki. In the first quarter of 2024, we generated an adjusted profit of $0.63 per diluted share and a reported profit of $0.75 per diluted share. The difference between adjusted and reported profit was primarily driven by a litigation settlement gain related to the Andy's arbitration and gains on sales included in equity income, partially offset by a derivative loss. We exited the first quarter with nearly $1.3 billion of unrestricted cash. We had a negative working capital change, which is typical for the first quarter and is largely due to semi-annual interest payments on our debt, annual property tax payments, and payments under our compensation plan.

Sunil Mathew: The difference between adjusted and reported profit was primarily driven by a litigation settlement gain related to the <unk> arbitration and gains on sales included in equity income.

Sunil Mathew: Partially offset by generated losses.

Sunil Mathew: We exited the first quarter with nearly $1 $3 billion of unrestricted cash.

Sunil Mathew: We had a negative working capital change, which is typical for the first quarter and is largely due to semi annual interest payments on our debt and will property tax payments and payments under our compensation plans.

Sunil Mathew: During the first quarter, we delivered over $700 million of free cash flow before working capital. Despite third party outpatient packs to portions of our oily high margin production in the Gulf of Mexico.

Sunil Mathew: During the first quarter, we delivered over $700 million of free cash flow before working capital, despite third-party outage impacts to portions of our oily, high-margin production in the Gulf of Mexico. First quarter free cash flow was underpinned by outperformance in our onshore domestic portfolio and our midstream and OPC Chem sector. Looking ahead to the second quarter, total company production is expected to increase to a range of 1.23 to 1.27 million BOE per day, compared to the first quarter annual low of 1.17 million BOE per day. The midpoint of second quarter production guidance will be the highest quarterly production in over three years.

Sunil Mathew: First quarter free cash flow was underpinned by outperformance in our onshore domestic portfolio and our midstream and <unk> segments.

Sunil Mathew: Looking ahead to the second quarter.

Sunil Mathew: Company production is expected to increase to a range of one to three to 1.2 dollars 7 million Boe per day compared to the first quarter annual low of 1.17 million Boe per day.

Sunil Mathew: The midpoint of second quarter production guidance will be the highest quarterly production in over three years.

Sunil Mathew: The production increase is mainly due to U.S. onshore activity levels, the completion of annual plant maintenance at Dolphin and the return of production in mid-April from the Gulf of Mexico. Our second quarter Gulf of Mexico production guidance includes third party outage impacts in April as well as plant maintenance in the central Gulf of Mexico. Though we fully revised our Gulf of Mexico production guidance down as a result of the extended outage, it is fully offset by outperformance in the Rockies, and we are maintaining our total company production guidance for the year. The modified production mix is expected to impact annual total company oil cuts.

Sunil Mathew: The production increase is mainly due to U S onshore activity levels. The completion of annual plant maintenance at Dolphin and the return of production in mid April from the Gulf of Mexico outage.

Sunil Mathew: Second quarter Gulf of Mexico production guidance includes third party outage impacts in April.

Sunil Mathew: Plant maintenance in the central Gulf of Mexico.

Sunil Mathew: Dolby the wife's fully a Gulf of Mexico production guidance down as a result of the extended outage. It was fully offset by outperformance in the Rockies and we are maintaining our total company production guidance for the year.

Sunil Mathew: The modified production mix is expected to impact annual total company oil cut.

Sunil Mathew: We had a strong start to 2024, and our chemicals business and anticipate modest price improvements during the second quarter combined with higher volumes as we exit the usual period of seasonal subdued demand.

Sunil Mathew: We had a strong start to 2024 in our chemicals business and anticipate modest price improvements during the second quarter, combined with higher volumes as we exit the usual period of seasonal subdued demand. Though lower gas prices are unfavorable elsewhere in our portfolio, OxyChem benefits from reduced energy costs, and our midstream teams are well positioned to capitalize on the Gas Marketing Opportunities that Vicki highlighted. Solid outperformance has enabled us to raise Midstream's Fool Year Guidance Range by $110 million.

Sunil Mathew: Those lower gas prices are unfavorable <unk> spread in our portfolio.

Sunil Mathew: <unk> benefits from reduced energy costs and midstream teams are well positioned.

Sunil Mathew: Capitalize on the gas markets marketing opportunities that Ricky highlighted.

Sunil Mathew: Solid outperformance enabled us to raise midstream full year guidance range by $110 million.

Sunil Mathew: <unk> first quarter performance demonstrates the benefits of our differentiated portfolio.

Sunil Mathew: Oxy's first quarter performance demonstrates the benefits of a differentiated portfolio. Our diversified assets and distinguished operational capabilities offer our shareholders cash flow resiliency throughout the commodity cycle. In terms of capital spending, our first quarter results were in alignment with the 2024 business plan and the capital program that is weighted towards the first half of the year. On the last earnings call, we stated that approximately 40% of Rocky's capital for the year is associated with drilled and uncompleted wells or dust carried in from 2020.

Sunil Mathew: Diversified assets and distinguished operational capabilities.

Sunil Mathew: If our shadow those cash flow resiliency throughout the commodity cycle.

Sunil Mathew: In terms of capital spending our first quarter results were in alignment with the 'twenty 'twenty four business flow and the capital program that is weighted towards the first half of the year.

Sunil Mathew: On the last earnings call, we stated that approximately 40% of Rockies capital for the year is associated with drilled and uncompleted wells, how does got it and from 'twenty to 'twenty three.

Sunil Mathew: We intend to continue completing these wells and reduce duck inventory through the first half of the year. Similarly, Permian capital is weighted towards the first half of the year due to working interest variability and the desire to high-grade rigs and increase utilization rates into the second half of the year. This U.S. onshore capital profile, combined with the battleground project ramp-up, is expected to result in the second quarter being the highest quarterly capital for the year.

Sunil Mathew: We intend to continue completing these wells and reduce DUC inventory through the first stuff after you Sim.

Sunil Mathew: Similarly.

Sunil Mathew: <unk> capital is weighted towards the first half of the year due to working interest rate ability and then decided to high grade rigs and increase utilization rates into the second half of the year.

Sunil Mathew: This U S onshore capital profile combined with battleground project ramp up <unk>.

Sunil Mathew: <unk> to result in second quarter being the highest quarterly capital for the year.

Speaker Change: I would like to close today by touching on the Crown block acquisition.

Sunil Mathew: I would like to close today by touching on the Crown Rock acquisition. Our teams are working constructively with the FTC, and we anticipate that the transaction will close in the third quarter of this year. As a reminder, Oxy will benefit from CrownRocks activity between the transaction's January 1, 2024 effective date and close, subject to customary purchase price adjustment. Concurrent with the CrownRock acquisition, we announced a $4.5 to $6 billion divestiture program to be completed within 18 months of the transaction's close.

Sunil Mathew: Our teams are working constructively with the FTC and we anticipate that the transaction will close in the third quarter of this year.

Sunil Mathew: As a reminder, oxy will benefit from <unk> activity between the Transaction's January one 'twenty 'twenty four effective date and close subject to customary purchase price adjustments.

Sunil Mathew: Concurrent with the Crown block acquisition, we announced a four 5% to $6 billion divestiture program.

Sunil Mathew: We completed within 18 months of the transactions close.

Sunil Mathew: The high-quality assets within our portfolio have garnered much interest, and our teams have commenced the early stages of the divestiture process. Sales proceeds will be applied to deleveraging until we reduce our principal debt to $15 billion or below. The near-term cash flow enhancements that Vicki highlighted are expected to deliver significant free cash flow growth per diluted share for our common shareholders and to enable us to accelerate the achievement of our debt target.

Sunil Mathew: The high quality assets within our portfolio have garnered much interest and the teams have commenced the early stages of the divestiture process.

Sunil Mathew: Sales proceeds will be applied to deleveraging until we reduce our principal debt to $15 billion or below.

Sunil Mathew: So near term cash flow enhancements that we highlighted are expected to deliver significant free cash flow growth per diluted share for our common shareholders and to enable us to accelerate the achievement of that target.

Sunil Mathew: After a debt target is met, we intend to resume our share repurchase program and provide even greater value for common shares, as we have discussed on today's call. We are well positioned to build on a strong first quarter of 2024 and deliver a differentiated long-term value proposition to our shareholders. I will now turn the call back over to Vicki.

Sunil Mathew: After our debt target is met we intend to resume our share repurchase program and provide even greater value for common share.

Sunil Mathew: As we have discussed on today's call.

Vicki: We are well positioned to build on our strong first quarter of 2024 and deliver a differentiated long term value proposition to our shareholders I will now turn the call back over to Rick.

Vicki: Thank you Sunil.

Vicki A. Hollub: Before we move to Q&A, I want to tell you about a milestone our team celebrated last quarter. Oxy began trading on the New York Stock Exchange on March 3, 1964. On that day, our operations consisted of 252 oil and gas wells in six states. Today, we're an international energy, chemicals, and carbon management company with the best portfolio in our history. But I believe that Oxy's employees are a true differentiator. Their expertise and drive to outperform continue to stretch the limits of what is achievable in our industry.

Vicki: Before we move to Q&A I'm going to tell you about a milestone our teams celebrated last quarter.

Vicki A. Hollub: He began trading on the New York stock Exchange on March 3rd 1964.

Vicki A. Hollub: On that day, our operations consisted of 252 oil and gas wells in six states.

Vicki A. Hollub: Today, we are an international energy chemicals, and carbon management company when the best portfolio in our history.

Vicki A. Hollub: But I believe that oxy employees are a true differentiator.

Vicki A. Hollub: Their expertise and drive to outperform continue to stretch the limits of what is achievable in our industry. Our employees are hard at work executing our strategy through superior operations and best in class assets there.

Vicki A. Hollub: Our employees are hard at work executing our strategy through superior operations and best-in-class assets. Their efforts result in long-term shareholder value, and I look forward to showcasing more of their achievements on future calls. That will now open the call to questions, and as a reminder, as Jordan mentioned, Richard Jackson and Ken Dillon are with us today for the Q&A session.

Vicki A. Hollub: Their efforts result in long term shareholder value and I look forward to showcasing more of their achievements on future calls.

Speaker Change: With that well now open the call for questions and as a reminder, as Jordan mentioned, Richard Jackson, and Ken Dillon are with US today for the Q&A session.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit your questions to one primary question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Roger Read with Wells Fargo. Please go ahead.

Roger David Read: If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two please limit questions to one primary question and one follow up at this time, we will pause momentarily to assemble our roster.

Roger David Read: The first question comes from Roger read with Wells Fargo. Please go ahead.

Roger David Read: Yes, Thank you and good afternoon.

Roger David Read: Yeah, thank you, and good afternoon. I'd like if we could maybe just dig in a little bit more on the Permian Outlook here, probably including the Rockies. Maybe we should just call it the lower 48. If we look at the CapEx, and then we look at the forecast for the full year, I'm just a little curious why you didn't get a little more optimistic about total volumes. And I recognize that within the year over year changes, we're looking at a little more EOR, maybe a little less shale wells. And I was wondering if that's part of the difference we're seeing, or maybe why we don't see production increase as well.

Roger David Read: But if we could maybe just dig in a little bit more on the.

Roger David Read: Tell me an outlook here, probably including the Rockies, maybe let's just call it the lower 48.

Roger David Read: Look at the Capex and then we look at the forecast for the full year I'm just a little curious why you didn't get a little more optimistic about total volumes and are recognized that within the year over year changes, we're looking at a little more.

Roger David Read: Or maybe a little less shale wells and I was wondering if that's part of the.

Roger David Read: The difference we're seeing or.

Roger David Read: Maybe why we don't see production raised as well.

Roger David Read: Richard.

Vicki A. Hollub: Yeah, thanks, Roger. I appreciate the question.

Speaker Change: Yes, Thanks Raj I appreciate the question.

Speaker Change: Clearly very pleased with our first quarter.

Richard A. Jackson: I mean, clearly, very pleased with our first quarter results coming out of both the Rockies and the Permian. Both had a beat in the quarter, with Permian looking good on several fronts. I'll focus on that first.

Roger: <unk> coming out of the both the Rockies and the Permian both had a beat on the on the quarter with Permian.

Richard A. Jackson: I guess a couple of things just kind of anchor the year on. As we think about going from the first quarter to the second quarter, which, you know, Sunil mentioned, is quite a big step up in terms of production. But even looking at first half versus second half in the Permian, the implied increase is about 18,000 barrels of oil a day, first half to second half. And we're doing that while reducing rigs for in the Permian. So we're getting more with less in terms of how we think about activity.

Richard A. Jackson: Looking looking good on several fronts I'll focus there first I guess a.

Richard A. Jackson: A couple of things just kind of anchor of the euro on.

Richard A. Jackson: As we think about going from first quarter to the second quarter, which sooner.

Richard A. Jackson: Sunil mentioned quota.

Richard A. Jackson: Big step up in terms of production, but even looking at first half versus second half in the Permian.

Richard A. Jackson: The implied increases about eight 818000 barrels a day first half to second half and we're doing that while reducing rigs four in the Permian. So we're getting more with less.

Richard A. Jackson: In terms of how we think about activity some of that place. The roomba capitalize you mentioned as were a bit frontloaded heavy.

Richard A. Jackson: Some of that plays through on the capital, as you mentioned, as we're a bit front load heavy, both on rigs, but also facilities, as we're front loading the facilities in the first half of the year to take on that production increase starting next quarter. The good news is that things are performing well. And so when you look at the year and think about the trajectory we're going on with things that are meaningful to our business, we highlight the new well production, not only the primary zones, which we've highlighted over the last couple of years, but now, especially this quarter, we really wanted to highlight the success of the secondary benches that play a meaningful role in our portfolio for the year.

Richard A. Jackson: Both on rigs, but also facilities as we're frontloading the facilities in the first half of the year to take on that production increase.

Richard A. Jackson: Darting, starting next quarter the.

Richard A. Jackson: The good news is things are performing well and so when you look at the year. When you think about the trajectory we're going on with things that are meaningful to our business.

Richard A. Jackson: We highlight the new well production in not only the primary zones, which we've highlighted over the last couple of years, but now, especially you know this quarter, we really wanted to highlight the success of the secondary benches in the play a meaningful role.

Richard A. Jackson: In our portfolio for the year.

Richard A. Jackson: The other thing that we don't talk enough about is base decline. And so if you look at our Permian resources this year, we're improving; our base declined from last year by about 4 to 5 percent. That's around 15,000 barrels a day.

Richard A. Jackson: The other thing that we don't talk enough about is base decline and so if you look at our Permian resources. This year, we're improving.

Richard A. Jackson: Our base decline from last year about 4% to 5% that's around 15000 barrels a day and so that's really come through not only better wells, but a lot better operations, our uptime is improving 1% to 2% and in places like the Delaware and so I think you know as we thought.

Richard A. Jackson: And so that's really coming through, you know, not only better wells but a lot better operations. Our uptime is improving, you know, 1 to 2 percent in places like Delaware. And so, you know, as we thought about full-year guidance, we certainly appreciated the results in the first quarter, but we wanted to see, you know, how this plays out over this steep production increase over the next couple of quarters, but look forward to updating you on our milestones on progress on that.

Richard A. Jackson: Full year guidance, we certainly appreciated the results in the first quarter, but we wanted to see how this plays out over the steep production increase over the next couple of quarters, but look forward to updating you know.

Richard A. Jackson: Our our milestones on progress.

Richard A. Jackson: The last thing I would just say is, you know, behind that, as you think about capital, we are seeing capital efficiency. So we highlighted some of the well cost improvements, both in the Rockies and the Permian, and we are very pleased with our team's progress there. You know, that's being done through strong approaches with our service companies but also through well-designed changes, which we have noted. And so, as we put that together, you know, we look at this total year production versus capital.

Speaker Change: To that the last thing I would just say as you know.

Richard A. Jackson: Behind that as you think about capital we are seeing capital efficiency. So we highlighted some of the well cost improvements both in the Rockies and the Permian and very pleased with our team's progress there that's being done through a strong.

Richard A. Jackson:

Richard A. Jackson: Approaches with our service companies, but also through well design changes, which we we noted and so as we put that together we look at this total year production versus capital our capital intensity. This year is improved over last year, which is the goal. So what we're spending dollars millions of dollars per production added has improved year.

Richard A. Jackson: Our capital intensity this year has improved over last year, which is the goal. You know, so what we're spending dollars on, millions of dollars per production added, have improved year on year and, you know, we'll stay focused on that. So look forward to more updates as we go this year to kind of help put that piece together for our total year outlook.

Richard A. Jackson: One year and we will stay focused on that so look forward to more updates as we go this year to kind of help put that piece together for our total year outlook.

Speaker Change: Okay I appreciate that I guess the other question I had just you talked about it on the entry of their Vicki but the.

Roger David Read: Okay, I appreciate that. I guess the other question I had was just what you talked about in the intro there, Vicki, but the performance of the midstream. How much of that You know, is something that we ought to think about as we're going forward over the next, you know, year and a half, two years. We'll have another period where we're probably constrained on being able to move oil and gas out of the base and just maybe a way to think about, you know, other opportunities coming forward for y'all to capture a little bit better.

Roger David Read: Performance of the midstream.

Roger David Read: How much of that.

Roger David Read: It is something that we ought to think about as we're going to go forward over the next.

Roger David Read: Year to have two years, we'll have another period, where we're probably constrained on being able to move oil and gas out of the base and just maybe a way to think about other opportunities coming forward for you all to capture a little bit better.

Vicki: So for US it's not really we don't have an issue moving our oil or gas out of the Permian Basin and in fact, you know some of the things the positive impacts for our midstream performance or due to the fact that my Gaspar perspective, we have capacity elsewhere. So that we can move molecules around.

Vicki A. Hollub: Well, for us, it's not really We don't have an issue moving oil or gas out of the Permian Basin. And in fact, some of the positive impacts on our midstream performance are due to the fact that, from a gas perspective, we have capacity elsewhere so that we can move molecules around and trade molecules. And we have ways to get gas to California and to other markets. So from a gas marketing perspective, we're in really good shape, and we can take away capacity in good shape there. Oil, we're also in good shape.

Vicki A. Hollub: Two and trade molecules and we have ways to get gas to to California and to other markets. So from a gas marketing perspective, we're in really good shape and takeaway capacity in good shape. There well. We're also in good shape, we have overcapacity now to get.

Vicki A. Hollub: Barrels out of the Permian So when we talk about fluctuations in the midstream business with respect to crude marketing normally that some of that's associated with picking up the third party barrels that are associated with the capacity that we need to fill with incremental barrels above and beyond our current.

Vicki A. Hollub: We have over capacity now to get barrels out of the Permian. So when we talk about fluctuations in the midstream business with respect to crude marketing, normally, some of that's associated with picking up the third-party barrels that are associated with the capacity that we need to fill with incremental barrels above and beyond. Our current production. So that's the volatility, mostly in the midstream business. That, along with gas marketing, does cause volatility, but normally that volatility is to the upside for us because of the fact that, as I just mentioned, we have the capability to move things around and to take advantage of situations where others are disadvantaged. So while with WAHA in the situation that it's in now, our upstream realizations are lower, but our midstream business is able to capture opportunities to offset that.

Vicki A. Hollub: <unk>.

Vicki A. Hollub: So that's the volatility are mostly in the and the midstream business that along with the gas marketing desk, all cause volatility that normally.

Vicki A. Hollub: Volatility is to the upside for us because of the fact that as I. Just mentioned, we have the capability to move things around and to take advantage of the situations that where others are disadvantaged so while with Baja in this situation that its in now our upstream realizations.

Vicki A. Hollub: Our lower but our midstream business is able to capture our opportunity to offset that.

Vicki A. Hollub: The next question comes from Paul Cheng with Scotiabank. Please go ahead.

Paul Cheng: The next question comes from Paul Cheng with Scotiabank. Please go ahead. Thank you. Good morning.

Paul Cheng: Thank you and good morning.

Paul Cheng: Hum make it or maybe this rich in their world you're talking about this secondary branches I think is the bone spring is it widespread for all your entire operation or specifically in certain cockpits that any cough car Ts that are that you can see in terms of.

Paul Cheng: The pattern that would need to do this we need strong performing wells.

Paul Cheng: Those branches Oh, that's not those area. So what we're trying to understand that I mean, how important your tastes to your <unk> operation or inventory.

Paul Cheng: So we're trying to understand that, I mean, how important it is to your overall operation or your overall inventory level. And secondly, that your DEJ has been performing really well, has been, I think, beating your own guidance for a number of quarters, actually, I mean, at least for, say, seven or eight quarters already. So from that standpoint, is your current estimate maybe a little bit conservative for the remaining of the year in the DEJ? And also, I mean, what are the primary reasons for their performance there?

Paul Cheng: Inventory at landfall and secondly that Youre D. G has been performing really well has been I think beating your.

Paul Cheng: All guidance for a number of quarters factory I mean at these ball.

Paul Cheng: Seven or eight quarters already.

Paul Cheng: So from that standpoint is your carbon estimate may be a little bit conservative.

Paul Cheng: That for the remaining of the year in the D. J and also with that I mean, what.

Paul Cheng: Primary reasons for the outperformance there. Thank you.

Speaker Change: Yeah, Thanks, Paul I'll start in the Permian.

Paul Cheng: To the Rockies I think you know what.

Paul Cheng: What the way, we described sort of our approach to primary benches the minutes turn into our secondary benches is really unique by area.

Paul Cheng: So you know we spend a lot of time and we've talked about in the past, we're really focused on the subsurface aspects both from a geologic perspective and then as you think about it over time from a reservoir perspective.

Paul Cheng: And so I think you know as we've continued to.

Paul Cheng: 98 and.

Paul Cheng: The more broad in terms of the zones that we put together are.

Paul Cheng: And in areas, we focus on how do we how do we put these wells.

Paul Cheng: In space together in the subsurface to optimize that recovery and of course your stimulation design and these other factors play play an important role. So I don't think it's unique.

Paul Cheng: Unique by area I think it's the same approach that we've delivered in terms of the Midland Basin with the success we've had in the Barnett.

Paul Cheng: What we're doing in the Delaware basin, whether it's upper bone springs or deeper wolfcamp.

Paul Cheng: You know as we think about the Rockies are saying same sort of approach there in terms of the Rockies. They they've had great performance over the last really year, plus and in a lot of that started with the subsurface approach.

Paul Cheng: Approach, where we really.

Paul Cheng: Spit time.

Paul Cheng: Thinking about how do we approach lateral length spacing stimulation intensity and I think a lot of the early gains we were seeing there I think what we're seeing today.

Paul Cheng: A lot more operational we talk we talk about how do we draw. These wells down so early time flow back and then longer term and what we're seeing is really improvements in both so in the early time performance, it's really having the facilities and the emissions handling to do that no one yet.

Paul Cheng: Correct, right, but to handle the emissions and then long term, we've talked about the base recovery with things like our plunger lift assist.

Paul Cheng: Kind of AI.

Paul Cheng: So these type of things are really what delivered the over performance I wish I could say it was conservative I just think they've improved so much when you are a proven.

Paul Cheng: Better than 20% year on year, that's sometimes tough to outlook, but I think.

Paul Cheng: They've gotten more mature in terms of some of these.

Paul Cheng: Advancements over the last year and I think we've done a lot better job sort of narrowing the uncertainty of those outlooks, but but all the teams are still on the hook to outperform this year, we're optimistic like I answered earlier in terms of what we're doing in the Permian as well. So appreciate the question hopefully that helps.

Paul Cheng: The next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Richard A. Jackson: Thank you.

Richard A. Jackson: Yeah, thanks, Paul. I'll start in the Permian and then get to the Rockies. I think, you know, the way we describe sort of our approach to primary benches and then it's, you know, turned into our secondary benches is really unique by area. And so, you know, we spend a lot of time, and we've talked about it in the past, really focused on the subsurface aspects, both from a geologic perspective. And then, as you think about it over time from a reservoir perspective,

Speaker Change: Yeah Vicki team. Thanks, Thanks for the call. So far the my first question is just around noncore asset sales recognizing we still have some time before the deal closes but.

Richard A. Jackson: And so I think, you know, as we've continued to delineate and, you know, be more broad in terms of the zones that we put together in areas, we focus on, you know, how do we put these wells in space together in the subsurface to optimize that recovery? And of course, you know, your stimulation design and these other factors play an important role. So I don't think it's unique by area.

Richard A. Jackson: I think it's the same approach that we've delivered in terms of the Midland Basin with the success we've had in the Barnett, what we're doing in the Delaware Basin, whether it's Upper Bone Springs or deeper Wolf Camp. And I think, you know, as we think about the Rockies, the same sort of approach there in terms of the Rockies, they've had great performance over the last really year plus. And, you know, a lot of that started with this subsurface approach where we really, you know, spent time thinking about how we approach lateral length, spacing, stimulation, and intensity. And I think a lot of the early gains we were seeing there; I think what we're seeing today is a lot more operational. We talk about how do we draw these wells down?

Richard A. Jackson: So early time flow back, and then longer term. And what we're seeing is really improvements in both. So, in early time performance, it's really having the facilities and the emissions handling to do that. Not only at a correct rate, but to handle the emissions. And then, long term, we've talked about base recovery with things like our plunger lift assist, you know, kind of AI. And so these types of things are really what delivered the over performance. I wish I could say it was conservative.

Richard A. Jackson: I just think they've improved so much. You know, when you're improving better than 20% year on year, that's sometimes tough to look ahead to. But I think, you know, they've gotten more mature in terms of some of these advancements over the last year. And I think we've done a lot better job, you know, sort of narrowing the uncertainty of those outlooks. But, But all the teams are still on the hook to outperform this year. We're optimistic. Like, I answered earlier in terms of what we're doing in the Permian as well. So I appreciate the question. Hopefully, that helps.

Neil Singhvi Mehta: The next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Singhvi Mehta: Yeah, I would imagine you continue to have conversations around the divestments and so just curious what your perspective is.

Neil Singhvi Mehta: Yeah, Vicki, and team, thanks for the call so far. My first question is just around non-core asset sales, recognizing we still have some time before the deal closes, but I would imagine you continue to have conversations around the divestments, and so just curious what your perspective is on the market right now and your confidence in the achievability of

Neil Singhvi Mehta: On the market right now and your confidence in the Achievability of up to the $6 billion of noncore asset sales.

Neil Singhvi Mehta: We have anchor to.

Neil Singhvi Mehta: Yeah.

Vicki A. Hollub: Yeah, there's a lot of incoming interest. Once we announced that we were going to divest between four and a half billion and six billion, Sunil started getting a lot of phone calls and letters.

Neil Singhvi Mehta: There's a lot of incoming interest.

Vicki A. Hollub: Since we announced that we were going to divest between four and a half a billion and $6 billion. Sunil started getting a lot of phone calls and letters and so the interest is there and it's very high interest.

Vicki A. Hollub: And so the interest is there, and it's very high interest. And what we're hoping and expecting is that that high level of interest translates into appropriate levels of offers for the things that we might consider selling. But it all comes down to valuation, and that's going to make the difference for us because we do have options, and, as you know, lots of acreage, so we're going to make the best value decision that we can. But we don't see that there would be any impediments, barring something that we haven't foreseen that would cause us to have issues with our divestiture.

Vicki A. Hollub: And what we're hoping and expecting is that that high level of interest translates into appropriate levels of the offers for further things that that we might consider selling but it all comes down to valuation and and that's gonna make the difference for us because we do have options and as you know a lots of lots of.

Vicki A. Hollub: Acreage. So we are we're going to make the best value decision that we can but we don't see that there would be any impediments barring something that that we haven't seen that would cause us to have issues with without divestitures.

Neil Singhvi Mehta: Thanks, Vicki, and the follow-up is just your presentation.

Speaker Change: Thanks for taking the follow up is just your.

Speaker Change: I will start with smeal.

Vicki A. Hollub: Yeah, what we were going to do is, just for those that haven't heard, Sunil is going to go through the kind of what we think about with respect to divestitures, just to give those who might be listening an idea of what we're looking at. Hi, Neil.

Neil Singhvi Mehta: Yeah, but what we were going to do is just for those that haven't heard I'll. It's sunil.

Vicki A. Hollub: And I go through the kind of what we think about with respect to divestitures. Just said just to give those who might be listening an idea of what we're looking at tightening.

Sunil Mathew: Yeah, So as we've said previously.

Sunil Mathew: Yeah, so as we have said previously, you know, we are evaluating our portfolio, the hydrated portfolio, and identifying what are the assets that do not fit in our development plan, our near-term development plan, but that could be attractive to other companies.

Neil: <unk> a portfolio of the highest rated portfolio and identifying what are the assets that does not fit in our development plan no near term to further develop a plan and but that could be attractive to other companies. So what is the strategic fit of that asset and this high graded portfolio and like Vicki mentioned, what is the value that.

Sunil Mathew: So, what is the strategic fit of that asset in this highly rated portfolio? And, like Vicki mentioned, what is the value that we can get? And can we potentially accelerate the value by monetizing this asset? So, like Vicki said, we're getting a lot of inbounds even before the announcement and a lot more after the announcement, but this is the criteria that we're using to evaluate: is this an asset that we want to potentially monitor?

Sunil Mathew: We can get and can be potentially accurately the value by monetizing this asset.

Sunil Mathew: So like Vicki said, we're getting a lot of inbounds, even before the announcement and a lot more after the announcement, but this is a criteria that would be using evaluate is this an asset that we want to potentially monetize.

Sunil Mathew: And going back to your question about $4.5 to $6 billion, yes, we are fully committed to achieving the target within 18 months of closing. And between the proceeds from asset sales and organic cash flow, we want to get to the $15 billion of principal debt that we have out.

Sunil Mathew: Going back to your question about $4 $5 6 billion, yes, we are fully committed to achieving the target within 18 months of closing and between the proceeds from asset sales and organic cash flow, we want to get to the $15 billion of principal debt that we have outlined.

Speaker Change: That's great perspective, thank you Neil.

Sunil Mathew: That's a great perspective. Thank you, Sunil. And then the follow-up is just on Battleground.

Speaker Change: The follow up is just on battleground just love your perspective on both the chlorine and caustic soda markets and how.

Speaker Change: How do you think about the outlook there and once the expansion comes online do you think that changes the supply demand dynamics for for any of these products.

Sunil Mathew: Yeah.

Neil Singhvi Mehta: I just love your perspective on both the chlorine and caustic soda markets. And how do you think about the outlook there? And once the expansion comes online, do you think that changes the supply-demand dynamics for any of these products?

Sunil Mathew: Just to go back and look at what ER Oxycodone has been able to do the last few years.

Sunil Mathew: When we think about pricing of the PVC and caustic soda. It's yeah. We've just come out of a an incredible super cycle. There are in 2022 week, we achieved our highest annual earnings ever our second best earnings in 2021, and our third best in 2023, right now that we're into 'twenty two.

Vicki A. Hollub: You know, just to go back and look at what OxyChem has been able to do the last few years, when we think about the pricing of PVC and caustic soda, it's, you know, we've just come out of an incredible super cycle where, in 2022, we achieved our highest annual earnings ever, our second best earnings in 2021, and our third best earnings in 2023. Now that we're into 2024, prices don't seem to be quite at the bottom. And as we were going through the first quarter, we started to see some strengthening in both caustic soda and PVC, a little bit.

Vicki A. Hollub: 24 prices.

Vicki A. Hollub: It seemed to be quite at the bottom and as we were going through the first quarter, we started to see some strengthening and.

Vicki A. Hollub: Caustic soda and PVC and a little bit.

Vicki A. Hollub: But the reality is that inflation in the United States, along with very weak demand out of China, because they're basically overbuilt right now in both commercial and residential housing and buildings. So we don't see Chinese demand getting better anytime soon. But we do believe that beyond this year, getting past our inflationary environment, once there's some certainty around some reduction in inflation, we think the housing market is already primed for growth again.

Vicki A. Hollub: But the reality is that.

Vicki A. Hollub: Inflation in the United States, along with very a weak demand out of China, because they're basically overbuilt right now in both commercial.

Vicki A. Hollub: And and residential housing in buildings.

Vicki A. Hollub: We don't see China demand getting better anytime soon.

Vicki A. Hollub: But we do believe that beyond this year getting past our inflationary environment that that was there's some certainty around some.

Vicki A. Hollub: <unk> and inflation.

Vicki A. Hollub: I think a a the housing market is already.

Vicki A. Hollub: I'm.

Vicki A. Hollub: Primed for for growth again, and so if I'm, if we can get to an inflation level that is conducive for that we'll certainly see start seeing recovery in prices here in the United States.

Vicki A. Hollub: And so if we could get to an inflation level that is conducive to that, we'll certainly start seeing recovery in prices here in the United States. The international market, and we do export, so the international market impacts us. And so we'll continue to see some pricing challenges in that market. But ultimately, getting beyond this year and the next 18 months, I do believe that, driven by India and other places, we'll see growth in demand again, and that we'll start seeing prices go back up. So we're feeling like we're probably at a bottom right now.

Vicki A. Hollub: And then in the international.

Vicki A. Hollub: Market and we do export a.

Vicki A. Hollub: So the international market impacts us and so we can we will continue to see some pricing challenges in that market, but ultimately getting beyond this year in the next 18 months.

Vicki A. Hollub: I do believe that and driven by India, and other places that well see growth and demand again and that we'll start seeing prices going back up. So we were feeling like were probably at a bottom right now.

Vicki A. Hollub: The next question comes from John Royall with Jpmorgan. Please go ahead.

John Macalister Royall: The next question comes from John Royall of J.P. Morgan. Please go ahead.

John Macalister Royall: Good afternoon. Thanks for taking my question. So just thinking about the $400 million for midstream contract rolloffs, how much of the better terms baked into those numbers are you modeling that's locked in today versus what you're just kind of expecting? And to the extent it isn't locked in, what's your level of confidence that the terms won't move the other way as we get closer to the

John Macalister Royall: Hi, good afternoon, Thanks for taking my question.

John Macalister Royall: So just thinking about the 400 million from midstream contract roll off how much of the better terms baked into those numbers.

John Macalister Royall: Are you modeling that.

John Macalister Royall: Hum.

John Macalister Royall: Versus what youre kind of expecting.

John Macalister Royall: Yeah.

John Macalister Royall: What's your level of confidence in terms of what was the other way.

John Macalister Royall: Closer to the Rollouts.

Operator: I'm sorry, could you repeat that question a little bit? We had some disturbance. Mr. Royall, could you pick up, if you're on a speakerphone, pick up a handset by any chance?

Speaker Change: I'm, sorry could you repeat that question a little bit we had.

Royall: Some disturbance Mr. Royal could you pick up if you're on a speakerphone pick up a handset by any chance.

John Macalister Royall: Is this better?

Speaker Change: Is this better can you hear me now I think that is.

Operator: I think that is better. Go ahead, sir. Please repeat your question. Okay. Apologies for that, Vicki.

Operator: Sir please repeat okay apologies for that Vicki. So I was just thinking about the 400 million from midstream contract roll off how much of the better terms baked into those numbers.

John Macalister Royall: So, just thinking about the $400 million from midstream contract roll-offs, how much of the better terms baked into those numbers is locked in today versus kind of what you're expecting? And what's your level of confidence that, to the extent it's not locked in, that it might not go the other way before you have to renegotiate?

John Macalister Royall: Walked in today versus kind of what you're expecting in <unk>.

John Macalister Royall: What's your level of confidence that to the extent, it's not walked in that it might not go the other way before you have to renegotiate.

Vicki A. Hollub: I have high confidence that we'll achieve the $400 million, and some of that we're already seeing today, and I do believe that we wouldn't trust me, we wouldn't say it if we weren't pretty confident that we'd get it.

John Macalister Royall: And I have high confidence that we'll achieve the $400 million and some of that we're already seeing today and.

Vicki A. Hollub: I do believe that we we wouldn't.

Vicki A. Hollub: Trust me, we wouldn't say it if we weren't pretty confident they will we will get it.

Sunil Mathew: And John, it's this conference that actually helped us increase our cash flow, incremental cash flow from $350 million to $400 million.

Speaker Change: And John it's this confidence that actually helped us increase our.

Sunil Mathew: Cash flow incremental cash flow from 350 to 400 million yeah.

John Macalister Royall: Fair enough. And then, apologies if I miss anything on this, but I was hoping you could get into the 2Q OPEX guide a little bit, which is somewhat flattish with 1Q despite higher production with the GOM back up. So it looks like a numerator issue and not a denominator issue. Just maybe some color there on the OPEX guide.

Speaker Change: Okay Fair enough and then apologies if I Miss anything on this but I was hoping you could get into the <unk> Opex guide a little bit which is somewhat.

John Macalister Royall: Somewhat flattish with <unk>, despite higher production with the gone back up so.

John Macalister Royall: It looks like a numerator issue and not a denominator issue just maybe any color there on the on the Opex Guide.

John Macalister Royall: I think the Opex guide, but was driven mostly by the impact of the Gulf of Mexico production and the production coming back on it yet is it.

Vicki A. Hollub: I think the optics guide was driven mostly by the impact of the Gulf of Mexico production and the production coming back on it. Yeah, it's It I don't see any differential there, do you?

Speaker Change: I don't see any differential there.

Sunil Mathew: No, I think that's right. We're seeing improvement with Gulf of Mexico production coming back. But again, like I mentioned in my prepared remarks, the second quarter does include some impact from the pipeline outage, and we also have a planned shutdown in the central Gulf of Mexico. So by the time you get to the third and fourth quarters, you should see an improvement in operating costs.

Vicki A. Hollub: I think that's right that's a if youre seeing improvement with Gulf of Mexico production coming back, but again like I mentioned in my prepared remarks.

Sunil Mathew: Our second quarter does include some impact from the pipeline outage and we also have a plant shutdown in the central Gulf of Mexico. So by the time you get to the third and fourth quarter, you should see an improvement in the operating cost.

Sunil Mathew: Yeah, John, just to add to that trajectory, Q1 actuals were at $10.31 for U.S. LOE, and we're forecasting $10.10 for the second quarter.

Speaker Change: Yeah, John just to add to that trajectory Q1 actuals were at 10 31 for U S. L O V and we're out looking.

Speaker Change: $10.10 in the second quarter.

Sunil Mathew: The next question comes from Neal Dingmann with Truest. Please go ahead.

Neal David Dingmann: The next question comes from Neal Dingmann with Truist. Please go ahead. Good afternoon.

Neal David Dingmann: Good afternoon. Thanks for the time. Vicki, my question's on your Permian D&C plans, particularly around slide 24. I like what you're showing there. You all suggest running about 21 rigs this year on average. This is kind of something you talked about after running, I think it shows, what, was it 24 in the first quarter?

Neal David Dingmann: Hi, good afternoon. Thanks for the time, making my question is on your Permian D&C plans, particularly around slide 24, I like what you're showing there.

Neal David Dingmann: You all suggest I guess running about 21 rigs. This year on average this is kind of something you talked about after running I think it shows what it was at 24 in the first quarter and I'm, just wondering I'm trying to get a sense of the cadence would it just be sort of typical ramp down.

Neal David Dingmann: And I'm just wondering, trying to get a sense of the cadence, would it just be a sort of typical ramp down? And I'm also wondering if your operational efficiencies continue to be as good as they've been, would you let some rigs go and continue kind of with that production plan, or would you maybe just ultimately end up producing more?

Neal David Dingmann: And I'm also wondering if your operational efficiencies continue to be as good as they've been.

Neal David Dingmann: Would you, let some rigs go and continue kind of with that production plan or would you maybe just ultimately end up producing more.

Speaker Change: Okay, Yeah perfect. Yeah I appreciate the question like I mentioned earlier the point is to ramp down just sequentially kind of as we go into the second half of the year.

Richard A. Jackson: Yeah, perfect. Yeah, I appreciate the question.

Richard A. Jackson: Like I mentioned earlier, the plan is to ramp down just sequentially, kind of as we go into the second half of the year. And really, that's been the plan since we poured it in and came out. So we are seeing good operational efficiencies. I'd say time to market is really slightly improved in every area. So we'll consider that as we go into the year to just kind of understand how that may accelerate any capital and how we want to respond to that.

Richard A. Jackson: And really that's been the plan since we reported.

Richard A. Jackson: Same out so we are seeing good operational efficiencies I'd say time to market really in every area has slightly improved so we'll consider that.

Richard A. Jackson: That as we go into the into the year to just kind of understand how that how that may accelerate any capital and how we want to respond to that I would say one thing that has played out well what we noted.

Richard A. Jackson: I would say one thing that has played out well. We noted, you know, these cost improvements. And, you know, a couple of things to note. Beyond just operational efficiencies, we are seeing some good outcomes as we work with our service providers like FRAC. And so we've been able to kind of as we relook and hit that more levelized, I'd say, balance and activity in the second half of the year, our utilization is going up about 10% on our FRAC core.

Richard A. Jackson: These cost improvements.

Richard A. Jackson: You know a couple of things to note.

Richard A. Jackson: You know beyond just operational efficiencies, we are seeing some good outcomes as we work with our service providers alike, Frac and so we've been able to kind of as we re look in.

Richard A. Jackson: <unk> hit that more level wise, let's say balance in activity in the second half of the year, our utilization is going up about 10% on our Frac core so that's more pumping hours per year and that's both good for us, but also good for our frac providers in terms of how they manage their business and so those type of things are.

Richard A. Jackson: So that's more pumping hours per year, and that's both good for us but also good for our FRAC providers in terms of how they manage their business. So those types of things are delivering the savings, which we think will pace well, even with some acceleration in our operational efficiency. So, you know, as the cadence goes this year, we're heavy on DNC to start the year and facilities as well, like I mentioned, and really in that back half of the year, you'll see that capital drop, and you'll see production increase.

Richard A. Jackson: Delivering the savings, which we think will pace well, even with some acceleration in our operational efficiencies.

Richard A. Jackson: So you know as the cadence goes this year, we're heavy on D&C the start the year in F and facilities as well like I mentioned and really in that back half of the year Youll see that capital draw and Youll see the production increase and so.

Richard A. Jackson: And so, you know, looking forward to that, and then that should set us up at a much more leveled and optimized pace going into 2025. And so, obviously, we'll have options, you know, depending on where Vicki wants to take us with our capital program, but that's sort of the thinking going into this year and into next.

Richard A. Jackson: Looking forward to that and then that should set us up.

Richard A. Jackson: Much more level loaded and optimize pace going into 2025, and so obviously, we'll have options, depending on where Vicky wants to take us with our capital program, but that's that's sort of the thinking going into this year and into next.

Neal David Dingmann: And that's what I was looking for, Richard. And then, Richard, a quick follow-up on the Permian for my second question: how do you view the typical, these days, you're doing great on both, but your typical Delaware versus Midland well economics? Why I ask is just looking at the curves you all show on slides 25 and 29, which is, again, I think you're towards the top. I think you're showing around 450,000 BOE in the Dell after a year versus around 250,000 in the Midland, which, again, knowing that they're cheaper wells, just want to, maybe, in broad strokes, how you think about the difference in the economics. Yeah,

Speaker Change: That's what I was looking for Richard and then Richard quick follow up on the Permian for my second how do you view. The typical these days you're doing great on both that your typical Delaware versus Midland well economics, why I ask is just looking at the curves you all show on slide 25% to 29, which is again I think you are towards the top I think youre showing around 450.

Neal David Dingmann: The Dell after year versus around 250000 of Midland, which again, knowing that theyre cheaper wells just wondering maybe in broad strokes. How you think about the difference in the economics.

Speaker Change: Yeah, I mean, you're you're you're saying it right I mean, I think and it's the same way we think about these primary and secondary benches, even in the in the Delaware.

Richard A. Jackson: Yeah, I mean, you're saying it right. I think, and it's the same way we think about these primary and secondary benches, even in Delaware. You know, the cost matters. And it's not only the drilling and completion costs. You can look at a little bit shallower, a little bit, you know, different drilling in the Midland Basin, leading to lower drilling and completion costs. Same for the secondary benches in the Delaware. If you get a little shallower into the bone springs, they're cheaper.

Richard A. Jackson: That cost matters, and it's not only the drilling and completion cost you can look at.

Richard A. Jackson: A little bit shallower a little bit.

Richard A. Jackson: Different drilling in the Midland basin, leading to lower our drilling and completion costs same for the secondary benches in the Delaware do you get a little shallower into the bone Springs, Theyre cheaper and so certainly you see it play through in the DNC.

Richard A. Jackson: And so certainly, you see it play out on the DNC. But the way the teams put together their development areas, they think about the impacts on facility costs. So one of the examples, I know we reviewed here recently, we had some shallower bone spring wells that came on, I think about three years after we drilled the Wolf Camp wells. And the returns for those secondary wells, even with lower production, were about double the primary.

Richard A. Jackson: But but the way the teams put together their development areas. They think about the impacts from facility costs. So one of the examples I know we had reviewed here recently, we had some shallower bone spring wells that.

Richard A. Jackson: It came on.

Richard A. Jackson: I think about three years after we drilled the Wolfcamp wells and the returns for those secondary wells, even with lower production was about double the primary and that was because we were able to utilize these production facilities and so that timing of how you put that production together.

Richard A. Jackson: And that was because we were able to utilize these production facilities. And so the timing of how you put that production together can make a tremendous impact on the improvement of the economy. And so, as you think about it in basins, we do the same thing. You know, the advantages of being more balanced in the Midland Basin allow us to optimize all these facility costs, maintenance costs, all these things to make sure we're getting the most production per dollar spent, not just capital, but even OPEC. So I appreciate the question. And that's absolutely how we look at balancing capital, looking for that full cycle return.

Richard A. Jackson: Can make a tremendous impact on the improvement of the economics and so as you think about it in basins, we do the same thing.

Richard A. Jackson: The advantages of being more balanced in the Midland Basin allows us to optimize all of these.

Richard A. Jackson: Facility costs maintenance costs, all these things to make sure we're getting the most production per dollar spent not just capital, but even opex. So I appreciate the question.

Richard A. Jackson: That's absolutely how we look at balancing the capital looking for that full cycle return.

Richard A. Jackson: Four.

Richard A. Jackson: The next question comes from Scott Gruber with Citigroup. Please go ahead.

Scott Andrew Gruber: The next question comes from Scott Gruber with Citigroup. Please go ahead.

Scott Andrew Gruber: Yes, good afternoon. Staying on the topic of the Permian, can you provide some color on what's included in the Permian's unconventional inventory count when it comes to the secondary benches in Brown Springs, and how does their success potentially push the inventory count higher?

Scott Andrew Gruber: Yes, good afternoon, I'm staying on the topic of the Permian can you provide some color on what's included in the Permian unconventional inventory count when it comes to the secondary benches in the bone Springs, and what is their success potentially push the inventory count higher.

Speaker Change: Yeah, I'll, just maybe give you some perspective on how we're thinking about.

Richard A. Jackson: Yeah, I'll just maybe give you some perspective on how we're thinking about our inventory in general terms of how that's going, and I can address some of the bone spring.

Richard A. Jackson: Our inventory in general in terms of how that's going and I can address some of the bone spring. So over the last couple of years, we've been able to more than replace the wells drilled with.

Richard A. Jackson: So in the last couple of years, we've been able to more than replace the wells drilled with, you know, improvements in inventory, which come in two buckets. One is appraisal activity, which I'll give you a little color on in terms of bone spring to your question, but also, also, production improvement and cost reduction. So both of those things not only add inventory, but they move it, we call it to the left, but it gets us to, you know, less than 60. Less than 50.

Richard A. Jackson: Improvements in inventory, which come in two buckets, one is appraisal activity, which I'll give you a little color on in terms of bone spring to your question, but also also.

Richard A. Jackson: Production improvement and cost reduction so both of those things only AD inventory, but they move it we call it to the left but gets us to you know less than 60 less than 50, and then ultimately what we're going for less than $40 breakeven inventory.

Richard A. Jackson: And then ultimately, what we're going for is less than $40 in breakeven inventory. And so as we think about this year in the unconventional, we had a target of around adding 450 wells in the unconventional for less than $50 in breakeven. A bulk of that will come from, you know, one of the highlights we had was this third bone spring target that we had on the slide highlighting the four wells with greater than 780 MBOE or MBO.

Richard A. Jackson: So as we think about you know this year and the and the unconventional we we had a target of.

Richard A. Jackson: Of around adding 450 wells.

Richard A. Jackson: And the unconventional less than $50 breakeven.

Richard A. Jackson: Bulk of that well.

Richard A. Jackson: Will come from.

Richard A. Jackson: We highlighted one of the highlights we had was this.

Richard A. Jackson: Third bone spring target that we had on the slide highlighting the four wells with the greater than 780, <unk> N V O E. R. M B O.

Richard A. Jackson: These will add the bulk of our improvement this year in terms of that promotion of inventory. And so when I look at even the first quarter, just to give you some color, so we're aiming for this 450 in the first quarter, we had 90 ads, less than $50 breakeven, you know, that came about half of that from the bone spring wells that I mentioned, but we're also getting things out of New Mexico and some of the shallower bone springs there.

Richard A. Jackson: Those will add a bulk of our improvement this year in terms of that that promotion of inventory and so when I look at even the first quarter just to give you. Some color. So we're aiming for this $4 50 in the first quarter, we had 90 adds less than $50 breakeven.

Richard A. Jackson: That came about.

Richard A. Jackson: About half of that from the.

Richard A. Jackson: Bone spring wells that I mentioned, but we're also getting things out of new Mexico, and some of the shallower bone spring there and so.

Richard A. Jackson: And so, you know, it's not only what we're drilling today, which is, you know, going up in terms of secondary benches as a percentage of our total drilled wells in the year, but it's really adding that low cost inventory in the future. And so, you know, a lot of times we'll get the so-what out of this inventory, and that's really it. It's being able to extend this low cost capital intensity as we pursue our plan over the next.

Richard A. Jackson: It's not only what we're drilling today, which is.

Richard A. Jackson: Going up in terms of secondary benches are as a percentage of our total drill wells in the year, but it's really adding that low cost inventory in the future and so you know a lot of times, we get the so what of this inventory and that's really it it's being able to extend this low cost.

Richard A. Jackson: The capital intensity as we prosecute our plan over the next few years.

Speaker Change: Got it.

Scott Andrew Gruber: Got it. And then how do you think about, you know, potentially co-developing some of the zone springs, you know, along with the Coral Wolf Camp or even looking at coming back and hitting those zones, you know, leveraging the installed infrastructure, as you mentioned?

Richard A. Jackson: How do you think about potentially co developing.

Speaker Change: Some of the.

Scott Andrew Gruber: With the bone Springs, well, along with the core Wolfcamp, a and then you're looking at that coming back in.

Scott Andrew Gruber: In it he knows zones, leveraging the installed infrastructure as you mentioned.

Speaker Change: Yeah, I think I mean, that's a big part of I'd say the next few years is really optimizing how we put that together obviously in the Midland We do a lot more called co development, where you're doing these zones at the same time one of the benefits in the in the Delaware is being able to sequence some of them have a little bit more pre.

Richard A. Jackson: Yeah, I think I mean, that's a big part of the next few years is really optimizing how we put that together. Obviously, in the Midland, we do a lot more what we call co-development where you're doing these zones at the same time. One of the benefits of the in the Delaware is being able to sequence them with a little bit more precision because of the frack barriers. So we don't have, you know, to think about more of the cube or co-development opportunities, which gives us a great opportunity to really maximize the savings we get from reusing these facilities, like I described.

Richard A. Jackson: <unk> because of the Frac barriers, so we don't have.

Richard A. Jackson: The to think about more of the cube or co development opportunities, which gives us a.

Richard A. Jackson: Great opportunity to really maximize the savings we get.

Richard A. Jackson: From reusing these facilities like I described so.

Richard A. Jackson: So, you know, last year, I think we were around 20% secondary benches in Delaware. This year, we're north of 30. So you can see, you know, that sort of opportunity becoming more prominent in terms of our development plan.

Richard A. Jackson: Last year I think we were around 20% secondary benches in the Delaware. This year, we're north of 30. So you can see that sort of opportunity becoming more prominent in terms of our development plans.

Richard A. Jackson: The next question comes from Newton Kumar with Mizuho. Please go ahead.

Nitin Kumar: The next question comes from Nitin Kumar with Mizuho. Please go ahead.

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

Nitin Kumar: Hi, good afternoon, and thanks for taking my question. I just want to start on Crown Rock quickly.

Nitin Kumar: I just want to start on Crown rock quickly you mentioned that Youre still on track to close the deal in the third quarter.

Vicki A. Hollub: You mentioned that you're still on track to close the deal in the third quarter. When we announced the deal, you had talked about about 170,000 BOE per day of production from Crown Rock. Just wanted to see if we could revisit that and see how things are trending there as you are getting closer to the close.

Vicki A. Hollub: When we announced the deal you had talked about but 170000 Boe per day of production from Crown Royal just wanted to see if you could revisit that and see how things are trending there.

Vicki A. Hollub: You are getting closer to the close.

Vicki A. Hollub: We don't really have any update on the either the protection or or any of the other metrics from crown rock just what we've provided previously.

Vicki A. Hollub: We don't really have any update on either production or any of the other metrics from Crown Rock, just what we provided previously. We'll probably provide we'll definitely provide an update when we have our next quarterly meeting, because by that time, I believe we will have closed. Maybe not, but it's going to be certainly sometime in the third quarter.

Vicki A. Hollub: We'll probably provide well, we'll definitely provide an update when we.

Vicki A. Hollub: When we have our next.

Vicki A. Hollub: Quarterly meeting because by that time I believe we will have closed maybe not that it's going to be certainly sometime in the third quarter.

Vicki A. Hollub: Great.

Nitin Kumar: Great, I thought I'd take a shot. And I just, you know, there's been some movement in Colorado around the SB 24, which requires a production fee for oxy, and producers want to see, you know, what that would look like for oxy, you're a big producer in the state, and sort of what your thoughts are around the initiative.

Vicki A. Hollub: Right.

Nitin Kumar: Just there.

Nitin Kumar: There has been some movement in Colorado around SB, 24, which requires a production fee on.

Nitin Kumar: Users want to see.

Nitin Kumar: <unk>.

Nitin Kumar: What that would look like for oxy or a big producer in the state and sort of what your thoughts are on that initiative.

Speaker Change: Yeah, I think that that thing the agreement that was reached in Colorado is a win win for both the people of Colorado and the investments of the investors in Colorado. So.

Vicki A. Hollub: Yeah, I think that the agreement that was reached in Colorado is a win-win for both the people of Colorado and the investors in Colorado. So we feel that paying the fee and along with paying the fee to have taken away some bills and some potential ballot measures that would have severely restricted what the oil and gas industry could do, that when you take that together, all together, it provides a scenario for the governor and the government of Colorado to do something positive with the fees that will be collected.

Vicki A. Hollub: So we feel that.

Vicki A. Hollub: At.

Vicki A. Hollub: Paying the fee and along with paying the fee to have taken away.

Vicki A. Hollub: Some bills and some potential ballot measures that would have severely restricted but the oil and gas industry can do.

Vicki A. Hollub: That when you when you take that together altogether. It's it provides a scenario for the governor.

Vicki A. Hollub: And the government of Colorado to do something positive with a phase that will be collected so we view this to be not overly burdensome for our operations. We think it's a it's actually going to be a doable scenario for us as we work toward doing some of the other things that will come along with this which is.

Vicki A. Hollub: So we view this not to be overly burdensome for our operations. We think it's actually going to be a doable scenario for us as we work toward doing some of the other things that will come along with this, which is working more on doing things that impact and help to reduce the impact on the ozone layer, as well as doing some things that will help from an environmental justice standpoint.

Vicki A. Hollub: Working more on doing.

Vicki A. Hollub: So it's a package deal. It's not just a fee. And putting all that together, it's a good deal.

Vicki A. Hollub: Doing things that it in fact and helped to reduce the impact on the Zen layer as well as doing some things that will will help.

Vicki A. Hollub: Environmental Justice standpoint, so it's a full package deal that's not just a fee and putting all that together, it's a good deal.

Vicki A. Hollub: The next question comes from David <unk> with TD Cowen. Please go ahead.

David Adam Deckelbaum: The next question comes from David Deckelbaum with TD Cowan. Please go ahead.

David Adam Deckelbaum: Good afternoon, Vicki and team thanks for taking my questions.

David Adam Deckelbaum: Afternoon, Vicki and team. Thanks for taking my questions.

David Adam Deckelbaum: I wanted to ask for a little bit more color just on the guide, just so I'm clear on how the numbers are progressing this year. The impact from the Gulf of Mexico, is that exclusively what's contributing to the 100 basis point reduction in oil cuts this year? Are you seeing some contribution from some gassier zones and some other core assets, or perhaps the impact of the PSC in areas like Algeria?

David Adam Deckelbaum: I wanted to ask for a little bit more color or just from a guy just so I'm clear on how our members are progressing this year.

David Adam Deckelbaum: The impact from the Gulf of Mexico.

David Adam Deckelbaum: Is that exclusively what's contributing to the 100 basis point reduction in oil cut this year.

David Adam Deckelbaum: Are you seeing some contribution from some gas here zones and some other of your core assets or perhaps the impact of the PSC in areas like Algeria.

David Adam Deckelbaum: No. It was almost entirely due to the Gulf of Mexico shut down there, there's really nothing else trending differently that are that we have in our portfolio.

Vicki A. Hollub: No, it was almost entirely due to the Gulf of Mexico shutdown. There's really nothing else trending differently that we have in our portfolio.

Vicki A. Hollub: I appreciate that and then maybe just a follow up on the discussion around this deleveraging and noncore asset sales.

David Adam Deckelbaum: I appreciate that. Then, maybe just to follow up on the discussion around deleveraging and non-core asset sales. It sounds like on this call you might be emphasizing more the cash flow returns that you would be otherwise receiving from some of these assets that maybe the market has flagged as divestiture candidates. Is that the intention here in signaling that you intend to de-lever more organically and that non-core asset sales either theoretically would be higher in dollar value to reflect that cash flow contribution or might take longer to materialize?

David Adam Deckelbaum: It sounds like on this call you might be emphasizing more the cash flow returns that you would be otherwise.

David Adam Deckelbaum: Otherwise receiving from some of these <unk>.

David Adam Deckelbaum: Assets that maybe the market hedge for I guess.

David Adam Deckelbaum: The divestiture candidates.

David Adam Deckelbaum: Is that the intention here in signaling that you intend to delever more organically in that noncore asset sales.

David Adam Deckelbaum: Theoretically it would be higher in dollar value to reflect that cash flow contribution or might take longer to materialize.

Vicki A. Hollub: I don't think that's what we intended to say. That was not the message we intended to give. When we talk about the fact that we will evaluate everything from a value perspective, what we want to do is just ensure that we're making the right decisions, and divestitures of non-core areas are something that we want to do. We believe that, based on the interest that we're seeing, we should be able to do that.

Speaker Change: I don't I don't think that's what we intended to say that that was not the message. We intended to give when we talk about the fact that we will evaluate everything from the value perspective, well. We want to do is just to ensure that we're making the right decisions and and divestitures of.

Vicki A. Hollub: Noncore areas is something that we want to do and are we we believe that based on the interest that we're seeing that we should be able to achieve.

Vicki A. Hollub: In the interest of time. This concludes our question and answer session I would like to turn the conference back over to Vicki Hello for any closing remarks.

Vicki A. Hollub: In the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Vicki Hollub for any closing remarks.

Vicki A. Hollub: I'd just like to thank you all for your questions and for joining our call have a great rest of your day.

Vicki A. Hollub: I'd just like to thank you all for your questions and for joining our call. Have a great rest of your day. The conference has now concluded. Thank you for attending.

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

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

Operator: Okay.

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