Q2 2024 ConocoPhillips Earnings Call

Welcome to the second quarter 2024 ConocoPhillips earnings conference call. My name is Liz and I will be your operator for today's call.

Liz: My name is Liz, and I will be your operator for today's call. At this time, all participants are on a list... Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 1 on your touch tone.

Liz: My name is Liz, and I will be your operator for today's call. At this time, all participants are in a listen-only mode.

Liz: Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star-1-1 on your touch-tone phone.

Speaker Change: At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 1 on your touchtone phone.

Phil Gresh: I will now turn the call over to Phil Gresh by President Investor Relations.

Phil Gresh: I will now turn the call over to Phil Gresh, Vice President, Investor Relations. Thank you, Liz, and welcome, everyone, to our second quarter 2024 Earnings Conference. On the call today are several members of the ConocoPhillips leadership team, including Ryan Lance, Chairman and CEO; Bill Bullock, Executive Vice President and Chief Financial Officer. Andy O'Brien, Senior Vice President of Strategy, Commercial, Sustainability, and Technology; Nick Olds, Executive Vice President of Bloor 48; and Kirk Johnson, Senior Vice President of Global Operations.

Phil Gresh: Sir, you may begin.

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

Phil Gresh: Thank you, Liz, and welcome everyone to our second quarter, 2020-4 earnings conference call. On the call today are several members of the ConocoPhillips leadership team, including Ryan Lance, Chairman and CEO; Phil Bullock, Executive Vice President and Chief Financial Officer; and Andy O'Brien, Senior Vice President of Strategy, Commercial, Sustainability, and Technology. Nick Olds, Executive Vice President of Lower 48, and Kirk Johnson, Senior Vice President of Global Operations.

Phil Gresh: Thank you, Liz, and welcome, everyone, to our second quarter 2024 earnings conference call.

On the call today are several members of the ConocoPhillips leadership team, including Ryan Lance, Chairman and CEO.

Bill Bullock, Executive Vice President and Chief Financial Officer.

Andy O'brien: Andy O'Brien, Senior Vice President of Strategy, Commercial, Sustainability, and Technology.

Speaker Change: Nick Olds, Executive Vice President of Bloor 48, and Kirk Johnson, Senior Vice President of Global Operations.

Phil Gresh: Ryan and Bill will kick it off with opening remarks, after which the team will be available for your questions. A few quick reminders.

Phil Gresh: Ryan and Bill will kick it off with opening remarks, after which the team will be available for your questions. A few quick reminders. First, along with today's release, we publish supplemental financial materials and a slide presentation that you can find on the Investor Relations website. Second, during this call, we will make four forward-looking statements based on current expectations. Actual results may differ due to factors noted in today's release and in our periodic SEC filings.

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

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

Speaker Change: A few quick reminders. First, along with today's release, we publish supplemental financial materials and a slide presentation, which you can find on the Investor Relations website.

Speaker Change: Second, during this call, we will make four looking statements based on current expectations.

Speaker Change: Actual results may differ due to factors noted in today's release and in our periodic SEC filings.

Speaker Change: will make reference to some non-GAAP financial measures.

Reconciliations to the nearest corresponding gap measure can be found in today's release and on our website.

Phil Gresh: Third, when we move to Q&A, we will take one question per caller.

Phil Gresh: We'll make reference to some non-GAAP financial measures. Reconciliations to the nearest corresponding gap measure can be found in today's release and on our website. Third, when we move to Q&A, we'll take one question per caller. With that, I will turn the call over to Ryan. Thanks, Phil.

Third, when we move to Q&A, we'll take one question per caller.

Ryan Lance: With that, I will turn the call over to Ryan.

Ryan Lance: And thank you to everyone for joining our second quarter 2024 earnings conference call. It was another busy quarter for the company. We continue to execute on our returns-focused value proposition. We announced a 34% increase in our ordinary dividends starting in the fourth quarter.

Ryan Lance: Thanks, Phil, and thank you to everyone for joining our second quarter, 2020-4 earnings conference call. It was another busy quarter for the company. We continue to execute on our returns-focused value proposition.

Speaker Change: With that, I will turn the call over to Ryan.

Ryan Lance: Thanks, Phil, and thank you to everyone for joining our second quarter 2024 earnings conference call.

Ryan Lance: It was another busy quarter for the company.

Ryan Lance: We continue to execute on our returns focused value proposition. We announced a 34% increase in our ordinary dividends starting in the fourth quarter.

Ryan Lance: We announced a 34% increase in our earniery dividends starting in the fourth quarter. We announced the planned acquisition of Marathon Oil, and we further progressed our global commercial LNG strategy. Now, starting with results, we delivered record production in the second quarter with strong contributions from the entire portfolio. In the lower 48, we still expect to deliver low single-digit production growth in 2024 at a lower level of capital spending relative to 2023. Internationally, production continued to ramp up at Sirmont Pad 267 and the Montany in Canada, full high phase 4B in China, and four subsea tiebacks in Norway.

Ryan Lance: We announce the planned acquisition of Marathon Oil, and we've further progressed our global commercial LMG strategy. Now, starting with the results. We delivered record production in the second quarter, with strong contributions from the entire portfolio. In the lower 48, we still expect to deliver low single-digit production growth in 2024 at a lower level of capital spending relative to 2023. Internationally, production continued to ramp up at Surmont Pad 267 and the Montagne in Canada, Ohio Phase IV-B in China, and four sub-c-type X in Norway.

Ryan: We announced the planned acquisition of Marathon Oil, and we further progressed our global commercial LNG strategy.

Ryan: Now, starting with results, we delivered record production in the second quarter with strong contributions from the entire portfolio.

Speaker Change: In the lower 48, we still expect to deliver low single-digit production growth in 2024 at a lower level of capital spending relative to 2023.

Ryan: Internationally, production continued to ramp up at Surmont Pad 267 and the Montagne in Canada.

Ryan: Ohio Phase IV-B in China, and four sub-C type X in Norway.

Ryan Lance: And we continue to make strong progress at Willow and on our LNG projects at Port Arthur and Qatar. As shifting to commercial LNG, we recently signed two additional long-term regastification and failed agreements to deliver volumes into Europe and Asia, both of which will start in 2027. With these agreements, we have now secured just under six million tons per annum of volume placement for our off-take commitments. And we continue to work new off-take and placement opportunities as we look to expand our commercial LNG portfolio up to 10 to 15 million tons per annum in the coming years.

Ryan Lance: And we continue to make strong progress at Willow and on our LNG projects at Port Arthur and Qatar. Shifting to commercial LNG, we recently signed two additional long-term regasification and sales agreements to deliver volumes into Europe and Asia, both of which will start in 2027. With these agreements, we have now secured just under 6 million tons per annum of volume placement for our offtake commitment, and we continue to work on new offtake and placement opportunities as we look to expand our commercial LNG portfolio up to 10 to 15 million tons per annum in the coming years.

Speaker Change: And we continue to make strong progress at Willow and on our LNG projects at Port Arthur and Qatar.

Ryan: As shifting to commercial LNG, we recently signed two additional long-term regasification and sales agreements to deliver volumes into Europe and Asia, both of which will start in 2027.

Speaker Change: With these agreements, we have now secured just under 6 million tons per annum of volume placement for our offtake commitments.

Speaker Change: And we continue to work new offtake and placement opportunities as we look to expand our commercial LNG portfolio up to 10 to 15 million tons per annum in the coming years.

Ryan Lance: Now regarding our planned acquisition of Marathon Oil, we remain very excited about this transaction, and integration planning activities are underway to ensure a seamless transition upon close. The Marathon Oil shareholder vote has been set for August 29th, and we are working through the FTC's second request that we received in mid-July. We still expect to close the transaction late in the fourth quarter. On return of capital, we remain committed to distributing at least 9 billion to shareholders this year on a standalone basis. As we set back in May, we will be incorporating our V-Rock into our base dividend starting in the fourth quarter, representing a 34% increase in the ordinary dividend.

Ryan Lance: Now, regarding our planned acquisition of Marathon Oil, we remain very excited about this transaction, and integration planning activities are underway to ensure a seamless transition upon close. The Marathon Oil shareholder vote has been set for August 29th, and we are working through the FTC's second request that we received in mid-July.

Speaker Change: Now regarding our planned acquisition of Marathon Oil, we remain very excited about this transaction and integration planning activities are underway to ensure a seamless transition upon close.

Speaker Change: The Marathon Oil shareholder vote has been set for August 29th, and we are working through the FTC's second request that we received in mid-July. We still expect to close the transaction late in the fourth quarter.

Ryan Lance: We still expect to close the transaction late in the fourth quarter. As for return of capital, we remain committed to distributing at least $9 billion to shareholders this year on a stand-alone basis. As we said back in May, we will be incorporating our VROC into our base dividends starting in the fourth quarter, representing a 34% increase in the ordinary dividend. And consistent with our long-term track record, we are confident that we can grow this dividend at a top quartile rate relative to the S&P 500.

Speaker Change: On return of capital, we remain committed to distributing at least $9 billion to shareholders this year on a stand-alone basis.

Speaker Change: As we said back in May, we will be incorporating our VROC into our base dividends starting in the fourth quarter, representing a 34% increase in the ordinary dividend.

Ryan Lance: And consistent with our long-term track record, we are confident that we can grow this dividend at a top quartile rate relative to the S&P 500.

Speaker Change: And consistent with our long-term track record, we are confident that we can grow this dividend at a top quartile rate relative to the S&P 500.

Ryan Lance: Finally, as we previously announced with the marathon acquisition, we will be increasing our annualized buyback rent rate by $2 billion upon closing, with a plan to retire the equivalent amount of newly issued equity in two to three years.

Ryan Lance: Finally, as we've previously announced with the marathon acquisition, we will be increasing our annualized buyback run rate by $2 billion upon closing, with a plan to retire the equivalent amount of newly issued equity in two to three years. So to wrap up, we're pleased with our operational execution, and we are looking forward to closing the marathon transaction later this year. Now, I will turn the call over to Bill to cover our second quarter performance and 2024 guidance in more detail. Well, thanks, Ryan. In the second quarter, we generated $1.98 per share in adjusted earnings.

Speaker Change: Finally, as we previously announced with the marathon acquisition, we will be increasing our annualized buyback run rate by two billion dollars upon closing with a plan to retire the equivalent amount of newly issued equity in two to three years.

Ryan Lance: So to wrap up, we're pleased with our operational execution, and we are looking forward to closing the marathon transaction later this year.

Speaker Change: So to wrap up, we're pleased with our operational execution, and we are looking forward to closing the marathon transaction later this year.

Bill Bullock: Now let me turn the call over to Bill to cover our second quarter performance in 2024 guidance in more detail.

Speaker Change: Now let me turn the call over to Bill to cover our second quarter performance and 2024 guidance in more detail.

Bill Bullock: Well, thanks, Ryan. In the second quarter, we generated $1.98 per share in adjusted earnings. We produced 1,945,000 barrels of oil equivalent per day, representing 4% underlying growth year over year. And this includes the impact of 18,000 barrels per day of turnaround. Lower 48 production average 1,105,000 barrels of oil equivalent per day, with 748,000 in the Permian, 238,000 in the Eagle Ford, and 105,000 in the Bakken. Alaska International Production averaged 839,000 barrels of oil equivalent per day, also representing roughly 4% underlying growth year over year.

Bill Bullock: Well, thanks Ryan

Bill Bullock: In the second quarter, we generated $1.98 per share in adjusted earnings.

Bill Bullock: We produced 1,945,000 barrels of oil equivalent per day, representing 4% underlying growth year over year, and this includes the impact of 18,000 barrels per day of turnaround. Lower 48 production averaged 1,105,000 barrels of oil equivalent per day, with 748,000 in the Permian, 238,000 in the Eagleford, and 105,000 in the Bosque.

Bill: We produced 1,945,000 barrels of oil equivalent per day, representing 4% underlying growth year over year. And this includes the impact of 18,000 barrels per day of turnarounds.

Bill Bullock: Lower 48 production averaged 1,105,000 barrels of oil equivalent per day with 748,000 in the Permian, 238,000 in the Eagleford, and 105,000 in the Balkans.

Bill Bullock: Alaska International production averaged 839,000 barrels of oil equivalent per day, also representing roughly 4% underlying growth year-over-year, excluding the Sermon Acquisition Effect. Now this highlights the benefits of our diversified global portfolio. Moving to cash flows, second quarter CFO was $5.1 billion, which included over $300 million of APLNG distribution. Working capital was a $100 million headwind, which was lower than our guidance of $600 million as the expected timing of some of our tax payments shifted into the third quarter.

Bill: Alaskan International Production averaged 839,000 barrels of oil equipment per day, also representing roughly 4% underlying growth year over year, excluding the storm line acquisition effects.

Bill Bullock: Excluding the storm on acquisition effects. Now this highlights the benefits of our diversified global portfolio. Moving to cash flows, second quarter CFO was $5.1 billion, which included over 300 million of APL NG distributions. Working capital with $100 million headwind, which was lower than our guidance of $600 million, has the expected timing of some of our tax payments shifted into the third quarter. Capital expenditures were just under $3 billion. We returned $1.9 billion to shareholders in the quarter, including $1 billion in buybacks and $900 million in orderly dividends and V-rock payments. And we ended the quarter with cash and short-term investments of $6.3 billion, and $1 billion in longer-term liquid investments.

Bill: Now this highlights the benefits of our diversified global portfolio.

Bill Bullock: Capital expenditures were just under $3 billion. We returned $1.9 billion to shareholders in the quarter, including $1 billion in buybacks and $900 million in ordinary dividends and VROC payments. And we ended the quarter with cash and short-term investments at $6.3 billion and $1 billion in longer-term liquid investments. Now, turning to guidance. For the third quarter, we expect production to be in a range of 1.87 to 1.91 million barrels of oil equivalent per day.

Bill: And we ended the quarter with cash and short-term investments of $6.3 billion and $1 billion in longer-term liquid investments.

Bill Bullock: Now turning to guidance. For the third quarter, we expect production to be in a range of 1.87 to 1.91 million barrels of oil equivalent per day. This is inclusive of the 90,000 barrels per day of turnaround impacts that we discussed last quarter.

Bill Bullock: This is inclusive of the 90,000 barrels per day of turnaround impacts that we discussed last quarter. The primary driver for this is our once every five-year turnaround at Surmont, which will impact production by about 50,000 barrels per day during the quarter. For the full year, we have raised the midpoint of our production outlook, reflecting strong second quarter results. Our new range is 1.93 to 1.94 million barrels of oil equivalent per day, which implies roughly 3% underlying growth year over year.

Bill: For the third quarter, we expect production to be in a range of 1.87 to 1.91 million barrels of oil equivalent per day. This is inclusive of the 90,000 barrels per day of turnaround impacts that we discussed last quarter.

Bill Bullock: The primary driver that is our once every five year turnaround of Sermon, which will impact production by about 50,000 barrels per day during the quarter. For the full year, we have raised the midpoint of our production outlook, reflecting strong second quarter results. Our new range is 1.93 to 1.94 million barrels of oil equivalent per day, which implies roughly 3% underlying growth year over year. Our full year turnaround forecast continues to be about 30,000 barrels per day.

Bill: The primary driver of that is our once-every-five-year turnaround at Surmont, which will impact production by about 50,000 barrels per day during the quarter.

Bill: Our new range is 1.93 to 1.94 million barrels of oil equivalent per day, which implies roughly 3% underlying growth year-over-year.

Bill Bullock: Our full year turnaround forecast continues to be about 30,000 barrels per day. On income statement guidance items, we have lowered our DD&A guidance to a range of $9.3 to $9.4 billion, and we have lowered our annual after-tax adjusted corporate segment net loss to a range of $800 to $900 million.

Bill: Our full year turnaround forecast continues to be about 30,000 barrels per day.

Bill Bullock: On income statement guidance items, we have lowered our DDA guidance to a range of 9.3 to 9.4 billion, and we have lowered our annual after-tax adjusted corporate segment net loss to a range of 800 to 900 million. Now, these decreases are partially offset by higher forecasted adjusted operating costs, which we now anticipate to be in a range of 9.2 to 9.3 billion, primarily due to increased transportation and processing costs and inflationary pressures on the Lower 48. For CAPEX, we expect to spend approximately 11.5 billion. Now, this reflects strong progress on our willoscope for the year, as well as some additional capital allocated to Lower 48 partner operate activity that has highly competitive returns.

Bill Bullock: These decreases are partially offset by higher forecasted adjusted operating costs, which we now anticipate to be in a range of $9.2 to $9.3 billion, primarily due to increased transportation and processing costs and inflationary pressures in the lower 48. For CapEx, we expect to spend approximately $11.5 billion. This reflects strong progress on our willow scope for the year, as well as some additional capital allocated to lower 48 partner operate activity that has highly competitive returns. On cash flow, we are increasing full year guidance for APLNG distributions by $100 million to $1.4 billion, and we expect $400 million of these distributions in the third quarter.

Bill Bullock: On cashflow, we are increasing full year guidance for APLNG distributions by 100 million to 1.4 billion, and we expect 400 million of these distributions in the third quarter. Additionally, we're going to have a 100 million dollar pension contribution in the third quarter.

Bill: On cash flow we are increasing full year guidance for APLNG distributions by 100 million to 1.4 billion and we expect 400 million of these distributions in the third quarter.

Bill Bullock: Additionally, we're going to have a $100 million pension contribution in the third quarter. Finally, regarding working capital... We anticipate a $500 million outflow based on the tax payment shift I mentioned from the second quarter to the third quarter. And as a reminder, guidance excludes the impact of pending acquisitions.

Bill: Additionally, we're going to have a 100 million dollar pension contribution in the third quarter.

Bill Bullock: Finally, regarding working capital, we anticipate a 500 million dollar outflow based on a tax payment shift I mentioned from the second quarter to the third quarter.

Bill: Finally, regarding working capital, we anticipate a 500 million dollar outflow based on a tax payment shift I mentioned from the second quarter to the third quarter.

Bill Bullock: And, as a reminder, guidance excludes the impact of pending acquisitions. So, in conclusion, we continue to deliver on our strategic initiatives. We remain focused on executing our plan for 2024. We are committed to staying highly competitive on our shareholder distributions, and we are progressing towards closing the marathon transaction.

Bill: And as a reminder, guidance excludes the impact of pending acquisitions.

Bill Bullock: So in conclusion, we continue to deliver on our strategic initiatives. We remain focused on executing our plan for 2024. We're committed to staying highly competitive in our shareholder distribution, and we're progressing towards closing the marathon transaction. That concludes our prepared remarks. I'll now turn it back over to the operator to start the Q&A. Thank you.

Bill: So in conclusion, we continue to deliver on our strategic initiatives, we remain focused on executing our plan for 2024, we are committed to staying highly competitive on our shareholder distributions, and we are progressing towards closing the marathon transaction.

Bill Bullock: That concludes our prepared remarks.

Liz: I'll now turn it back over to the operator and start the Q&A.

Speaker Change: That concludes our prepared remarks. I'll now turn it back over to the operator to start the Q&A.

Liz: Thank you.

Operator: We will now begin the question and answer session. In the interest of time, we ask that you limit yourself to one question. If you have a question, please press star 1 on your touch tone. If you wish to be removed from the queue, please press star 1 once. If you're using a speakerphone, you may need to pick up the handset first before pressing the number.

Liz: We will now begin the question and answer session. In the interest of time, we ask that you limit yourself to one question. If you have a question, please press star one one on your touchtone phone. If you wish to be removed from the Q, please press star one one again. If you're using a speaker phone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star one one on your touchtone phone.

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

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

Operator: Once again, if you have a question... Star 1-1 on your touch-tone. Your first question will come from the line of Neil Mehta with Goldman Sachs. Good morning, Ryan and team. Thank you for taking the time.

Speaker Change: Once again, if you have a question, please press star 1 1 on your touchtone phone.

Neil Mehta: Our first question will come from the line of Neil Metta with Goldman Sachs. Your line is now open.

Neil Mehta: Good morning, Ryan and team. Thank you for taking the time. My question is just around everything buyback.

Bill Bullock: My question is just around everything buyback. So, if you could just talk about the share repurchase strategy and remind us, you know, between now and August 29, you're probably going to be out of the market, but your commitment to come back in the second half of the year and get to that over $9 billion at or above the $9 billion capital return number. So your perspective on taking advantage of some of the volatility and, as you plan for the back half as it relates to share.

Bill: Good morning, Ryan and team. Thank you for taking the time. My question is just around everything buyback. So if you could just talk about.

Ryan Lance: So if you could just talk about the share repurchase strategy and remind us, you know, between now and August 29th, it probably can be out of the market, but your commitment to come back in the back half of the year and get to that over $9 billion at or above the $9 billion capital return number. So your perspective on taking advantage just of the volatility and and as you plan for the back half has a related to share repurchases.

Speaker Change: the share repurchase strategy and remind us you know between now and August 29th you're probably going to be out of the market.

Speaker Change: but your commitment to come back in the back half of the year and get to that over $9 billion at or above the $9 billion capital return number. So your perspective on taking advantage of some of the volatility and as you plan for the back half as it relates to share repurchases.

Ryan Lance: Yeah, Neil, we're very confident in at least $9 billion of distributions for the year. And if you look at things, we've paid out about 40% of CFO in the first half of the year, and that's despite having some restrictions on open market repurchases that are related to the Marathon transaction that we've had in place since May. And so, as you look at things, as a result of those restrictions, our 4.2 billion of distributions in the first half, that's a bit below a $9 billion annualized run rate. But, as you know, the proxy is now mailed out with regulatory requirements that we have in place.

Bill Bullock: Yeah, Neil, we're very confident in at least $9 billion of distributions for the year. And if you look at it, we've paid out about 40% of our CFO in the first half of the year. And that's despite having some restrictions on open market repurchases that are related to the marathon transaction that we've had in place since May. And so as you look at things that, as a result of those restrictions, are $4.2 billion of distributions in the first half, that's a bit below a $9 billion annualized run rate.

Neil: Yeah, Neil. We're very confident in at least $9 billion of distributions for the year.

Speaker Change: And if you look at things, we've paid out about 40% of CFO in the first half of the year. And that's despite having some restrictions on open market repurchases that are related to the marathon transaction that we've had in place since May.

Bill: And so, as you look at things, as a result of those restrictions, our $4.2 billion of distributions in the first half, that's a bit below a $9 billion annualized run rate.

Bill Bullock: But as you know, the proxy is now mailed out with regulatory requirements that we have in place. We're restricted from buying back any of our shares until that marathon shareholder vote, but that is just around the corner. That's August 29.

Bill: But as you know, the proxy is now mailed out with regulatory requirements that we have in place. We're restricted from buying back any of our shares until that marathon shareholder vote. But that is just right around the corner. That's August 29.

Ryan Lance: We're restricted from buying back any of our shares and told that Marathon shareholder vote. But that is just right around the corner. That's August 29. And so to answer your question, once the marathon shareholder votes complete, you should expect us to be leading in the buybacks. And we think that's really important because we consistently been one of our largest buyers of stock every quarter. And you can run the math on that. It's pretty straightforward. That's at least $3 billion of buybacks that you should expect through the third and fourth quarter. And that would put us really right in line with our long-term track record of retiring about 5% of our shares on an annualized basis that we've had since the strategy reset.

Bill Bullock: And so to answer your question, once the marathon shareholder votes are complete, you should expect us to be leaning into a buyback. And we think that's really important because we've consistently been one of our largest buyers of stock every quarter. And you can run the math on that. It's pretty straightforward.

Bill: And so, to answer your question, once the marathon shareholder vote is complete, you should expect us to be leaning into buybacks. And we think that's really important because we've consistently been one of our largest buyers of stock every quarter.

Bill Bullock: That's at least $3 billion of buybacks that you should expect through the third and fourth quarters. And that would put us really right in line with our long-term track record of retiring about 5% of our shares on an annualized basis that we've had since the strategy reset. And then, as Ryan reiterated in his comments, once we close Marathon, we expect to be increasing our annualized buyback rate by $2 billion. That would put total annualized distributions at a run rate above 11, inclusive of the base dividend increase slated for the fourth quarter.

Speaker Change: And you can run the math on that, it's pretty straightforward, that's at least three billion of buybacks that you should expect through the third and fourth quarter.

Speaker Change: And that would put us really right in line with our long-term track record of retiring about 5% of our shares on an annualized basis that we've had since the strategy reset.

Ryan Lance: Then, as Ryan Rio de Janeiro comments, once we close marathon, we expect to be increasing our annualized buyback rate by $2 billion. That would put total annualized distributions at a run rate above $11, inclusive of the base dividend increase slated for the fourth quarter. So, yeah, leaning into buybacks as we go through the remainder of the year and really quite a little bit of things to be looking forward to. Pretty excited about.

Speaker Change: And then, as Ryan reiterated in his comments, once we close Marathon, we expect to be increasing our annualized buyback rate by $2 billion.

Speaker Change: That would put total annualized distributions at a run rate above 11 inclusive of the base dividend increase slated for the fourth quarter So yeah leaning into buybacks as we go through the the remainder of the year and really quite a little bit Things to be looking forward to pretty excited about

Ryan Lance: So, yeah, leaning into buybacks as we go through the remainder of the year and really quite a few things to be looking forward to, pretty excited about. And Neal, I would add that, you know, look, the share price has been frustrating to watch through the first half of the year, and we understand that. We've been out of the market due to the marathon transaction. I just want to remind everybody that, you know, shareholders come first in our value proposition, and that's been consistent since we reset in 2016.

Ryan Lance: And Neil, I would add that look, the share price has been frustrating to watch through the first half of the year. And we get it. We've been out of the market due to the marathon transaction. I just remind everybody that the shareholders come first in our value proposition. And that's been consistent since we reset in 2016. I mean, we retired over 400 million of our shares over that period of time, and the average price per share that we purchased is somewhere in the $70 per share price. So it's been the program has been managed really well.

Speaker Change: And Neil, I would add that, you know, look, the share price has been frustrating to watch.

Speaker Change: and I are going to be talking about the Marathon Transaction. I just want to remind everybody that the shareholders come first in our value proposition. That has been consistent since we reset in 2016. We retired over 400 million of our shares.

Ryan Lance: You know, we retired over 400 million of our shares over that period of time, and I think the average price per share that we've purchased is somewhere in the $70 per share price range, so it's been a – it's been – the program's been managed really well.

Speaker Change: Over that period of time and I think the average price per share that we purchased is somewhere in the $70 Per share price, so it's been a it's been remember the program has been managed

Ryan Lance: If you look at cumulatively our return of capital over that period of time from 2017 through what we expect to do at the end of this year, that's, you know, nearly $57 billion of capital has gone back to our shareholders over that period of time, representing about 45 percent of our market cap today. So, with the – and why we're excited about the marathon transaction is that this is going to be – we're going to be bigger, but we're going to be better, and we're going to have more free cash flow, and we're going to have more funds to distribute back to our shareholders, and we'll retire the shares, as I said in my opening comments, you know, in two to three years, just, you know, So, you know, this is a – this is an important question.

Ryan Lance: If you look at cumulatively, our return of capital over that period of time from 2017 through what we expect to do the end of this year. That's nearly 57 billion dollars of capital has gone back to our shareholders over that period of time, representing about 45% of our market cap today. So with the and why we're excited about the marathon transaction is there's just going to be we're going to be bigger, but we're going to be better. And we're going to have more free cash flow, and we're going to have more fun to distribute back to our shareholders, and will retire the shares, as I said in my opening comments.

Speaker Change: really well. If you look at cumulatively our return of capital over that period of time from 2017 through what we expect to do the end of this year, that's

Speaker Change: And why we're excited about the marathon transaction is we're going to be bigger, but we're going to be better.

Speaker Change: And we're going to have more free cash flow, and we're going to have more funds to distribute back to our shareholders.

Ryan Lance: You know, two to three years just, you know, based on our plans as we see it today. So, you know, this is a, this is an important question. It probably got some undercurrent around the share price performance, which we're not pleased with as well, but we're determined to be back in the market as soon as we can. And buy back the shares to get our return of capital target for 2024.

Speaker Change: you know, two to three more years, just, uh,

Doug Leggett: It's probably got some undercurrent around the share price performance, which we're not pleased with as well, but we're determined to be back in the market as soon as we can and buy back the shares to hit our return of capital target for 2024. Our next question will come from the line, from Doug Leggett with Wolf Research. Oh, sorry guys, I'm trying to turn off the mute button.

Doug Leggate: Our next question will come from the line of Doug Leggate with Wolf Research. Your line is now open.

Doug Leggett: How's everybody doing? Ryan, it was good seeing you a couple weeks ago. Thanks for taking my questions. I got kicked out of a question last time, so I'm going to stick to one, and that is that market recognition of value flows through dividends for companies of your size, so I commend you on your decision on the dividend decision, and I think you only have to look at CNQ to see what I'm talking about, so congratulations on making that decision.

Doug Leggate: Sorry, guys, trying to turn off the mute button. How's everybody doing, Ryan? It was good seeing you a couple of weeks ago. Thanks, sir, for taking my questions.

Speaker Change: Your line is now open.

Speaker Change: Oh, sorry guys, trying to turn off the mute button. How's everybody doing? Ryan, it was good seeing you a couple weeks ago. Thanks for taking my questions.

Doug Leggate: I got done out of a question last time, so I'm going to stick to one, but I want to make one comment very quickly. That is that market recognition of all your Ryan flows through the dividends for companies of your size. So I can manage you under the decision, on the dividend decision, and I think you only have to look at CNQ to see what I'm talking about. So congratulations on making that decision.

Ryan: So I guess I'll get done out of our...

Speaker Change: I got done out of a call a question last time so

Ryan: I'm going to stick to one but I want to make one comment very quickly and that is that

Doug Leggett: My question, however, is on the deal you announced while I was out, and more importantly, the tax benefits that I don't think were really fleshed out in the Q&A. Marathon has a lot of legacy NOLs, and what I'm trying to understand is how you use that, and whether or not that was incorporated into your risk view of synergies, and if not, what that could look like, ultimately, in terms of Yeah, sure. Hi Doug. This is Bill.

Bill Bullock: My question, however, is on the bill you announced while I was out, and more importantly, the tax benefits that I don't think were really fleshed out on the Q&A.

Speaker Change: My question, however, is on the deal you announced while I was out, and more importantly, the tax benefits.

Bill Bullock: The smartphone has a lot of legacy NOLs, and what I'm trying to understand is how you use that and whether or not that was incorporated into your list view of synergies, and if not what I could look like ultimately in terms of value.

Ryan: But I don't think we're really fleshed out on the on the Q&A

Speaker Change: Marathon has a lot of legacy NOLs and what I'm trying to understand is how you use that and whether or not that was incorporated into your risk view of synergies and if not what I could look like ultimately in terms of value.

Bill Bullock: Yeah, sure. Hi, Doug, this is Bill. Yeah, Marathon had what $2.8 billion of NOLs as of the end of year, last year of December 31, 2023. That's a tax-effective value of about $600 million. We certainly expect that Marathon will be using a portion of those losses in 2024 prior to closing, but as you point out, that this is a stock transaction has such, we'd be assuming Marathon's tax basis in its assets, as well as any of those net operating losses that they have or NOLs. And so, just as a reminder, we're in a full tax cash paying position right now, and at today's pricing, we would expect to be able to use any remaining NOLs within the first three years or so.

Bill Bullock: Yeah, Marathon had $2.8 billion of NOLs as of the end of the year last year, December 31, 2023. That's a tax effective value of about $600 million. And we certainly expect that Marathon will be using a portion of those losses in 2024 prior to closing. But as you point out, this is a stock transaction. As such, we'd be assuming Marathon's tax basis and its assets, as well as any of those net operating losses that they have or NOLs.

Speaker Change: Sure, hi Doug, this is Bill. Yeah, Marathon had what 2.8 billion dollars of NOLs as of the end of year last year of December 31st.

Speaker Change: 2023, that's a tax-effective value of about $600,000.

Speaker Change: million dollars and we certainly expect that Marathon will be using a portion of those losses in 2024 prior to closing but as you point out that this isn't a stock transaction

Speaker Change: As such, we'd be assuming Marathon's tax basis and its assets, as well as any of those net operating losses that they have, or NOLs.

Bill Bullock: And so just as a reminder, we're in a full tax cash paying position right now, and at today's prices, we would expect to be able to use any remaining NOLs within the first three years or so. And so what I think is important about this is that we don't consider NOLs as synergies.

Speaker Change: And so, just as a reminder, we're in a full tax cash paying position right now.

Speaker Change: And at today's pricing, we would expect to be able to use any remaining NOLs within the first three years or so.

Bill Bullock: And so what I think is important about this is that we don't consider NOLs as synergies. We tend to think about synergies as things that we're going to be taking action on. So we didn't bring the NOLs up as part of the deal announcement, but yeah, tax benefits are certainly something we consider as part of the transaction. They are real values.

Speaker Change: What I think is important about this is that we don't consider NOLs as synergies.

Bill Bullock: We tend to think about synergies as things that we're going to be taking action on, so we didn't bring the NOLs up as part of the deal announcement. But yeah, tax benefits are certainly something we consider as part of this transaction. They are real value. And Doug, this is Andy.

Speaker Change: We tend to think about synergies as things that we're going to be taking action on.

Speaker Change: We didn't bring the NLs up as part of the deal announcement, but yeah, tax benefits are certainly something we consider as part of this transaction. They are real value.

Bill Bullock: And Doug Cizandi, and as I saw mentioned, we didn't include the NOLs as part of our synergies, but in terms of the synergy, things are progressing really well there too. We remain very confident of achieving that 500 billion synergy run rate within a year or closing, and we see upside to that number. So our activities are now progressing well. As we mentioned previously, we expect to be a pretty seamless integration. We've stood up our integration teams. They're focused on reviewing the organizational structures and systems so that we can be ready to close as soon as we get the go.

Andy O'brien: And as Phil mentioned, you know, we didn't include the NOLs as part of our synergies. But in terms of the synergy, you know, things are progressing really well there, too. You know, we remain very confident of achieving that $500 billion synergy run rate within a year of closing. And we see upsides to that number. So our activities are now progressing well. As we mentioned previously, you know, we expect this to be a pretty seamless integration. We've set up our integration teams. They're focused on reviewing the organizational structures and systems so that we can be ready to close, you know, as soon as we get the go.

Doug: Doug, this is Andy. As Phil mentioned, we didn't include the NOLs as part of our synergies, but in terms of the synergy, things are progressing really well there too. We remain very confident of achieving that $500 billion synergy run rate within a year of closing, and we see upsides of that number.

Doug: So our activities are now progressing well, as we mentioned previously, and we expect this to be a pretty seamless integration.

Speaker Change: We've stood up our integration teams. They're focused on reviewing the organizational structures and systems so that we can be ready to close You know as soon as we get to go

Ryan Lance: So there are some obvious, you know, G&A synergies, primarily focused on the back office support, the corporate function duplication, as well as system integration. But the other synergies that we're looking at are on the operating cost side of things. So there's clear adjacency of the operating areas, which is going to lead to efficiencies such as improved productivity of our field staff. We're also going to be able to rationalize the field office.

Bill Bullock: So there are some obvious, you know, DNA synergies, primarily focused on the back office support, the corporate function duplication, as well as system integrations. The other synergies that we're looking at are on the operating cost side of things. There's clear adjacency of the operating areas, which is going to lead to efficiencies such as improved productive time of our field staff. We're also going to be able to rationalize the field office. And on the capital side, we've been really digging in here too. We've worked the cost setting opportunities, you know, from several angles here. A couple of examples would be, you know, our ability to run the consistent program scale is going to drive savings.

Speaker Change: So there are some obvious, you know, G&A synergies, primarily focused on the back-office support, you know, the corporate function duplication, as well as system integrations.

Speaker Change: You know, the other synergies that we're looking at are on the operating cost side of things. So there's clear adjacency of the operating areas, which is going to lead to efficiencies such as improved productive time of our field staff. We're also going to be able to rationalize the field office.

Ryan Lance: On the capital side, we've been really digging in here too. We've worked out cost-saving opportunities from several angles. A couple of examples would be our ability to run the consistent program of scale is going to drive savings. As we look deeper, we see opportunities to bring the use of our super zippers and remote frack operations to the Marathon Eagles platform. On the synergy side of things, we're progressing really well. We're going to be ready to go day one as soon as the transaction closes. And I'd say, Zach, I'd add just one last thing. I appreciate your comments on the dividend. Look, I'm probably the holdout on the team, given the history and having to make the decision back in 2016.

Speaker Change: And on the capital side, we've been really digging in here, too. We've worked the cost-saving opportunities, you know, from several angles here, and a couple of examples would be, you know, our ability to run the consistent program of scale is going to drive savings.

Bill Bullock: As we look deeper, we see opportunities to bring the use of our super zippers and remote freight operations to the Mountain Eagle position. So, you know, on the synergy side of things, you know, we're progressing really well. We're going to be ready to go day one as soon as the transaction closes.

Speaker Change: You know, as we look deeper, we see opportunities to bring the use of our super zippers and rope frack operations to the Marathon Eagles position. So you know, on the synergy side of things, you know, we're progressing really well. We're going to be ready to go day one as soon as the transaction closes.

Ryan Lance: And I'd say that I just want to ask that I appreciate your comments on the div and they look on private holdout on the team, given the history and having to make the decision back in 2016. The company's gotten a lot bigger. We've gotten a lot better, and we've gotten a lot; we've lowered our cost supply. We have dramatically more resource, more free cash flow, more cash flow. It's in lower prices. We lower as we've lowered our staining capital as well, balance sheets and great shapes. So it all lent itself to doing the dividend action that we're going to do in the fourth quarter, consistent with the close of the marathon transaction to your comment.

Speaker Change: And I'd say, just one last thing, I appreciate your comments on the dividend look, I'm probably going to hold out on the team.

Speaker Change: given the history and having to make the decision back in 2016.

Ryan Lance: But look, the company's gotten a lot bigger. We've gotten a lot better. And we've gotten a lot – we've lowered our cost supply. We have dramatically more resources, more free cash flow – more cash flow at lower prices. We've lowered our sustaining capital as well, and our balance sheet's in great shape.

Speaker Change: So look, the company's gotten a lot bigger, we've gotten a lot better, and we've gotten a lot, we've lowered our cost supply.

Speaker Change: [inaudible]

Ryan Lance: So it all lent itself to doing the dividend action that we're going to do in the fourth quarter, consistent with the close of the marathon transaction, to your earlier comment. And lastly, on the – you know, we do this integration really well. Just look at our contra experience, the shell experience.

Ryan Lance: And lastly, on the, you know, we do this integration really well. Just look at our concert experience, the shell experience. We'll do this one really well, and we will over deliver on the synergies.

Speaker Change: consistent with the close of the marathon transaction to your earlier comment. And lastly, we do this integration really well. Just look at our Contra experience, the Shell experience. We'll do this one really well, and we will over-deliver on the synergies.

Scott Hanold: Our next question comes from the line of Scott handled with RBC Capital Markets.

Ryan Lance: We'll do this one really well, and we will over-deliver on the synergy. Our next question comes from the line of Scott Hanold with RBC Capital Markets. Your line.

Speaker Change: Our next question comes from the line of Scott Hanold with RBC Capital Markets. Your line is now open.

Scott Hanold: Your line is now open. Thanks.

Scott Hanold: Thanks. My question is around LNG, and I'd be interested to hear about, you know, how your strategy is evolving, specifically your recent regas agreement at the Zubrugge and the Asia agreement. You know, how are you thinking about regional targeting and contracting on the future takeaway to get to that 10 to 15 that you've stated out there? Hey Scott, this is Andy. I can take that one.

Andy O'brien: My question is around LNG, and I'd be interesting to hear about, you know, how your strategy is evolving, specifically your recent regas agreement, the grugee and the age agreement. You know, how are you thinking about regional targeting and in contract on the future takeaway to get to that 10 to 15 that you've stated out there. It's got Zandi; I can take that one. As you mentioned, yeah, we have made further progress on marketing RNG. We did secure 0.75 mtba of regas capacity at the Zabruga terminal in Belgium. And then we also entered into a long-term sales contract with an Asian buyer for approximately 0.5 mtba.

Scott Hanold: Thanks. My question is around LNG, and I'd be interested to hear about, you know, how your strategy is evolving, specifically your recent re-gas agreement at the Zubrugge and

Andy O'brien: And as you mentioned, yeah, we have made further progress on marketing our LNG. We did secure 0.75 MTPA of re-gas capacity at the Zeebrugger terminal in Belgium. And then we also entered into a long-term sales contract with an Asian buyer for approximately 0.5 MTPA. So these recent placements take our total now from the 4.5 we previously communicated to 6 MTPA. As a reminder, two of those are in support of the SPAs we have with CATA.

Zandy: It's got Zandy, I can take that one.

Speaker Change: As you mentioned, yeah, we have made further progress on marketing our LNG. We did secure 0.75 MTPA of regas capacity at the Zeebrugge terminal in Belgium And then we also entered into a long-term sales contract with an Asian buyer for approximately 0.5 MTPA

Andy O'brien: These recent placements take our total now from the 4.5 we previously communicated to 6 mtba. I was reminded two of that is in support of the FBAs we have with Qatar. Now, for competitive reasons, we don't talk too much about in advance, you know, where we're developing offtake sources or regas capacity. But as you can see from this quarter, you know, we're making really good progress on both fronts. And as we previously communicated, you know, over the long term, 10 to 15 Mtba would be a good range of capacity for us. At that size, we can achieve the full benefits of scale already across our organization.

Speaker Change: So these recent placements take our total now from the 4.5 we previously communicated to 6 MTPA. As a reminder, two of that is in support of the SPAs we have with CATA.

Andy O'brien: Now, for competitive reasons, we don't we don't talk too much about in advance where we're developing offtake sources or re-gas capacity. But, you know, as you can see from this quarter, we're making really good progress on both fronts. And as we previously communicated, over the long term, 10 to 15 MTPA would be a good range of capacity for us.

Speaker Change: Now, for competitive reasons, we don't talk too much about in advance where we're developing offtake sources or re-gas capacity, but as you can see from this quarter, we're making really good progress on both fronts.

Speaker Change: And as we previously communicated, over the long term, 10 to 15 MTPA would be a good range of capacity for us. At that size, we can achieve the full benefits of scale really across our organization.

Andy O'brien: At that size, we can achieve the full benefits of scale across our organization. So I think we're really happy with the progress we've made this quarter, and I think everything's on track for what we're trying to achieve here. Our next question comes from the line of Betty Jiang with Barker. Your line is now. Good morning.

Andy O'brien: So, you know, I think we're really happy with the progress we've made, made this quarter and think everything's on track or we're trying to achieve here.

Speaker Change: So, you know, I think we're really happy with the progress we've made this quarter and I think everything's on track for what we're trying to achieve here.

Betty John: Our next question comes from a line of Betty John with Barclays. Your line is now open.

Speaker Change: Our next question comes from the line of Betty Jung with Barclays. Your line is now open.

Betty John: Good morning. Thank you for taking my question. So I want to ask about the upward roommate catbacks to the upper end of the guidance range, which was specifically attributed to Willow and then the operator access.

Betty Jiang: Thank you for taking my question. So I want to ask about the aborted movement in CAPEX to the upper end of the guidance range, which was specifically attributed to Willow and then the non-operated activities. Can you give us an update on how Willow is tracking versus your plan, and is that responsible for most of the increase in the budget? Sure, this is Andy.

Betty Jung: Oh, good morning.

Andy O'brien: Kennedy, can you give us an update on how Willow is tracking versus your plan, and is that responsible for most of the increase in the budget?

Andy O'brien: Okay, this is Andy. Maybe I'll start by just sort of clearing sort of the total guidance, then Kirk, and take your Willow question directly. So, you know, we initially set a guidance range of 11 to 11.5 billion at the beginning of the year, and that includes a number of uncertainties, including Willow. So, we now have wrapped up a successful winter construction season, and we're halfway through the year, and we now have a line of side of achieving a scope of work at Willow around $1.5 to $1.7 billion this year, and any large projects such as Willow, achieving scope of milestones on time or early in the first two years is really quite critical.

Andy O'brien: Maybe I'll start by just sort of clearing the total guidance, then Kirk can take your Willow question directly. So, you know, we initially set a guidance range of $11 to $11.5 billion at the beginning of the year, and that included a number of uncertainties, including Willow. So, you know, we've now wrapped up a successful winter construction season, and we're halfway through the year. And we now have a line of sight of achieving a scope of work at Willow of around $1.5 to $1.7 billion this year. On any large project such as Willow, achieving scope and milestones on time or early in the first few years is really quite critical.

Kirk Johnson: You know, it sets the foundation for us to success and de-risk our project execution.

Andy O'brien: It sets the foundation for us to succeed and de-risks our project execution. The other area we specifically called out is the lower 48. Now, there are a couple of moving parts here. You know, we see an increase in our partner-operated scope. And specifically here, when we're balloted on attractive, low-cost supply opportunities by partners, we're going to participate. And then also on the operating side of things, we are seeing more wealth as a result of our efficiencies.

Kirk Johnson: Then I said, the other arrow we specifically called out is below 48. Now, there are a couple of moving parts here. You know, we see the an increase in our partner operator scope. And specifically here, when we're balancing on attractive low-cost opportunities by partners, we're going to, we're going to participate. And then also on the operating side of things, you know, we are seeing more wild results of our efficiencies. So, both the partner operator activity and the efficiencies, you know, they're going to produce some production benefit in 2025. So, when we think about it, we're pleased with the scope of work we've achieved so far this year, and then the scope we've locked in for the second half.

Speaker Change: And I'd say the other area we specifically called out is the low of 48. Now, there are a couple of moving parts here. We see an increase in our partner-operated scope, and specifically here, when we're balanced on attractive, low-cost supply opportunities by partners, we're going to participate.

Speaker Change: And then also on the operating side of things, you know, we are seeing more wells as a result of our efficiencies. So both the partner operator activity and the efficiencies, you know, they're going to provide us some production benefit in 2025.

Andy O'brien: So both the partner operating activity and the efficiencies are going to provide us with production benefits in 2025. So when we think about it, we're pleased with the scope of work we've achieved so far this year and then the scope we've locked in for the second half. Given we're halfway through the year, we're now comfortable guiding the capital for the total year is going to be about $11.5 billion. Betty, this is this is Kirk, and I can give a little bit more color on Willow specifically, certainly as Andy spoke to our strong execution and the accomplishments that we've realized here in the first part of this year just continue to give us a strong view of what Willow Capital will be here in 2024. And that's why we're moving into this 1.5 to 1.7 billion range.

Speaker Change: So, when we think about it, we're pleased with the scope of work we've achieved so far this year, and then the scope we've locked in for the second half. Now, given we're halfway through the year, we're now comfortable guiding that capital for the total year is going to be about $11.5 billion.

Kirk Johnson: Now, given we're halfway through the year, we're now comfortable guiding the capital for the total year is going to be about $1.5 billion.

Kirk Johnson: And Betty, this is, this is Kirk, and I can get a little bit more color here on, on Willow specifically. Certainly, as Andy spoke to our strong execution and the accomplishments that we've realized here in the first part of this year, just continues to give us a strong view of what will a capital will be here in 2024. And that's why we're moving into this 1.5 to 1.7 billion range. Again, it's just a function of really strong execution across our workflows, and that is, of course, factored into our total company guidance. On any large projects such as Willow, achieving our scope and our milestones across the full suite of workflows from engineering through fabrication and construction all the way through supply chain in these first few years, especially having just taken FID here late last year.

Speaker Change: And Betty, this is this is Kirk and I can give a little bit more.

Betty Jung: here on Willow specifically. Certainly as Andy spoke to, our strong execution and the accomplishments that we've realized here in the first part of this year, just continues to give us a strong view of what Willow Capital will be here in 2024. And that's.

Kirk Johnson: Again, it's just a function of really strong execution across our workflows. And that is, of course, factored into our total company guidance. On any large project such as Willow, achieving our scope and our milestones across the full suite of workflows from engineering through fabrication and construction all the way through the supply chain in these first few years, especially having just taken FID here late last year, it's just critical.

Speaker Change: on any large project such as Willow, achieving our scope and our milestones across the full suite of workflows.

Kirk Johnson: And this sets the foundation for our success going forward as a project. Certainly, as you heard from me last quarter, our winter construction season here in 2024 wrapped up, and we were able to achieve all the critical scope that we had planned here, despite some pretty challenging weather that caused some early delays, but ultimately, we were able to get all of that critical scope completed. On fabrication, the largest of our operation center modules were completed ahead of schedule. Those modules shipped, and they've now actually arrived in Alaska, and we have plans to take offload them from barge to shore here this month in August.

Kirk Johnson: It's just critical, and this sets the foundation for our success going forward as a project. Certainly, as you heard from me last quarter, our winter construction season here in 2024 wrapped up, and we were able to achieve all the critical scope that we had planned here, despite some pretty challenging weather that caused some early delays. But ultimately, we were able to get all of that critical scope completed. On fabrication, the largest of our operation center modules, we completed ahead of schedule those modules shipped, and they've now actually arrived in Alaska, and we have plans to take offload from barge to shore here this month in August.

Speaker Change: Certainly, as you heard from me last quarter, our winter construction season here in 2024 wrapped up and we were able to achieve all the critical scope that we had planned here despite some pretty challenging weather.

Speaker Change: The largest of our operation center modules we completed ahead of schedule. Those those modules.

Speaker Change: shipped and they've now actually arrived in Alaska and we have plans to take offload from barge to shore here this month in August.

Kirk Johnson: The first engineering is also on track, and when we couple up the fact that we're just doing really well on engineering as well as wrapping up these operations center modules a bit early, it's allowed us and our contractors to rule directly from fab to the office center modules into the central processing facility modules, and we're able to do that actually a couple months better than plan, which just puts us in a strong position as we set this foundation for the large project. In fact, we cut steel here just last month in July, so I'll wrap it up by again just reinforcing this first year post FID is important, and it's also important in procurement. All of our major facility contracts have been landed in equipment orders, and in fact, we're now at a place where we can say 80% of our total facility spend is wrapped up within contracts, and we continue to make progress on that here as we move into the second half of the year.

Kirk Johnson: Engineering is also on track, and when we couple up the fact that we're just doing really well on engineering as well as, you know, wrapping up these operations center modules a bit early, it's allowed us and our contractors to roll directly from the fab of the operation center modules into the central processing facility modules, and we're able to do that actually a couple months earlier than planned, which just puts us in a strong position as we set this foundation In fact, we cut steel here just last month in July.

Speaker Change: Engineering is also on track and and when we couple up the fact that we're just doing really well on on engineering as well as you know wrapping up these operation center modules a bit early

Speaker Change: It's allowed us and our contractors to roll directly from Fab of the Op Center modules into the Central Processing Facility modules.

Kirk Johnson: So, I'll wrap it up by, again, just reinforcing that this first year post FID is important, and it's also important in procurement. All of our major facility contracts have been secured, and equipment orders, and, in fact, we're now at a place where we can say 80% of our total facility spend is wrapped up in contracts, and we continue to make progress on that here as we move into the second half of the year.

Speaker Change: In fact, we cut steel here just last month in July.

Speaker Change: So, I'll wrap it up by again just reinforcing, you know, this first year post-FID is important, and it's also important in procurement. All of our major facility contracts have been landed and equipment orders, and in fact we're now at a place where we can say 80% of our total facility spend

Speaker Change: is wrapped up within contracts, and we continue to make progress on that here as we move into the second half of the year.

Kirk Johnson: So again, across all the workflows, just hitting these milestones early is really important, and it gives us a lot of confidence to reinforce our prior guide on total project capital, and we're still on track for a 2029 first oil.

Kirk Johnson: So, again, across all the workflows, just hitting these milestones early is really important and gives us a lot of confidence to reinforce our prior guide on total project capital, and we're still on track for 2029 first oil. Betty, I would step back and make a couple comments on my side, too.

Speaker Change: So, again, across all the workflows.

Speaker Change: to reinforce our prior guide on total project capital, and we're still on track for a 2029 first oil.

Ryan Lance: And Betty, I would step back to sit at a very eye level, a couple of comments on my side too. You, you shareholder, should want us doing this. This is the risking the big project is Kirk described. And on the, on the extra of your work that Andy talked about, look, our choice is to cut back our operating program to hit some capital number for the year, and that's not a good decision either. So rather than cut back an operating program, just to cover for additional ballots for getting from us. Other operators doesn't make a lot of sense to us, given the cost of supply of those opportunities.

Betty: and Betty I would step back just at a very high level a couple comments on my side to you. Shareholders should want us doing this. This is de-risking the big project as Kirk described.

Ryan Lance: You shareholders should want us doing this because this is de-risking the big project, as Kirk described. And on the extra OBO work that Andy talked about, look, our choice is to cut back our operating program to hit some capital number for the year, and that's not a good decision either. So rather than cut back an operating program just to cover for additional ballots we're getting from other operators doesn't make a lot of sense to us given the cost of supply of those opportunities.

Speaker Change: and on the extra-OBO work that Andy talked about. Look, our choice is to cut back our operating program to hit some capital number.

Speaker Change: for the year, and that's not a good decision either. So rather than cut back an operating program just to cover for additional ballots we're getting from other operators, it doesn't make a lot of sense to us given the cost of supply of those opportunities. So we're wanting to fund both of them at this stage.

Ryan Lance: So we're wanting to fund both of them at this time. Our next question comes from the line, Richardson, with Evercore ISD.

Ryan Lance: So we're wanting to fund both of them at this stage.

Steve Richardson: Our next question comes from a line of Steve Richardson with Evercore ISI. Your line is now open.

Speaker Change: Our next question comes from the line of Steve Richardson with Evercore ISI. Your line is now open.

Stephen Richardson: Our line is now open. Thank you. I wonder if you could just follow up on that last comment, Ryan, in terms of activity in the lower 48. So it sounds like a combination of more OBO and also maintaining your program. Can you talk a little bit about what you're seeing on the leading edge of service costs and appreciate that that probably, you know, doesn't show up in the high-level numbers in terms of the second half of this year? But if you can foreshadow kind of what you're seeing on the leading edge and what that could mean for 25. Maybe I'll just start that, and Nick can talk about the details of Law 48.

Steve Richardson: Thank you.

Steve Richardson: I wonder if you could just follow up on that last comment, Ryan, in terms of activity in the lower 48. So it sounds like a combination of more OBO and also maintaining your program.

Steve Richardson: Thank you. I wonder if you could just follow up on that last comment, Ryan, in terms of activity in the lower 48. So it sounds like a combination of more OBO and also maintaining your program. Could you talk a little bit about what you're seeing on the leading edge of service costs and appreciate that that probably...

Ryan Lance: Can you talk a little bit about what you're seeing on the leading edge of service costs and appreciate that that probably, you know, doesn't show up in the high level numbers in terms of the second half of this year, but if you could foreshadow kind of what you're seeing on the leading edge and what that could mean for 25. Maybe I'll just start that, and Nick can talk to the details of the lower 48. So, you know, in terms of, you know, inflation and deflation, I was previously communicated where we're seeing a bit of a bifurcation this year with lower 48 seeing deflation while ANI is experiencing some inflation.

Speaker Change: doesn't show up in the high level numbers in terms of the second half of this year, but if you could foreshadow kind of what you're seeing on the leading edge and what that could mean for 25.

Speaker Change: Maybe I'll just start that and Nick can talk to the details of Law 48.

Andy O'brien: So, you know, inflation and deflation, as we previously communicated, you know, where we're seeing a bit of a bifurcation this year with the lower 48 seeing deflation while ANI is experiencing some inflation. Now, I'd say, right at the margin, we're seeing slightly more deflation than we expected in the lower 48, while A&Is are slightly higher than expected, but that's right at the You know, overall, our full-year expectation is still in the low single-digit annual average deflation, company-wide, as we previously guided.

Speaker Change: So, you know, in terms of, you know, inflation and deflation, as we previously communicated, you know, we're seeing a bit of a bifurcation this year with lower 48s seeing deflation while ANI is experiencing some inflation.

Ryan Lance: Now, I'd say right at the margin, you know, we're seeing slightly more deflation than we expected in the lower 48, while ANI is slightly higher than expected. But that's right at the margin, you know. Overall, our Fudger expectation is still in the low single digit annual average deflation company-wide, as has been previously guided. Now, I'll let Nick provide a bit more color on the lower 48, but you know, industry-wide, what we're seeing, we've seen a 20% drop in rig and frack activity over the last 12 months, driven by efficiency gains and activity reductions. And you know, those efficiency improvements are still resulting in higher production as specifically to the Lower 48.

Nick Olds: Now, I'd say right at the margin, you know, we're seeing slightly more deflation than expected in the lower 48, while ANIs are slightly higher than expected, but that's right at the margin. You know, overall, our full-year expectation is still in the low single-digit annual average deflation, company-wide, as we previously guided.

Andy O'brien: Now, I'll let Nick provide a bit more color on the lower 48, but, industry-wide, what we're seeing, we've seen a 20% drop in rig and frack activity over the last 12 months, and your low-sufficiency improvements are still resulting in higher production. As specifically to the lower 48, you know, we are seeing high single to low double-digit deflation in some of our key spend categories. Yes, Steve. Yeah, this is Nick.

Nick Olds: I'll let Nick provide a bit more color on the level 48, but you know industry-wide what we're seeing, we've seen a 20% drop in rig and frack activity over the last 12 months driven by efficiency gains and activity reductions.

Nick Olds: And you know those efficiency improvements are still resulting in higher production Specifically to the lower 48, you know, we are seeing high single to low double digit deflation in some of our key spend categories

Nick Olds: You know, we are seeing high single to low double-digit deflation in sort of our key span categories. Yes, Steve, you know, this is Nick, just a little more commentary, you know, for the first half, we've seen continued deflation around pumping services. The profit; there's an oversupply of profit out in the Permian, so we're seeing some price reduction in there. We think that'll continue into the second half. Now, we spoke about OCTG as well. We see that'll probably continue in the second half as well. A little probably see a little bit of curtail or decrease in deflation in the second half going into 2025, because we've seen fairly large gains over the first half of 2024.

Nick Olds: Just a little more commentary. You know, for the first half, we've seen continued deflation around pumping services, and the prop, and there's an oversupply of prop and out in the Permian. So we're seeing some price reductions in there. We think that'll continue into the second half. And we spoke about OCTG as well.

Nick Olds: Yes, Steve, this is Nick. Just a little more commentary, you know, for the first half we've seen continued deflation around pumping services

Speaker Change: There's an oversupply of Propan out in the Permian, so we're seeing some price reduction in there. We think that'll continue into the second half. And we spoke about OCTG as well.

Speaker Change: And we'll see that will probably continue in the second half as well.

Speaker Change: we'll probably see a little bit of curtailment or decrease in deflation in the second half going into 2025 because we've seen fairly large gains over the first half of 2024.

Nick Olds: We see that will probably continue in the second half as well. We'll probably see a little bit of a curtailment or decrease in deflation in the second half going into 2025 because we've seen fairly large gains over the first half of 2024. But overall, you know, we're capturing that. And when you look at the lower 48 general, we'll have a full run rate; if you look from July through December, we'll capture that deflation.

Nick Olds: But overall, you know, we're capturing that. And when you look at lower 48, general, we'll have a full run rate. If you look from July through December, we'll capture that deflation. That's where we see the fact that our 2024 budget is modestly lower than 2023, primarily driven by that market deflation cap.

Speaker Change: But overall, you know, we're capturing that and when you look at lower 48 general, we'll have a full run rate if you look from July through December.

Speaker Change: will capture that deflation. That's where we see the fact that our 2024 budget is modestly lower than 2023, primarily driven by that market deflation capture.

Nick Olds: Richard.

John Royall: Our next question comes from a line of John Royall with JP Morgan. Their line is now open.

Nick Olds: That's where we see the fact that our 2024 budget is modestly lower than 2023, primarily driven by that market deflation capture. Our next question comes from the line of John Royall with J.P. Morgan. Your line is now open. Hi, good morning.

Speaker Change: Our next question comes from the line of John Royal with JP Morgan. Your line is now open.

John Royall: Hi, good morning. Thanks for taking my question. So my question is on production. I'm just looking at your guidance for 3-2 and then backing into the guidance for 4-2 from your full-year guide. It looks like a pretty steadily increasing profile throughout the year if I had back the turnaround impact in 3-2.

John Royall: Thanks for taking my question. So my question is on production. I'm just looking at your guidance for 3Q and then backing into the guidance for 4Q from your full-year guidance. It looks like a pretty steadily increasing profile throughout the year if I add back the turnaround impacts in 3Q. And I think that's in line with how you've talked about the year generally, but maybe you could just give a little color on the moving pieces in production between the different regions as we progress back after the year outside of the turnaround impacts you've already called out. Sure, I can take that one, and I think the short answer is, yes, it is pretty steady when you adjust the turnarounds.

John Royal: Hi, good morning. Thanks for taking my question.

John Royal: So my question is on production. I'm just looking at your guidance for 3.2 and then backing into the guidance for 4.2 from your four-year guide.

Speaker Change: It looks like a pretty steadily increasing profile throughout the year if I add back the turnaround impacts in 3Q.

John Royall: I think that's in line with how you talked about the year generally, but maybe you could just give a little color on the moving pieces in production between the different regions as we progress the back after the year outside of the turnaround impact you've already called out. Sure, I can take that one, and I think the short answer is yes; it is pretty steady when you adjust the turnaround. We're expecting organic production to grow 2-4% in 2024, and actually pretty consistent across the lower 48 and Alaskan international. As Bill said in his prepared remarks, organic production was roughly 4% year over year in the second quarter, which is towards the top end of our guidance, again with a balance across the lower 48 and Al.

Speaker Change: and I think that's in line with how you've talked about the year generally, but maybe you could just give a little color on the moving pieces in production between the different regions as we progress back after the year outside of the turnaround impacts you've already called out.

Speaker Change: Sure, I can take that one and I think the short answer is yes, it is pretty steady when you adjust the turnarounds.

Andy O'brien: We're expecting organic production to grow 2% to 4% in 2024, and that should be pretty consistent across the lower 48 and Alaska and international. And as Bill said in his prepared remarks, organic production was up roughly 4% year over year in the second quarter, which is towards the top end of our guidance, again, with a balance across levels 48 in A&I. Now, if you look at our production profile this year, and I think this is what you were alluding to, is that if you exclude the turnarounds, we're basically growing at 1% each quarter. It's pretty straightforward.

Speaker Change: We're expecting organic production to grow 2-4% in 2024, and that should be pretty consistent across the lower 48 and Alaska and international.

Speaker Change: And as Bill said in his prepared remarks, organic production was up roughly 4% year over year in the second quarter, which is towards the top end of our guidance, again with a balance across level 48 in A&I.

Andy O'brien: Now, if you look at our production profile this year, and I think this is where you are alluding to, is that if you exclude the turnaround, we're basically growing up 1% each quarter. It's pretty straightforward.

Speaker Change: Now if you look at our production profile this year, and I think this is what you were alluding to, is that if you exclude the turnarounds, we're basically growing up 1% each quarter. It's pretty straightforward.

Andy O'brien: You know, the profile that was being amassed a bit in the third quarter, as that was one of our heaviest turnaround quarters in some time, with 90,000 barrels a day of turnaround impact that Bill mentioned in the prepared remark. Maybe just to give a little bit more color on that, you know, that 90,000 barrels are split 50 in Canada, 20 in the lower 48, six in Alaska, five in Norway, and then four in Malaysia and Qatar.

Andy O'brien: The profile always being a massive bit in the third quarter as that's one of our heaviest turnaround quarters in some time with the 90,000 barrels a day of turnaround impact that Bill mentioned in the prepared remarks. Maybe just to give a little bit more color on that. That 90,000 barrels is split 50 in Canada, 20 in the lower 48, 6 in Alaska, 5 in Norway, and 4 in Malaysia and Qatar. And in the lower 48 specifically, our second quarter actually outperformed our expectations. Now we are expecting production to be fairly flat in the third quarter, and that's due to the turnaround I just mentioned in the 20,000 barrels a day that we have at EGLEPOOD.

Bill Bullock: You know, the profile that was being amassed a bit in the third quarter, as that's one of our heaviest turnaround quarters in some time, with a 90,000 barrels a day of turnaround impact that Bill mentioned in the prepared remarks.

Speaker Change: Maybe just to give a little bit more color on that, that 90,000 barrels is split 50 in Canada, 20 in the lower 48, 6 in Alaska, 5 in Norway, and 4 in Malaysia and Qatar.

Andy O'brien: And in the lower 48 specifically, our second quarter actually outperformed our expectations, and we are expecting production to be fairly flat in the third quarter. And that's due to the turnaround I just mentioned of the 20,000 miles a day that we have at Eagleford. Then we'll be up in the fourth quarter versus the third quarter.

Speaker Change: And in the lower 48 specifically, our second quarter actually outperformed our expectations. We are expecting production to be fairly flat in the third quarter, and that's due to the turnaround I just mentioned of the 20,000 vials a day that we have at Eagleford.

Andy O'brien: Then we'll be up in the fourth quarter versus the third quarter. So bottom line, we're tracking right in line with our guidance, just according to quarters of somewhat massive bit with the turnaround activity that you're seeing.

Andy O'brien: So, you know, bottom line, we're tracking right in line with our guidance. Just the quarter to quarter is somewhat masked a bit by the turnaround activity that you're seeing. Our next question comes from the line of Roger Read with Wells Fargo. Your line is now open. Yeah, thanks. Good morning. Um, maybe come back on.

Speaker Change: then we'll be up in the fourth quarter versus the third quarter. So, you know, bottom line, you know, we're tracking right in line with our guidance. Just the quarter-to-quarters are somewhat masked a bit with the turnaround activity that you're seeing.

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

Speaker Change: Our next question comes from the line of Roger Reed with Wells Fargo. Your line is now open.

Roger Reed: Yeah, thanks.

Andy O'brien: Good morning. Maybe you can come back on the guidance side on the op-ex front. Obviously, you know, you're talking about costs going up a little bit. You've talked about some of the things on the capex side. I didn't know if those were tied together like higher activity, higher costs. What part of this is, you know, kind of internal versus external, and broadly speaking, what are the inflationary pressures?

Roger Reed: Yeah, thanks. Good morning.

Roger Read: Welcome back on the guidance side on the OPEX front. You know, you're talking about costs going up a little bit. You've talked about some of the things on the CapEx side. I didn't know if those were... tied together like higher activity and higher costs. What part of this is, you know, kind of internal versus external? Broadly speaking, what are the inflationary pressures? Roger, this is Andy.

Roger Reed: Um, maybe come back on the...

Roger Reed: Come back on the guidance side on the OPEX front.

Roger Reed: You know, you're talking about costs going up a little bit. You've talked about some of the things on the CapEx side. I didn't know if those were tied together, like higher activity, higher costs. What part of this is, you know, kind of internal versus external?

Speaker Change: Broadly speaking, what are the inflationary pressures?

Andy O'brien: Sure, Roger. This is Andy. I can take that one. I still mentioned the prepared remarks. We have raised the guidance to 92 to 93 for the full year. Now, about half of this is from our lower 48 non-operated position; then the other half is our own lifting costs. It's primarily a result of the higher transportation processing costs, some higher utilities, as an additional workover activity. And we have been experiencing some of these impacts in the second quarter, and we're now incorporating those into the full year guidance. Obviously, another point I would make is that, as a reminder, the third quarter is going to be our largest turnaround that I just referred to.

Andy O'brien: I can take that one. As Bill mentioned in his prepared remarks, we have raised the guidance to 9.2 to 9.3 for the full year. Now, about half of this is from our lower 48 non-operated position, and then the other half is our own lifting costs. It's primarily a result of higher transportation and processing costs, some higher utilities, and some additional work over activity.

Speaker Change: Sure, Roger. This is Andy. I can take that one. As Bill mentioned in the prepared remarks, we have raised the guidance to 9.2 to 9.3 for the full year.

Speaker Change: Now about half of this is from our lower 48 non-operated position, and then the other half is our own lifting costs.

Speaker Change: It's primarily a result of the higher transportation and processing costs, some higher utilities, and some additional work over activity. And we have been experiencing some of these impacts in the second quarter, and we're now incorporating those into the four-year guidance.

Andy O'brien: And we have been experiencing some of these impacts in the second quarter, and we're now incorporating them into portfolio guidance. Another point I would make is that, as a reminder, the third quarter is going to be our large turnaround that I just referred to. So with that, we will actually see the third quarter be the high point of controllable costs for this year. Our next question comes from the line of Ryan Todd with Piper Sandler and Carolina Snow.

Speaker Change: Another point I would make is, as a reminder, the third quarter is going to be our large turnaround that I just referred to. So with that, we will actually see the third quarter be the high point of the controllable costs for this year.

Andy O'brien: So with that, we will actually see the third quarter be the high point of the controllable cost for this year.

Ryan Todd: Our next question comes from a line of Ryan Todd with Piper Sandler. Her line is now open.

Speaker Change: Our next question comes from a line of Ryan Todd with Piper Sandler.

Speaker Change: Your line is now open.

Andy O'brien: Thanks. Maybe I could follow up on an LNG topic from earlier. Congratulations on the two announced uptake deals that you have in the LNG business. Can you speak more broadly in terms of what you're seeing on... As you've gone out and marketed gas, what are you seeing more broadly on appetite and market dynamics for LNG sales contracts, and maybe how you think about global supply-demand dynamics over the next couple years in those markets?

Ryan Todd: Maybe if I could follow up on an LLNG topics from earlier, congrats on the two announced off-take bills that you have an LLNG business. Maybe can you speak more broadly in terms of what you're seeing on, as you've gone out in market to gas, what you're seeing more broadly on appetite and market dynamics for LLNG sales contracts, and maybe how you think about global supply demand dynamics over the next couple of years in those markets. Hi, I can take that one too in terms of what we're seeing. In terms of the off-take side of things, I may document from the off-take and the marketing.

Ryan Todd: Thanks. Maybe if I could follow up on an LNG topic from earlier. Congrats on the two announced uptake bills that you have in the LNG business.

Ryan Todd: Can you speak more broadly in terms of what you're seeing on as you've gone out and marketed gas what you're seeing more broadly on appetite and market dynamics for LNG sales contracts and maybe how you think about global supply-demand dynamics over the next couple years in those markets?

Andy O'brien: Hi there, yeah, I can take that one too, in terms of what we're seeing, you know, in terms of the offtake side of things. Maybe I'll come in from the offtake and the marketing side of things. In terms of the offtake side of things, we're happy with our position. And we know we continue to look for further opportunities that have competitive pricing and a high likelihood of FID.

Speaker Change: I can take that one too in terms of what we're seeing. In terms of the off-take side of things, maybe I'll come in from the off-take and the marketing, in terms of the off-take side of it, we're happy with our position and we continue to look for further opportunities that have competitive pricing and a high likelihood of FID.

Ryan Todd: In terms of the off-take side of it, we're happy with our position and we continue to look for further opportunities; our competitive pricing and I'm highly likely to have FID. The LNG pause is causing some questions from potential buyers on the timing of things. But again, against this backdrop, we've been able to sign two deals this quarter, and I think that clearly highlights the benefits of our preventive project. In terms of the marketing of the LNG, we remain happy with the demand we continue to see both in Europe and Asia for new LNG. We continue to work opportunities across the globe, and the reward to come on that with we're aggressive.

Ryan Todd: The LNG pause is causing some questions from potential buyers on the timing of things. But again, against this backdrop, we've been able to sign two deals this quarter, and I think that clearly highlights the benefits of our permitted project.

Andy O'brien: The LNG pause is causing some questions from potential buyers on the timing of things. But again, against this backdrop, we've been able to sign two deals this quarter, and I think that clearly highlights the benefits of our permitted project. And in terms of the marketing of the LNG, you know, we remain happy with the demand we continue to see both in Europe and Asia for new LNG. And we're continuing to work on opportunities across the globe, you know, and, you know, there'll be more to come on that as we address them. We don't We don't talk too much about them in advance.

Ryan Todd: In terms of the marketing of the LNG, we remain happy with the demand we continue to see both in Europe and Asia for new LNG. We're continuing to work opportunities across the globe and there will be more to come on that as we address them. We don't talk too much about them in advance.

Ryan Todd: We don't talk too much about them in advance. But I say no big picture. We remain very constructive on LNG and the role it's going to play.

Andy O'brien: But I think, in the big picture, we remain very constructive on LNG and the role it's going to play. And we're quite pleased with the progress that we're making to move our position out to the 10 to 15 MTPA that we've previously communicated. Our next question comes from a line from Neal Dingmann with Carolina South. Thank you. Thank you. Morning, thanks for the time.

Ryan Todd: But I think a big picture, you know, we remain very constructive on LNG and the role it's going to play And we're quite pleased with the progress that we're making To go our position out to the 10 to 15 MTPA that we've previously communicated

Ryan Todd: And we're quite pleased with the progress that we're making to go out position out to the 10 to 15 MTPA that we've previously communicated.

Neil Dingmann: Our next question comes from a line of Neil Dingman with Truest. Your line is now open.

Ryan Todd: Our next question comes from a line of Neil Dingman with Truist. Your line is now open.

Neil Dingmann: Good morning. Thanks for the time. My question is on the Permian under Permian gas takeaway and maybe Lower 48 realization expectations. I'm just wondering. You also just expect the Permian gas price to remain depressed. And they can tell the more third-party pipeline capacity is added.

Neal Dingmann: My question is on the Permian gas takeaway and maybe lower 48 realization expectations. I'm just wondering, you all suggest you expect the Permian gas price to remain depressed, I think, until more third-party pipeline capacity is added. My question is, are you all thinking the pressure could be for several quarters ahead?

Neil Dingman: Morning, thanks for the time. My question is on the Permian gas takeaway and maybe lower 48 realization expectations. I'm just wondering, you all suggest you expect the Permian gas price to remain depressed.

Neil Dingmann: My question is, are you all thinking the pressure could be for several quarters ahead? And, you know, would you all consider. Pertail and anything until gas rebounds. I know you have mostly oil. So just it's enough. There's anything to potentially curtail.

Speaker Change: And they can tell the more third-party

Speaker Change: pipeline capacity is added. My question is are you all thinking the pressure could be for several quarters ahead and you know would you all consider curtailing anything until gas rebounds? I know you have mostly oil so just if there's anything to potentially curtail.

Neal Dingmann: And, you know, would you all consider curtailing anything until gas rebounds? I know you've mostly got oil, so just to see if there's anything to potentially curtail. Yeah, Neil.

Ryan Lance: Yeah, Neil. So, as we indicated on our first quarter earnings call, we expected lower 48 gas realizations in the second quarter to be particularly low. You'll recall at that time, Permian Basin pricing was printing negative. That is in fact how things played out for the quarter. You saw a negative Waha first of month and gas daily pricing through the quarter. So yeah, first of month, lower 48 realizations were just under 20% of Henry Hub in the quarter. Now, we've got a significant portion of our production in the Permian Basin. We've said that we shipped to multiple markets out of the Permian, including the Gulf Coast and Westcorp Coast, but a sizeable portion of our production does receive in base and price.

Bill Bullock: So, as we indicated on our first quarter earnings call, we expected lower 48 gas realizations in the second quarter to be particularly low. You'll recall that at that time, Permian Basin pricing was printing negative. That is, in fact, how things played out for the quarter. You saw negative WAHA first of the month and gas daily prices through the quarter. So yeah, first of the month, lower 48 realizations were just under 20% of Henry Hubb's in the quarter.

Speaker Change: Good to see you, Neil.

Speaker Change: Yeah, Neil, so as we indicated on our first quarter.

Speaker Change: earnings call, we expected lower 48 gas realizations in the second quarter to be particularly low.

Speaker Change: You'll recall at that time, Permian Basin Pricings...

Speaker Change: was printing negative. That is, in fact, how things played out for the quarter. You saw a negative WAHA first of month and gas daily pricing through the quarter.

Roger Reed: So, yeah, first-of-month lower 48 realizations were just under 20% of Henry Hub in the quarter. Now, we've got a significant portion of our production is Permian Basin.

Bill Bullock: Now, we've got a significant portion of our production in the Permian Basin. We've said that we ship to multiple markets out of the Permian, including the Gulf Coast and West Coast, but a sizable portion of our production does receive in-basin pricing. And as we went through the second quarter, there was increased maintenance activity in the Permian Basin that put downward pressure on prices. The basin is pretty constrained right now. The takeaway is fully utilized.

Roger Reed: We've said that we ship to multiple markets out of the permit, including the Gulf Coast and West Coast, but a sizable portion of our production does receive in-basin pricing.

Ryan Lance: Anderson, and as we went through the second quarter, there was increased maintenance activity in the premium basin that put downward pressure on pricing. The basin is pretty constrained right now; take away fully utilized outages are an issue, and we would expect that to trim to continue into the third quarter. Relief is really coming later in the third quarter with Matterhorn pipeline coming on, adding some significant takeaway. We think that's going to be really helpful for Permian Basin pricing as we look towards the end of the third quarter and end of the fourth quarter. We should improve overall Lord 48 capture rates as we go forward.

Roger Reed: As we went through the second quarter, there was increased maintenance activity in the Permian Basin that put downward pressure on pricing.

Bill Bullock: Outages are an issue, and we would expect that trend to continue into the third quarter. Relief is really coming later in the third quarter with Matterhorn Pipeline coming on, adding some significant takeaway. We think that's gonna be really helpful for Permian Basin pricing as we look towards the end of the third quarter and end of the fourth quarter and should improve overall lower 48 capture rates as we go forward. The other thing I just note, as you look at the second quarter and think about the remainder of the year, is that in the second quarter, not only was Permian Basin pricing low, but a lot of the premium markets were impacted.

Roger Reed: The basin is pretty constrained right now. Takeaway is fully utilized. Outages are an issue. We would expect that trend to continue into the third quarter. Relief is really coming later in the third quarter with Matterhorn Pipeline coming on, adding some significant takeaway.

Roger Reed: We think that's going to be really helpful for Permian Basin pricing as we look towards the end of the third quarter and end of the fourth quarter.

Roger Reed: and should improve overall lower 48 capture rates.

Ryan Lance: The other thing I just note as you look at second quarter, you think about the remainder of the year, is that in the second quarter, not only was Permian Basin pricing low, but a lot of the premium markets were impacted. California border pricing traded at a discount to Henry Hub, which is a bit unusual. You know, inventory levels were high; mild or weather was going on. I would expect, as we go out of the shoulder months and into the fall, that that will resolve itself too. But the big thing we're looking for is additional takeaway capacity coming out of the Permian Basin, with Matterhorn taking up, and we've got a little bit of capacity on that.

Roger Reed: as we go forward.

Roger Reed: The other thing I'd just note as you look at second quarter and you think about the remainder of the year is that in the second quarter, not only was Permian Basin pricing low, but a lot of the premium markets...

Bill Bullock: California border pricing traded at a discount to Henry Hub, which is a bit unusual. You know, inventory levels were high. Milder weather was going on, so I would expect, as we go out of the shoulder months and into the fall, that that will resolve itself, too. But the big thing we're looking for is additional takeaway capacity coming out of the Permian Basin with Matterhorn picking up. And we've got a little bit of capacity for that. And then, to your point about, you know, would you think about curtailing it?

Roger Reed: were impacted. California border pricing traded at a discount to Henry Hub, which is a bit unusual.

Roger Reed: [inaudible]

Roger Reed: of the Permian Basin with Matterhorn picking up and we've got a little bit of capacity on that.

Ryan Lance: And then you're to your point about you know what you think about curtailing. Well, as we've said repeatedly for conical folks, that this is a pricing issue, not a flow assurance issue. And that's really important because we're primarily investing in oil producing opportunities in the Permian Basin, and we do not routinely flare, so being able to move that production is important. So we're a long way away from looking curtailing oil production, but we are looking forward to additional capacity coming out of the Permian Basin.

Bill Bullock: Well, as we've said repeatedly for ConocoPhillips, this is a pricing issue, not a flow assurance issue. And that's really important because we're primarily investing in oil production opportunities in the Permian Basin, and we do not routinely flare. So being able to move that production is important. So we're a long way away from looking at curtailing oil production. But we are looking forward to additional capacity coming out of the Permian Basin. Our next question comes from the line of Leo Mariani with Roth.

Roger Reed: And then to your point about what you think about curtailing, well, as we've said repeatedly for ConocoPhillips, this is a pricing issue, not a flow assurance issue, and that's really important because...

Roger Reed: We're primarily investing in oil producing opportunities in Permian Basin and we do not routinely flare So being able to move that production is important. So We're a long way away from from looking at curtailing oil production But we are looking forward to additional capacity coming out of the Permian Basin

Leo Mariani: Our next question comes from the line of Leo Mariani, with broth for line is no open. I wanted to just touch base on a couple of your different operating areas from a production perspective. Eagle Ford volumes are up, you know, very, very sharply, you know, this quarter. And you also saw a pretty nice rise in your Canadian, you know, Monteney volumes as well. So it was hoping you can give, you know, a little color around those. I mean, some of the jump in Eagle Ford production, you know, somewhat temporary. Maybe there was a lot of turn in lines and expect production to moderate, you know, later this year and also just on the on the Monteney stuff.

Roger Reed: Our next question comes from the line of Leo Mariani with Roth. Your line is now open.

Leo Mariani: I wanted to just touch base on a couple of your different operating areas from a production perspective. Eagle Ford volumes are up, you know, very, very sharply this quarter. And you also saw a pretty nice rise in your Canadian, you know, Montney volumes as well. So I was hoping you could give, you know, a little color around those.

Speaker Change: I want to just touch base on a couple of your different operating areas from a production perspective.

Speaker Change: Eagle Ford volumes are up, you know, very, very sharply, you know, this quarter.

Leo Mariani: And you also saw a pretty nice rise in your Canadian, you know, Montney volumes as well. So, I was hoping you can give, you know, a little color around those. I mean, is some of the jump in Eagle Ford production, you know, somewhat temporary? Maybe there was a lot of turning lines and expect production there to moderate, you know, later this year. And also, just on the Montney stuff, is that just going to kind of steadily grow? Just trying to get a sense of trajectory on that asset also. Thanks.

Leo Mariani: I mean, some of the jump in Eagle Ford production, you know, somewhat temporary; maybe there was a lot of turning lines and expect production there to moderate, you know, later this year. And also, just on the Montney stuff, is that just going to kind of steadily grow? Just trying to get a sense of trajectory on that asset also. Thanks.

Leo Mariani: Is that just going to kind of steadily grow, just trying to get a sense of trajectory on that asset also. Thanks.

Leo Mariani: Yeah, Leo, I'll start here. So on Eagle Ford, you're right; we really encourage with the production. We hit 238,000 barrels equivalent per day versus the 197,000 from Q1. Take the group back; you know, we had that frat gap that we had the second half of 2023. And then we reinstated that frat crew. And so you're really seeing the benefit in Q2 as we work through that inventory. So really encourage with the wells that we placed online and a Q1 and in Q2. So we've seen a strong bump in the production there. Wells are performing very strong throughout.

Nick Olds: Yeah, Leo, I'll start here. So on Eagleford, you're right, we were really encouraged by the production; we hit 238,000 barrels of equipment per day versus 197,000 from Q1. Take the group back, you know, we had that frack gap that we had in the second half of 2023, and then we reinstated that frack crew.

Speaker Change: Yeah, Leo, I'll start here. So on Eagle Ferd, you're right, we really encouraged with the production. We hit 238,000 barrels of equipment per day versus 197,000 from Q1.

Roger Reed: take the group back. You know, we had that frack gap that we had in the second half of 2023.

Nick Olds: And so you're really seeing the benefit in Q2 as we work through that inventory. So, really encouraged with the wells that we placed online in Q1 and in Q2. So we've seen a strong bump in the production there, and the wells are performing very strong throughout.

Roger Reed: and then we reinstated that frat crew and so you're really seeing

Roger Reed: The benefit in Q2 is we work through that inventory.

Speaker Change: So, really encouraged with the wells that we placed online and in Q1 and in Q2, so we've seen a strong bump in the production there. Wells are performing very strong throughout. Now, as Andy mentioned, on the turnarounds, we're currently going through, as we speak,

Nick Olds: Now, as Andy mentioned about the turnarounds, we're currently going through, as we speak, a large turnaround in Eagleford. That's going as planned, as expected. So we'll be slightly down on that. That's 20,000 barrels per day impact, and equipment per day for Q3. And you'll expect to have Q4 back up and running. So a really strong performance on Eagleford overall. Yeah, and Leo, you asked about Montany as well.

Leo Mariani: Now, as Andy mentioned on the turn around, we're currently going through, as we speak, a large turn around in Eagle Ford. That's going as planned, as expected. So we'll be slightly down on that. That's 20,000 barrels per day impact equivalent per day for Q3. And you'll expect to cap Q4 back up and running. So really strong performance on Eagle Ford overall.

Andy O'brien: a large turnaround in Eagleford. That's going as planned, as expected. So we'll be slightly down on that. That's 20,000 barrels per day impact, equivalent per day for Q3, and you'll expect to have Q4 back up and running. So, really strong performance on Eagleford overall.

Leo Mariani: Yeah, and Leo, you asked about Milwaukee as well. You know, we had a really strong start here in 2024. We're in the second quarter of this last quarter; we averaged 43,000 barrels equivalent today, and I too can take you back a bit. That's more than double relative to same quarter last year, and then we're up quarter over quarter as well, roughly 3,000 barrels today, and all that's just being driven by us bringing additional wells online, as we seek to fill this new CPF2 capacity, obviously, that we commissioned here late last year. Also, for Maudney, our production rights have been in line with our tight perps, so really pleased with how we're seeing those wells come online, and we do, in fact, continue to expect to modestly grow our production throughout 2024.

Kirk Johnson: We had a really strong start here in 2024, where in the second quarter, this last quarter, we averaged 43,000 barrels equivalent today. And I, too, can take you back a bit. That's more than double relative to the same quarter last year. And then we're up quarter over quarter as well, roughly 3,000 barrels a day. And all that's just being driven by us bringing additional wells online as we seek to fill this new CPF2 capacity, obviously, that we commissioned here late last year. Also, for Montany, our production rates have been in line with our type curve.

Speaker Change: Yeah, and Leo, you asked about Montney as well. You know, we had a really strong start here in 2024.

Leo Mariani: where in second quarter, this last quarter, we averaged 43,000 barrels equivalent today. And, you know, I too can take you back a bit, that's more than double relative to same quarter last year. And then we're up quarter over quarter as well, roughly 3,000 barrels today.

Roger Reed: And all that's just being driven by us bringing additional wells online as we seek to fill this new CPF2 capacity, obviously, that we commissioned here late last year.

Kirk Johnson: So we're really pleased with how we're seeing those wells come online. And we do, in fact, continue to expect to modestly grow our production throughout 2024. Albeit, as you know, and you've witnessed from us in the lower 48, unconventional profiles, they can be a bit lumpy quarter to quarter. And so I'll guide you here a little bit.

Roger Reed: Also, for Montany, our production rates have been in line with our tight curve, so we're really pleased with how we're seeing those wells come online.

Roger Reed: and we do in fact continue to expect to modestly grow our production.

Leo Mariani: I'll be, as you know, and you've witnessed from us in a lower 48, unconventional profiles. They can be a bit lumpy quarter to quarter, and so I'll guide you here a little bit. We do expect third quarter to be pretty flat to second quarter, but then we'll start seeing up tick again here in the last quarter of the year. So, of course, you know, naturally, we're seeking to make sure our production remains in sync with this new processing facility and off-take capacity, that having just added last year, you know, again, it's a 100 million cubic feet a day of gas processing capacity, and an additional 30 in both crude and condensate handling capacity with this new phase.

Roger Reed: throughout 2024, albeit, as you know,

Roger Reed: and you've witnessed from us in the lower 48 unconventional profiles can they can be a bit lumpy quarter-to-quarter.

Kirk Johnson: We do expect the third quarter to be pretty flat compared to the second quarter, but then we'll start to see an uptick again here in the last quarter of the year. So of course, naturally, we're seeking to make sure our production remains in sync with this new processing facility and offtake capacity that, having just added last year, again, it's 100 million cubic feet a day of gas processing capacity and an additional 30 in both crude and condensate handling capacity with this new phase.

Roger Reed: And so I'll guide you here a little bit. We do expect third quarter to be pretty flat to second quarter, but then we'll start to see an uptick again here in the last quarter of the year.

Roger Reed: So, of course, you know, naturally we're seeking to make sure our production remains in sync with this new processing facility and offtake capacity that having just added last year, you know, again, it's 100 million cubic feet a day of gas processing capacity and an additional 30

Kirk Johnson: And so having brought on the second rig earlier this year, we're just slowly ramping into that new capacity, and we expect that to continue modestly into the future. So just again, pleased with how we're making some progress on our well activities, their performance, and then obviously everything that we're gaining from the experience we have in the lower 48. Our next question comes from the line of Kalei Akamine with Bank of America. Hey, good morning, guys.

Roger Reed: in both crude and condensate handling capacity with this new phase. And so, having brought on the second rig earlier this year, we're just slowly ramping into that new capacity, and we expect that to continue here modestly into the future.

Leo Mariani: And so, having brought on the second rig earlier this year, we're just slowly raising and ramping into that new capacity, and we expect that to continue here modestly into the future. So, just again, pleased with how we're making some progress on our wells activities, their performance, and then obviously everything that we're gaining from the experience we have in the lower 48.

Speaker Change: I'm just, again, pleased with how we're making some progress on our wells activities, their performance, and then, obviously, everything that we're gaining from the experience we have in the lower 48.

Kaleinoheaokealaula Akamine: Our next question comes from the line of Kalei Akamine with Bank of America. Your line is now open.

Roger Reed: Our next question comes from the line of Kalei Akamai with Bank of America. Your line is now open.

Kaleinoheaokealaula Akamine: Hey, good morning, guys. I'd like to follow up on the gas discussion. You talked a little bit about how your Permian is well set up through your end. To the extent you can, I'd like you to expand on that and talk about how the macro is shaping up through the end of 2025. And longer term, maybe that macro gets a little bit more interesting due to power and exports. So, as you sort of assess that change, wondering if you think your portfolio is appropriately positioned to exploit that kind of macro.

Kalei Akamine: I'd like to follow up on the gas discussion. You talked a little bit about how your Permian is well set up through year end. To the extent you can, I'd like to expand on that and talk about how the macro is shaping up through the end of 2025. And, longer term, maybe that macro gets a little bit more interesting due to power and exports. So as you sort of assess that change, I was wondering if you think your portfolio is appropriately positioned to exploit that kind of macro? Hi Clay, I can take that. This is Andy here.

Kalei Akamai: Hey, good morning guys. I'd like to follow up on the gas discussion. You talked a little bit about how your Permian is well set up through year-end. To the extent you can, I'd like you to expand on that and talk about how the macro is shaping up through the end of 2025 and longer term, maybe that macro gets a little bit more interesting due to power and exports.

Speaker Change: So, as you sort of assess that change, wondering if you think your portfolio is appropriately positioned to exploit that kind of macro.

Kaleinoheaokealaula Akamine: Hi, Clay. I can take that stand here. Maybe I'll start with the demand side of that. And then we can talk about sort of how we might respond to that. So, you know, I think you set up the narrative pretty well there in terms of sort of, you know, we are expecting to see, you know, tell wins, you know, in sort of gas, you know, demand for gas. On the LNG side, you know, data center size and transportation needs, you know, just the under construction LNG plants, you know, are going to add 10 to 15 BCF a day over the next several years.

Andy O'brien: Maybe I'll start with the demand side of that, and then we can talk about sort of how we might respond to that. So, you know, I think you set up the narrative pretty well there in terms of sort of, you know, we are expecting to see tailwinds, you know, in gas demand for gas. On the LNG side, you know, data center size and transportation needs. So just the under-construction LNG plants are going to add 10 to 15 BCF a day over the next several years, and that's alongside the broader electrification trends.

Kalei Akamai: Hi Clay, I can take that, it's Andy here. Maybe I'll start with you know the demand side of that and then we can talk about sort of how we might respond to that so

Andy O'brien: You know, I think you set up the narrative pretty well there in terms of sort of, you know, we are expecting to see tailwinds, you know, in sort of gas, you know, demand for gas on the LNG side, you know, data center size and transportation needs.

Roger Reed: So just the under-construction LNG plants are going to add 10 to 15 BCF a day over the next several years, and that's alongside the broader electrification trends.

Kaleinoheaokealaula Akamine: And that's alongside the broader electrification trends. You know, there has been a lot of forecasts. You know, I think we've all seen them on, in a way, I driven power demand. And they're all constructive for natural gas demand. But, you know, I do want to find out; it's important. So there are lots of different factors of play here, such as a pace of those data center build outs, you know, constraints on the power expansion, you know, the expected improvement in efficiency. So, you know, we're still carefully working through that piece of the equation in terms of just seeing how, you know, how material it's going to be over time.

Andy O'brien: You know, there have been a lot of forecasts, you know, we've all seen them on, you know, AI driven power demand. And they're all constructive for natural gas demand. But, you know, I do want to point out that it's important.

Roger Reed: know that know the

Speaker Change: There has been a lot of forecasts, you know, I think we've all seen them on, you know, AI-driven power demand And they're all constructed for natural gas demand, but you know, I do want to find out it's important So there are lots of different factors at play here such as the pace of those data center build outs

Roger Reed: [inaudible]

Andy O'brien: So there are lots of different factors at play here, such as the pace of those data center build outs, you know, constraints on the power expansion, you know, the expected improvement in efficiency. So, you know, we're still carefully working through that piece of the equation in terms of just seeing how, you know, how material it's going to be over time. But, you know, absolutely, yeah, you know, we do see a driving demand.

Kaleinoheaokealaula Akamine: But, you know, absolutely, you know, we do see it driving demand. Then, then sort of, you know, we're going to the second half of the question sort of, you know, what does that mean for us? So, in terms of our portfolio, we have a lot of gas opportunities in our portfolio that we're not currently developing today, a lot of dry gas opportunities. Also, we have a lot of associated gas, you know, unconventional, and we could choose to basically target, you know, gassy parts of the unconventional. But, you know, for us, the bottom line is, you know, it's got to compete on a cost of supply basis, you know, where we are today to make the cut for our annual capital program.

Andy O'brien: Then, sort of, you know, going to the second half of the question, sort of, you know, what does that mean for us? So, in terms of our portfolio, we have a lot of gas opportunities in our portfolio that we're not currently developing today, a lot of dry gas opportunities. Also, we have a lot of associated gaps in our unconventionals, and we could choose to basically target gassier parts of the unconventionals.

Roger Reed: Then sort of, you know, going to the second half of the question, sort of, you know, what does that mean for us, you know?

Roger Reed: So in terms of our portfolio, you know, you know,

Roger Reed: We have a lot of gas opportunities in our portfolio that we're not currently developing today, a lot of dry gas opportunities.

Roger Reed: You know also, you know, we have a lot of associated gaps in our unconventionals and we could know we could choose to basically Target, you know gassier parts of the unconventionals

Andy O'brien: But, you know, for us, the bottom line is, you know, it's got to compete on a cost-to-supply basis where we are today to make the cut for our annual capital program. And the really nice thing about, you know, these gas opportunities is, if the demand is there and the support is there, we can pivot very quickly to gas in our portfolio if it makes sense and it's competing on a cost-to-supply basis. Our next question comes from the line of Bob Brackett with Bernstein Research. Your line is now open.

Roger Reed: But, you know, for us the bottom line is, you know, it's got to compete on a cost of supply basis, you know, where we are today to make the cut for, you know, our annual capital program.

Kaleinoheaokealaula Akamine: And the really nice thing about, you know, these gas opportunities is, you know, if the demand is there and the support is there, we can pivot very quickly to the gas in our portfolio, if it makes sense and it's competing on the cost of the supply basis.

Roger Reed: And the really nice thing about these gas opportunities is if the demand is there and the support is there, we can pivot very quickly to the gas in our portfolio if it makes sense and it's competing on the cost supply basis.

Bob Brackett: Our next question comes in the line of Bob Brackett with Bernstein Research. Your line is now open.

Roger Reed: Our next question comes from the line of Bob Brackett with Bernstein Research. Your line is now open.

Bob Brackett: Good morning, and I'll return to the Willow project. It's perhaps seven billion of capex. It's the biggest project, I think, on the North Slope of the last 20 years.

Bob Brackett: Good morning, and I'll return to the Willow project. It's perhaps 7 billion in CapEx. It's the biggest project. I'll ask some questions that are a little nitpicky to get a sense of comfort around, and do ability.

Bob Brackett: Good morning, and I'll return to the Willow Project. It's perhaps 7 billion of CapEx. It's the biggest project, I think, on the North Slope in the last 20 years. And so I'll ask some questions that are a little nitpicky to get comfort around.

Kirk Johnson: And so I'll ask some questions that are a little nitpicky to get comfort around the doability of the project. And I guess on the facility side of spend, you mentioned the arrival of the operation center. The other pieces of the facility, I guess, are the drill pads and then the central processing facility. What's the design philosophy around those, and how do you get comfort that you're in strong control of those?

Kirk Johnson: Project, and I guess on the facility side of Spence. You mentioned the arrival of the Operations Center. The other pieces of the facility, I guess, are the drill pads and then the central processing facility. What's the design philosophy around those, and how do you get comfort that you're in strong?

Speaker Change: William Bullock, Ph.D.: The do ability of the project. And I guess on the facility side of spend you mentioned that the arrival of the operation center.

Speaker Change: The other pieces of the facility, I guess, are the drill pads and then the central processing facility. What's the design philosophy around those and how do you get comfort that you're in strong control of those?

Kirk Johnson: Hi Bob, this is Kirk.

Kirk Johnson: Yeah, hi Bob. This is Kirk. Yeah, certainly, good questions. We've been very proactive in how we've planned this project out over the coming years. And certainly, what you're hearing from me is how that's playing out for us, which is, it's a combination. Of course, naturally, we're seeking to build as many of these modules outside of the Alaska North Slope, where we have pretty challenging weather conditions. It's remote, and it takes a lot of effort and a lot of planning to do what we can do each winter within those winter construction seasons.

Kirk Johnson: Yeah, certainly good questions. We've been very proactive in how we plan this project out over the coming years. And certainly what you're hearing from me is how that's playing out for us, which is it's a combination, of course, naturally, what we're seeking to build as much of these modules outside of the Alaska North Slope, where we have pretty challenging weather conditions. It's remote, and it takes a lot of effort and a lot of planning to do what we can do each winter within those winter construction seasons. And so we've been very purposeful in how we identify areas in which we can aggregate and build these large modules off site, whether it be in Alaska or in other regions globally.

Bob Brackett: Hi Bob, this is Kirk.

Bob Brackett: Yes, certainly good questions. We've been very proactive in how we plan this project out over the coming years, and certainly what you're hearing from me is how that's playing out for us.

Speaker Change: It's a combination. Of course, naturally, we're seeking to build as much of these modules outside of the Alaska North Slope, where we have pretty challenging weather conditions.

Kirk Johnson: And so we've been very purposeful in identifying areas in which we can. We're going to aggregate and build these large modules off-site, whether it be in Alaska or in other regions globally, and build those certainly with preferred contractors and partners that can move those with us. You've heard how I've described we've locked up a bulk of our spend, upwards of 80 percent of our total facility spend, in the fabrication as well as in the construction of all of this, whether it be off-site, through the modules. Obviously, we have to work on the transportation, sea-lifting those into Alaska. We're still making a few truckables, pieces of work that are appropriate that we can do there in Alaska and exploit the talent and the labor markets that we have in Alaska.

Bob Brackett: It's remote, and it takes a lot of effort and a lot of planning to do what we can do each winter within those winter construction seasons. And so, we've been very purposeful in how we identify areas in which we can.

Bob Brackett: aggregate and build these large modules off-site, whether it be in Alaska or in other regions globally.

Kirk Johnson: And build those certainly with preferred contractors and partners that can progress those with us. You've heard how I've described we've locked up bulk of our spend upwards of 80% of our total facility spend in the fabrication as well as in the construction of all of this, whether it be off site through the modules. Obviously, we have to work on the transportation, sea lifting those into Alaska. We're still making a few truckables and pieces of work that are appropriate that we can do there in Alaska and exploit the talent and the labor markets that we have in Alaska.

Bob Brackett: and build those certainly with preferred contractors and partners that can progress those with us. You've heard how I've described we've locked up bulk of our spend, upwards of 80 percent of our total facility spend.

Bob Brackett: in the fabrication as well as in the construction of all of this, whether it be off-site, through the modules. Obviously, we have to work on the transportation, sea lifting those into Alaska. We're still making a few truckables.

Bob Brackett: in pieces of work that are appropriate that we can do there in Alaska and exploit the talent and the labor markets that we have in Alaska. And then of course we're transporting all of that to the North Slope. And these are across multiple winter construction seasons.

Kirk Johnson: And then, of course, we're transporting all of that to the North Slope. And this is across multiple winter construction sites, which is why you hear me describe the good work that we had this year. We do actually have expectations of even more work next year in 2025 on the North Slope. And again, that's all weather dependent. And this is why it's so important for us when we have good weather to knock that scope out when we have that opportunity.

Kirk Johnson: And then, of course, we're transporting all of that to the North Slope. And these are across multiple winter construction seasons, which is why you hear me describe the good work that we have this year. We do actually have expectations of even more work next year in 2025 on the North Slope. And again, that's all weather dependent. And this is why it's so important for us, when we have good weather, to knock that scope out when we have that opportunity. And so we've purposely staged and created this project so that we can get that scope done.

Bob Brackett: which is why you hear me describe the good work that we had this year. We do actually have expectations of even more work next year in 2025 on the North Slope.

Bob Brackett: And again, that's all weather dependent, and this is why it's so important for us.

Bob Brackett: when we have good weather to knock that scope out when we have that opportunity. And so we've purposely staged and created this project so that we can get that scope done. We expect to have our peak activity

Kirk Johnson: And so we purposely staged and created this project so that we could get that scope done. We expect to have our peak activity both in fabrication and construction in Alaska across 2024 and 2025. But expect that to stair-step down. But again, that's premised on good weather.

Kirk Johnson: We expect to have our peak activity, both in fabrication and construction in Alaska across 2024 and the 2025 years; expect that to stare step down. But again, that's premised on good weather. Strong line of sight to our contractors.

Bob Brackett: both in fabrication and construction in Alaska.

Bob Brackett: across 2024 and the 2025 years.

Bob Brackett: expect that to stair-step down. But again, that's premised on good weather, strong line of sight to our contractors, and so we just feel like we've got a really strong foundation to how this project's starting just immediately post-FID. So we're really happy with how all this is looking for us, Bob.

Ryan Lance: Strong line of sight to our contractors, and so we just feel like we've got a really strong foundation for how this project's starting just immediately post FID. So we're really happy with how all this is looking. And, Bob, I'd add a couple other things just from my long-term experience on the North Slope. You know, this is the, I don't know, 25th or more drill site that we've built on the North Slope. They're all truck and lateral designs. They're the same design that we've done on drill sites for the last 10 or 15 years. So we know how to do them.

Kirk Johnson: And so we just feel like we've got a really strong foundation to how this project is starting, just immediately post FID. So we're really happy with how all this is looking.

Ryan Lance: and Bob. Bob, I had a couple of other things from my long-term experience on the North Slope. This is, I don't know, 25th or more drill site that we've built on the North Slope. They're all truck and lateral designs. They're the same design that we've done on drill sites for the last 10 or 15 years. So we know how to do them. We've done a lot of them, and this isn't an incremental scope. And then on the central facilities to your question, we've done both. We've stick-built facilities on the North Slope. During our winter construction seasons, and we've built them offsite and seedless that them up.

Bob Brackett: And Bob I'd add a couple other things just from my long-term experience on the North Slope, you know, this is I don't know

Speaker Change: 25th or more drill sites that we've built on the North Slope. They're all truck and lateral designs. They're the same design that we've done on drill sites, you know, for the last, you know, 10 or 15 years. So we know how to do them. We've done a lot of them, and this isn't any incremental scope. And then on the central facilities, to your question, you know, we've done both. We've stick-built facilities on the North Slope during our winter construction seasons, and we've built them off-site and C-listed them up and

Ryan Lance: We've done a lot of them, and this isn't any incremental scope. And then on the central facilities, to your question, you know, we've done both. We've stick-built facilities on the North Slope during our winter construction seasons, and we've built them off-site and seat-lifted them up.

Ryan Lance: And the important part for Willow was the size of the opportunity there for us, and the size and scope of the facilities lent themselves to off-site fabrication. And I think the team did a great job hitting the window pretty well on the Gulf Coast when there was a ramping down of activity. We could slot our project in pretty quickly, get good productivity, and then, as we've already demonstrated our ability to seat-lift the facilities up to the North Slope, it's going really well with the first set of facilities showing up.

Ryan Lance: And the important part for Willow was the size of the opportunity there for us, and the size and scope of the facilities lend themselves to offsite fabrication. And I think the team did a great job hitting the window pretty well on the Gulf Coast when there was wrapping down a activity. We could slot our project in pretty quickly, get the good productivity. And then, as we've already demonstrated our ability to see lift facilities up to the North Slope, it's gotten really well with the first set of facilities showing up. So that's an important distinction because a lot of stick-built on the North Slope, but the size of Willow to us demonstrated the need to go offsite and build it on the Gulf Coast, take advantage of better productivity and year-round building, and then shift to the North Slope.

Speaker Change: The important part for Willow was the size of the opportunity there for us and the size and scope of the facility lent themselves to off-site fabrication.

Speaker Change: And I think the team did a great job hitting the window pretty well on the Gulf Coast.

Speaker Change: When there was a ramping down of activity, we could slot our project in pretty quickly, get the good productivity, and then as we've already demonstrated, our ability to see lift the facilities up to the North Slope.

Speaker Change: It's gotten really well with the the first set of facilities showing up. So that's an important distinction because a lot of stick built on the North slope, but the size of willow, you know, to us demonstrated the need to go off.

Ryan Lance: So that's an important distinction because a lot of stick-built facilities on the North Slope, but the size of Willow, you know, to us, demonstrated the need to go off-site and build it on the Gulf Coast, take advantage of better productivity and year-round building, and then ship it to the North Slope.

Ryan Lance: So that should give you some comfort. We know what we're doing. We've done this before, and these are just repeats of stuff we've done in the past. Our next question comes from the line of Kevin MacCurdy with Pickering Energy. Your line is now open. Hey, good morning.

Speaker Change: off-site and build it on the Gulf Coast, take advantage of better productivity and year-round building, and then ship to the North Slope. So that should give you some comfort. We know what we're doing. We've done this before, and these are just repeats of stuff we've done in the past.

Ryan Lance: So that is so that you give some comfort. We don't we're doing. We've done this before, and these are just repeats of stuff we've done in the past.

Kevin MacCurdy: Our next question comes from a line of Kevin McCurdy with Pickering Energy Partners. Your line is now open.

Speaker Change: Our next question comes from the line of Kevin McCurdy with Pickering Energy Partners. Your line is now open.

Kevin MacCurdy: Good morning. To build on the earlier question about CAPEX, your first half CAPEX was in line, but now you're pointing to that kind of the high end of the range for the year. We would assume that the Willow spin is more geared towards fourth quarter, but when do you see or when do you expect to see the higher activity and CAPEX from the partner operated activity and how material is the production impact for not activity?

Kevin MacCurdy: To build on the earlier question about CapEx, your first half CapEx was in line, but now you're pointing to that kind of the high end of the range for the year. We would assume that the Willow spin is more geared toward the fourth quarter. But when do you see or when do you expect to see the higher activity and CapEx from the partner-operated activity? And how material is the production impact? Yeah, let me jump in here, Kevin.

Kevin McCurdy: Hey, good morning. To build on the earlier question about CapEx, your first half CapEx was in line, but now you're pointing to that kind of the high end of the range for the year.

Speaker Change: We would assume that the willow spin is more geared towards fourth quarter But when do you see or when do you expect to see the higher activity and capex from the partner operated activity? And how material is the production impact from that activity?

Kevin MacCurdy: Yeah, let me jump in here, Kevin, and then if Kirk, if you want to add anything on this as well, maybe I'll just take you back to the total capital for Lower 48. As Ryan mentioned, we expect CAPEX will be modestly lower compared to 2023, mainly driven by that market deflation. Now on the operated side, we, as we mentioned before, are fairly flat on Reagan-Fratcrue counts, and that's driven by that improved operating capital efficiencies that we continue to realize through 2024, and then we'll have deflation capture. Now on the non-operated side, to your point, CAPEX is higher as we've seen a higher amount of Permian non-operated ballots than anticipated relative to the 2024 guidance given.

Nick Olds: And then, Kirk, if you want to add anything on this as well, maybe I'll just take you back to the total capital for the lower 48. As Ryan mentioned, we expect capital to be modestly lower compared to 2023, mainly driven by market deflation. Now, on the operated side, we, as we mentioned before, are fairly flat on rig and frat crew counts. And that's driven by the improved operating capital efficiencies that we continue to realize through 2024. And then we'll have deflation capture.

Kirk Johnson: Yeah, let me jump in here, Kevin, and then, Kirk, if you want to add anything on this as well. Maybe I'll just take you back to the total capital for lower 48. As Ryan mentioned, you know, we expect capital to be modestly lower compared to 2023, mainly driven by that market deflation.

Speaker Change: Now on the operated side we as we mentioned before we are fairly flat on rig and frack crew counts

Speaker Change: And that's driven by that improved operating capital efficiencies that we continue to realize through 2024. And we'll have deflation capture. Now on the non-operated side, to your point, capital is higher, as we've seen higher amount of Permian non-operated ballots than anticipated.

Nick Olds: Now, on the non-operated side, to your point, capital is higher, as we've seen, a higher amount of Permian non-operated ballots than anticipated relative to the 2024 guidance given. So that's higher activity. And as Andy mentioned, we'll continue to participate in those. Now, these investments are attractive within our cost supply framework and are competitive compared to our operated program. We've seen that through, you know, two Qs especially, and that's why we've raised guidance. We do detailed analysis on all of these as we go through our cost supply framework.

Kevin MacCurdy: So that's higher activity, and as Andy mentioned, we'll continue to participate in those. Now these investments are attractive within our cost supply framework and a competitive comparator operate program. We've seen that through 2Qs, especially, and that's why we've raised guidance. We do detailed analysis on all these as we go through our cost supply framework. Now, if I look in the second half of this year, we'll continue to realize the benefit of the deflation, and like we've seen in previous years, that non-opt activity typically tails off. Kind of the back end of Q3 and then Q4, so we expect that as well.

Speaker Change: relative to the 2024 guidance given.

Speaker Change: So that's higher activity, and as Andy mentioned, we'll continue to participate in those.

Speaker Change: Now, these investments are attractive within our cost supply framework and are competitive compared to our operating program. We've seen that through, you know, 2Q especially, and that's why we've raised guidance.

Speaker Change: we do detailed analysis on all these as we go through our cost supply framework. Now if I look in the second half of this year

Nick Olds: Now, if I look at the second half of this year, we'll continue to realize the benefit of deflation. And like we've seen in previous years, that non-op activity typically tails off, you know, kind of at the back end of Q3 and then Q4. So we expect that as well.

Speaker Change: will continue to realize the benefit of the deflation.

Paul Cheng: So, again, just kind of circling back, you know, our capital for the year is just modestly lower than 2023. Our next question comes from the line of Paul Cheng with Scotiabank. Mr. Lyons, Mr. Lyons, Mr. Lyons.

Kevin MacCurdy: So again, this kind of circling back, you know, our capital for the years is this mostly lower than 2023.

Paul Cheng: Our next question comes from the line of Paul Cheng with Scotia Bank.

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

Paul Cheng: Your line is now open. Thank you.

Paul Cheng: Hi, thank you. Hey guys, good morning. Maybe this is Ryan, or maybe it's for Phil.

Paul Cheng: Good morning. Maybe this is a line, or maybe this is for Bill. If we're looking at for 2025 and 2026, in terms of CAP-X, can you share with us some of the moving parts that have been done compared to 2024? I would imagine part of a standing would be Wei Jiang, but that looked like Alaskan may actually be up the spending compared to.

Paul Cheng: Hi, thank you. Hey guys, good morning.

Speaker Change: maybe this is Ryan or maybe it's for Bill. If we're looking at for 2025 and 2026

Paul Cheng: In terms of CapEx, can you share with us some of the moving parts that have been done compared to 2024? I would imagine the point of ascending would be way down, but that looks like...

Paul Cheng: If we're looking at 2025 and 2026, in terms of CapEx, can you share with us some of the moving parts that have been done compared to 2024? I would imagine part of our spending will be way down, but it looks like Alaska may actually be up in spending compared to. So if you can give us some idea of what the key moving parts that we should take into consideration, I have more than the... Yeah, Paul, you know... you've highlighted a few of the moving parts that we'll have in 2025.

Bill Bullock: So if you can give us some idea that what is the key moving parts that we should take into consideration?

Paul Cheng: Alaska may actually be up the spending compared to. So if you can give us some idea that what is the key moving parts that we should take into consideration.

Bill Bullock: Hi, Paul. Paul, you highlighted a few of the moving parts that we'll have in 2025, but at this point, it's a bit early for us to be talking about what the 2025 CAP-X spend is going to be. Particularly when we're prior to closing the marathon transactions. I think that's going to have to wait until we get through. Let us through the year and get the marathon transactions closed. We're going to be wanting to talk in detail about 25 CAP-X.

Paul Cheng: I have more than the... Go ahead, Andy.

Paul Cheng: But, you know, at this point, it's a bit early for us to be talking about, you know, what the 2025 capital spend is going to be, particularly when we go prior to closing the marathon transaction. So, you know, I think that's going to have to wait until later in the year and get the marathon transaction closed before we're going to be wanting to talk in detail about 25 CapEx. Our next question comes from the line of Josh Silverstein with UBS. Your line is now open.

Andy O'brien: Yeah, Paul, you know...

Andy O'brien: You've highlighted a few of the moving parts that we'll have in 2025, but

Andy O'brien: at this point, it's a bit early for us to be talking about

Andy O'brien: you know what the 2025 capital spend is going to be.

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

Speaker Change: and the following are the top 10 most popular sports magazines. Top 10 is The Daily Mail. Top 10 is The Daily Mail. Top 10 is The Daily Mail. Top 10 is The Daily Mail. Top 10 is The Daily Mail. Top 10 is

Speaker Change: Our next question comes from the line of Josh Silverstein with UBS. Your line is now open.

Josh Silverstein: Yeah, thanks, guys. I just wanted to get an update on some of the LNG project development. I was curious if the permitting slowdown in the US has actually helped the pace of development at Porter Arthur.

Josh Silverstein: Yeah, thanks guys. I just wanted to get an update on some of the LNG product development. I was curious if the permitting slowdown in the U.S. has actually helped the pace of development at Port Arthur. And then it's, I think it's been about a year since the Seguro LNG announcement. Just wanted to get an update on that project, too. Thanks. Yeah, Sandy, I can take that one, you know, on the port in Port Arthur specifically, as you mentioned, that is our phase one is a fully permitted project. You know, we started construction, or the operator started construction there with a contractor.

Josh Silverstein: Yeah, thanks guys. Just wanted to get an update on some of the LNG project development. I was curious if the permitting slowdown in the U.S. has actually helped the pace of development at Port Arthur, and then it's, I think it's been about a year since the Seguro LNG announcement. I just wanted to get an update on that project too. Thanks.

Josh Silverstein: And then it's, I think it's been about a year since the Cicero LNG announcement. I just wanted to get an update on that project too. Thanks.

Andy O'brien: And at this stage, I just say things are on track. Really not much else to say, you know, in terms of the construction of the project at this point, it's on track and is going as planned. And then I think your second question was, you know, really about NPL. You know, this one, you know, this is impacted. You know, projects in the US and Mexico are impacted by the pause.

Josh Silverstein: Yeah, I can take that one.

Josh Silverstein: You know, on the Port Arthur specifically, you know, as you mentioned, you know, that is our phase one is a fully permitted project. You know, we've started construction or the offer to start a construction there with the contractor. And at this stage, I just say things are on track. Really not much else to say in terms of the construction of the project at this point. It's on track and going as planned.

Speaker Change: Sandy, I can take that one. You know, on Port Arthur specifically, you know, as you mentioned, that is our phase one is a fully permitted project.

Speaker Change: We've started construction, or the operator has started construction there with the contractor and at this stage I'd just say things are on track. Really not much else to say in terms of the construction of the project at this point. It's on track and going as planned.

Josh Silverstein: And then I think your second question was really on MPL. You know, this one, you know, this is impacted in projects in the US and Mexico. These are impacted by the pause. That is impacting the FID there. But I probably point you to go and those questions are probably better at the way MPL in terms of the pace of the project and where they're at. You know, we see like you see sort of critical milestone being progressed, but they know that they face the same record hurdles that the rest of the industry does. You know, you mentioned, you know, you're correct that we have, we've agreed to take 2.2 MTPA off, take an MPL.

Speaker Change: And then I think your second question was, you know, was really on NPL. You know, this one, you know, this is impacted. You know, projects in the U.S. and Mexico, these are impacted by the pause.

Andy O'brien: You know, that is impacting the FID there. But I'd, you know, I'd probably point you to go and, you know, those questions are probably better answered by NPL in terms of sort of the pace of the project and where they're at. You know, we see, like you see, sort of critical milestones being progressed. But they, you know, they face the same regulatory hurdles that the rest of the industry does.

Andy O'brien: You mentioned, you're correct that we have agreed to take 2.2 MTPA of uptake in NPL. So we're, you know, we're keenly watching the progress there too, but that one is contingent on the LNG pause.

Josh Silverstein: So, you know, we're keenly watching the progress there too, but that one is contingent on the LNG pause.

Liz: We have no further questions. at this time.

Liz: Thank you, ladies and gentlemen.

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

Liz: This concludes today's conference. Thank you for participating.

Liz: You may now disconnect. . The The The Dr. Dr.

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