Q2 2024 Occidental Petroleum Corp Earnings Call

Good afternoon and welcome to Occidental's second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchcone phone.

To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded.

Jordan Tanner: To withdraw your question, please press star then. Please note, this event is being recorded. I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead. Thank you, Drew. Good afternoon, everyone.

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

Jordan Tanner: And thank you for participating in Occidental's second quarter 2024 earnings conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer. Sunil Mathew.

Jordan Tanner: Thank you, Drew. Good afternoon, everyone, and thank you for participating in Occidental's second quarter 2024 earnings conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer.

Speaker Change: Sunil Mathew, Senior Vice President and Chief Financial Officer, Richard Jackson, President Operations, U.S. Onshore Resources, and Carbon Management.

Ken Dillon: and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations.

Ken Dillon: This afternoon we will refer to slides available on the investor section of our website.

Speaker Change: The presentation includes a cautionary statement on slide 2 regarding forward-looking statements that will be made.

Speaker Change: On the call this afternoon, we'll also reference a few non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website. I will now turn the call over to Vicki.

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

Vicki Hollub: I'll begin today by highlighting another quarter of exceptional execution across our business sectors. Our teams delivered strong operational performance during the second quarter. Our technical and operational excellence, paired with a high quality asset portfolio, continue to deliver value across our business. Last week, we further strengthened our portfolio through the addition of Crown Rocks assets in the Midland Basin. We were also pleased to announce that our strategic divestiture program is progressing, and we have a clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December.

Vicki: Thank you, Jordan, and good afternoon, everyone. I'll begin today by highlighting another quarter of exceptional execution across our business segment.

Vicki: Our teams delivered strong operational performance during the second quarter. Our technical and operational excellence, paired with a high-quality asset portfolio, continue to deliver value across our businesses.

Speaker Change: Last week we further strengthened our portfolio through the addition of Crown Rocks assets in the Midland Basin.

Vicki: We were also pleased to announce that our strategic divestiture program is progressing and we have clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December .

Vicki Hollub: This afternoon, I'll cover our second-quarter results and operational performance, as well as our Crown Rock integration plan. Sunil will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings. In the second quarter, we delivered Opsy's highest quarterly production in four years for both Total Company and U.S. Onshore.

Vicki: This afternoon, I'll cover our second quarter results and operational performance, as well as our Crown Rock integration plans.

Sunil will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings.

Speaker Change: In the second quarter, we delivered OPC's highest quarterly production in four years for both Total Company and U.S. Onshore. This exceeds the midpoint of Total Company production guidance.

Vicki Hollub: This exceeds the midpoint of Total Company production guidance, generating $1.3 billion in free cash flow before working capital. This was driven by exceptional execution across our business segments, with notably strong Permian new well performance and higher production uptime, along with Outperformance in the Gulf of Mexico. We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program. This year to date, we've seen approximately 10% improvement in our unconventional well costs compared to the first half of last year, putting us ahead of our planned well cost savings. These savings have been achieved through lower non-productive time, increased frac utilization, operational efficiency gains, and facility optimization as part of our focused program to lower well costs, decrease time to market, and increase free cash flow.

Sunil: generating 1.3 billion dollars in free cash flow before working capital. This was driven by exceptional execution across our business segments with notably strong Permian new well performance and higher production uptime along with outperformance in the Gulf of Mexico.

Sunil: We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program.

Jordan Tanner: Attorney's Conference Call. All participants will be in listen only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by a zero.

Sunil: This year to date, we've seen approximately 10% improvement in our unconventional well cost compared to the first half of last year, putting us ahead of our planned well cost savings.

Jordan Tanner: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than one on your touch-tone phone. To withdraw your question, please press star than two. Please note this event is being recorded.

Sunil: These savings have been achieved through lower non-productive time, increased frac utilization, operational efficiency gains, and facilities optimization as part of our focused program to lower wells cost, decrease time to market, and increase free cash flow.

Jordan Tanner: I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead. Thank you, Drew. Good afternoon, everyone. And thank you for participating in Occidental's second quarter, 2024 Earnings Conference Call. On the call with us today are Vicki Hollub, President and Chief Executive Officer, Sunil Mathew, Senior Vice President and Chief Financial Officer, Richard Jackson, President and Operations, US Unshore Resources, and Carbon Management, and Ken Dillon, Senior Vice President and President International Oil and Gas Operations.

Vicki Hollub: We anticipate further acceleration in time to market in the second half of the year. Importantly, we continue to deliver industry-leading performance and secondary bench development, supporting long-term economics and inventory replenishment. The momentum we are generating on development costs across many facets should translate to capital efficiency improvements as we look toward the end of the year and the end of 2025. In addition to improved capital efficiency and continued strong performance leadership, our teams have driven down lease operating expenses across our domestic assets to enhance our cash margins.

Vicki: We anticipate further acceleration in time to market in the second half of the year.

Vicki: Importantly, we continue to deliver industry-leading performance in secondary bench development, supporting long-term economics and inventory replenishment.

Vicki: The momentum we are generating on development costs across many facets should translate to capital efficiency improvements as we look toward the end of the year and into 2025.

Vicki: In addition to improved capital efficiency and continued well-performance leadership, our teams have driven down lease operating expenses across our domestic assets to enhance our cash margins.

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

Vicki Hollub: In the second quarter, our per BOE lease operating expenses decreased by over 60 cents a barrel, a 6% improvement relative to the average of the prior three quarters. We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end. For example, in our Permian EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs. We're also optimizing our artificial lift, which has led to reduced failure rates and associated downhaul maintenance costs. In the Delaware Basin, we've decreased water disposal costs by doubling the volume of water recycled relative to the first half of last year.

Vicki: In the second quarter, our per BOE lease operating expenses decreased over 60 cents a barrel, a 6% improvement relative to the average of the prior three quarters.

Vicki: We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year-end.

Vicki: For example, in our Permian EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs.

Vicki Hollub: I will now turn the call over to Vicki. Thank you, Jordan, and good afternoon, everyone. I'll begin today by highlighting another quarter of exceptional execution across our business sector. Our teams delivered strong operational performance during the second quarter. Our technical and operational excellence paired with a high-quality asset portfolio continued to deliver value across our businesses. Last week, we further strengthened our portfolio through the addition of Crown Rocks assets in the Midland Basin. We were also pleased to announce that our strategic diversity program is progressing and we have clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December.

Vicki: We're also optimizing our artificial lift, which has led to reduced failure rates and associated downhaul maintenance costs.

Vicki: In the Delaware Basin, we've decreased water disposal costs by doubling the volume of water recycles relative to the first half of last year.

Vicki Hollub: Water stewardship remains a key priority in our operations, and I'm pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midland South Curtis Ranch treatment facility. In addition, we have now recycled over 150 million barrels in our New Mexico operations since 2019. Overall, we have built solid oil and gas segment momentum as we move into the second half of 2024. This gives us confidence to maintain our full-year production guidance, excluding around Crown Rock, for our total company and Permian assets, despite the expected divestiture of 15,000 BOE per day in the fourth quarter.

Vicki: Water stewardship remains a key priority in our operations and I'm pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midland South Curtis Ranch treatment facility.

Vicki: In addition, we have now recycled over 150 million barrels in our New Mexico operations since 2019.

Vicki: Overall, we have built solid oil and gas segment momentum as we move into the second half of 2024.

Vicki Hollub: This afternoon, I'll cover our second quarter results in operational performance as well as our Crown Rock integration plans. The deal will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings. In the second quarter, we deliver the highest quarterly production in four years for both total company and US onshore. This exceeds the midpoint of total company production guidance, generating $1.3 billion in free cash flow before working capital.

Vicki: This gives us confidence to maintain our full-year production guidance, excluding Crown Rock, for our total company and Permian assets, despite the expected divestiture of $15,000 BW per day in the fourth quarter.

Vicki Hollub: Our midstream business significantly outperformed in the second quarter with an adjusted pre-tax income more than $180 million higher than the guidance midpoint. Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations. Furthermore, as healthy storage levels and stable permit output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on take-away pipelines.

Vicki: Our midstream business significantly outperformed in the second quarter with an adjusted pre-tax income more than $180 million higher than the guidance midpoint.

Vicki: Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations.

Vicki Hollub: This was driven by exceptional execution across our business segments with notably strong premium new well performance and higher production uptime. Along with outperformance in the Gulf of Mexico. We're exceeding our production expectations for onshore new wells across all our bases and are continuing to achieve operational efficiencies as we execute our capital program. This year today, we've seen approximately 10% improvement in our unconventional well cost compared to the first half of last year, putting us ahead of our planned well cost savings.

Vicki: Furthermore, as healthy storage levels and stable permitting output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on take-away pipelines.

Vicki Hollub: Our team has capitalized on this opportunity, highlighting the value the diversity of our asset base provides. As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months.

Speaker Change: Our team has capitalized on this opportunity.

Vicki: Highlighting the value the diversity of our asset base provides.

Vicki: As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months. However, our teams will be prepared to act if additional bottlenecks arise.

Vicki Hollub: These savings have been achieved through lower nonproductive time, increased track utilization, operational efficiency gains, and facilities optimization as part of our focused program to lower well cost, decreased time to market, and increased free cash flow. We anticipate further acceleration and time to market in the second half of the year. Importantly, we continue to deliver industry leading performance in secondary bench development, supporting long-term economics and inventory replenishment. The momentum we are generating on development cost across many facets to translate to capital efficiency improvements as we look towards the end of the year and end of 2025.

Vicki Hollub: However, our teams will be prepared to act if additional bottlenecks arise. Looking now at our low-carbon businesses, we're excited by the progress we're making. As construction of Stratos, our first direct air capture facility, moves forward, our low-carbon ventures team continues to demonstrate that demand for carbon dioxide removal credits is growing. In July, we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos. The agreement is the largest single purchase of direct air capture CDR credits to date and highlights the increasing recognition of carbon engineering technology as a solution to help organizations achieve their net zero goal.

Vicki: Looking now at our low-carbon businesses, we're excited by the advancements we're making. As construction of Stratos, our first direct air capture facility, moves forward, our low-carbon ventures team continues to demonstrate that demand for carbon dioxide removal credits is growing.

Vicki: In July , we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos.

Vicki: The agreement is the largest single purchase of direct air capture CDR credits to date and highlights the increasing recognition of carbon engineering technology as a solution to help organizations achieve their net zero goals.

Vicki Hollub: In addition to improved capital efficiency and continued well-performance leadership, our teams have driven down lease operating expenses across our domestic assets to enhance our cash margins. In the second quarter, our per BOE lease operating expenses decreased over 60 cents a barrel, a 6% improvement relative to the average of the prior three quarters. We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end.

Vicki Hollub: I would now like to talk about how pleased we are to integrate Crown Rock into the Greater Oxy portfolio. We closed the acquisition on August 1st, and we continue to be impressed with Crown Rock's efficient operations and employee talent. As we have discussed previously, this acquisition complements and enhances our premier Permian portfolio with the addition of high-margin production and low-break-even undeveloped inventory. We are excited about the subsurface and geologic potential of these assets, and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value. We're also looking forward to leveraging our newfound scale in the Midland Basin. Over the years, we've seen how scale has driven significant technical advancements and operational efficiencies in our other basins.

Vicki: I would now like to talk about how pleased we are to integrate CrownRock into the Greater Oxy portfolio.

Speaker Change: We closed the acquisition on August 1st, and we continue to be impressed with Crown Rock's efficient operations and employee talent. As we have discussed previously, this acquisition complements and enhances our premier Permian portfolio with the addition of high-margin production and low-break-even undeveloped inventory.

Vicki Hollub: For example, in our premium EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs. We are also optimizing our artificial lip, which has led to reduced failure rates and associated downhole maintenance costs. In the Delaware basin, we have decreased water disposal costs by doubling the volume of water recycles relative to the first half of last year. Water stewardship remains a key priority in our operations, and I am pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midlands South Curtis Ranch treatment facility.

Vicki: We're excited about the subsurface and geologic potential of these assets and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value.

Vicki: We're also looking forward to leveraging our newfound scale in the Midland Basin. Over the years, we've seen how scale has driven significant technical advancements and operational efficiencies in our other basins.

Vicki Hollub: We're confident that as we integrate our Midland Basin assets, we'll unlock meaningful efficiencies through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations. Our combined teams have made great strides in the past several days getting to know each other and integrating Crown Rock into Oxy's organization. On our next call, we're looking forward to telling you more about our post-CrownRock Enhanced Portfolio and how the integration is advancing. One of the many benefits of this acquisition was the opportunity to upgrade Oxy's existing portfolio of assets.

Vicki: We're confident that as we integrate our Midland Basin assets, we'll unlock meaningful efficiencies through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations.

Vicki Hollub: In addition, we have now recycled over 150 million barrels in our New Mexico operations since 2019. Overall, we have built solid old and gas segment momentum as we move into the second half of 2024. This gives us confidence to maintain our full-year production guidance excluding around Crown Rock for our total company and Permian assets despite the expected divestiture of 15,000 B a week per day in the fourth quarter. Our midstream business significantly outperformed in the second quarter, with an adjusted pre-tax income more than $180 million higher than the guidance midpoint.

Vicki: Our combined teams have made great strides in the past several days getting to know each other and integrating Crown Rock into Oxy's organization.

Vicki: On our next call, we're looking forward to telling you more about our post-Crown Rock Enhanced Portfolio and how the integration is advancing.

Vicki: One of the many benefits of this acquisition was the opportunity to high-grade Oxy's existing portfolio of assets.

Vicki Hollub: In December, we laid out plans for a $4.5 to $6 billion dollar divestiture program to be completed within 18 months of the acquisition's close. Given the inventory depth of our onshore portfolio, we welcome the opportunity to monetize some of these assets at an attractive price, and as we announced last week, the divestiture program is progressing well. Since the start of the year, we have closed or announced approximately one billion dollars of Permian Basin divestitures. The proceeds from these sales will go directly toward debt reduction.

Vicki: In December , we laid out plans for a $4.5 to $6 billion divestiture program to be completed within 18 months of the acquisition's close.

Vicki: Given the inventory depth of our onshore portfolio, we welcome the opportunity to monetize some of these assets at an attractive price, and as we announced last week, the divestiture program is progressing well.

Vicki Hollub: Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations. Furthermore, as healthy storage levels and stable Permian output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on take-away pipelines. Our teams capitalized on this opportunity highlighting the value the diversity of our asset base provides. As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months. However, our teams will be prepared to act as additional bottlenecks arise.

Vicki: Since the start of the year, we have closed or announced approximately one

Vicki: billion dollars of Permian Basin divestitures.

Vicki: The proceeds from these sales will go directly toward debt reduction.

Vicki Hollub: This progress on divestitures, coupled with a robust organic cash flow underpinned by our steady focus on operational excellence, has positioned us well to reduce our debt in the near term. Sunil will address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter, which means, which speaks to both the quality of our assets and our future cash flow potential. Now I'll hand the call over to Sunil to provide more details about our second quarter financial results, our guidance, and progress on Strategic Financial Action. Thank you, Vicki.

Vicki: This progress on divestitures coupled with robust organic cash flow underpinned by our steady focus on operational excellence has positioned us well to reduce our debt in the near term.

Vicki: Sunil will address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter.

Sunil Mathew: which means

Sunil: which speaks to both the quality of our assets and our future cash flow potential.

Sunil: Now I'll hand the call over to Sunil to provide more details about our second quarter financial results, our guidance, and progress on strategic financial action.

Vicki Hollub: Looking now at our low carbon businesses, we're excited by the advancements we're making. As construction of Stratus, our first director, Capture Facility, moves forward. Our low carbon ditchers team continues to demonstrate that demand for carbon dioxide removal credits is growing, and July, we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos. The agreement is the largest single purchase of direct air capture CDR credits to date and highlight the increasing recognition of carbon engineering's technology as a solution to help organizations achieve their net zero goals.

Sunil Mathew: We are excited with the recent progress we have made in executing the portfolio iGrading plan we outlined in December. Oxy has realized an immediate enhancement of a U.S. onshore portfolio with a low break-even inventory and expansion of free cash flow generation potential upon the closing of Crown Rock last summer. The opportunity to build scale in the Midland Basin made this transaction a strategic fit for Roxy, and the newly acquired assets will immediately compete for capital. In late July, we issued $5 billion of senior unsecured notes.

Sunil: Thank you, Vicki. We are excited with the recent progress we have made in executing the Portfolio I-Grading Plan we outlined in December .

Sunil: Oxy has realized an immediate announcement of a U.S. onshore portfolio with low break-even inventory and expansion of free cash flow generation potential upon the closing of Crown Rock last week.

Speaker Change: The opportunity to build scale in the Midland Basin made this transaction a strategic fit for Roxy, and the newly acquired assets will immediately compete for capital.

Vicki Hollub: I would now like to talk about how pleased we are to integrate Crown Rock into the greater Oxy Portillo. We close the acquisition on August 1st and we continue to be impressed with Crown Rock's official operations and employee talent. As we have discussed previously, this acquisition complements and enhances our premier Permian Portillo with the addition of high margin production and low-break even undeveloped inventory. We are excited about the subsurface and geologic potential of these assets and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value.

Sunil: In late July , we issued $5 billion of senior unsecured notes.

Sunil Mathew: We will use the net proceeds of the offering and term loans to fund the cash consideration of the Crown Rock acquisition. Overall, we were highly pleased with the investor demand for the bond offer. We placed notes maturing in five tranches at 3, 5, long 7, 10, and 30 years at a weighted average coupon rate of less than 5.5%, creating a manageable debt maturity profile given our deleveraging plan. Our efforts to strengthen our balance sheet remain a top priority, and we are achieving early success in debt reduction.

Vicki: We use the net proceeds of the offering and term loans to fund the cash consideration of the Crown Rock acquisition.

Vicki: Overall, we were highly pleased with the investor demand for the bond offering.

Vicki: We placed nodes maturing in 5 tranches at 3, 5, long 7, 10, and 30 years at a weighted average coupon rate of less than 5.5%, creating a manageable debt maturity profile given our deleveraging plans.

Vicki Hollub: We're also looking forward to leveraging our newfound scale in the middle and basins. Over the years, we've seen how scale has driven significant technical advancements in operational efficiencies in our other basins. We're confident that as we integrate our middle and basin assets, we'll unlock meaningful efficiencies through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations. Our combined teams have made great strides in the past several days, getting to know each other and integrating Crown Rock into Oxy's organization.

Vicki: Our efforts to strengthen our balance sheet remain a top priority, and we are achieving early success in debt reduction.

Sunil Mathew: In July, we retired $400 million of debt at maturity, and our strong organic free cash flow is enabling further deleveraging progress in the coming months. By the end of August, between additional oxy maturities and the early redemption of ground rock snow, we will have prepaid an additional $1.9 billion of debt, bringing the total to $2.3 billion.

Vicki: In July , we retired $400 million of debt at maturity, and our strong organic free cash flow is enabling further deleveraging progress in the coming weeks.

Vicki: By the end of August , between additional oxymaturities and the early redemption of Crown Rocks notes, we will have prepaid an additional $1.9 billion of debt, bringing the total to $2.3 billion.

Vicki Hollub: On our next call, we're looking forward to telling you more about our post Crown Rock enhanced portfolio and how the integration is advancing. One of the many benefits of this acquisition was the opportunity to hide great Oxy's existing portfolio of assets.

Sunil Mathew: Add to this the proceeds from the Barilla Draw divestiture, and we expect to have repaid over $3 billion in debt by the end of the third quarter, which is almost 70% of our near-term reduction commitment of $4.5 billion. We will continue to prudently advance deleveraging via free cash flow and proceeds from our divestiture program. We were pleased last week to announce an agreement to sell certain Delaware Basin assets for approximately $818 million.

Sunil: Add to this the proceeds from the Barilla Draw divestiture, and we expect to have repaid over $3 billion in debt by the end of the third quarter, which is almost 70% of our near-term reduction commitment of $4.5 billion.

Vicki Hollub: In December, we laid out plans for a four and a half to $6 billion investiture program to be completed within 18 months of the acquisition's close. Given the inventory depth of our onshore portfolio, we welcome the opportunity to monetize some of these assets as an attractive price. As we announced last week, the investiture program is progressing well. Since the start of the year, we have closed or announced approximately $1 billion of Permian Basin Investitures.

Sunil: We will continue to prudently advance deleveraging via free cash flow and proceeds from our divestiture program.

Sunil: We were pleased last week to announce the agreement to sell certain Delaware Basin assets for approximately $818 million.

Sunil Mathew: The core of this divestiture centers around approximately 27,500 net acres in the Barilla Drawfield of the Texas Delaware Basin. While these assets have been called to Oxy's Southern Delaware position for over a decade, the remaining inventory is longer dated in our current development plan. We anticipate closing the sale late in the third quarter and estimate a 15,000 BOE per day reduction in fourth quarter Permian production. Separately from this transaction, we also announced additional completed dispositions from earlier in the year, involving several smaller undeveloped acreage positions throughout the Permian, for approximately $152 million in total. This brings total year-to-date closed or announced divestments to $970 million.

Sunil: The core of this divestiture centers around approximately 27,500 net acres in the Barilla Drawfield of the Texas-Delaware Basin.

Vicki Hollub: The proceeds from these sales will go directly toward debt reduction. This progress on the vestitures coupled with robust organic cash flow underpin by our steady focus on operational excellence has positioned us well to reduce our debt in the near term. We're able to address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter, which means which speaks to both the quality of our assets and our future cash flow potential.

Sunil: While these assets have been close to Auxie's southern Delaware position for over a decade, the remaining inventory is longer dated in our current development plans.

Sunil: We anticipate closing the sale late in the third quarter and estimate a $15,000 BOE per day reduction in fourth quarter Permian production.

Sunil: Separate from this transaction, we also announced additional completed dispositions from earlier in the year involving several smaller undeveloped acreage positions throughout the Permian, approximately $152 million in total.

Sunil Mathew: Now I'll hand the call over to Senegal to provide more details about our second quarter financial results, our guidance, and progress on strategic financial action. Thank you, Wiki. We are excited with the recent progress we are made in executing the portfolio-igrating plan we outlined in December. Oxy has realized an immediate announcement of a US onshore portfolio with low-break even inventory and expansion of free cash flow generation potential upon the closing of Crown Rock last week.

Sunil: This brings total year-to-date closed or announced divestments to $970 million.

Sunil Mathew: Consistent with our cash flow priorities, all net proceeds from these sales will be allocated to debt reduction. We are satisfied with the progress of our divestiture program and the trajectory of our debt reduction plan. We are ahead of schedule on our near-term debt reduction commitments, and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion or less. In the second quarter, we generated both an adjusted and reported profit of $1.03 per diluted share and exited the second quarter with $1.8 billion of unrestricted cash.

Sunil: Consistent with our cash flow priorities, all net proceeds from these sales will be allocated to debt reduction.

Sunil: We are satisfied with the progress of our divestiture program and the trajectory of debt reduction plans.

Sunil Mathew: The opportunity to build scale in the Midland Basin made this transaction a strategic fit for OXE, and the newly acquired assets will immediately compete for capital. In late July, we issued $5 billion of senior unsecured notes. We used the net proceeds of the offering and term loans to fund the cash consideration of the Crown Rock acquisition. Overall, we were highly pleased with the investor demand for the bond offering. We placed notes maturing in five branches at three, five, long seven, ten, and thirty years at a weighted average coupon rate of less than five and a half percent, creating a manageable debt maturity profile given our deleveraging plans.

Sunil: We are ahead of schedule on our near-term debt reduction commitments, and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion or less.

Sunil: In the second quarter, we generated both an adjusted and reported profit of $1.03 per diluted share and exited the second quarter with $1.8 billion of unrestricted cash.

Sunil Mathew: As Vicki highlighted earlier, we generated over $1.3 billion of free cash flow before working capital, driven by sustained success across a diversified business sector. More specifically, the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volumes. In the midstream segment, substantial value capture was realized, particularly in gas marketing, as evident through the greater than $180 million adjusted free tax income outperformance when compared to the midpoint of guidance.

Sunil: As Vicki highlighted earlier, we generated over $1.3 billion of free cash flow before working capital.

Vicki: Driven by sustained success across our diversified business segments.

Sunil Mathew: Our efforts to strengthen our balance sheet remain at top priority, and we are achieving early success in debt reduction. In July, we retired $400 million of debt at maturity, and our strong organic free cash flow is enabling further deleveraging progress in the coming weeks. By the end of August, between additional OXE maturities and the early reduction of Crown Rock's notes, we will have repaid an additional $1.9 billion of debt, bringing the total to $2.3 billion.

Vicki: More specifically, the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volumes.

Vicki: In the midstream segment, substantial value capture was realized, particularly in gas marketing, as evident through the greater than $180 million adjusted free tax income outperformance when compared to the midpoint of guidance.

Sunil Mathew: We are delighted with how Operational Excellence drove financial results in the second quarter and continue to benefit from a complementary asset base that positions us for success through a wide range of pricing environments. Our second quarter capital was largely in line with the first quarter, consistent with our business plan of a front-off AVO and domestic oil and gas activity. We reported a negative working capital change in the second quarter, primarily due to higher oil volumes and increased barrel shipments on the water at quarter end. Additionally, Rocky's related property tax payments, which are based on a two-year revenue lag and incorporate a period of higher oil and natural gas prices from 2022, also played a contributing factor.

Vicki: We are delighted with our operational excellence through financial results in the second quarter and continue to benefit from a complementary asset base that positions us for success through a wide range of pricing environments.

Sunil Mathew: Add to this, the proceeds from the Buriala draw divestiture, and we expect to have repaid over $3 billion in debt by the end of the third quarter, which is almost seventy percent of our near term reduction commitment of $4.5 billion. We will continue to prudently advance deleveraging via free cash flow and proceeds from our divestiture program. We were pleased last week to announce the agreement to sell certain delever-based assets for approximately $818 million.

Vicki: Our second quarter capital was largely in line with the first quarter, consistent with our business plan of a front-off AVO and domestic oil and gas activity.

Sunil: We reported a negative working capital change in the second quarter, primarily due to higher oil volumes and increased barrel shipments on the water at quarter end.

Sunil: Rocky's related property tax payments, which are based on a two-year revenue lag and incorporates a period of higher oil and natural gas prices from 2022, also played a contributing factor.

Sunil Mathew: The core of this divestiture centers around approximately 27,500 net acres in the Buriala draw field of the Texas Delaware Basin. While these assets have been called to OXE's southern Delaware position for over a decade, the remaining inventory is longer dated in our current development plans. We anticipate closing the sale late in the third quarter and estimate a 15,000 BoE per day reduction in fourth quarter permeant production. Separate from this transaction, we also announced additional completed dispositions from earlier in the year involving several smaller undeveloped acreage positions throughout the permeant, approximately $152 million in total.

Sunil Mathew: Now, we are looking ahead to the second half of 2024. We have provided PROFORMA guidance based upon the following assumptions. We included Crown Rock in our guidance beginning August 1st, and we excluded from guidance the 15,000 BOE per day of 4Q production associated with the Permian divestment as we expect the transaction to close late in the third quarter. Even after adjusting for this disposition, Oxy's total and Permian full-year production, excluding Crown Rock, is expected to remain flat due to higher Permian outlook. Including Crown Rock, the midpoint of total company production guidance has increased from 1.25 million to approximately 1.32 million BOE per day.

Sunil: Now looking ahead to the second half of 2024.

Sunil: We have provided PROFORMA guidance based upon the following assumptions.

Sunil: We included Crown Rock in our guidance beginning August 1st, and we excluded from guidance the 15,000 BOE per day of 4Q production associated with the Permian divestment, as we expect the transaction to close late in the third quarter.

Sunil: Even after adjusting for this disposition, Oxy's total and Permian full year production, excluding Crown Rock, is expected to remain flat due to higher Permian outlook.

Sunil: Including Crown Rock, the midpoint of our total company production guidance has increased from 1.25 million to approximately 1.32 million BOE per day.

Sunil Mathew: This brings total year-to-date closed or announced divestments to $970 million. Consistent with our cash flow priorities, all net proceeds from these sales will be allocated to debt reduction. We are satisfied with the progress of our divestiture program and the trajectory of debt reduction plans.

Sunil Mathew: Building on the operational momentum generated in the first and second quarters, we anticipate an improving production trajectory in the back half of the year for all our domestic assets, including the Gulf of Mexico, even after incorporating some downtime for potential disruptive tropical weather in our guidance.

Sunil: Building on the operational momentum generated in the first and second quarters, we anticipate an improving production trajectory in the back half of the year in all our domestic assets.

Sunil Mathew: We are ahead of schedule on our near-term debt reduction commitments and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion on In the second quarter, we generated both an adjusted and reported profit of one dollar and three cents per diluted share and exited the second quarter with $1.8 billion of unrestricted cash. As Vicki highlighted earlier, we generated over $1.3 billion of free cash flow before working capital, driven by sustained success across our diversified business segments.

Sunil: This includes the Gulf of Mexico, even after incorporating some downtime for potential disruptive tropical weather in our guidance.

Sunil Mathew: Excluding Crown Rock, the midpoint of our 3Q production guidance would represent a new record for the highest quarterly production in over four years. In the appendix, we have summarized some of the key FOLIA guidance changes associated with consolidating GroundRock into our portfolio. Aside from the production benefits, we anticipate a notable improvement in domestic operating costs from adding these high-margin barrels. Excluding Crown Rock, we are also pleased with Auxie's improvement and favorable trajectory of operating costs and capital efficiency across our U.S. onshore assets, as highlighted by Vicki earlier.

Sunil: Excluding Crown Rock, the midpoint of our 3Q production guidance would represent a new record for the highest quarterly production in over four years.

Sunil: In the appendix, we have summarized some of the key FOLIA guidance changes associated with consolidating GroundRock into our portfolio.

Sunil: Aside from the production benefits, we anticipate a notable improvement in domestic operating costs.

Vicki: from adding these high margin barrels.

Sunil: Excluding Crown Rock, we are also pleased with Auxie's improvement and favorable trajectory of operating costs and capital efficiency across our U.S. onshore assets, as highlighted by Vicki earlier.

Sunil Mathew: More specifically, the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volumes. In the midstream segment, substantial value capture was realized, particularly in gas marketing, as evident through the greater than $1.80 million had just a free tax income out performance when compared to the midpoint of guidance. We are delighted with our operational excellence, grow financial results in the second quarter and continue to benefit from a complimentary asset base that positions us for success through a wide range of pricing environments.

Sunil Mathew: OxyChem's 2024 business is performing well, with results largely in line with the plan we laid out at the start of the year. However, challenging economic conditions in China, combined with the continued deferral of interest rate reductions, have dampened OxyChem's trajectory for the year.

Speaker Change: OxyChem's 2024 business is performing well, with results largely in line with the plan we laid out at the start of the year.

Sunil: However,

Speaker Change: Challenging economic conditions in China combined with the continued deferral of interest rate reductions have dampened OxyChem's trajectory for the year.

Sunil Mathew: As a result, we are revising OxyChem's full year guidance down to a range of $1 to $1.1 billion. We continue to anticipate that 2024 will be another strong year for OxyChem by historical standards. With midstream and marketing a strong second quarter, we have raised full year guidance by $220 million. We anticipate a more muted third quarter as additional Permian gas takeaway capacity is expected to come online, reducing gas marketing optimization opportunities. We continue to execute our 2024 capital program as scheduled, while the legacy oxy capital will decrease in the second half as a result of tapered domestic activity.

Sunil: As a result, we are revising OxyChem's full year guidance down to a range of $1 to $1.1 billion.

Sunil: We continue to anticipate that 2024 will be another strong year for OxyChem by historical standards.

Sunil Mathew: Our second quarter capital was largely in line with the first quarter, consistent with our business plan of a front-off AV and domestic oil and gas activity. We reported a negative working capital change in the second quarter, primarily due to higher oil volumes and increased barrel shipments on the water at quarter end. Rocky's related property tax payments, which are based on a two-year revenue lag, and incorporates a period of higher oil and natural gas prices from 2022, also played a contributing factor.

Sunil: With Midstream and Marketing's strong second quarter, we have raised full-year guidance by $220 million.

Sunil: We anticipate a more muted third quarter as additional Permian gas take-away capacity is expected to come online, reducing gas marketing optimization opportunities.

Sunil: We continue to execute our 2024 capital program as scheduled.

Sunil: While the legacy oxy capital will decrease in the second half as a result of tapered domestic activity.

Sunil Mathew: Maintaining Crown Rock's five-rig program will reshape the investment profile as we increase the full-year total company net capital range to $6.8 to $7 billion. In closing, I want to discuss how Oxy is delivering on the financial milestones we laid out in December. A sustainable and growing dividend is the foundation of our shareholder return priority. Earlier this year, we followed through on a commitment we made when we announced the Crown Rock acquisition and raised our quarterly common dividend by over 22%.

Sunil: Maintaining Crown Rock's five-rig program will reshape the investment profile as we increase the full-year total company net capital range to $6.8 to $7 billion.

Sunil Mathew: Now looking ahead to the second half of 2024, we have provided performance guidance based upon the following assumptions. We included Crown Rock in our guidance, beginning August 1st, and we excluded from guidance the 15,000 BoE per day of 4Q production associated with the Permian divestment, as we expect the transaction to close late in the third quarter. Even after adjusting for this disposition, OFC's total and Permian fully a production excluding Crown Rock is expected to remain flat due to higher Permian outlook.

Speaker Change: In closing, I want to discuss how Auxie is delivering on the financial milestones we laid out in December .

Sunil: A sustainable and growing dividend is the foundation of our shareholder return priorities.

Sunil: Earlier this year, we followed through on a commitment we made when we announced the Crown Rock acquisition and raised our quarterly common dividend by over 22%.

Sunil Mathew: The free cash flow accretion that we anticipate from CrownRock, along with the expected improvements from our non-oil and gas segments of our portfolio, provided us with the confidence to raise the dividend. Maintaining our investment grade credit rating is a key priority.

Sunil: The free cash flow accretion that we anticipate from Crown Rock, along with the expected improvements from our non-oil and gas segments of our portfolio, provided us with the confidence to raise the dividend.

Sunil Mathew: Including Crown Rock, the midpoint of our total company production guidance has increased from 1.25 million to approximately 1.32 million BoE per day. Building on the operational momentum generated in the 1st and 2nd quarters, we anticipate an improving production trajectory in the back half of the year in all our domestic assets. This includes the Gulf of Mexico even after incorporating some downtime for potential disruptive tropical weather in our guidance. Excluding Crown Rock, the midpoint of our 3Q production guidance would represent a new record for the highest quarterly production in over 4 years.

Sunil: Maintaining our investment grade credit rating is a key priority.

Vicki Hollub: In recent weeks, we received ratings affirmations from all three ratings agencies, including our investment-grade credit ratings from Moody's and FIT. We are focused on our deleveraging strategy, and we remain on track to retire at least $4.5 billion of debt well before next August. We are off to a promising start with our divestiture program. We will continue to evaluate a high-quality asset portfolio for divestment opportunities. And we'll apply those proceeds to further debt reduction, thereby strengthening our balance. Oxy is methodically delivering on this key financial commitment.

Sunil: In recent weeks, we received ratings affirmations from all three ratings agencies, including our investment grade credit ratings from Moody's and Fitch.

Sunil: We are focused on our deleveraging strategy and we remain on track to retire at least $4.5 billion of debt well before next August .

Sunil: We are off to a promising start with our divestiture program. We will continue to evaluate our high-quality asset portfolio for divestment opportunities and will apply those proceeds to further debt reduction thereby strengthening our balance sheet.

Sunil Mathew: In the appendix, we have summarized some of the key fully a guidance changes associated with consolidating Crown Rock into a portfolio. Aside from the production benefits, we anticipate a notable improvement in domestic operating costs from adding these high margin barrels, excluding Crown Rock. We are also pleased with OXI's improvement and favourable trajectory of operating costs and capital efficiency across our US onshore assets as I lighted by Vicki earlier. With results largely in line with the plan, we laid out at the start of the year.

Sunil: Oxy is methodically delivering on these key financial commitments.

Vicki Hollub: The strategic and financial actions we have taken in recent quarters are converging to benefit our portfolio, increase cash flow generation capability, and ultimately accelerate shareholder value. I will now turn the call back over to Vicki. Thank you, Sunil. Before we move on to the Q&A, I would like to close by focusing on a few of Oxy's differentiated value catalysts.

Sunil: The strategic and financial actions we have taken over recent quarters are converging to benefit our portfolio, increase cash flow generation capability, and ultimately accelerate shareholder value.

Sunil: I will now turn the call back over to Vicki.

Vicki: Thank you, Sunil. Before we move on to the Q&A, I would like to close by focusing on a few of Oxy's differentiated value catalysts.

Operator: Our subsurface expertise, technical excellence, and operational strength allow us to continuously achieve basin-leading well performance while simultaneously driving efficiency and savings. The addition of Crown Rock further enhances what I believe is Oxy's strongest portfolio in our century-long history. And it kicks off another phase of Oxy's cash flow growth with future upside through improved resource recovery and lower cost opportunities. I can't wait to see the value that the newly combined teams deliver given the quality and depth of development opportunities coming with this new asset.

Sunil Mathew: However, challenging economic conditions in China, combined with the continued deferral of interest rate reductions have dampened OXI Kim's trajectory for the year. As a result, we are revising OXI Kim's full year guidance down to a range of 1 to 1.1 billion dollars. We continue to anticipate that 2024 will be another strong year for OXI Kim by historical standards. With midstream and marketing strong second quarter, we have raised full year guidance by 2 to 20 million dollars.

Speaker Change: Our subsurface expertise, technical excellence, and operational strength allow us to continuously achieve basin-leading well performance while simultaneously driving efficiency and savings.

Vicki: The addition of Crown Rock further enhances what I believe is Oxy's strongest portfolio in our century-long history.

Vicki: And it kicks off another phase of Oxy's cash flow growth with future upside through improved resource recovery and lower cost opportunities.

Vicki: I can't wait to see the value that the newly combined teams deliver given the quality and depth of development opportunities coming with this new asset.

Operator: Beyond oil and gas, we expect our oxygen and midstream businesses to continue to provide material cash flow durability in the years ahead. And finally, LCB continues to develop practical decarbonization solutions that are solidifying our leadership in this important emerging market. These businesses together position Oxy's common shareholders to benefit financially for decades to come. We will now open the call to questions. As Jordan mentioned, Richard Jackson and Ken Dillon are on the call with us today for the Q&A session. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Sunil Mathew: We anticipate a more muted third quarter as additional Burmian gas takeaway capacity is expected to come online, reducing gas marketing optimisation opportunities. We continue to execute our 2024 capital program as scheduled, while the legacy OXI capital will decrease in the second half as result of tapered domestic activity. Maintaining Crown Rock's Fiberic program will reshape the investment profile as we increase the full year total company net capital range to 6.8 to 7 billion dollars.

Vicki: Beyond oil and gas, we expect our OxyChem and midstream businesses to continue to provide material cash flow durability in the years ahead.

Vicki: And finally, LCB continues to develop practical decarbonization solutions that are solidifying our leadership in this important emerging market. These businesses together position Oxy's common shareholders to benefit financially for decades to come. We will now open the call for questions.

Speaker Change: As Jordan mentioned, Richard Jackson and Ken Dillon are on the call with us today for the Q&A session.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2.

Sunil Mathew: In closing, I want to discuss how OXI is delivering on the financial milestones we laid out in December. A sustainable and growing dividend is the foundation of our shareholder return priorities. Earlier this year, we followed through on a commitment we made when we announced the Crown Rock acquisition and raised our quarterly common dividend by over 22%. The free cashflow accretion that we anticipate from Crown Rock along with the expected improvements from our non-oil and gas segments of our portfolio provided us with the confidence to raise the dividend.

Vicki: Please limit yourself to one primary question and one follow-up.

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

Operator: To withdraw your question, please press star then 2. Please limit yourself to one primary question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Neal Mehta with Goldman Sachs. Please go ahead.

Speaker Change: The first question comes from Neal Mehta with Goldman Sachs. Please go ahead.

Neal Mehta: Good morning, Vicki and team, and good progress here on deleveraging. That's kind of where I want to start, remembering the Borilla draw announcement here a couple days ago. But, you know, what does the asset sale market look like, and can you talk about the opportunity set to continue to make progress on a Yeah, as you know, we have a deep inventory of assets, and our portfolio is very, very strong. And I certainly appreciate your interest in the details, but we feel that talking in detail about what the assets would be would compromise our ability to maximize the value of those divestitures. We've said previously that we get a lot of incoming offers, but it's clear that some think that this is a fire sale, and it is not.

Neal Mehta: Good morning Vicki and team and good progress here on deleveraging. That's kind of where I want to start. Recognize the Borilla draw announcement here a couple days ago but you know what's the asset sale market look like and can you talk about the opportunity set to continue to make progress?

Sunil Mathew: Maintaining our investment grade credit rating is a key priority. In recent weeks, we received ratings affirmations from all three ratings agencies including our investment grade credit ratings from Moody's and Fitch. We are focused on our deal averaging strategy and we remain on track to retire at least 4.5 billion dollars of debt well before next August. We are off to a promising start with a diverse literature program. We will continue to evaluate our high quality asset portfolio for divestment opportunities and will apply those proceeds to further debt reduction by strengthening our balance sheet. OXI is methodically delivering on this key financial commitments, the strategic and financial actions we have taken over recent quarters are converging to benefit our portfolio. Increase cashflow generation capability and ultimately accelerate shareholder value. Thank you.

Speaker Change: on monetization.

Speaker Change: Yeah, the...

Speaker Change: As you know, we have a deep inventory of assets and our portfolio is very, very strong.

Speaker Change: And I certainly appreciate your interest in the details, but we feel like talking in detail about what the assets would be would compromise our ability to maximize the value of those divestitures.

Speaker Change: We've said previously that we get a lot of incoming offers, but it's clear that some think that this is a fire sale, and it is not.

Vicki Hollub: This acquisition has actually enabled us to improve our inventory quality and scale, which gives us now the opportunity to bring forward value. And that's what we did with this Crown Rock acquisition. It's not that the assets that we just sold weren't, as Sunil said, a part of our core for 10 years; it's that we knew that we needed to bring value to our shareholders, and we did it in a way that made our inventory stronger. So it was the best possible way to do it.

Speaker Change: This acquisition has actually enabled us to improve our inventory quality and scale, which provides us that now the opportunity to bring forward value. And that's what we did with this Crown Rock acquisition. It's not that the assets that we just sold

Speaker Change: worked on, as Sunil said, a part of our core for 10 years.

Sunil Mathew: It's that we knew that we needed to bring forward the value to our shareholders.

Vicki Hollub: I will now turn the call back over to Vicki. Thank you, Neil.

Speaker Change: And we did it in a way that makes our inventory stronger, so it was the best possible way to do it. But in terms of talking about the other assets, I can just assure you that

Vicki Hollub: But in terms of talking about the other assets, I can just assure you that we have high confidence that we're going to be able to achieve our debt reduction targets. And as you saw, and as you mentioned, it was definitely a good start. And we were excited about where we're headed with this and think that certainly the $15 billion that we are targeting to achieve is doable by the end of 2026 or first of 2027, as we've previously said. Thanks, Vicki.

Vicki Hollub: Before we move on to the Q&A, I would like to close by focusing on a few of OXI's differentiated value catalysts. Our subsurface expertise, technical excellence, and operational strength allow us to continuously achieve basin leading well performance, while simultaneously driving efficiency and saving. The addition of Crown Rocks further enhances what I believe is OXI's strongest portfolio in our century-long history, and it kicks off another phase of OXI's cash flow growth with future upside to improve resource recovery and lower cost opportunities.

Speaker Change: We have high confidence that we're going to be able to achieve our debt reduction targets.

Speaker Change: And as you saw, and as you mentioned, it was definitely, we're off to a good start.

Speaker Change: And we're excited about where we're headed with this and think that certainly the $15 billion that we are targeting to achieve is doable by the end of 2026 or first of 2027, as we've previously said.

Vicki Hollub: And then just to follow up on the Crown Rock acquisition, just building off slide 27, just your early thoughts, recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile. I know you talked about this being $170,000 a barrel of bay asset, and the guide is a little softer than that, but recognize that it's not a full year, and you haven't had your hands full on these assets.

Vicki: Thanks, Vicki. And then just to follow up on the Crown Rock acquisition, just building off slide 27, just your early thoughts, recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile.

Vicki Hollub: I can't wait to see the value that the newly combined teams deliver given the quality and depth of development opportunities coming with this new asset. The young oil and gas we expect our OXI can administering businesses to continue to provide material cash flow durability in the years ahead. And finally, LCB continues to develop practical decarbonization solutions that are solidifying our leadership in this important emerging market. These businesses together position OXI's common shareholders to benefit financially for decades to come.

Speaker Change: I know you had talked about this being a $170,000 barrel a day asset, and the guide is a little softer than that, but recognize that it's not a full year and you haven't done your hands full on these assets, so just your perspective on the production profile and the synergies associated with that.

Vicki Hollub: So just your perspective, and the production profile and synergies associated with it. Now, bearing in mind that, with the SEC rules and regulations, our teams have had the opportunity to get together and to talk, but not to dive into the details or their plans. And so we've had now just a week for the team to start looking at what the situation is now with Crown Rock, and we're, again, incredibly excited about the assets. But I think Richard's team, you have found some additional details that have differentiated what we were expecting versus what happened over the past couple of quarters. Yeah, that's great. Thanks, Vicki.

Speaker Change: Now bearing in mind that with the SEC rules and regs, our teams have had the opportunity to get together and to talk, but not to dive into the details or their plans.

Jordan Tanner: We will now open the call for questions. As Jordan mentioned, Richard Jackson and Ken Dillon are on the call with us today for the Q&A session. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourself to one primary question and one follow-up.

Speaker Change: And so we've had now just a week for the team to start looking at what the situation is now with Crown Rock. And we're, again, incredibly excited about the assets. But I think, Richard's team, you have found some...

Richard Jackson: Some additional details that have differentiated what we were expecting versus what happened.

Richard Jackson: And I'll try to answer this question in a couple of pieces. I'll start with sort of where we are today. And like Vicki said, I guess the first thing to say is just very excited to work with our new team and be able to spend some time, you know, after close, you know, in the last week with them. And, you know, everything that we thought they would be, they are, and they are very excited about the opportunity.

Jordan Tanner: At this time, we will pause momentarily to assemble our roster.

Richard Jackson: Over the past couple of quarters. Yeah, that's great. Thanks, Vicki. And I'll try to answer this question in a couple of pieces. I'll start with sort of where we're at today and.

Neil Mehta: The first question comes from Neil Meta with Golden Facts. Please go ahead. Good morning, Vicki and team and good progress here on the leveraging. That's kind of where I want to start. Recognize the Burrila draw announcement here a couple days ago. But what's the asset sale market look like? Can you talk about the opportunity set to continue to make progress on monetization? As you know, we have a deep inventory of assets that are portfolio is very very strong and I certainly appreciate your interest in the details.

Richard Jackson: Like Vicki said, I guess the first thing to say, just very excited to work with our new team.

Speaker Change: was able to spend some time, you know, after closed.

Speaker Change: you know, in the last week with them and

Speaker Change: You know, everything that we thought they would be, they are, and very excited about, really, the opportunity. So, the first part, I'll kind of address where we are, and then I'll go ahead and speak to some of the synergies and how we're thinking about that generally, and then, as I think we said in our prepared remarks, we'll have more updates, I think, as we go into the end of the year. So, where do we start?

Richard Jackson: So in the first part, I'll kind of address where we are, and then I'll go ahead and speak to some of the synergies and how we're thinking about that generally. And then, as I think we said in our prepared remarks, we'll have more updates, I think, as we go into the end of the year. So where should we start? Again, this plan started with the rules that Cranrock really had a 2024 plan that they constructed.

Speaker Change: Again, this plan started, you know, with the rules that Cranrock really had a 2024 plan that they constructed.

Neil Mehta: But we feel like talking in detail about what the assets would be, would compromise our ability to maximize the value of those investitures. We've said previously that we get a lot of incoming offers, but it's clear that something that this is a far sale and it is not. This acquisition has actually enabled us to improve our inventory quality and scale, which provides us that now the opportunity to bring forward value. And that's what we did with this crown rock acquisition.

Richard Jackson: We didn't have a lot of insight into that, so we spent time kind of understanding where we are and lots of positives. The upsides that we saw, not only in a one-year program, but longer term, we still see. As we think about that 170 and our latest guidance, we were able to talk to the team about a couple of things. One, like us, had some downtime due to some weather events early in the year and just some other operational downtime that was a part of that. I'd call them more singular events than ongoing.

Speaker Change: You know, didn't have a lot of insight to that, so we've spent time kind of understanding where we are.

Speaker Change: and, you know, lots of positives.

Speaker Change: The upsides that we saw, not only in a one-year program, but longer term, still see.

Speaker Change: As we think about that 170 and our latest guidance and we're able to talk to the team a couple of things. One, like us, had some...

Neil Mehta: It's not that the assets that we just sold worked as Sunil said a part of our core for 10 years. It's that we knew that we needed to bring forward the value to our shareholders and we did it in a way that makes our inventory stronger. So it was the best possible way to do it. But in terms of talking about the other assets, I can just assure you that we have high confidence that we're going to be able to achieve our debt reduction targets.

Speaker Change: downtime due to some weather events early in the year and just some other operational downtime that was a part of that. I'd call it more singular events than ongoing.

Richard Jackson: And then the majority is really well-mixed, I think, due to their development plans and trying to optimize returns beyond just this year, they really focused on some shallower zones that were a bit tighter spaced and even a little less horizontal length. And so there are different reasons they constructed the program today versus what we had originally had in our plan. So we're in the process of deconstructing that, but again, we see that same upside as we roll this forward. I would say it was more delayed in terms of getting to the 170 as we anticipated. It certainly hasn't gone away.

Speaker Change: And then, you know, the majority is really well-mixed, I think, due to their development plans and trying to optimize returns, you know, beyond just this year that they...

Speaker Change: You know, really focused on some shallower zones that were a bit tighter spaced.

Vicki Hollub: And as you saw and as you mentioned, it's definitely we're off to a good start and we're excited about where we're headed with this and think that certainly the 15 billion dollars that we are targeting to achieve is doable by the end of 2026 or 1st of 2027. We've previously said Thanks, Vicki. And then just to follow up on the Crown Rock acquisition, just building off slide 27. And just your early thoughts, recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile.

Speaker Change: and even a little less horizontal length. And so, you know, there are different reasons they constructed the program today versus what we had originally had in our plan. So we're in the process of deconstructing that, but again, we see that same upside as we roll this forward. I would say it was more delayed in terms of getting to the 170 as we anticipated. It certainly hasn't gone away.

Richard Jackson: A couple of good things to note: I'd say well priced, and again, this applied to Oxy as well, but encouraged by where not only their costs are today but what they see as improvement opportunities. And so we'll be diving into that. And then looking at some of the opportunities going forward, I think they remain from a well performance perspective. I think the ability now to compare notes on things like well spacing and even the sequencing of how we develop these stack pays, we see opportunity. And so that'll be a big part of what we're working on for the rest of this year and next year. And then just scale and efficiency.

Speaker Change: A couple of good things to note, I'd say well cost, and again this applied to Oxy as well, but encouraged by where not only their costs are today, but what they see as improvement opportunities, and so we'll be diving into that.

Vicki Hollub: I know you had talked about this being 170,000 barrel of May asset, and the guy that is a little softer than that, but recognize that it's not a full year and you haven't done your hands full on these assets. So you just your perspective on the production profile and the synergies associated with that. Now, bearing in mind that with the SEC rules and regs, our teams have had the opportunity to get together in the talk, but not to dive into the details or their plans.

Speaker Change: And then, you know, looking at some of the opportunities going forward, I think, remain, you know, from a well-performance perspective, I think the ability now to compare notes.

Speaker Change: on things like well spacing and even the sequencing of how we develop these.

Speaker Change: The stack pay, we see opportunity, and so that'll be a big part of what we're working through for the rest of this year. Next year...

Vicki Hollub: And so we've had now just a week for the team to start looking at where the situation is now with Crown Rock. And we're again incredibly excited about the assets, but I think Richard's team you have found some additional details that have differentiated what we were expecting versus what happened over the past couple of quarters. Yeah, that's great. Thanks, Vicki. And I'll try to answer this question in a couple of pieces.

Richard Jackson: So we can quickly see opportunities as we think about rig and frat core utilization, and really that rolls into time to market improvements. And so as you are able to drive utilization of those resources up, we still see time to market. And then, as Vicky mentioned, water management.

Speaker Change: and then just scale.

Speaker Change: and Efficiency. So we can quickly see opportunities.

Speaker Change: You know, as we think about rig and frat core utilization and, you know, really that rolls into time-to-market improvements, and so as you are able to drive utilization of those resources up, we still see time-to-market.

Richard Jackson: We've been very proud of our water management capabilities, but when we combine them with a very strong position and, frankly, more scale with what the Crown Rock team has put together, I think that's going to deliver cost synergies as well as operational synergies. So to sum it all up, again, I'm excited to be with the team. Same opportunity, same upside, just we're rolling it forward from where we started today, and we're looking forward to providing more details as we go into the end of the year. The next question comes from Betty Jiang with Berkley's. Please go ahead. Excuse me, Ms. Chang, your line is open. Oh, sorry, I was on mute.

Speaker Change: um

Speaker Change: And then, as Vicki mentioned, really, the water management. We've been very proud of our water.

Speaker Change: sort of management capabilities, but when we combine with a very strong position and frankly more scale with what the Crown Rock team has put together, I think that's gonna deliver, you know, cost synergies as well as operational synergies. So to sum it all up, you know, again, excited to be with the team, same opportunity, same upside.

Vicki Hollub: I'll start with sort of where we're at today. And like Vicki said, I guess the first thing to say just very excited to work with our new team and was able to spend some time after close in the last week with them and everything that we thought they would be they are and very excited about really the opportunity. So the first part I'll kind of address where we are and then I'll go ahead and speak to some of the synergies and how we're thinking about that generally.

Speaker Change: We're rolling it forward from where we start today, and we're looking forward to providing more details as we go into the end of the year.

Vicki Hollub: And then as I think we said in our prepared remarks, we'll have more updates, I think as we go into the end of the year or so. So where we start again, this plan started with the rules that Crown Rock really had a 2024 plan that they constructed. We didn't have a lot of insight to that. And so we've spent time kind of understanding where where we are. And you know, lots of positives.

Operator: Please go ahead. Hi, good afternoon. Sorry about that.

Speaker Change: The next question comes from Betty Jiang with Berkley's. Please go ahead.

Speaker Change: Excuse me, Ms. Jang, your line is open.

Betty Jiang: Oh sorry, I was on mute. Please go ahead.

Betty Jiang: Maybe I want to switch gears a bit. I want to ask about the Stratos project. Really, congratulations on signing the agreement with Microsoft this quarter. I wanted to get an update on where that project is today, the startup timing on that, and any goal on what percentage of the carbon credits that you want to sell ahead of time. Yeah, maybe start from there. Great. No, thanks for the question.

Vicki Hollub: The the upsides that that we saw, not only in a one year program, but longer term still see, but we think about that 170 and our latest guidance and we're able to talk to the team a couple of things. One like us had some downtime due to some weather events early in the year and just some other operational downtime that that was a part of that I'd call it more singular events than ongoing.

Betty Jiang: Hi, good afternoon. Sorry about that.

Betty Jiang: Maybe I want to switch gear a bit. I want to ask about the Stratos project. Really, congratulations on signing the agreement with Microsoft this quarter and want to get an update on where that project is today. The startup timing on that

Vicki Hollub: And then, you know, the majority is really well mix. I think due to their development plans and trying to optimize returns, you know, beyond just this year that they. You know, really focused on some shallower zones that were a bit tighter spaced and even a little less horizontal length. And so, you know, there are different reasons they constructed the program today versus what we had originally had in our plan. So we'll we're in the process of deconstructing that.

Speaker Change: and any goal on what percentage of the carbon credits that you want to sell ahead of time. And yeah, maybe start from there.

Ken Dillon: We're excited, certainly, about the Stratos project and the progress, and I'll flip it to Ken after a few remarks to kind of give you more detail on that. I'd say, generally, great progress in the business. Obviously, the sales with Microsoft were not only the largest CDR kind of block sale to date, but really, that counterparty meant a lot to us.

Speaker Change: Great. No, thanks for the question. We're excited, certainly, with the Stratos project and the progress and I'll...

Speaker Change: Flip it to Ken after a few remarks to kind of give you more detail.

Ken Dillon: on that. I'd say generally, continue to see great progress in the business. Obviously, the

Vicki Hollub: But again, we see that same upside as we roll this forward. I would say it was more delayed in terms of getting to the 170 as we anticipated. It certainly hasn't hasn't gone away. A couple of good things to note, I'd say well cost. And again, this applied to oxygen as well, but encouraged by where not only their costs are today, but what they see is improvement opportunities. And so we'll be diving into that.

Ken Dillon: Sales with Microsoft not only be the largest CDR kind of block sale.

Ken Dillon: We know they're very diligent in the way they think about what the product of a CDR can mean to the business, and, you know, it's just great constructive dialogue that ultimately rolls into the future market and what that product can deliver. So beyond just the monetary aspect of that, I'm very pleased with that outcome. I'd say the other thing I'd like to highlight, and I think, again, as we roll into Stratos next year and then think about the future, we will continue to see great progress out of our carbon engineering R&D team.

Speaker Change: to date.

Ken Dillon: But really, that counterparty meant a lot to us. We know they're very diligent in the way they think about what the product of a CDR can mean to their business. And, you know, it's just great constructive dialogue that ultimately rolls into the future market and what that product can deliver. So beyond just the monetary aspect of that, I'm very pleased with that outcome. I'd say the other thing I'd like to highlight, and I think, again, as we roll into Stratos next year and then think about the future, continue to see great progress out of our carbon engineering R&D team.

Vicki Hollub: And then, you know, looking at some of the opportunities going forward, I think, remain. You know, from a well performance perspective, I think the ability now to compare notes on things like well spacing and even the sequencing of how we develop these. The stack pay, we see opportunity. And so that'll be a big part of what we're working through for the rest of the year next year. And then just scale and efficiency.

Ken Dillon: And so, as we think about the core elements of that process, being able to process air, capture CO2 in our liquid sorbent, and then, you know, how do you efficiently release that and either sequester or use it? We're seeing some very innovative things that we can see a direct line of sight to cost down, which is ultimately what we're trying to do as we get into the development. And so, those are sort of the catalysts we're paying closely attention to intentionally.

Speaker Change: And so, as we think about the core elements of that process, being able to process air,

Speaker Change: Capture CO2 in our sorbent, liquid sorbent, and then, you know, how do you efficiently release that and and either sequester or use it?

Vicki Hollub: So we can quickly see opportunities. You know, as we think about a rig and frack core utilization and, you know, really that rolls into time to market improvements. And so as you are able to drive utilization of those resources up, we still see time to market. And then, as Vicki mentioned, really the water management. We've been very proud of our water sort of management capabilities. But when we combine with a very strong position and, and frankly, more scale with what the Crown Rock team has put together, I think that's going to deliver.

Speaker Change: We're seeing some very innovative things that we can see, direct line of sight to cost down, which is ultimately what we're trying to do as we get into the development.

Ken Dillon: I would say, to your point, we'll continue to monitor CDR sales. We remain very optimistic about the outlook for that market. We hadn't set any specific parameters in terms of what that target is, you know, going forward, but it'll be a major component of our FID criteria for that, too, for certain. And so, I think as we get closer to that, you know, over the next, you know, period of time here, we'll be able to give more disclosure of how we think about that from a commercial project FID perspective. So maybe with that, I'll turn it over to Ken. Good afternoon, Betty.

Speaker Change: And so those are sort of the catalysts we're paying too closely to intentionally. I would say, you know, to your point, we'll continue to monitor CDR sales.

Speaker Change: We remain very optimistic on the outlook of that market. We haven't set any specific parameters in terms of what that target is, you know, going forward, but it'll be a major component of our FID criteria for that, too, for certain.

Vicki Hollub: You know, cost energies as well as operational energy. So, so the summit all up, you know, again, excited to be with the team. Same opportunity, same upside. And just we're rolling it forward from where we start today.

Ken Dillon: And so I think as we get closer to that, you know, over the next, you know, period of time here, that we'll be able to give more disclosure of how we think about that from a commercial project FID. So maybe with that, I'll turn it over to Ken.

Richard Jackson: And we're looking forward to providing more details as we go into the end, of the Year.

Betty Zhang: The next question comes from Betty Zhang with Worklies. Please go ahead. Excuse me, Ms. Zhang, your line is open. Oh, sorry, I was on mute. Please go ahead. Hi, good afternoon. Sorry about that. Maybe I want to switch gear a bit. I want to ask about the Stratos project. Really, congratulations on signing the agreement with Microsoft this quarter. And I want to get an update on where that project is today. The startup timing on that and any go on what percentage of the carbon credits that you want to sell ahead of time. And yeah, maybe start from there. Great. No, thanks for the question.

Ken Dillon: Overall, we remain on track for startup next summer. We currently have around 1200 people at the site, which is our peak. We'll start rolling off soon. We've been able to staff all trades as necessary, and Worley continues to do an excellent job. The efficiency of each of the trades is at or above where we expected them to be. We're now moving away from bulk fill, by that I mean putting in the large typing, table, et cetera, into completing the systems one by one.

Betty Jiang: Good afternoon, Betty.

Ken Dillon: Overall, we remain on track for startup next summer. We currently have around 1,200 people at site, which is our peak. We'll start rolling off soon.

Ken Dillon: We've been able to staff all trades as necessary and Worley continues to do an excellent job. The efficiency of each of the trades is at or above where we expected them to be.

Speaker Change: We're now moving away from bulk fill, by that I mean putting in the large typing, ABLE, etc., into completing the systems one by one, so we're at that stage now, so that we can commission in the right sequence.

Ken Dillon: So we're at that stage now so that we can commission in the right sequence. We get power live this month, which then means we can start getting the control room up and running and testing all of the instrumentation throughout the plant. So it's going really well at the moment. Also, as Richard highlighted, learning constantly during construction and also from the CEIC, we're seeing really great potential for performance improvements and cost-down improvements, and we're looking at how to incorporate these learnings as quickly as possible. Companies like Technip Energies are also focused on how to achieve cost-down improvements for their equipment.

Speaker Change: We get power live this month which then means we can start getting the control room up and running and testing all of the instrumentation throughout of the plan. So they're going really well at the moment.

Richard Jackson: Also, as Richard highlighted, learning constantly during construction and also from the CEIC. We're seeing really great potential for performance improvements and cost down improvements, and we're looking at how to incorporate these learnings as quickly as possible.

Vicki Hollub: We're excited, certainly with the Stratos project and the progress, and I'll look at the kin after a few remarks, kind of give you more detail on that. That's a generally, continue to see great progress in the business. Obviously, the sales with Microsoft, not only be the largest CDR kind of block sale to date. But really, that counterparty meant a lot to us. We know they're very diligent in the way they think about what the product of a CDR can mean to the business.

Speaker Change: Companies like Techneap Energies are also focused on how to achieve cost down for their equipment, and that's driven from the top of the company, so we're getting great support from our visionary vendors who have bought into long-term DAC future, so I hope that answers your question.

Ken Dillon: And that's driven from the top of the company. And so we're getting great support from our visionary vendors who have bought into the long-term DAC future. So I hope that answers your question. Yes, it does. Thank you very much for that color.

Betty Jiang: Maybe shifting back to Upstream, a follow-up on the Rockies, just after several quarters of very strong performance, do you think that, and then third quarter guidance is also seeing sequential growth, but as activity is expected to slow down in the second half, we'd love to get some color on how you think about the production and activity trajectory going forward. Yeah, no. I appreciate that question. The Rockies have been a significant part of our outperformance, you know, really, over the last couple of years.

Vicki Hollub: And, you know, it's just great constructive dialogue that ultimately rolls into the future market and what that product can deliver. So, beyond just the monetary aspect of that very pleased with that outcome, I say the other thing I'd like to highlight. And I think, again, as we roll into Stratos next year and then think about the future, continue to see great progress out of our carbon engineering R&D team. And so, as we think about the core elements of that process, being able to process air capture CO2 and our sorbent liquid sorbent, and then, you know, how do you efficiently release that and either sequester use it.

Speaker Change: Yes, it does. Thank you very much for that color. Maybe shifting back to upstream, follow up on the Rockies.

Speaker Change: After several quarters of very strong performance, do you think that in the third quarter guidance is also again seeing sequential growth?

Speaker Change: But as activity is expected to slow down in the second half, we'd love to get some color on how you think about the production and activity trajectory going forward.

Betty Jiang: So, a couple of things going on there, I think, you know, continue to do well in the DJ and the Powder River Basin. So, you know, as we highlighted in the slide, each of those is seeing sequential well performance improvement, even in the DJ, where we've been more mature in terms of operation. And so, you know, very, very pleased with that. From an activity standpoint, we really did some work in the early part of this year in the Powder River Basin, where, again, the well performance has been very good. Not only against the industry, which we note, but also against our internal expectations.

Speaker Change: Yeah, no, I appreciate that question. The Rockies has been a significant part of our outperformance.

Speaker Change: You know, really over the last couple of years, so a couple of things going on there. I think, you know, continue to do well in the DJ.

Vicki Hollub: We're seeing some very innovative things that we can see direct line of side to cost down, which is ultimately what we're trying to do as we get into the development. And so, those are sort of the catalysts we're paying to closely to intentionally. I would say, you know, to your point, we'll continue to monitor CDR sales where we remain very optimistic on the outlook of that market. We hadn't said any specific parameters in terms of what that target is, you know, going forward.

Speaker Change: and the Powder River Basin. So, you know, as we highlighted, I think, in the slide, you know, each of those are seeing sequential well performance improvement, even in the DJ, where we've been more mature in terms of operation.

Speaker Change: And so, you know, very, very pleased with that. From an activity standpoint, you know, we're, we really have done work in the early part of this year in the Powder River Basin, where, again, the well performance has been very good, not only against

Richard Jackson: And so what we're planning to do there is we'll have lower activity in the second half of the year while we pause and really rework our development plan. And so similar to what we kind of laid out generally in our highlight slide, we're really looking at how you take primary and secondary benches with the Turner and NIO and even the Mallory and think about that longer term as we build out our infrastructure.

Speaker Change: the industry, which we note, but also against our internal expectations. And so what we're planning to do there is we'll be lower activity in the second half of the year while we pause and really rework our development plans.

Vicki Hollub: But it'll be a major component of our FID criteria for that, too, for certain. And so, I think as we get closer to that, you know, over the next, you know, period of time here that we'll be able to give more disclosure of how we think about that from a commercial project FID.

Speaker Change: And so similar to what we kind of laid out generally in our highlight slide, we're really looking at how do you take

Ken Dillon: So, it might be with that. I'll turn it over to Ken.

Speaker Change: Primary and Secondary Benches with, you know, the Turner and NIO and even the Maori and think about that longer term as we build out our infrastructure.

Betty Zhang: Good afternoon, Betty. Overall, we remain on track for start up next summer. We currently have around 1,200 people at site, which is our peak. We'll start rolling off soon. We've been able to staff all trades as necessary, and Warwick continues to do an excellent job. The efficiency of each of the trades is at or above where we expected them to be. We're now moving away from bulk fill, by that I mean putting in the large typing, Able, etc, into completing the systems one by one, so we're at that stage now, so that we can commission in the right sequence.

Richard Jackson: And so what we're expecting is to be in position at the end of this year to put together a development plan and then have that compete with capital as we go into 2025. So I think, again, just very pleased with that, but I would call it steady activity in the DGA with a couple of rigs and then really putting a competitive case forward for the Powder River Basin in 2025. The next question comes from Paul Cheng with Scotiabank. Please go ahead. Thank you. Good morning.

Speaker Change: And so what we're expecting is to be in position at the end of this year to...

Speaker Change: You know, be able to put together a development plan and then have that compete with capital as we go into 2025.

Speaker Change: So I think, again, just very pleased with that, but I would call it steady activity in the DJ with a couple of rigs, and then really putting a competitive case forward for Powder River Basin in 2025.

Speaker Change: The next question comes from Paul Cheng with Scotiabank.

Betty Zhang: We get power live this month, which then means we can start getting the control room up and running and testing all of the instrumentation throughout the plan, so going really well at the moment. Also, as Richard highlighted, learning constantly during construction, and also from the CIC, we're seeing really great potential for performance improvements and cost down improvements, and we're looking at how to incorporate these landings as quickly as possible. Companies like Technique Energy are also focused on how to achieve cost down for their equipment, and that's driven from the top of the company, so we're getting great support from our visionary vendors who have bought into long-term back future, so hope that answers your question. Yes, it does. Thank you very much for that color.

Speaker Change: Please go ahead.

Paul Cheng: That's the first one. NATIONAL HOCKEY TEAM, I think you guys have said you discussed with AgriPetrol for them to purchase 30% of dividends from Congo, and then that fell apart.

Paul Cheng: Thank you. Good morning.

Speaker Change: I think that first one is maybe for Sunil.

Paul Cheng: Thank you.

Speaker Change: I think you guys have said, you have discussed with Air Patrol for the...

Speaker Change: for them to purchase 30% undivided interest in the Kwang rock.

Vicki Hollub: So from that standpoint, what, that, and perhaps more important. The reason why you... Purchase Crown Wall. The Better Oof. Better than that.

Speaker Change: and then that's fell apart so from that stand point what is the sticky point on that and perhaps more importantly

Speaker Change: The reason why you purchase Crowne World must be you think the asset is better or at least better than the average of your portfolio. So why that would be one of the reasons.

Vicki Hollub: Audio. So why would that be one? First onset

Vicki Hollub: John Dick, get some answers about the logic behind when you initially talk. Our second question is that I know you're a little bit early for CapEx and production, so I want to give you some idea of that, part, plus and minuses for next year. Paul, thank you for the question. I'll take the first question you had, and I can tell you that we absolutely believe that the Crown Rock asset, as a combined asset, is one of the best we've seen.

Speaker Change: First asset that you're trying to sell down, so trying to get some understanding of the logic behind when you initially talking to AgriPetrol for the deal.

Vicki Hollub: Maybe shifting back to upstream follow-up on the Rockies, just after several quarters of very strong performance, do you think that an insert quarter guidance is also, again, seeing sequential growth, but as activity is expected to slow down in the second half, we'll love to get some color on how you think about the production and activity trajectory going forward. Yeah, I know, I appreciate that question. The Rockies has been a significant part of our outperformance, you know, really over the last couple of years, so a couple of things going on there, I think, continue to do well in the DJ and the Powder River Basin.

Speaker Change: Our second question is that I know it's a little bit early for 2025 for CAPEX and production, but can you give us some idea that maybe the moving part, plus and minus, for next year on both the CAPEX and the production outlook? Thank you.

Speaker Change: Paul, thank you for the question.

Tim: I'll take the first question you had, and I can tell you we absolutely believe that the Crown Rock assets as a combined asset is, it is one of the best we've seen. Tim.

Vicki Hollub: As we highlighted, I think in the slide, each of those are seeing sequential well performance improvement, even in the DJ, where we've been more mature in terms of operation, and so very pleased with that. From an activity standpoint, we really have done work in the early part of this year in the Powder River Basin, where, again, the well performance has been very good, not only against the industry, which we note, but also against our internal expectations, and so what we're planning to do there is we'll be lower activity in the second half of the year while we pause, and really rework our development plans, and so it's similar to what we kind of laid out generally in our highlight slide.

Vicki Hollub: Tim Dunn did a great job of putting together the portfolio of assets that Crown Rock had, and they did a great job of developing it. And there are a lot of really good possibilities in there for continued expansion. And as you know, the inventory came in mostly in our tier one inventory.

Speaker Change: Tim Dunn did a great job of putting together the the portfolio of assets that Crown Rock had And they did a great job of developing it and there's there's a lot of really good

Speaker Change: possibilities in there for for continued expansion and as you know the inventory came in mostly in our tier one inventory.

Vicki Hollub: So, the way that worked was that we wanted to buy 100% of Crown Rock, and I actually informed Echo Patrol on numerous occasions that our preference was to purchase 100% of Crown Rock, but, as a part of the Rodeo JV, we had an agreement with Ecopatrol under that JV agreement that they had the right to purchase 49% of anything that we purchased within a certain area and vice versa. If they were to purchase something, we would have had the right to buy 49% of what they had purchased within a given area within the Midland Basin. So, we wanted it all, but they also wanted to be a part of it.

Speaker Change: So, the way that worked is that we wanted to buy 100% of Crown Rock, and I actually informed Echo Patrol on numerous occasions that our preference was to purchase 100% of Crown Rock, but

Speaker Change: As a part of the Rodeo JV, we had an agreement with Echo Patrol within that JV agreement that they had the right to purchase 49 percent

Vicki Hollub: We're really looking at how do you take primary and secondary benches with the Turner and Nao and even the Maori, and think about that longer term as we build out our infrastructure, and so what we're expecting is to be in position at the end of this year to be able to put together a development plan and then have that compete with capital as we go into 2025. So I think, again, just very pleased with that, but I would call it steady activity in the DJ with a couple of rigs, and then really putting a competitive case forward forward Powder River Basin in 2025.

Speaker Change: of anything that we purchased within a certain area and vice versa. If they were to purchase something, we would have had the right to buy 49 percent of what they had purchased.

Vicki Hollub: They saw the assets. They knew they were high-quality assets. They wanted to be a part of it.

Speaker Change: within a given area within the Midland Basin.

Speaker Change: So we wanted it all, but they also wanted to be a part of it. They saw the assets. They know they were high-quality assets. They wanted to be a part of it.

Vicki Hollub: So since they are a valued partner to us, we've been in partnerships with them for decades, and we have a great relationship with them, we negotiated for a 30% working interest that we felt like would be fair and beneficial to both of us. And we worked on that deal from March to just last week, and we thought we were done, but President Petro of Colombia didn't approve of it. He, and you know, he's made it very clear to the world that he's anti-oil and gas, anti-fracking, and anti-US. And with those three strikes, he pretty much dealt the Echo Patrol out of the deal.

Speaker Change: So since they are a valued partner to us, we've been in partnerships with them for decades and we have a great relationship with them. So we negotiated to a 30% working interest that we felt like would be fair and beneficial to both of us.

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

Paul Cheng: Good morning. I think that first one is maybe for Sunil. I think you guys have said you have discussed with the echo patrol for them to purchase 30% on divided inches in the crown rock and then that fell apart. So from that standpoint, what is the sticky point on that? And perhaps more importantly, the reason why you purchase crown rock must be you think the answer is better or at least better than the average of Neil Portillo.

Speaker Change: And we worked on that deal from March to just last week, and we thought we were done.

Speaker Change: But President Petro of Colombia didn't approve of it. He's made it very clear to the world that he's anti-oil and gas, anti-fracking, and anti-U.S.

Speaker Change: And with those three strikes, he pretty much dealt the Echo Patrol out of the deal.

Vicki Hollub: And that's all according to news reports. But certainly, we wanted it all; they wanted a part of it. You know, unfortunately, there are others in the world like Petro, and there are some in the United States like Petro, who believe that oil and gas should go away and believe that we shouldn't be an industry anymore. And that renewable energy will be all that's needed to go forward and to help with the climate transition. But the reality is that, as you know, oil and gas are going to be needed for many decades to come. And so, the other part of what Echo Patrol had some interest in was our strategy.

Speaker Change: And that's all according to news reports, but certainly.

Speaker Change: We wanted it all. They wanted a part of it. You know, unfortunately, there are others in the world like Petro and

Paul Cheng: So why that will be one of the first answer that you're trying to sell down. So trying to get some understanding of the logic behind when you initially talking to echo patrol for the field. Second question is that I know you're a little bit early for 2025 or Capix and production, but can you give us some idea that maybe the moving part percent minor just for next year on both the Capix and the production now.

Speaker Change: And there are some, actually in the United States, like Petro, who believe that oil and gas should go away, and believe that we shouldn't be an industry anymore, and that renewable energy will be all that's needed to go forward and to

Speaker Change: to help with the climate transition. But the reality is that, as you know, oil and gas is going to be needed for many decades to come.

Vicki Hollub: And our strategy in the Midland Basin with respect to CO2 and enhanced oil recovery. Our strategy is very important to the world in that we're going to be taking CO2 out of the atmosphere and putting it in the assets that we have in the Midland Basin, including Crown Rock, to get more oil out of the ground. And so, they were very excited about that and wanted to be a part of it. The next question comes from Doug Leggate with Wolf Research. Please go ahead. Hi, this is John Abbott on for Doug Leggett. He's just sticking with it. Equitrol Shell Joint Manufacturer. How much production? is associated with JV.

Speaker Change: And so the other part of what Echo Patrol had some interest in was our strategy.

Paul Cheng: Thank you. Thank you for the question. I'll take the first question you had and I can tell you we absolutely believe that the crown rock assets as a combined asset is it is one of the best we've seen. Tim, Tim done did a great job of putting together the portfolio of assets that crown rock had and they did a great job of developing it and there's there's a lot of really good possibilities in there for continued expansion.

Speaker Change: and our strategy in the Midland Basin with respect to CO2 and in-and-out store recovery.

Speaker Change: And our strategy is very important to the world in that we're going to be taking CO2 out of the atmosphere and putting it in the assets that we have in the Middle Basin, including Crown Rock, to get more oil out of the ground.

Speaker Change: And so they were very excited about that and wanted to be a part of it.

Speaker Change: The next question comes from Doug Leggate with Wolf Research. Please go ahead.

Speaker Change: Hi, this is John Abbott on for Doug Leggett.

John Abbott: Yes, just sticking with the Equipatrol shale joint fracture.

Paul Cheng: And as you know, the inventory came in mostly in our tier one inventory. So the way that worked is that we wanted to buy 100% of crown rock and I actually informed echo patrol on numerous occasions that our preference was to purchase 100% of crown rock. But as a part of the rodeo JV we had an agreement with echo patrol within that JV agreement that they had to write the right to purchase 49% of anything that we purchased within a certain area and vice versa.

John Abbott: How much production is associated with that JV?

John Abbott: And, you know, just out of curiosity, if they did not want to continue in the Midland for some reason, would you be potentially interested in that question? The way that would work is that if we continued on beyond the potential ending of the JV, the interest would just be divided 49% for Eco Patrol, 51% for Oxy. So a discontinuation of the JV would just result in a couple of scenarios, one being if we just broke it off, didn't go forward at all with the JV, we would each just have a normal operating situation where it's 51% us, 49% Did that answer your question?

Speaker Change: and you know just out of curiosity if they did not want to continue in the Midland for some reason would you be a potentially interested in that asset?

Speaker Change: So the way that would work is that if we continued on beyond the ending of the potential ending of the JV,

Speaker Change: The interest would just be divided 49% for Ecopetrol.

Speaker Change: 51% for Oxy. So a discontinuation of the JV would just...

Paul Cheng: If they were to purchase something we would have had the right to buy 49% of what they had purchased within a given area within the middle and basin. So we wanted it all, but they also wanted to be a part of it. They saw the assets. They know they were high quality assets. They wanted to be a part of it. So since they are a value partner to us, we've been in partnerships with them for decades and we have a great relationship with them.

Speaker Change: result in a couple of scenarios. One being if if we just broke it off, didn't go for

Speaker Change: forward at all with the JV. We would each just have just like a normal operating situation where it's 51% us, 49% them. Did that answer your question?

Vicki Hollub: Yeah, I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently. I believe that's around 40,000 barrels a day. Yeah, that's right. Yeah, it's around 40.

Speaker Change: Yeah, I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently.

Paul Cheng: So we negotiated to a 30% working interest that we felt like wood would be fair and beneficial to both of us. And we worked on that deal from March to just last week and we thought we were done, but President Petro of Columbia didn't approve of it. He made it very clear to the world that he's anti oil and gas, anti fracking, and anti US, and with those three strikes, he pretty much dealt the eco patrol out of the deal.

Speaker Change: I believe that's around 40,000 barrels a day. Yeah, that's right. Yeah, it's around 40.

Paul Cheng: That's all according to news reports, but certainly we wanted it all, they wanted a part of it. Unfortunately, there are others in the world like Petro and there are some actually in the United States like Petro who believe that oil and gas should go away and believe that we shouldn't be an industry anymore and that renewable energy will be all that's needed to go forward and to help with the climate transition.

Vicki Hollub: That's very helpful. And then for the second question, very quickly, what was the run rate spending at Crown Rock? Was it 900?

Speaker Change: That's very helpful. And then for the second question, very quickly, what was the run rate spending at Crown Rock?

Richard Jackson: Yeah, it's been very steady. I mean, I think we gave the guidance, you know, midpoint around 950, and it's been very steady with their five rigs. So we looked at that, and you know, I think that's part of their success. They've been able to be very flat, which turns into a great production profile as well.

Speaker Change: That was it, 900?

Speaker Change: Yeah, it's been very steady. I mean, I think we gave the guidance, you know, midpoint around 950, and it's been very steady with their five rigs. So, we looked at that and, you know, I think that's part of their success. They've been able to be very

Richard Jackson: So, so very, very, you can think about it very steadily. Yeah, I just wanted to clarify on the Midland Productions, the 40,000 is our net production. The next question comes from John Royall with J.P. Morgan. Please go ahead.

Speaker Change: flat, which turns into a great production profile as well. So very, very, you can think about it very steady.

Speaker Change: Yeah, I just want to clarify on the midland production, the 40,000 is our net production.

Speaker Change: The next question comes from John Royall with J.P. Morgan. Please go ahead.

John Royall: Hi, good afternoon. Thanks for taking my question. So my first question is about the asset sale program. To date, you've sold or agreed to sell about a billion dollars worth of assets. Is there anything you can offer on the lost cash flow that you expect from these assets? We know the production impact from Borilla Draw, but I was just wondering on the cash flow side if there's anything you can give us there.

John Royall: We can't yet because we really haven't made decisions on what the next set of divestitures would be. We're still evaluating that. Okay, yeah, I was just referring to the billion that you've already announced. Okay, so my follow-up is just on the DAC program.

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

John Royall: So my first question is on the asset sale program. To date, you've sold or agreed to sell about a billion dollars' worth of assets. Is there anything you can offer on the lost cash flow that you expect from these assets? We know the production impact from Borilla draw, but I was just wondering on the cash flow side if there's anything you can give us there.

Paul Cheng: But the reality is that as you know, oil and gas is going to be needed for many decades to come. And so the other part of what eco patrol had had some interest in was our strategy and our strategy in the middle and base with respect to CO2 and in and have store recovery. And our strategy is very important to the world and we're going to be taking CO2 out of the atmosphere and putting it in the assets that we have in the middle and base. And including Crown Rock to get more oil at the ground. And so they were they were very excited about that and wanted to be a part of it.

Speaker Change: We can't yet because we really haven't made decisions on what the next set of divestitures would be. We're still under evaluation of that.

Speaker Change: Thank you for tuning in. Bye. Bye.

Vicki Hollub: Maybe you can talk about how it's developing, kind of looking past Stratos. Are you in serious or advanced discussions with potential partners and or licensees for future DACs, or do you expect that those discussions would ramp up once you have sort of a proof of concept out there with Stratos being operational? Just try and understand how you expect the program to evolve post-Stratos. Yeah, maybe answer that kind of yes to both.

Speaker Change: Maybe you can talk about how it's developing, kind of looking past STRATOS. Are you in serious or advanced discussions with potential partners and or licensees?

Douglas Leggate: The next question comes from Doug Legate with Wolf Research. Please go ahead. Hi, this is John Abbott on for Doug Legate. He's just sticking with the eco patrol, eco patrol, sharing venture. How much production is associated with that JV? And you know, just out of curiosity, if they did not want to continue in the midland for some reason, would you be a potentially interested in that asset? So the way that would work is that if if we continued on beyond the ending of the potential ending of the JV, the interest would just be divided 49% for eco patrol 51% for oxy.

Douglas Leggate: So a discontinuation of the JV would just result in a couple of scenarios, one being if if we just broke it off didn't go forward at all with the JV. We would each just have just like a normal operating situation where 51% us, 49% them. Did that answer your question? Yeah, I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently. I believe that's around 40,000 barrels a day. Yeah, that's right. Yeah, it's around 40.

Speaker Change: For future DACs, or do you expect that those discussions would ramp up once you have sort of a proof of concept out there with STRATOS being operational? Just try and understand how you expect the program to evolve post-STRATOS.

Richard Jackson: I think, you know, one thing we've done is, you know, with the King Ranch sequestration hub, we continue to develop that we're pursuing really across all of our sequestration hubs in the Gulf Coast, our stratigraphic wells that prove the subsurface storage capability. We're going through permitting for Class 6 wells. And so we've really put that sort of front end work together to be able to accommodate both direct air capture and our point source.

Speaker Change: Yeah, maybe answer that, kind of yes to both, I think.

Speaker Change: You know, one thing we've done is, you know, with the King Ranch sequestration hub, we continue to develop that.

Speaker Change: We're pursuing really across all of our sequestration hubs in the Gulf Coast, our

Speaker Change: Stratigraphic Wells that prove the subsurface storage capability. We're going through permitting for Class 6 wells, and so we've really put that sort of front-end work together to be able to accommodate both direct air capture and our point source, and that continues to go well.

Richard Jackson: And that continues to go well. King Ranch is really what we've targeted for the next kind of development beyond the Permian. And it really has a lot of scale advantages that we've talked about in the past, both with the subsurface and, you know, as we think about it, the balance of plants. You think about key power inputs, emissions-free power inputs, water, or other advantages.

Speaker Change: You know, King Ranch is really what we've targeted for the next.

Speaker Change: kind of development beyond the Permian and it really has a lot of scale advantages that we've talked about in the past both with the subsurface and

Speaker Change: You know, as we think about it, the balance of plants, you think about key power inputs, emissions-free power inputs, water, or other advantages. And so that sort of engineering work we continue to do for South Texas as it relates to the subsurface and DAC.

Richard Jackson: And so that sort of engineering work we continue to do for South Texas as it relates to the subsurface and DAAC. But, yes, to your first part of the question, which is, we do think it's really important to see Stratos as we continue to show that this great line of sight on cost down, both for Stratos and the construction, and then as it turns into operations next year, and also how we think about the Carbon Engineering Innovation Center and the R&D improvements that Ken and I talked about earlier.

Speaker Change: but

Speaker Change: Yes to your first part of the question, which is we do think it's really important to see Stratos as we continue to show that this great line of sight on cost down both in Stratos and the construction and then as it turns into operations next year and also how we think about the Carbon Engineering Innovation Center and the R&D improvements that Ken and I talked about earlier roll in.

Douglas Leggate: That's very helpful. And then for the second question, very quickly, what was the run rate spending at Crown Rock? Is that was it 900? Yeah, it's been very steady. I mean, I think we gave the guidance, you know, midpoint around 950 and it's been very steady with their five rigs. So we looked at that and, you know, I think that's part of their success. I've been able to be very flat, which turns into a great production profile as well. So it's a very, very deep thing about it.

Richard Jackson: So we do feel like as a milestone going into next year, getting this plant online, we're able to incorporate some of these learnings already into that process as we begin ramping up that capacity next year. We think that's a really important thing to factor into that South Texas FID in addition to the continued CDR sales that I mentioned earlier. And the last thing to say, the exciting part about that King Ranch development, that's really a 30 million ton per year hub.

Speaker Change: So we do feel like from a, you know, from a milestone going into next year, getting

Speaker Change: This Plan Online, we're able to incorporate some of these learnings already.

Douglas Leggate: Study. Yeah, I just want to clarify on the mid-length production, the 40,000 is on net production.

Speaker Change: into that process as we begin ramping up that capacity next year. We think that's a really important thing.

Speaker Change: to factor into that South Texas FID in addition to the continued CDR sales that I mentioned earlier.

John Royall: The next question comes from John Royall with JP Morgan.

John Royall: Please go ahead. Hi, good afternoon, thanks for taking my question. So my first question is on the asset sale program to date you've sold or agreed to sell about a billion dollars worth of assets. Is there anything you can offer on the lost cash flow? The expect from these assets, we know the production impact from Barilla draw, but I was just wondering on the cash flow side, if there's anything you can give us there.

Speaker Change: And the last thing to say, you know, the exciting part about that King Ranch development, that's really...

John Royall: We can't, yeah, because we really haven't made decisions on what the next set of divestitures would be, we're still under evaluation of that. Okay, yeah, I was just referring to the billion that you've already announced.

Richard Jackson: And so you get these tremendous economies of scale that we really think add to the R&D improvements in terms of cost. And so that's really how we see that play out. If you go back to our early presentations on the development plan for the next decade, that's a big part of that ramp up. So let me stop there, and hopefully that answers your question.

Speaker Change: you know, a 30 million ton.

Speaker Change: per year hub. And so you get these tremendous economies of scale that we really think add to the R&D improvements in terms of a cost down. And so that's really how we see that play out. If you go back to our early sort of presentations on the development plan,

Speaker Change: into the next decade. That's a big part of that ramp up. So let me stop there and hopefully that answered some of the intent of your question.

Roger Read: Some of the intent of your question. The next question comes from Roger Read with Wells Fargo. Please go ahead.

John Royall: Okay, so my follow-up is just on the DAC program. Maybe you can talk about how it's developing kind of looking past straddles. Are you in serious or advanced discussions with potential partners under our lights and fees? For future doctors, do you expect that those discussions would ramp once you have sort of a proof of concept out there with straddles being operational? Just try and understand how you expect the programs to evolve post-straddles.

Speaker Change: The next question comes from Roger Read with Wells Fargo. Please go ahead.

Vicki Hollub: Yeah, thank you, and good afternoon. Um, I guess. I'd kind of like to come at the question on the cash returns, comments were made in the presentation on, catch up calls yesterday, get the debt paid down, and then get back to buying back shares, potentially even, after retiring the preferred, and I'm just curious kind of how you're looking at that in terms of what you would want to do.

Roger Read: Yeah, thank you and good afternoon.

Roger Read: Um, I guess...

Roger Read: I'd kind of like to come at the question on the cash returns, you know, comments were made in the presentation on the

Roger Read: catch up calls yesterday, you know, get the debt paid down and then get back to buying back shares, potentially even, you know, go after retiring the preferred and I'm just curious kind of how you're looking that at that in terms of

Richard Jackson: Yeah, maybe answer that. Kind of yes to both. I think one thing we've done is with the King Ranch sequestration hub, we continue to develop that. We're pursuing really across all of our sequestration hubs in the Gulf Coast, our stratigraphic wells that prove the subsurface storage capability. We're going through permitting for classics wells, and so we've really put that sort of front end work together to be able to accommodate both direct air capture and our point source, and that continues to go well.

Vicki Hollub: Once the balance sheets are, meaning, do you want to get all the way back to buying back the preferred again, or does it make sense to be a little more steady with the share repos, raise the dividend, and then leave yourself the flexibility to act? It really depends on the macro because what we're doing today with this accretive acquisition actually delivers better value than buying back shares, so given that's why we did the deal we did.

Speaker Change: What you would want to do once the balance sheet is where you want it.

Speaker Change: Meaning, do you want to get all the way back to buying back to preferred again or does it make sense to be a little more steady with the share repos, raise the dividend, and then leave yourself the flexibility for acquisitions?

Speaker Change: It really depends on the macro because

Speaker Change: What we're doing today with this accretive acquisition, to me, is actually delivers better value.

Richard Jackson: King Ranch is really what we've targeted for the next kind of development beyond the Permian, and it really has a lot of scale advantages that we've talked about in the past, both with the subsurface and, you know, as we think about it, the balance of plant, do you think about key power inputs, emissions-free power inputs, water, or other other advantages? And so that sort of engineering work we continue to do for South Texas, as it relates to the subsurface and DAC, but yes to your first part of the question, which is we do think it's really important to see Stratos as we continue to show that this great line of sight on cost down both in Stratos and the construction, and then as it turns into operations next year, and also how we think about the carbon engineering innovation center and the R&D improvements that Ken and I talked about earlier roll in.

Speaker Change: and Buying Back Shares. So given that's why we did the deal we did.

Vicki Hollub: But share repurchases still are a part of our value proposition, and especially given the fact that our share price is so much lower than we believe it should be. So, as we get through this period and we get our debt down to $15 billion, we will then resume share repurchases. And it really depends on the macro at that point.

Speaker Change: But share repurchases still is a part of our value proposition, and especially given the fact that our share price is so much lower than we believe where it should be. Thank you. Thank you.

Speaker Change: So as we get

Speaker Change: through this period and we get our debt back down to $15 billion, we will then resume share repurchases.

Vicki Hollub: If we are in a scenario where we can buy enough shares back to trigger the $4 per share, then we would start also buying back the preferred. That would be a part of what we do. We can't ever rule out, you know, the possibility that we would be in a prolonged high-priced environment. Because I think that although the Berkshire Preferred becomes available to us at a 5% rather than 10% premium starting in 2029, so that if we haven't bought it back by then, we would definitely launch a campaign at that point to buy the Preferred.

Speaker Change: And it really depends on the macro at that point.

Speaker Change: If we are in a scenario where we can buy enough shares back to trigger the $4 per share, then we would start also buying back the preferred. That would be a part of what we do.

Speaker Change: We can't ever rule out, you know, the...

Speaker Change: And what the situation would be if we were in a prolonged high-price environment. Because I think that although the Berkshire Preferred becomes

Richard Jackson: So we do feel like from a, you know, from a milestone going into next year, getting, you know, this plan online, we're able to incorporate some of these learnings already into that process, as we begin ramping up that capacity next year. We think that's a really important thing to factor in to that South Texas FID, in addition to the continued CDR sales that I mentioned earlier. And the last thing to say, you know, the exciting part about that King Ranch development, that's really, you know, a 30 million ton per year hub.

Speaker Change: available to us at a 5% rather than 10% premium starting in 2029 so that if we haven't bought it back by then we would definitely launch a campaign at that point to buy the preferred.

Vicki Hollub: Yeah, right, the 10-year, Okay, and then, as an unrelated follow-up, just your guidance on the midstream business and gas trading. What is the expectation that you have on Matterhorn in terms of startup that's built into your expectations? Is that it?

Speaker Change: Yeah, right, the 10-year kind of change. Okay, and then as an unrelated follow-up, just your guidance on the midstream business and the gas trading,

Richard Jackson: And so you get these tremendous economies of scale that we really think add to the R&D improvements in terms of a cost down. And so that's really how we see that play out if you go back to our early sort of presentations on a development plan into the next decade. That's a big part of that ramp up.

Speaker Change: What is the expectation that you have on Matterhorn in terms of startup that's built into your expectations? Is that middle of the quarter, end of the quarter? I'm just trying to understand, like, maybe upside, downside to the guidance.

Speaker Change: That would probably happen mid to late quarter is the last update that we've had.

Richard Jackson: So let me stop there. And hopefully that answered some of the intent of your question.

Roger Read: The next question comes from Roger Read with Wells Fargo, please go ahead. Yeah, thank you and good afternoon. I guess I'd kind of like to come at the the question on the cash returns, you know, comments are made in the presentation on the catch up calls yesterday, you know, get the debt paid down and then get back to buying back shares potentially even, you know, go after retiring the preferred. And I'm just curious kind of how you're looking at that in terms of what you would want to do once the balance sheets where you want it.

Vicki Hollub: Middle of the quarter, end of the quarter, I'm just trying to understand, like, maybe upside, downside to the guy. That would probably happen mid to late quarter is the last update that we've had. The next question comes from Neal Dingmann with Truist Security. Hi, good afternoon.

Speaker Change: The next question comes from Neal Dingmann with Truist Securities.

Neal Dingmann: Thanks for taking my question. My first question, Vicki, is just about the Gulf of Mexico. Specifically, could you give some color on how active you might be with tiebacks through the remainder of the year? I think you've got a lot of opportunities there. And then maybe even, you know, look at all the exploration opportunities. I'm just, you know, given all these opportunities you have, you anticipate a bit more startups there on the exploration side, starting next year.

Roger Read: Meaning, do you want to get all the way back to buying back to prefer it again, or does it make sense to be a little more steady with the share repose, raise the dividend and then leave yourself the flexibility for acquisitions? It really depends on the macro because what we're doing today with this accretive acquisition to me is it is actually delivers better value and buying back shares. So given that's that's why we did the deal we did.

Neal Dingmann: Hi, good afternoon. Thanks for taking my question. My first question, Vicki, is just on the Gulf of Mexico. Specifically, could you give some colors how active...

Neal Dingmann: You might be with tiebacks through the remainder of the year. I think you've got a lot of opportunities there and then maybe even, you know, look at all the exploration opportunities. I'm just, you know, given all these opportunities you have, do you anticipate a bit more startups there on the exploration side starting next year?

Neal Dingmann: You know, the exploration won't be as aggressive as it has been in the past because of the fact that we've launched an evaluation using data analytics and AI. And what we want to do is give our teams the tools that we believe will help them even further understand what's happening in the subsurface of the very complex deep water prospects within the Gulf of Mexico. But the exciting thing is we have numerous other things that we can do in the Gulf of Mexico that Ken can describe. Thanks, Vicki.

Speaker Change: You know, the exploration, it won't be as aggressive as it's been in the past because of the fact that we've launched a, an evaluation using, um...

Speaker Change: Data Analytics, and AI. And what we want to do is

Speaker Change: is to give our teams the tools that we believe will help even further understand what's happening in the subsurface of the very complex deepwater prospects within the Gulf of Mexico. But the exciting thing is we have numerous other things that we can do in the Gulf of Mexico that Ken can describe.

Vicki Hollub: I think overall, the teams are performing really well on all fronts, the base, including primary exploration and the water flood designs. On the base, for example, as a result of recent OBN seismic data, we moved further northwest of one of our fields and brought on a 15,000 barrels a day well, which came on in early May. From further analysis of the OBN data, we're seeing more potential in that area and others. In exploration, we're currently involved in two recent discoveries in Guam, Ocotillo and Tiberias. Ocotillo, Ocotillo, Kentucky Back to Marlin, Tiberias, Delucius. These are like three and a half mile to eight mile tiebacks.

Ken Dillon: Thanks Vicki. I think overall the teams are performing really well on all fronts. The base including primary, exploration, and the water flood designs.

Roger Read: But share repurchases still is a part of our value proposition, and especially given the fact that our share price is so much lower than we believe where it should be. So as we get through this period and we get our debt down back down to 15 billion, we will then resume share repurchases. And then we're really depends on the macro at that point. If we are in the scenario where we can buy enough shares back to trigger the $4 per share, then we would start also buying back to preferred.

Ken Dillon: On the base, for example, as a result of recent OBN seismic data, we moved further northwest of one of our fields and brought on a 15,000 barrel a day well, which came on in early May.

Ken Dillon: From further analysis of the OBN data, we're seeing more potential in that area and others.

Speaker Change: In exploration, we're currently involved in two recent discoveries in Gaum, Ocotillo, and Tiberias.

Speaker Change: Ocotillo, Ocotillo can tie back to Marlin, Tiberias, Delucious, these are like three and a half mile to eight mile tiebacks. Both projects are going through our process to FID at the moment, and we can discuss more after sanction.

Ken Dillon: Both projects are going through our process to FID at the moment, and we can discuss more after sanction. Continuing our water flood project designs, we'll be capable of commencing execution next year. These have the potential to add substantial low-cost reserves, and these projects are in our wheelhouse as a company where water flooding is one of our strengths. And operationally, we've safely completed all our major turnarounds for the year, so very positive overall in GOM as we lean into the AI pilots that Vicki highlighted earlier. Great update. And then just a second on OFS services.

Roger Read: That would be a part of what we do. We can't ever rule out what the situation would be if we were in a prolonged high price environment because I think that although the the purchase preferred becomes available to us at a 5% rather than 10% premium starting in 2029. So that if we haven't bought it back by then, we would definitely want to campaign at that point to buy the preferred. Yeah, right.

Speaker Change: We're continuing our water flood project designs and will be capable of commencing execution next year. These have the potential to add substantial low-cost reserves and these projects are in our wheelhouse as a company where water flood is one of our strengths.

Speaker Change: And operationally, we've safely completed all our major turnarounds for the year, so very positive overall in GOM as we lean into the AI pilots that Vicki highlighted earlier.

Neal Dingmann: I'm just wondering, are you seeing any given sort of recent volatility or maybe a little bit of a downturn in oil prices? Have you seen any recent softness and just wondered how different prices, OFS prices, might be trending onshore versus offshore? Let me just start and then Ken can provide some better detail.

Speaker Change: Great update. And then just a second on OFS services. I'm just wondering, are you seeing any, given sort of the recent volatility or maybe downturn, a little bit downturn in oil, have you seen any recent softness and just wondered how different prices, OFS prices, might be trending onshore versus offshore?

Roger Read: The 10-year kind of change. Okay. And then as a unrelated follow-up, just your guidance on the midstream business and the gas trading, what is the expectation that you have on Matterhorn in terms of startup that's built into your expectations? Is that middle of the quarter into the quarter? I'm just trying to understand maybe upside down side to the guidance. That would probably happen mid to like quarter is the last update that we've had.

Richard Jackson: I just wanted to make a mention of certainly seeing improvement in overall capital efficiency or well cost. And we wanted to highlight that on the slide, mainly because the teams have really been engaged this year, you know, upfront improving operations, but also engaging with our service contractors to find how do we drive utilization up and how do we create this sustained kind of program. So we highlighted the 10% year-to-date on well cost, which we think is a tremendous value add as you roll that into 2025, in addition to the OPEX improvements that Vicki highlighted. But let me stop there.

Speaker Change: Let me just start and then Ken can provide some better detail. I just wanted to make mention, certainly see an improvement in overall capital efficiency or well cost.

Speaker Change: purpose

Speaker Change: Facilities, and we wanted to highlight that in the slide mainly because the teams have really been engaged this year, you know, up front improving operations but also engaging with our service contractors to find how do we drive utilization up and how do we create this sustained kind of program. So we highlighted the

Neil Dingman: The next question comes from Neil Dingman with true of security.

Neil Dingman: Hi, good afternoon. Thanks for taking my question.

Vicki Hollub: My first question, Vicki is just on the Gulf of Mexico, specifically could you give some color to how active you might be with tiebacks through the remainder of the year? I think you've got a lot of opportunities there, and then maybe even look at all the exploration opportunities. I'm just giving all these opportunities you have to anticipate a bit more start up there on the exploration side, starting next year. The exploration won't be as aggressive as it's been in the past because of the fact that we've launched an evaluation using data analytics and AI.

Ken Dillon: The 10% year to date on well cost, which we think is a tremendous value add as you roll that into 2025 in addition to the OPEX improvements that Vicki highlighted. But let me stop there. I just want to say thank you to the teams and turn it over to Ken.

Ken Dillon: I just want to say thank you to the teams and turn it over to Richard. Yeah, same as Richard, you know, onshore US, from a supply chain perspective, we see deflation continuing. Between, say, last summer and the end of this year, we see north of 10% rolling through in our drilling and completion basket. We also see OCTG significantly higher than that in terms of deflation, which also benefits, you know, all the other functions.

Ken Dillon: Yeah, same as Richard, you know, onshore U.S. from a supply chain perspective, we see deflation continuing between, say, last summer and the end of this year, we see north of 10 percent rolling through in our drilling and completion basket. We also see

Vicki Hollub: What we want to do is give our teams the tools that we believe will help even further understand what's happening in the subsurface of the very complex deep water prospects within the Gulf of Mexico. The exciting thing is we have a numerous other things that we can do in the Gulf of Mexico that can and can describe.

Ken Dillon: OCTG significantly higher than that in terms of deflation which also benefits you know all the other functions.

Ken Dillon: We see continued focus by the contractors to improve efficiency and technology, so e-fleets, and autofrags. They're really pushing the technological aspects, and they're working with us on utilization. And it's not only the efficiency that comes with utilization, but because of the planning that Richard's teams are doing, it releases those contractors to use that equipment in spaces where it is not, so they can maximize their margins also. Having mass matters, so Crown Rock will enable more value in that space in the Midland Basin, so it's definitely a key to that.

Speaker Change: We see continued focus by the contractors to improve efficiency and technology, so e-fleets, auto-frack.

Speaker Change: They're really pushing the technology aspects, and they're working with us on utilization. And it's not only the efficiency that comes with utilization, but because of the planning that Richard's teams are doing.

Richard Jackson: Thanks, Vicki. I think overall the teams are performing really well in all fronts, the base, including primary exploration and the water flood designs. On the base, for example, as a result of recent OBN seismic data, we moved further northwest to one of our fields and brought on a 15,000 parallel day well, which came on in early May. From further analysis of the OBN data, we're seeing more potential in that area than others.

Speaker Change: It releases those contractors to use that equipment in the spaces where not, so they can maximize their margins also. Having mass matters, so Crown Rock will enable more value in that space in the Midland Basin, so it's definitely accretive.

Ken Dillon: We hope that answers your question. The next question comes from David Deckelbaum with TD Cowan. Please go ahead.

Speaker Change: I hope I have answered your question.

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

Richard Jackson: In exploration, we're currently involved in two recent discoveries in Guam, Ocatillo and Tiberius. Ocatillo can tie back to Marlon, Tiberius, Delucius. These are like three and a half mile to eight mile tie backs. Both projects are going through our process to FID at the moment and we can discuss more after sanction. We're continuing our water flood project designs. We're capable of commencing execution next year. These are the potential to add substantial low cost reserves and these projects are in our real house as a company where water flood is one of our strengths. And operationally, we've safely completed all our major tonarons for the year. So very positive overall in Guam as we lean into the AI pilots, the key highlight through the earlier.

David Deckelbaum: Afternoon, Vicki and Dean. Thanks for taking my questions. I was curious if I could ask a little bit more on the Crown Rock progression into next year. I think you all still stand by getting towards that 170,000 a day target and perhaps growing it from there. So when we think about CapEx for next year, given that this was a highly graded transaction, do you see the crown rock assets sort of stealing some capital from some areas that you were spending money on in 24 as we think about that program? And I guess that's part of that. Is there some savings on the CapEx side associated with selling BarillaDraw?

Richard Jackson: Great update.

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

David Deckelbaum: I was curious if I could ask a little bit more just on the Crown Rock progression into next year. I think you all still are standing by getting towards that 170,000 a day target and perhaps growing it from there.

Speaker Change: So when we think about CAPEX for next year, given that this was a high-graded transaction,

Speaker Change: Do you see the Crown Rock assets sort of thieving some capital from some areas that you were spending money on in 24? As we think about that program, and I guess in part of that, is there some savings on the CapEx side associated with selling BarillaDraw?

Vicki Hollub: I would say that we would keep the same activity level with Crown Rock going into next year. They've had this, as Richard said earlier, this same activity level for quite a while, and it's worked well for them.

Speaker Change: I would say that we would keep the same activity level with Crown Rock going into next year.

Richard Jackson: And then just a second on OFS services. I'm just wondering are you seeing any given sort of the recent volatility or maybe downturn, a little bit downturn. Oil have you seen any recent softness and just wondered how different prices both as prices might be trending onshore versus offshore?

Speaker Change: They've had this, as Richard said earlier, this same activity level for quite a while, it's worked well for them. And we think that with the capability of our teams working together, that we'll actually be able to maybe do more with less.

Vicki Hollub: And we think that with the capability of our teams working together, we'll actually be able to maybe do more with less. And so we think that's going to be a good news story. So, probably, there will be no increase in activity in Crown Rock.

Richard Jackson: Let me just start in a hint and provide some better detail. I just wanted to make mention certainly seeing improvement in overall capital efficiency or well cost for facilities. And we wanted to highlight that in a slide mainly because the teams have really been engaged this year, upfront improving operations but also engaging with our service contractors to find how do we drive utilization up and how do we create this sustained kind of program. So we highlighted the 10% year-to-date on well cost which we think is tremendous value add as you roll that into 2025 in addition to the op-ex improvements of Vicki highlighted.

Speaker Change: And so we think that that's going to be a good news story. So likely no increase in activity in Crown Rock.

Vicki Hollub: In the Barilla Draw, part of the reason that we divested from Barilla Draw is that we weren't investing capital there because we had development going on in other areas that was taking the capital away from Barilla Draw. And so our philosophy has always been if we have an asset that doesn't compete for capital and or would have competed under different circumstances, but we're not going to get to it for five to ten years, then that's why we divested. I appreciate the color there.

Speaker Change: and the Barilla Draw. Part of the reason that we divested in Barilla Draw is because we weren't investing capital there, because we had development going on in other areas that was taking the capital away from Barilla Draw. And so our philosophy has always been, if we have an asset,

Speaker Change: that doesn't compete for capital and or would have competed under different circumstances but we're not going to get to it for five to ten years, then that's probably the best of it.

David Deckelbaum: And then maybe my second question, just on direct air capture, just following Stratos. I know there was some enthusiasm, especially last year, around ADNOC and their interest in direct air capture. Would you characterize most of your conversations with most parties at this point as sort of being in a wait-and-see mode around Stratos and how some of these first projects perform? I would say there's a lot of interest in Stratos, and it's now, I think, at every conference around the world, and companies around the world are all talking about Stratos.

Speaker Change: I appreciate the cover there. And then maybe my second question is just on direct air capture, just following Stratos. I know... ... ... ... ... ... ... ...

Richard Jackson: But let me, let me stop there. I just want to say thank you to the teams and turn it Yeah, same as Richard, you know, I'm sure you asked from a supply chain perspective, we see deflation continuing between say last summer and the end of this year, we see north of 10% rolling through in our drilling and completion basket. We also see OCTG significantly higher than that in terms of deflation, which also benefits, you know, all the other functions.

Speaker Change: There was some enthusiasm, especially last year, around ADNOC and their interest in direct air capture. Would you characterize most of your conversations with most parties at this point as sort of being in a wait-and-see mode around Stratos and how some of these first projects perform?

Speaker Change: I would say there's a lot of interest in Stratos and it's it's now I think about

Speaker Change: Every conference around the world and companies around the world are all talking about Stratos. In fact, we had a major

David Deckelbaum: In fact, we had a major operator, an international operator, come and visit our site because there's a lot of interest in it. But, as Richard said, first of all, we want to get it up and running because we believe that as we prove it, as we make it better, it's going to be much more valuable than what people realize today. Richard, did you have something to add? No, I just think that's right.

Richard Jackson: The efficiency and technologies of E-fleets auto-frag, they're really pushing the technology aspects and they're working with us on utilization and it's not only the efficiency that comes with utilization, but because of the planning that Richard's teams are doing, it releases those contractors to use that equipment in the spaces we're not so they can maximize their margins also. Having mass matters, so can rock, pull, enable more value in that space in the middle of the base and so it's definitely a creative.

Speaker Change: Operator.

Speaker Change: as an international operator, come and visit our site because

Speaker Change: There's a lot of interest in it, but as Richard said, first of all, we want to get it up and running because we believe that as we prove it up, as we make it better, that it's going to be much more valuable than what people realize today.

Vicki Hollub: I mean, I think we should continue to talk about our ambitious plans. We think that there's a lot of scope in terms of development. You've seen, you know, some of our development plans. And so, as we prove it, as we give line of sight to cost down, we're very confident that both strategic and capital partners are going to have an investable development that will be able to help us. So, that is our strategy.

David Deckelbaum: Richard, did you have something to add? No, I just think that's right. I mean, I think we continue to talk, you know, our ambitious plans. We think that there's a lot of scale in terms of development. You've seen, you know, some of our development plans.

David Duckelbaum: The next question comes from David Duckelbaum with TD Cowan, please go ahead. Thanks for taking my questions. I was curious if I could ask a little bit more, just on the crown rock progression into next year. I think you all still are standing by getting towards at 170,000 a day target and then perhaps growing it from there. So when we think about CAPEX for next year, given that this was a high graded transaction, do you see the crown rock assets sort of seeping some capital from some areas that you were spending money on in 24?

Speaker Change: As we prove it, as we give line of sight the cost down, we're very confident that both strategic and capital partners are going to have an investable.

David Deckelbaum: you know, development that will be able to help us. So that is our strategy, but I mean, we're doing a lot of engagement on multiple fronts, both from offtake and future capital partnership. So appreciate that question.

Vicki Hollub: But, I mean, we're doing a lot of engagement on multiple fronts, both from offtake and future capital partnerships. So, appreciate that. In the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Vicki Hollub for any closing remarks.

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

Vicki Hollub: I'd just like to say thank you all for your questions and have a great rest of your day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [inaudible] The Bulletproof Executive 2013 https://www.youtube.com.au The Bulletproof Executive 2013, The Ultimate Parody Site! https://www.youtube.com.au [music] Copyright 2019 Mooji Media Ltd. All Rights Reserved.

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

David Duckelbaum: As we think about that program and I guess in part of that, is there some savings on the CAPEX side associated with selling barilla drill? I would say that we would keep the same activity level with crown rock going into next year. They've had this as Richard said earlier, this same activity level for quite a while, it's worked well for them. And we think that with the capability of our teams working together that will actually be able to maybe do more with less.

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

David Duckelbaum: And so we think that's going to be a good news story. So likely no increase in activity in crown rock and the brilla draw part of the reason that we divested the brilla draws because we were an investing capital there because we had development going on in other areas that was taking the capital away from brilla draw. And so our philosophy's always been if we have an asset that doesn't compete for capital and or would have competed under different circumstances, but we're not going to get to it for five to 10 years.

David Duckelbaum: Then that's why we did best of it. I appreciate the color there.

David Duckelbaum: Then maybe my second question is just on direct air capture just following stratoes. I know there was some enthusiasm, especially last year around ad knock and they're interested in direct air capture. Would you characterize most of your conversations with most parties at this point is sort of being in a weight and sea mode around stratoes and how some of these first projects. Forum. I would say there's a lot of interest in Stratos and it's now I think about every conference around the world and companies around the world are all talking about Stratos.

David Duckelbaum: In fact, we had a major operator, an international operator come and visit our site because there's a lot of interest in it. As Richard said, first of all, we want to get it up and running and because we believe that as we prove it up, as we make it better, that it's going to be much more valuable than what people realize today. And Richard, did you have something to add? No, I just think that's right.

David Duckelbaum: I mean, I think we continue to talk, you know, our ambitious plans. We think that there's a lot of scale in terms of development. You've seen some of our development plans. And so as we prove it, as we give a line of sight at the cost down, we're very confident that both strategic and capital partners are going to have an investible, you know, development that we'll be able to help us. So that is our strategy, but I mean, we're doing a lot of engagement on multiple fronts, both from off-take and future capital partnerships. So appreciate that question.

Vicki Hollub: In the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Vicki Haulib or any closing remarks. I'd just like to say thank you all for your questions and have a great rest of your day.

Jordan Tanner: The conference has now concluded. Thank you for attending today's presentation.

Jordan Tanner: You may now disconnect.

Operator: No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. [music] Good afternoon, and welcome to Occidental's second quarter 2024 earnings conference call. All participants will be in listen only mode.

Vicki Hollub: [music].

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone.

Operator: To withdraw your question, please press star then. Please note this event is being recorded. I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead. Thank you, Drew. Good afternoon, everyone.

Vicki Hollub: [music].

Jordan Tanner: And thank you for participating in Occidental's second quarter 2024 earnings conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer. Sunil Mathew.

Speaker Change: Good afternoon, and welcome to Occidental's second quarter 2024 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press.

Vicki Hollub: Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

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

Vicki Hollub: I'd now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead.

Jordan Tanner: Thank you drew good afternoon, everyone and thank you for participating in Occidental second quarter 2024 earnings Conference call.

Speaker Change: On the call with US today are Vicki <unk>, President and Chief Executive Officer, Tsuneo, Matthew Senior Vice President and Chief Financial Officer.

Richard Jackson: Richard Jackson, President operations U S onshore resources and carbon management.

Speaker Change: And Ken Dillon, Senior Vice President and President International oil and gas operations.

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

David Deckelbaum: The presentation includes a cautionary statement on slide two regarding forward looking statements that will be made.

David Deckelbaum: On the call. This afternoon, we'll also referenced a few non-GAAP financial measures today <unk>.

David Deckelbaum: Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website I will now turn the call over to Vicki.

Vicki Hollub: Thank you Jordan and good afternoon, everyone I'll.

Vicki Hollub: I'll begin today by highlighting another quarter of exceptional execution across our business sectors. Our teams delivered strong operational performance during the second quarter. Our technical and operational excellence, paired with a high quality asset portfolio, continue to deliver value across our business. Last week, we further strengthened our portfolio through the addition of Crown Rocks assets in the Midland Basin. We were also pleased to announce that our strategic divestiture program is progressing, and we have a clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December.

Vicki Hollub: I'll begin today by highlighting another quarter of exceptional execution across our business segments.

Vicki Hollub: Our teams delivered strong operational performance during the second quarter, our technical and operational excellence paired with a high quality asset portfolio continue to deliver value across our businesses.

David Deckelbaum: Last week, we further strengthened our portfolio through the addition of Crown rocks assets in the Midland Basin.

David Deckelbaum: We were also pleased to announce that our strategic divestiture program is progressing well we have clear line of sight to meeting the debt reduction targets, we set out when we announced the deal last December.

Vicki Hollub: This afternoon, I'll cover our second quarter results and operational performance, as well as our Crown Rock integration plan. Sunil will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings. In the second quarter, we delivered Oxy's highest quarterly production in four years for both Total Company and U.S. Onshore.

David Deckelbaum: This afternoon I'll cover our second quarter results and operational performance as well as our Crown rock integration plans available.

David Deckelbaum: Neil will then review our financial results and guidance, including an increase in full year guidance for our midstream earnings.

David Deckelbaum: For the second quarter, we delivered its highest quarterly production and four years for both total company and U S onshore.

Vicki Hollub: This exceeds the midpoint of Total Company production guidance, generating $1.3 billion in free cash flow before working capital. This was driven by exceptional execution across our business segments, with notably strong Permian new well performance and higher production uptime, along with Outperformance in the Gulf of Mexico. We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program. This year to date, we've seen approximately 10% improvement in our unconventional well cost compared to the first half of last year, putting us ahead of our planned well cost savings. These savings have been achieved through lower non-productive time, increased frac utilization, operational efficiency gains, and facility optimization as part of our focused program to lower well costs, decrease time to market, and increase free cash flow.

David Deckelbaum: This exceeded the midpoint of total company production guidance generating $1 3 billion and free cash flow before working capital. This was driven by exceptional execution across our business segments, but notably strong Permian, new well performance and higher production uptime.

David Deckelbaum: Along with outperformance in the Gulf of Mexico.

David Deckelbaum: We're exceeding our production expectations for onshore new wells across all of our basins and are continuing to achieve operational efficiencies as we execute our capital program.

David Deckelbaum: This year to date, we've seen approximately 10% improvement in our unconventional low cost compared to the first half of last year, putting US ahead of our plan well cost savings. These savings have been achieved through lower nonproductive time increased frac utilization.

David Deckelbaum: Operational efficiency gains and facilities optimization as part of our focused program to lower well cost decrease time to market and increased free cash flow.

Vicki Hollub: We anticipate further acceleration in time to market in the second half of the year. Importantly, we continue to deliver industry-leading performance in secondary bench development, supporting long-term economics and inventory replenishment. The momentum we are generating on development costs across many facets should translate to capital efficiency improvements as we look toward the end of the year and the end of 2025. In addition to improved capital efficiency and continued strong performance leadership, our teams have driven down lease operating expenses across our domestic assets to enhance our cash margin.

David Deckelbaum: Anticipate further acceleration in time to market in the second half of the year.

David Deckelbaum: Importantly, we continue to deliver industry, leading performance in secondary bench development.

David Deckelbaum: Supporting long term economics and inventory replenishment.

David Deckelbaum: The momentum we are generating on development cost across many facets should translate to capital efficiency improvements as we look towards the end of the year and into 2025.

David Deckelbaum: In addition to improved capital efficiency and continued well performance leadership, our teams have driven down lease operating expenses across our domestic gas that's to enhance our cash margins.

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

Vicki Hollub: In the second quarter, our per BOE lease operating expenses decreased by over 60 cents a barrel, a 6% improvement relative to the average of the prior three quarters. We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end. For example, in our Permian EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs. We're also optimizing our artificial lift, which has led to reduced failure rates and associated downhaul maintenance costs. In the Delaware Basin, we've decreased water disposal costs by doubling the volume of water recycled relative to the first half of last year.

David Deckelbaum: In the second quarter, our per BOE lease operating expenses decreased over 66, a barrel a 6% improvement relative to the average of the prior three quarters.

David Deckelbaum: We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end.

David Deckelbaum: For example, in our Permian AOR business.

David Deckelbaum: We are finding ways to utilize C O two more efficiently in our reservoirs.

Vicki Hollub: I will now turn the call over to Vicki. Thank you, Jordan, and good afternoon, everyone. I'll begin today by highlighting another quarter of exceptional execution across our business sector. Our change delivered strong operational performance during the second quarter. Our technical and operational excellence paired with a high-quality asset portfolio continued to deliver value across our businesses. Last week, we further strengthened our portfolio through the addition of Crown Rocks' assets in the Midland Basin.

David Deckelbaum: We're also optimizing our artificial lift which has led to reduced failure rates and associated downhole maintenance costs.

David Deckelbaum: In the Delaware Basin, we've decreased water disposal cost by doubling the volume of water recycled relative to the first half of last year.

Vicki Hollub: Water stewardship remains a key priority in our operations, and I'm pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midland South Curtis Ranch treatment facility. In addition, we have now recycled over 150 million barrels in our New Mexico operations since 2019. Overall, we have built solid oil and gas segment momentum as we move into the second half of 2024. This gives us confidence to maintain our full-year production guidance, excluding crown rock, for our total company and Permian assets, despite the expected divestiture of $15,000 DOE per day in the fourth quarter.

David Deckelbaum: Water stewardship remains a key priority in our operations and I'm pleased to highlight a recent milestone, which we recycled a cumulative 50 million barrels in our Midland South Curtis Ranch treatment facility.

David Deckelbaum: In addition, we have now recycled over 115 million barrels at our new Mexico operations.

Vicki Hollub: We were also pleased to announce that our Strategic Diabestiture program is progressing and we have clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December. This afternoon, I'll cover our second quarter results in operational performance, as well as our Crown Rock integration plans. The NIL will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings.

David Deckelbaum: 2019.

David Deckelbaum: Overall, we have built solid oil and gas segment momentum as we move into the second half of 2024.

David Deckelbaum: This gives us confidence to maintain our full year production guidance, excluding around crowd rock for our total company and Permian assets. Despite the expected divestiture of 15000 daily per day in the fourth quarter.

Vicki Hollub: In the second quarter, we delivered up to these highest quarterly production in four years for both total company and U.S, onshore. This exceeds the midpoint of total company production guidance, generating $1.3 billion in free cash flow before working capital. This was driven by exceptional execution across our business segments with notably strong premium new well performance and higher production uptime, along without performance in the Gulf of Mexico. We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program.

Vicki Hollub: Our midstream business significantly outperformed in the second quarter with an adjusted pre-tax income more than $180 million higher than the guidance midpoint. Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations. Furthermore, as healthy storage levels and stable permit output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on take-away pipelines.

David Deckelbaum: Our midstream business significantly outperformed in the second quarter with an adjusted pre tax income more than $180 million higher than the guidance midpoint.

David Deckelbaum: Our domestic gas marketing teams followed up on the success of their first quarter by utilizing.

David Deckelbaum: Their extensive market Intel intelligence and transportation capability to benefit from regional pricing dislocations.

David Deckelbaum: Furthermore, as healthy storage levels and stable Permian output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on takeaway pipelines.

Vicki Hollub: Our team has capitalized on this opportunity, highlighting the value the diversity of our asset base provides. As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months.

David Deckelbaum: Our teams capitalized on this opportunity.

Vicki Hollub: This year today, we've seen approximately 10% improvement in our unconventional well cost compared to the first half of last year, putting us ahead of our planned well cost savings. These savings have been achieved through lower, non-productive time, increased track utilization, operational efficiency gains, and facilities optimization as part of our focused program to lower well cost, decreased time-to-market, and increased free cash flow. We anticipate further acceleration in time-to-market in the second half of the year.

David Deckelbaum: The value the diversity of our asset base provides.

David Deckelbaum: As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization. After the Matterhorn pipeline is placed in service, which is expected in the coming months. However, our teams will be prepared to act if additional bottlenecks arise.

Vicki Hollub: However, our teams will be prepared to act if additional bottlenecks arise. Looking now at our low-carbon businesses, we're excited by the progress we're making. As construction of Stratos, our first direct air capture facility, moves forward, our low-carbon ventures team continues to demonstrate that demand for carbon dioxide removal credits is growing. In July, we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos. The agreement is the largest single purchase of direct air capture CDR credits to date and highlights the increasing recognition of carbon engineering technology as a solution to help organizations achieve their net zero goals.

David Deckelbaum: Looking now at our low carbon businesses, we're excited by the advancements we're making as construction of status. Our first direct air capture facility moves forward, our low carbon ventures team continues to demonstrate that demand for carbon dioxide removal credits is growing.

Vicki Hollub: Importantly, we continue to deliver industry leading performance in secondary bench development, supporting long-term economics and inventory replenishment. The momentum we are generating on development costs across many facets should translate to capital efficiency improvements as we look towards the end of the year and end of 2025. In addition to improved capital efficiency and continued well performance leadership, our teams have driven down least operating expenses across our domestic assets to enhance our cash margins.

David Deckelbaum: In July we announced an agreement with Microsoft for the sale of 5000 500000 metric tons of C. D. R credits over six years from Stratus.

David Deckelbaum: The agreement is the largest single purchase of direct air capture Ctr credits to date and highlight the increasing recognition of carbon engineering technology as a solution to help organizations achieve their net zero goals.

Vicki Hollub: I would now like to talk about how pleased we are to integrate Crown Rock into the Greater Oxy Portfolio. We closed the acquisition on August 1st, and we continue to be impressed with Crown Rock's efficient operations and employee talent. As we have discussed previously, this acquisition complements and enhances our premier Permian portfolio with the addition of high-margin production and low-break-even undeveloped inventory. We're excited about the subsurface and geologic potential of these assets, and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value. We're also looking forward to leveraging our newfound scale in the Midland Basin. Over the years, we've seen how scale has driven significant technical advancements and operational efficiencies in our other basins.

David Deckelbaum: I would now like to talk about how pleased we are to integrate crown rock into the greater oxy portfolio.

Vicki Hollub: In the second quarter, our per-BOE lease operating expenses decreased over 60 cents a barrel, a six percent improvement relative to the average of the prior three quarters. We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end. For example, in our premium EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs. We're also optimizing our artificial lift, which has led to reduced failure rates and associated downhole maintenance costs.

David Deckelbaum: We closed the acquisition on August one and we continue to be impressed with crown rocks efficient operations and employee talent.

David Deckelbaum: We have discussed previously this acquisition complements and enhances our premier Permian portfolio with the addition of high margin production.

David Deckelbaum: And low breakeven undeveloped inventory.

David Deckelbaum: We are excited about the subsurface geologic potential of these assets and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value.

David Deckelbaum: We're also looking forward to leveraging our newfound scale in the Midland basin over the years, we've seen how scale is driven significant technical advancements and operational efficiencies and our other basins.

Vicki Hollub: In the Delaware basin, we've decreased water disposal costs by doubling the volume of water recycles relative to the first half of last year. Water stewardship remains a key priority in our operations, and I'm pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midlands South Curtis Ranch treatment facility. In addition, we have now recycled over a hundred and fifty million barrels in our New Mexico operations since 2019.

Vicki Hollub: We're confident that as we integrate our Midland Basin assets, we'll unlock meaningful efficiency through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations. Our combined teams have made great strides in the past several days getting to know each other and integrating Crown Rock into Oxy's organization. On our next call, we're looking forward to telling you more about our post-CrownRock Enhanced Portfolio and how the integration is advancing. One of the many benefits of this acquisition was the opportunity to upgrade Oxy's existing portfolio of assets.

David Deckelbaum: We're confident that as we integrate our Midland basin assets will unlock meaningful efficiencies through infrastructure sharing.

David Deckelbaum: Source utilization and by bringing together best practices from each of our organizations.

David Deckelbaum: Our combined teams have made great strides in the past several days getting to know each other and integrating crown rock into Oxy organization.

Vicki Hollub: Overall, we have built solid oil and gas segment momentum as we move into the second half of 2024. This gives us confidence to maintain our full-year production guidance, excluding around Crown Rock for our total company and Permian assets, despite the expected divestiture of 15,000 B a week per day in the fourth quarter. Our midstream business significantly outperformed in the second quarter, with an adjusted pre-tax income more than $180 million higher than the guidance midpoint.

David Deckelbaum: On our next call. We're looking forward to telling you more about our post crown rock enhanced portfolio and how the integration is advancing.

David Deckelbaum: One of the many benefits of this acquisition was the opportunity to high grade Oxy is an existing portfolio of assets.

Vicki Hollub: In December, we laid out plans for a four and a half to six billion dollar divestiture program to be completed within 18 months of the acquisition's close. Given the inventory depth of our onshore portfolio, we welcome the opportunity to monetize some of these assets at an attractive price, and as we announced last week, the divestiture program is progressing well. Since the start of the year, we have closed or announced approximately one billion dollars of Permian Basin divestitures. The proceeds from these sales will go directly toward debt reduction.

David Deckelbaum: In December we laid out plans for a four and a half to $6 billion divestiture program to be completed within 18 months of the acquisition is closed.

David Deckelbaum: Given the inventory depth of our onshore portfolio, we welcome the opportunity to monetize some of these assets at an attractive price and as we announced last week. The divestiture program is progressing well.

Vicki Hollub: Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations. Furthermore, as healthy storage levels and stable Permian output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on take away pipelines. Our teams catalyzed on this opportunity highlighting the value the diversity of our asset base provides. As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months.

David Deckelbaum: This has started the year, we have closed or announced approximately one.

David Deckelbaum: $1 billion of Permian Basin divestitures.

David Deckelbaum: Proceeds from these sales will go directly towards debt reduction.

Vicki Hollub: This progress on divestitures, coupled with a robust organic cash flow underpinned by our steady focus on operational excellence, has positioned us well to reduce our debt in the near term. Sunil will address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter, which means, which speaks to both the quality of our assets and our future cash flow potential. Now I'll hand the call over to Sunil to provide more details about our second quarter financial results, our guidance, and progress on strategic financial actions. Thank you, Vicki.

David Deckelbaum: This progress on divestitures, coupled with robust organic cash flow underpinned by our steady focus on operational excellence has positioned us well to reduce our debt in the near term.

David Deckelbaum: So Neil will address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter.

Neil: Which means.

Neil: Which speaks to both the quality of our assets at our future cash cash flow potential.

Vicki Hollub: However, our teams will be prepared to act if additional bottlenecks arise. Looking now at our low carbon businesses, we're excited by the advancements we're making. As construction of Stratos, our first director capture facility moves forward, our low carbon ditchers team continues to demonstrate that demand for carbon dioxide removal credits is growing. In July, we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos.

David Deckelbaum: Now I'll hand, the call over to Sunil to provide more details about our second quarter financial results, our guidance and progress on strategic financial actions.

Sunil Mathew: We are excited with the recent progress we have made in executing the portfolio iGrading plan we outlined in December. Oxy has realized an immediate announcement of a U.S. onshore portfolio with a low break-even inventory and expansion of free cash flow generation potential upon the closing of Crown Rock last year. The opportunity to build scale in the Midland Basin made this transaction a strategic fit for ROTC, and the newly acquired assets will immediately compete for capital. In late July, we issued $5 billion of senior unsecured notes.

Sunil Mathew: Thank you Vicky we are excited with the recent progress we have made in executing the portfolio high grading plan, we outlined in December <unk>.

Sunil Mathew: <unk> realized an immediate announcement of our U S onshore portfolio with low breakeven inventory and expansion of free cash flow generation potential upon the closing of Crown broke last week.

Vicki Hollub: The agreement is the largest single purchase of direct-air capture CDR credits to date and highlight the increasing recognition of carbon engineering technology as a solution to help organizations achieve their net zero goals. I would now like to talk about how pleased we are to integrate Crown Rock into the greater oxy portfolio. We close the acquisition on August 1st and we continue to be impressed with Crown Rock sufficient operations and employee talent.

David Deckelbaum: The opportunity to build scale in the Midland Basin made this transaction a strategic fit for oxy and the newly acquired assets will immediately compete for capital.

David Deckelbaum: In late July we issued $5 billion of senior unsecured notes.

Sunil Mathew: We will use the net proceeds of the offering and term loans to fund the cash consideration of the Crown Rock acquisition. Overall, we were highly pleased with the investor demand for the bond offer. We placed notes maturing in five tranches at 3, 5, long 7, 10, and 30 years at a weighted average coupon rate of less than five and a half percent, creating a manageable debt maturity profile given our deleveraging plan. Our efforts to strengthen our balance sheet remain a top priority, and we are achieving early success in debt reduction.

David Deckelbaum: We used the net proceeds of the offering and term loans to fund the cash consideration of the Crown block acquisition.

Vicki Hollub: As we have discussed previously, the acquisition compliments and enhancements are premier Permian portfolio with the addition of high margin production and low breakeven undeveloped inventory. We're excited about the subsurface and geologic potential of these assets, and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value. We're also looking forward to leveraging our newfound scale in the middle and basins. Over the years, we've seen how scale has driven significant technical advancements and operational efficiencies in our other basins.

David Deckelbaum: Overall, we were highly pleased with the investor demand for the bond offering.

David Deckelbaum: We placed normals maturing in five tranches at three five long 710, and 30 years at a weighted average coupon rate of less than 5%, creating a manageable debt maturity profile.

David Deckelbaum: Deleveraging plans.

David Deckelbaum: Our efforts to strengthen our balance sheet remains a top priority and we are achieving early success in depth reduction in July we retired $200 million of debt at maturity and our strong organic free cash flow.

Sunil Mathew: In July, we retired $400 million of debt at maturity, and our strong organic free cash flow is enabling further deleveraging progress in the coming months. By the end of August, between additional oxy maturities and the early redemption of ground rock snow, we will have prepaid an additional $1.9 billion of debt, bringing the total to $2.3 billion.

Vicki Hollub: We're confident that as we integrate our middle and basin assets, we'll unlock meaningful efficiencies through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations. Our combined teams have made great strides in the past several days, getting to know each other and integrating Crown Rock into Oxy's organization. On our next call, we're looking forward to telling you more about our post Crown Rock enhanced portfolio and how the integration is advancing.

David Deckelbaum: Enabling further deleveraging progress in the coming weeks.

David Deckelbaum: By the end of August.

David Deckelbaum: Additional Oxford maturities and the early redemption of ground rocks notes.

David Deckelbaum: We will have repaid.

David Deckelbaum: We paid an additional $1 $9 billion of debt.

David Deckelbaum: The total to $2 3 billion.

Sunil Mathew: Add to this the proceeds from the Barilla Draw divestiture, and we expect to have repaid over $3 billion in debt by the end of the third quarter, which is almost 70% of our near-term reduction commitment of $4.5 billion. We will continue to prudently advance deleveraging via free cash flow and proceeds from our divestiture program. We were pleased last week to announce the agreement to sell certain Delaware Basin assets for approximately $818 million. The core of this divestiture centers around approximately 27,500 net acres in the Barilla Drawfield of the Texas Delaware Basin.

David Deckelbaum: Add to this the proceeds from the barilla draw divestiture and we expect we have repaid over $3 billion in debt by the end of the third quarter, which is almost 70% of our near term production commitment of $4 5 billion.

Vicki Hollub: One of the many benefits of this acquisition was the opportunity to migrate Oxy's existing portfolio of assets. In December, we laid out plans for a $4.5 to $6 billion investiture program to be completed within 18 months of the acquisition's close. Given the inventory death of our onshore portfolio, we welcome the opportunity to monetize some of these assets at an attractive price. As we announced last week, the investiture program is progressing well.

David Deckelbaum: We will continue to prudently advance deleveraging, while our free cash flow and proceeds from our divestiture program.

David Deckelbaum: We were pleased last week to announce the agreement to sell certain Delaware basin assets for approximately $818 million.

Vicki Hollub: Since the start of the year, we have closed or announced approximately $1 billion of premium based end investitures. The proceeds from these sales will go directly toward debt reduction. This progress on investitures coupled with robust organic cash flow underpinned by our steady focus on operational excellence has positioned us well to reduce our debt in the near term.

David Deckelbaum: The core of this divestiture centers around approximately 27500 net acres in the barilla draw field of the Texas, Delaware Basin.

Sunil Mathew: While these assets have been crucial to Oxy's Southern Delaware position for over a decade, the remaining inventory is longer dated in our current development plan. We anticipate closing the sale late in the third quarter and estimate a 15,000 BOE per day reduction in fourth quarter Permian production. Separate from this transaction, we also announced additional completed dispositions from earlier in the year, involving several smaller undeveloped acreage positions throughout the Permian, for approximately $152 million in total. This brings total year-to-date closed or announced divestments to $970 million.

David Deckelbaum: While these assets are core to <unk>, southern Delaware position for over a decade now.

David Deckelbaum: The remaining inventory is longer dated in our current development plans.

Vicki Hollub: We've been able to address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter, which means which speaks to both the quality of our assets and our future cash flow potential.

David Deckelbaum: We anticipate closing the sale late in the third quarter and estimate of 15000 Boe per day reduction in fourth quarter Permian production.

David Deckelbaum: Separate from this transaction, we also announced additional completed disposal ships from earlier in the year involving several smaller undeveloped acreage positions throughout the Permian approximately $152 million in total.

Sunil Mathew: Now I'll hand the call over to Sunil to provide more details about our second quarter financial results, our guidance and progress on strategic financial action. Thank you, Vicky. We are excited with the recent progress we have made in executing the portfolio I grading plan we outlined in December. Oxie has realized an immediate announcement of a US onshore portfolio with low break even inventory and expansion of free cash flow generation potential upon the closing of Crown Rock last week.

David Deckelbaum: This brings total year to date closed or announced divestments to $970 million.

Sunil Mathew: Consistent with our cash flow priorities, all net proceeds from these sales will be allocated to debt reduction. We are satisfied with the progress of our divestiture program and the trajectory of our debt reduction plan. We are ahead of schedule on our near-term debt reduction commitments, and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion or less. In the second quarter, we generated both an adjusted and reported profit of $1.03 per diluted share and exited the second quarter with $1.8 billion of unrestricted cash.

David Deckelbaum: Consistent with our cash flow priorities all net proceeds from these sales will be allocated to debt reduction.

David Deckelbaum: We are satisfied with the progress of our divestiture program and the trajectory of debt reduction plans.

Sunil Mathew: The opportunity to build scale in the midland basin made this transaction a strategic fit for oxie and the newly acquired assets will immediately compete for capital. In late July, we issued $5 billion of senior unsecured notes. We use the net proceeds of the offering and term loans to fund the cash consideration of the Crown Rock acquisition. Overall, we were highly pleased with the investor demand for the bond offering. We placed notes maturing in five branches at three five long seven 10 and 30 years at a weighted average coupon rate of less than five and a half percent, creating a manageable debt maturity profile given our deleveraging plan.

David Deckelbaum: We are ahead of schedule on our near term debt reduction commitments and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion or less.

David Deckelbaum: In the second quarter, we generated both an adjusted and reported profit of $1 <unk> per diluted share and exited the second quarter with $1 $8 billion.

David Deckelbaum: <unk> unrestricted cash.

Sunil Mathew: As Vicki highlighted earlier, we generated over $1.3 billion of free cash flow before working capital, driven by sustained success across a diversified business sector. More specifically, the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volumes. In the midstream segment, substantial value capture was realized, particularly in gas marketing, as evident through the greater than $180 million adjusted free tax income outperformance when compared to the midpoint of guidance.

David Deckelbaum: <unk> highlighted earlier, we generated over $1 $3 billion of free cash flow before working capital driven.

David Deckelbaum: Driven by sustained success across our diversified business segments.

David Deckelbaum: Most specifically the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volumes.

Sunil Mathew: Our efforts to strengthen our balance sheet remain at top priority, and we are achieving early success in debt reduction. In July, we retired $400 million of debt at maturity, and our strong organic free cash flow is enabling further de-leveraging progress in the coming weeks. By the end of August, between additional oxy maturities and the early redemption of ground rock snows, we will have repaid an additional $1.9 billion of debt, bringing the total to $2.3 billion.

David Deckelbaum: In the midstream segment.

David Deckelbaum: Substantial value capture was realized particularly in gas marketing.

David Deckelbaum: Evident through the greater than $180 million adjusted pretax income outperformance when compared to the midpoint of guidance.

Sunil Mathew: We are delighted with how Operational Excellence drove financial results in the second quarter and continue to benefit from a complementary asset base that positions us for success through a wide range of pricing environments. Our second quarter capital was largely in line with the first quarter, consistent with our business plan of a front-off AVO and domestic oil and gas activity. We reported a negative working capital change in the second quarter, primarily due to higher oil volumes and increased barrel shipments on the water at quarter end. Additionally, Rocky's related property tax payments, which are based on a two-year revenue lag and incorporate a period of higher oil and natural gas prices from 2022, also played a contributing factor.

David Deckelbaum: We are delighted with our operational excellence drove financial results in the second quarter and continue to benefit from a complementary asset base that positions us for success through a wide range of pricing environments.

Sunil Mathew: Add to this, the proceeds from the Buriala draw divestiture, and we expect we have repaid over $3 billion in debt by the end of the third quarter, which is almost 70% of our near-term reduction commitment of $4.5 billion. We will continue to prudently advance de-leveraging via free cash flow and proceeds from our divestiture program. We were pleased last week to announce the agreement to sell certain delivery-based assets for approximately $818 million.

David Deckelbaum: Our second quarter capital was largely in line with the first quarter consistent with our business plan.

Speaker Change: Front of AB and domestic oil and gas activity.

Sunil Mathew: The core of this divestiture centers around approximately 27,500 net acres in the Buriala draw field of the Texas-Delivered Basin. While these assets have been code to oxy's southern-delivered position for over a decade, the remaining inventory is longer dated in our current development plans. We anticipate closing the sale late in the third quarter, and estimate a 15,000 BOE per day reduction in fourth quarter per-meant production. Separate from this transaction, we also announced additional completed dispositions from earlier in the year, involving several smaller, undeveloped acreage positions throughout the Permian, approximately $152 million in total.

Sunil Mathew: Now, we are looking ahead to the second half of 2024. We have provided PROFORMAT guidance based upon the following assumptions. We included Crown Rock in our guidance beginning August 1st, and we excluded from guidance the 15,000 BOE per day of 4Q production associated with the Permian divestment as we expect the transaction to close late in the third quarter. Even after adjusting for this disposition, Oxy's total and Permian full-year production, excluding Crown Rock, is expected to remain flat due to higher Permian outlook. Including Crown Rock, the midpoint of our total company production guidance has increased from 1.25 million to approximately 1.32 million BOE per day.

Sunil Mathew: This brings total year-to-date closed or announced divestments to $970 million. Consistent with our cash flow priorities, all net proceeds from these sales will be allocated to debt reduction. We are satisfied with the progress of our divestiture program and the trajectory of debt reduction plans. We are ahead of schedule on our near-term debt reduction commitments, and we will continue to focus on strengthening our balance sheet through a combination of divestitures and excess cash flow until we reach our principal debt target of $15 billion or less.

Sunil Mathew: Building on the operational momentum generated in the first and second quarters, we anticipate an improving production trajectory in the back half of the year for all our domestic assets, including the Gulf of Mexico, even after incorporating some downtime for potential disruptive tropical weather in our guidance.

Sunil Mathew: Excluding Crown Rock, the midpoint of our 3Q production guidance would represent a new record for the highest quarterly production in over four years. In the appendix, we have summarized some of the key FOULIER guidance changes associated with consolidating GroundRock into our portfolio. Aside from the production benefits, we anticipate a notable improvement in domestic operating costs from adding these high-margin barrels.

Sunil Mathew: In the second quarter, we generated both an adjusted and reported profit of $1.3 per diluted share and exceeded the second quarter with $1.8 billion of unrestricted cash. As Vicky highlighted earlier, we generated over $1.3 billion of free cash flow before working capital, driven by sustained success across a diversified business segments. More specifically, the second quarter was marked by strong production performance in the Permian and Gulf of Mexico, driving high oil volume.

Sunil Mathew: Excluding Crown Rock, we are also pleased with Auxie's improvement and favorable trajectory of operating costs and capital efficiency across our U.S. onshore assets, as highlighted by Vicki earlier. Additionally, OxyChem's 2024 business is performing well, with results largely in line with the plan we laid out at the start of the year. However, challenging economic conditions in China, combined with the continued deferral of interest rate reductions, have dampened OxyChem's trajectory for the year.

Sunil Mathew: Williams. In the midstream segment, substantial value capture was realized, particularly in gas marketing, as evident through the greater than $180 million had just their free tax income outperformance, when compared to the midpoint of guidance. We are delighted with our operational excellence through financial results in the second quarter, and continue to benefit from a complementary asset base that positions us for success through a wide range of pricing environments. Our second quarter capital was largely in line with the first quarter, consistent with our business plan of a front-off AV-year and domestic oil and gas activity.

Sunil Mathew: As a result, we are revising OxyChem's full year guidance down to a range of $1 to $1.1 billion. We continue to anticipate that 2024 will be another strong year for OxyChem by historical standards. With midstream and marketing a strong second quarter, we have raised full year guidance by $220 million.

Sunil Mathew: We anticipate a more muted third quarter as additional Permian gas takeaway capacity is expected to come online, reducing gas marketing optimization opportunities. We continue to execute our 2024 capital program as scheduled, and while the legacy oxy capital will decrease in the second half as a result of tapered domestic activity.

Sunil Mathew: We reported a negative working capital change in the second quarter, primarily due to higher oil volumes and increased barrel shipments on the water at quarter end. Rocky's related property tax payments, which are based on a two-year revenue lag, and incorporates a period of higher oil and natural gas prices from 2022, also played a contributing factor. Now looking ahead to the second half of 2024, we are provided to perform our guidance based upon the following assumptions.

Sunil Mathew: Maintaining Crown Rock's five-rig program will reshape the investment profile as we increase the full-year total company net capital range to $6.8 to $7 billion. In closing, I want to discuss how Oxy is delivering on the financial milestones we laid out in December. A sustainable and growing dividend is the foundation of our shareholder return priority. Earlier this year, we followed through on a commitment we made when we announced the Crown Rock acquisition and raised our quarterly common dividend by over 22%.

Sunil Mathew: We included Crown Rock in our guidance, beginning August 1st, and we excluded from guidance the 15,000 BoE per day of 4Q production associated with the Permian divestment as we expect the transaction to close late in the third quarter. Even after adjusting for this disposition, OFC's total and Permian Fulia production excluding Crown Rock is expected to remain flat due to higher Permian outlook. Including Crown Rock, the midpoint of our total company production guidance has increased from 1.25 million to approximately 1.32 million BoE per day.

Sunil Mathew: The free cash flow accretion that we anticipate from CrownRock, along with the expected improvements from our non-oil and gas segments of our portfolio, provided us with the confidence to raise the dividend. Maintaining our investment grade credit rating is a key priority.

Sunil Mathew: Building on the operational momentum generated in the first and second quarters, we anticipate an improving production trajectory in the back half of the year in all our domestic assets. This includes the Gulf of Mexico even after incorporating some downtime for potential disruptive tropical weather in our guidance. Excluding Crown Rock, the midpoint of our 3Q production guidance would represent a new record for the highest quarterly production in over four years. In the appendix, we have summarized some of the key Fulia guidance changes associated with consolidating Crown Rock into our portfolio.

Sunil Mathew: In recent weeks, we received ratings affirmations from all three ratings agencies, including our investment grade credit ratings from Moody's and Fitch. We are focused on our deleveraging strategy, and we remain on track to retire at least $4.5 billion of debt well before next August. We are off to a promising start with our divestiture program. We will continue to evaluate a high-quality asset portfolio for divestment opportunities. And we'll apply those proceeds to further debt reduction, thereby strengthening our balance. Oxy is methodically delivering on this key financial commitment.

Sunil Mathew: Aside from the production benefits, we anticipate a notable improvement in domestic operating costs from adding these high margin barrels. Excluding Crown Rock, we are also pleased with OFC's improvement and favorable trajectory of operating costs and capital efficiency across our U.S, onshore assets as I lighted by VK earlier. OFCM's 2024 business is performing well with results largely in line with the plan we laid out at the start of the year. However, challenging economic conditions in China combined with the continued deferral of interest rate reductions have dampened OFCM's trajectory As a result, we are revising Oxychem's Fulia Guidance Down to a range of 1 to 1.1 million dollars.

Sunil Mathew: The strategic and financial actions we have taken in recent quarters are converging to benefit our portfolio, increase cash flow generation capability, and ultimately accelerate shareholder value. I will now turn the call back over to Vicki. Thank you, Sunil. Before we move on to the Q&A, I would like to close by focusing on a few of Oxy's differentiated value catalysts.

Vicki Hollub: Our subsurface expertise, technical excellence, and operational strength allow us to continuously achieve basin-leading well performance while simultaneously driving efficiency and savings. The addition of Crown Rock further enhances what I believe is Oxy's strongest portfolio in our century-long history. And it kicks off another phase of Oxy's cash flow growth with future upside through improved resource recovery and lower cost opportunities. I can't wait to see the value that the newly combined teams deliver given the quality and depth of development opportunities coming with this new asset.

Sunil Mathew: We continue to anticipate that 2024 will be another strong year for Oxychem by historical standards. With midstream and marketing strong second quarter, we have raised Fulia Guidance by $220 million. We anticipate a more muted third quarter, as additional Permian Gas Take-away capacity is expected to come online, reducing gas marketing optimization opportunities. We continue to execute our 2024 capital program as scheduled, while the legacy Oxy capital will decrease in the second half, as a result of tapered domestic activity, maintaining Crown Rock's Fiberic Program will reshape the investment profile, as we increase the Fulia total company net capital range to $6.8 to $7 billion.

Vicki Hollub: Beyond oil and gas, we expect our oxygen and midstream businesses to continue to provide material cash flow durability in the years ahead. And finally, LCB continues to develop practical decarbonization solutions that are solidifying our leadership in this important emerging market. These businesses together have positioned Oxy's common shareholders to benefit financially for decades to come.

Operator: We will now open the call for questions. As Jordan mentioned, Richard Jackson and Ken Dillon are on the call with us today for the Q&A session. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Sunil Mathew: In closing, I want to discuss how Oxychem is delivering on the financial milestones we laid out in December. A sustainable and growing dividend is the foundation of our shareholder return priorities. Earlier this year, we followed through on a commitment we made when we announced the Crown Rock acquisition and raised our quarterly common dividend by over 22%. The free cash flow accretion that we anticipate from Crown Rock along with the expected improvements from our non-oil and gas segments of our portfolio provided us with the confidence to raise the dividend.

Operator: To withdraw your question, please press star then 2. Please limit yourself to one primary question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Neal Mehta with Goldman Sachs. Please go ahead.

Neal Mehta: Good morning, Vicki and team, and good progress here on deleveraging. That's kind of where I want to start. You may recognize the Borilla draw announcement here a couple of days ago. But, you know, what does the asset sale market look like? And can you talk about the opportunity set to continue to make progress on Monaco? Yeah, as you know, we have a deep inventory of assets, and our portfolio is very, very strong. And I certainly appreciate your interest in the details, but we feel that talking in detail about what the assets would be would compromise our ability to maximize the value of those divestitures. We've said previously that we get a lot of incoming offers, but it's clear that some think that this is a fire sale, and it is not.

Sunil Mathew: Maintaining our investment grade credit rating is a key priority. In recent weeks, we received ratings affirmations from all three ratings agencies, including our investment grade credit ratings from Moody's and Fitch. We are focused on our deal averaging strategy, and we remain on track to retire at least $4.5 billion of debt, well before next August. We are off to a promising start with our Divided Stitcher program. We will continue to evaluate our high-quality asset portfolio for divestment opportunities, and we will apply those proceeds to further debt reduction, thereby strengthening our balance sheet.

Vicki Hollub: This acquisition has actually enabled us to improve our inventory quality and scale, which gives us now the opportunity to bring forward value. And that's what we did with this Crown Rock acquisition. It's not that the assets that we just sold weren't, as Sunil said, a part of our core for 10 years; it's that we knew that we needed to bring value to our shareholders, and we did it in a way that made our inventory stronger. So it was the best possible way to do it.

Sunil Mathew: Oxy is methodically delivering on this key financial commitments. The strategic and financial actions we have taken over recent portals are converging to benefit our portfolio, increase cash flow generation capability, and ultimately accelerate shareholder value. I will now turn the call back over to VT. Thank you, snail.

Vicki Hollub: But in terms of talking about the other assets, I can just assure you that we have high confidence that we're going to be able to achieve our debt reduction targets. And as you saw, and as you mentioned, it was definitely a good start. And we were excited about where we're headed with this and think that certainly the $15 billion that we are targeting to achieve is doable by the end of 2026 or first of 2027, as we've previously said. Thanks, Vicki.

Vicki Hollub: Before we move on to the Q&A, I would like to close by focusing on a few of Oxy's differentiated value catalysts. Our sub-surface expertise, technical excellence, and operational strength allow us to continuously achieve based on leading well performance, while simultaneously driving efficiency and saving. The addition of Crown Rock further enhances what I believe is Oxy's strongest portfolio in our century-long history, and it kicks off another phase of Oxy's cash flow growth with future upside to improve resource recovery and lower cost opportunity.

Vicki Hollub: And then just to follow up on the Crown Rock acquisition, just building off slide 27, just your early thoughts, recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile. I know you talked about this being $170,000 a barrel of bay asset, and the guide is a little softer than that, but recognize that it's not a full year, and you haven't had your hands full on these assets.

Vicki Hollub: I can't wait to see the value that the newly combined teams deliver given the quality and depth of development opportunities coming with this new asset. Beyond all the gas, we expect our oxykin and mystery businesses to continue to provide material cash flow durability in the years ahead. And finally, LCB continues to develop practical decarbonization solutions that are solidifying our leadership in this important emerging market. These businesses together position oxy's common shareholders to benefit financially for decades to come.

Vicki Hollub: So just your perspective and the production profile in the Synergies Association. Now, bearing in mind that with the SEC rules and regulations, our teams have had the opportunity to get together and to talk, but not to dive into the details or their plans. And so we've had now just a week for the team to start looking at what the situation is now with Crown Rock, and we're, again, incredibly excited about the assets. But I think Richard's team, you have found some additional details that have differentiated what we were expecting versus what happened over the past couple of quarters. Yeah, that's great. Thanks, Vicki.

Jordan Tanner: We will now open the call for questions. As Jordan mentioned, Richard Jackson and Ken Dylan are on the call with us today for the Q&A session. We will now begin the question and answer session. To ask a question, you may press star than one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star than two. Please limit yourself to one primary question and one follow up. At this time, we will pause momentarily to assemble our roster.

Richard Jackson: And I'll try to answer this question in a couple of pieces. I'll start with sort of where we are today. And like Vicki said, I guess the first thing to say is just very excited to work with our new team and be able to spend some time, you know, after close, you know, in the last week with them. And, you know, everything that we thought they would be, they are, and they are very excited about the opportunity.

Neil Mehta: The first question comes from Neil Meta with Golden Facts. Please go ahead. Good morning, Vicki and team and good progress here on the leveraging. That's kind of where I want to start. Recognize the burrilla draw announcement here a couple days ago. But what's the asset sale market look like? Can you talk about the opportunity set to continue to make progress on one accusation? Yeah, the, as you know, we have a deep inventory of assets that are portfolio is very, very strong. And I certainly appreciate your interest in the details.

Richard Jackson: So, in the first part, I'll kind of address where we are, and then I'll go ahead and speak to some of the synergies and how we're thinking about that generally. And then, as I think we said in our prepared remarks, we'll have more updates, I think, as we go into the end of the year. So, where should we start? Again, this plan started with the rules that Crown Rock really had a 2024 plan that they constructed.

Vicki Hollub: But we feel like talking in detail about what the assets would be would compromise our ability to maximize the value of those investitures. We've said previously that we get a lot of incoming offers, but it's clear that something that this is a far sell and it is not. This acquisition has actually enabled us to improve our inventory quality and scale, which provides us that now the opportunity to bring forward value. And that's what we did with this crown rock acquisition.

Richard Jackson: We didn't have a lot of insight into that, so we've spent time kind of understanding where we are and lots of positives. The upsides that we saw, not only in a one-year program, but longer term, we still see. As we think about that 170 and our latest guidance, and we're able to talk to the team, a couple of things. One, like us, had some downtime due to some weather events early in the year, and just some other operational downtime that was a part of that. I'd call them more singular events than ongoing.

Vicki Hollub: It's not that the assets that we just sold weren't as Sunil said a part of our core for 10 years. It's that we knew that we needed to bring forward the value to our shareholders. And we did it in a way that makes our inventory stronger. So it was the best possible way to do it. But in terms of talking about the other assets, I can just assure you that we have high confidence that we're going to be able to achieve our debt reduction targets.

Richard Jackson: And then, the majority is really well-mixed, I think, due to their development plans and trying to optimize returns beyond just this year, they really focused on some shallower zones that were a bit tighter spaced and even a little less horizontal length. And so, there are different reasons they constructed the program today versus what we had originally had in our plan. So, we're in the process of deconstructing that, but again, we see that same upside as we roll this forward. I would say it was more delayed in terms of getting to the 170 than we anticipated. It certainly hasn't gone away.

Vicki Hollub: And as you saw and as you mentioned that it's definitely we're off to a good start. And we were excited about where we're headed with this and think that certainly the $15 billion that we are targeting to achieve is doable by the end of 2026 or first of 2027. We previously said. Thanks again and just the follow up on the crown rock acquisition, just building off slide 27. And just your early thoughts recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile.

Richard Jackson: A couple of good things to note. I'd say well-cost, and again, this applied to Oxy as well, but encouraged by where not only their costs are today but what they see as improvement opportunities, and so we'll be diving into that. And then, looking at some of the opportunities going forward, I think they remain from a well-performance perspective. I think the ability now to compare notes on things like well spacing and even the sequencing of how we develop these stack pay, we see opportunity, and so that'll be a big part of what we're working through for the rest of this year and next year.

Vicki Hollub: I know you had talked about this being 170,000 barrel of the asset and the guy that is a little softer than that, but recognize that it's not a full year and you haven't done your handful on these assets, on the production profile and the synergies associated with that. Now, Barry in mind that with the FCC rules and regs, our teams have had the opportunity to get together in the talk but not to dive into the details or their plans.

Richard Jackson: And then, just scale and efficiency, so we can quickly see opportunities as we think about rig and frack core utilization, and really that rolls into time-to-market improvements, and so as you are able to drive utilization of those resources up, we still see time-to-market. And then, as Vicky mentioned, really water management.

Vicki Hollub: And so we've had now just a week for the team to start looking at what the situation is now with Crown Rock and we're again incredibly excited about the assets. But I think Richard's team, you have found some additional details that have differentiated what we were expecting versus what happened over the past couple of quarters. Yeah, that's great. Thanks, Vicki. And I'll try to answer this question in a couple of pieces.

Operator: We've been very proud of our water management capabilities, but when we combine with a very strong position and, frankly, more scale with what the Crown Rock team has put together, I think that's going to deliver cost synergies as well as operational synergies. So, to sum it all up, again, excited to be with the team, same opportunity, same upside. We're rolling it forward from where we started today, and we're looking forward to providing more details as we go into the end of the year. The next question comes from Betty Jiang with Berkley's. Please go ahead. Excuse me, Ms. Chang. Your line is open. Oh, sorry. I was on mute.

Vicki Hollub: I'll start with sort of where we're at today. And like Vicki said, I guess the first thing to say just very excited to work with our new team and was able to spend some time after closed in the last week with them and everything that we thought they would be they are and very excited about really the opportunity. So the first part, I'll kind of address where we are and then I'll go ahead and speak to some of the synergies and how we're thinking about that generally.

Vicki Hollub: And then I think we should have our prepared remarks. We'll have more updates. I think as we go into the end of the year or so. So where we where we start. Again, this plan started, you know, with the rules that Crown Rock really had a 2024 plan that they constructed. We, you know, didn't have a lot of insight to that. And so we've spent time kind of understanding where where we are.

Vicki Hollub: And, you know, lots of positives. The upsides that that we saw not only in a one year program, but longer term still see. But as we think about that 170 and our latest guidance and were able to talk to the team a couple of things, one like us had some downtime due to some weather events early in the year and just some other operational downtime that was a part of that. I'd call it more singular events than ongoing.

Betty Jiang: Please go ahead. Hi, good afternoon. Sorry about that.

Betty Jiang: Maybe I want to switch gears a bit. I want to ask about the Stratos project. Really, congratulations on signing the agreement with Microsoft this quarter. I wanted to get an update on where that project is today, the startup timing on that, and any goal on what percentage of the carbon credits that you want to sell ahead of time. Yeah, maybe start from there. Great. No, thanks for the question.

Vicki Hollub: And then, you know, the majority is really well mix. I think due to their development plans and trying to optimize returns, you know, beyond just this year that they, you know, really focused on some shallower zones that were a bit tighter spaced and even a little less horizontal length. And so, you know, there are different reasons they constructed the program today versus what we had originally had in our plan. So we'll, we're in the process of deconstructing that.

Ken Dillon: We're excited, certainly, about the Stratos project and the progress, and I'll flip it to Ken after a few remarks to kind of give you more detail on that. I'd say, generally, great progress in the business. Obviously, the sales with Microsoft were not only the largest CDR kind of block sale to date, but really, that counterparty meant a lot to us.

Vicki Hollub: But again, we see that same upside as we roll this forward. I would say it was more delayed in terms of getting to the 170 as we anticipated. It certainly hasn't hasn't gone away. A couple of good things to note. I'd say well cost. And again, this applied to oxygen as well, but encouraged by where not only their costs are today, but what they see is improvement opportunities. And so we'll be diving into that.

Ken Dillon: We know they're very diligent in the way they think about what the product of a CDR can mean to the business, and it's just great constructive dialogue that ultimately rolls into the future market and what that product can deliver. So, beyond just the monetary aspect of that, I'm very pleased with that outcome. I'd say the other thing I'd like to highlight, and I think again as we roll into Stratos next year and then think about the future, we will continue to see great progress out of our carbon engineering R&D team.

Vicki Hollub: And then, you know, looking at some of the opportunities going forward, I think, remain. You know, from a well performance perspective, I think the ability now to compare notes on things like well spacing and even the sequencing of how we develop these. The stack pay. We see opportunity. And so that'll be a big part of what we're working through for the rest of this year next year. And then just scale and efficiency.

Ken Dillon: And so as we think about the core elements of that process, being able to process air, capture CO2 in our liquid sorbent, and then how do you efficiently release that and either sequester or use it, we're seeing some very innovative things that we can see a direct line of sight to cost down, which is ultimately what we're trying to do as we get into the development. And so those are sort of the catalysts we're paying too closely to intentionally.

Vicki Hollub: So we can quickly see opportunities. You know, as we think about rig and frack core utilization and, you know, really that rolls into time to market improvements. And so as you are able to drive utilization of those resources up, we still see time to market. And then as Vicki mentioned, really the water management. We've been very proud of our water sort of management capabilities. But when we combine with a very strong position and frankly, more scale with what the Crown Rock team has put together, I think that's going to deliver.

Ken Dillon: I would say, to your point, we'll continue to monitor CDR sales. We remain very optimistic about the outlook for that market. We haven't set any specific parameters in terms of what that target is going forward, but it'll be a major component of our FID criteria for that too, for certain. And so I think as we get closer to that over the next period of time here, we'll be able to give more disclosure of how we think about that from a commercial project FID perspective. So maybe with that, I'll turn it over to Ken. Good afternoon, Betty.

Vicki Hollub: You know, cost energies as well as operational synergy. So, so the summit all up, you know, again, excited to be with the team. Same opportunity, same upside and just we're rolling it forward from where we start today. And we're looking forward to providing more details as we go into the end, of the Year.

Vicki Hollub: The next question comes from Betty Zhang with Worklies. Please go ahead. Excuse me, Ms. Zhang, your line is open. Oh, sorry, I was on mute. Please go ahead. Hi, good afternoon. Sorry about that. Maybe I want to switch gear a bit. I want to ask about the Stratos project. Really congratulations on signing the agreement with Microsoft this quarter. I want to get an update on where that project is today. The startup timing on that and any go on what percentage of the carbon credits that you want to sell ahead of time.

Ken Dillon: Overall, we remain on track for startup next summer. We currently have around 1200 people at the site, which is our peak. We'll start rolling off soon. We've been able to staff all trades as necessary, and Worley continues to do an excellent job. The efficiency of each of the trades is at or above where we expected them to be. We're now moving away from bulk fill, by that I mean putting in the large typing, ABLE, et cetera, into completing the systems one by one.

Ken Dillon: So we're at that stage now so that we can commission in the right sequence. We get power live this month, which then means we can start getting the control room up and running and testing all of the instrumentation throughout the plant. We're going really well at the moment. Also, as Richard highlighted, learning constantly during construction and also from the CEIC, we're seeing really great potential for performance improvements and cost down improvements, and we're looking at how to incorporate these learnings as quickly as possible. Companies like Technip Energies are also focused on how to achieve cost down improvements for their equipment.

Vicki Hollub: Yeah, maybe start from there. Great. No, thanks for the question. We're excited. Certainly with the Stratos project and the progress and I'll look at the kin after a few remarks kind of give you more detail on that. That's a generally continue to see great progress in the business. Obviously the sales with Microsoft not only be the largest CDR kind of block sale to date. But really that that counterparty meant a lot to us.

Ken Dillon: And that's driven from the top of the company. And so we're getting great support from our visionary vendors who have bought into the long-term DAC future. So I hope that answers your question. Yes, it does. Thank you very much for that color.

Vicki Hollub: We know they're very diligent in the way they think about what the product of a CDR can mean to the business and it's just great constructive dialogue that ultimately rolls into the future market. And what that product can deliver so beyond just the monetary aspect of that very pleased with that outcome. I'd say the other thing I'd like to highlight and I think again as we roll into Stratos next year and then think about the future continue to see great progress out of our carbon engineering R&D team.

Betty Jiang: Maybe shifting back to upstream, a follow-up on the Rockies, just after several quarters of very strong performance, do you think that in the third quarter guidance is also again seeing sequential growth, but as activity is expected to slow down in the second half, we'd love to get some color on how you think about the production and activity trajectory going forward. Yeah, no. I appreciate that question. The Rockies have been a significant part of our outperformance, you know, really, over the last couple of years.

Vicki Hollub: And so as we think about the core elements of that process being able to process air capture CO2 and our sorbent liquid sorbent and then you know how do you efficiently release that and either sequester use it. We're seeing some very innovative things that we can see direct line aside to cost down, which is ultimately what we're trying to do as we get into the development. And so those are sort of the catalyst we're paying to closely to intentionally.

Betty Jiang: So, a couple of things going on there, I think, you know, continue to do well in the DJ and the Powder River Basin. So, you know, as we highlighted in the slide, each of those is seeing sequential well performance improvement, even in the DJ, where we've been more mature in terms of operation. And so, you know, very, very pleased with that. From an activity standpoint, we really did some work in the early part of this year in the Powder River Basin, where, again, the well performance has been very good. Not only against the industry, which we note, but also against our internal expectations.

Vicki Hollub: I would say you know to your point we'll continue to monitor CDR sales where we remain very optimistic on the outlook of that market. We hadn't said any specific parameters in terms of what that target is you know going forward but it'll be a major component of our FID criteria for that to for certain. And so I think as we get closer to that you know over the next you know period of time here that we'll be able to give more disclosure of how we think about that from a from a commercial project FID.

Richard Jackson: And so what we're planning to do there is we'll have lower activity in the second half of the year while we pause and really rework our development plan. And so similar to what we kind of laid out generally in our highlight slide, we're really looking at how you take primary and secondary benches with, you know, the Turner and NIO and even the Mallory and think about that longer term as we build out our infrastructure.

Ken Dillon: So maybe with that I'll turn it over to Ken. Good afternoon, Betty. Overall, we remain on track for start-up next summer. We currently have around 1,200 people at site, which is our peak. We'll start rolling off soon. We've been able to staff all trades as necessary, and Warley continues to do an excellent job. The efficiency of each of the trades is at or above where we expected them to be. We're now moving away from bulk fill.

Richard Jackson: And so what we're expecting is to be in a position at the end of this year to, you know, put together a development plan and then have that compete with capital as we go into 2025. So I think, you know, again, just very pleased with that, but I would call it steady activity in the DJ with a couple of rigs and then really putting a competitive case forward for the Powder River Basin in 2025. The next question comes from Paul Cheng with Scotiabank. Please go ahead. Thank you. Good morning. That's the first one. New York.

Ken Dillon: By that, I mean putting in the large piping, able, etc, into completing the systems one by one. So we're at that stage now, so that we can commission in the right sequence. We get power live this month, which then means we can start getting the control room up and running and testing all of the instrumentation throughout the plan. So we're going really well at the moment. We're also, as Richard highlighted, learning constantly during construction and also from the CIC.

Paul Cheng: Thank you. I think you guys have said that you discussed with Agri-Petrol for them to purchase 30% of dividends. Congratulations, and then that fell apart.

Ken Dillon: We're seeing really great potential for performance improvements and cost-down improvements, and we're looking at how to incorporate these landings as quickly as possible. Companies like Technique Energy are also focused on how to achieve cost-down for their equipment, and that's driven from the top of the company. So we're getting great support from our visionary vendors who have bought into long-term back future. So that answers your question. Yes, it does. Thank you very much for that color.

Vicki Hollub: So from that standpoint, what the reason why... Purchase Crown Wall. It's awesome, better than that. Audio.

Vicki Hollub: So why would that be one? The first thing that you're trying to sell is trying to get some of the logic behind when you initially talk. Our second question is that I know you're a little bit early for CapEx and production, some idea of that. Paul, Paul St. Mike, Paul, thank you for the question.

Betty Zhang: Maybe shifting back to upstream follow-up on the Rockies. Just after several quarters of very strong performance, do you think that an insert quarter guidance is also, again, seeing sequential growth, but as activity is expected to slow down in the second half, we'll love to get some color on how you think about the production and activity trajectory going forward. I appreciate that question. The Rockies has been a significant part of our outperformance really over the last couple of years.

Vicki Hollub: I'll take the first question you had, and I can tell you that we absolutely believe that the Crown Rock asset, as a combined asset, is one of the best we've seen. Tim Dunn did a great job of putting together the portfolio of assets that Crown Rock had, and they did a great job of developing it. And there are a lot of really good possibilities there for continued expansion. And as you know, the inventory came in mostly in our Tier 1 inventory.

Betty Zhang: So a couple of things going on there, I think, continue to do well in the DJ and the Powder River Basin. So as we highlighted, I think in the slide, each of those are seeing sequential well-performance improvement, even in the DJ, where we've been more mature in terms of operation. So very pleased with that. From an activity standpoint, we really have done work in the early part of this year in the Powder River Basin, where, again, the well-performance has been very good, not only against the industry, which we note, but also against our internal expectations.

Vicki Hollub: So the way that worked was that we wanted to buy 100 percent of Crown Rock. And I actually informed Echo Patrol on numerous occasions that our preference was to purchase 100 percent of Crown Rock.

Betty Zhang: And so what we're planning to do there is we'll be lower activity in the second half of the year while we pause and really rework our development plans. So similar to what we kind of laid out generally in our highlight slide, we're really looking at how do you take a primary and secondary benches with the Turner and Nao and even the Maori. And think about that longer term as we build out our infrastructure.

Vicki Hollub: As a part of the Rodeo JV, we had an agreement with Echo Patrol under that JV agreement that they had the right to purchase 49% of anything that we purchased within a certain area, and vice versa. If they were to purchase something, we would have had the right to buy 49% of what they had purchased within a given area within the Midland Basin. So we wanted it all, but they also wanted to be a part of it.

Betty Zhang: And so what we're expecting is to be in position at the end of this year, to be able to put together a development plan and then have that compete with capital as we go into 2020-25. So I think, again, just very pleased with that, but I would call it steady activity in the DJ with a couple of rigs, and then really putting a competitive case forward forward Powder River Basin in 2025.

Vicki Hollub: They saw the assets, they knew they were high-quality assets, and they wanted to be a part of it. So since they are a valued partner to us, we've been in partnerships with them for decades, and we have a great relationship with them. So we negotiated for a 30% working interest that we felt like would be fair and beneficial to both of us. And we worked on that deal from March to just last week, and we thought we were done, but President Petro of Colombia didn't approve of it.

Paul Cheng: The next question comes from Paul Cheng with Scotiabank. Please go ahead. Thank you. Good morning. I think that first one is maybe for Sunil. I think you guys have said you have discussed with the echo patrol for them to purchase 30% on divided inches in the crown rock and then that fell apart. So from that standpoint, what is the sticky point on that? And perhaps more importantly, the reason why you purchase crown rock must be you think the answer is better or at least better than the average of your portfolio.

Paul Cheng: So why that will be one of the first answer that you're trying to sell down. So trying to get some understanding of the logic behind when you initially talking to echo patrol for the deal. The second question is that I know you're a little bit early for 2025 or Capix and production, but can you give us some idea that maybe the moving part plus and minus just for next year on both the Capix and the production now. Thank you.

Vicki Hollub: And, you know, he's made it very clear to the world that he's anti-oil and gas, anti-fracking, and anti-US. And with those three strikes, he pretty much dealt the Echo Patrol out of the deal.

Vicki Hollub: And that's all according to news reports. But certainly, we wanted it all; they wanted a part of it. You know, unfortunately, there are others in the world like Petro, and there are some in the United States like Petro, who believe that oil and gas should go away and believe that we shouldn't be an industry anymore and that renewable energy will be all that's needed to go forward and to help with the climate transition.

Vicki Hollub: But the reality is that, as you know, oil and gas are going to be needed for many decades to come. And so the other part of what Echo Patrol had some interest in was our strategy. And our strategy in the Midland Basin with respect to CO2 and enhanced oil recovery. Our strategy is very important to the world in that we're going to be taking CO2 out of the atmosphere and putting it in the assets that we have in the Midland Basin, including Crown Rock, to get more oil out of the ground.

Sunil Mathew: Paul, thank you for the question. I'll take the first question you had and I can tell you we absolutely believe that the crown rock asset as a combined asset is it is one of the best we've seen. Tim, Tim done did a great job of putting together the portfolio of assets that crown rock had and they did a great job of developing it. And there's a lot of really good possibilities in there for for continued expansion.

Vicki Hollub: And so they were very excited about that and wanted to be a part of it. The next question comes from Doug Leggate with Wolf Research. Please go ahead. Hi, this is John Abbott on for Doug Leggett. Yes, just sticking with Equipatrol. Joe Jane Fetcher.

Sunil Mathew: And as you know, the inventory came in mostly in our tier one inventory. So the way that worked is that we wanted to buy 100% of crown rock and I actually informed echo patrol on numerous occasions that our preference was to purchase 100% of the crown rock. But as a part of the rodeo JV, we had an agreement with echo patrol within that JV agreement that they had to write the right to purchase 49% of anything that we purchased within a certain area.

John Abbott: How much production? is associated with JV. And, you know, just out of curiosity, if they did not want to continue in the Midland for some reason. Would you be potentially interested in that ask? The way that would work is that if we continued on beyond the potential ending of the JV, the interest would just be divided 49% for Eco Patrol, and 51% for Oxy. So a discontinuation of the JV would just result in a couple of scenarios, one being if we just broke it off, didn't go forward at all with the JV, we would each just have a normal operating situation where it's 51% us, 49% them.

Sunil Mathew: And vice versa, if they were to purchase something, we would have had the right to buy 49% of what they had purchased within a given area within the middle of basin. So we wanted it all, but they also wanted to be a part of it. They saw the assets. They know they were high quality assets. They wanted to be a part of it. So since they are a value partner to us, we've been we've been in partnerships with them for decades and we have a great relationship with them.

John Abbott: Did that answer your question? Yeah, I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently. I believe that's around 40,000 barrels a day. Yeah, that's right. Yeah, it's around 40.

Sunil Mathew: So we negotiated to a 30% working interest that we felt like would would be fair and beneficial to both of us. And we worked on that deal from March to just last week and we thought we were done. But President Petro of Columbia didn't approve of it. He and you know, he's made it very clear to the world that he's anti oil and gas anti fracking and anti US, and with those three strikes he pretty much dealt the eco patrol out of the deal and that's all according to news reports but certainly we wanted it all, they wanted a part of it.

Vicki Hollub: That's very helpful. And then for the second question, very quickly, what was the run rate spending at Crown Rock? Was it 900?

Richard Jackson: Yeah, it's been very steady. I mean, I think we gave the guidance, you know, midpoint around 950, and it's been very steady with their five rigs. So we looked at that, and I think that's part of their success. They've been able to be very flat, which turns into a great production profile as well.

Richard Jackson: So, so very, very, you can think about it very steadily. Yeah, I just wanted to clarify on the Midland Productions, the 40,000 is our net production. The next question comes from John Royall with J.P. Morgan. Please go ahead. Hi, good afternoon.

Sunil Mathew: You know, unfortunately there are others in the world like Petro and there are some actually in the United States like Petro who believe that oil and gas should go away and believe that we shouldn't be an industry anymore and that renewable energy will be all that's needed to go forward and to help with the climate transition. But the reality is that as you know, oil and gas is going to be needed for many decades to come and so the other part of what eco patrol had had some interest in was our strategy and our strategy in the middle and base with respect to CO2 and in and have store recovery and our strategy is very important to the world and that we're going to be taking CO2 out of the atmosphere and putting it in the assets that we have in the middle and base and including crown rights. We're going to talk to get more oil at the ground and so they were very excited about that and wanted to be a part of it.

John Royall: Thanks for taking my question. So my first question is on the asset sale program. To date, you've sold or agreed to sell about a billion dollars worth of assets. Is there anything you can offer on the lost cash flow you expect from these assets? We know the production impact from Borilla drawdown, but I was just wondering on the cash flow side if there's anything you can give us there. We can't yet because we really haven't made decisions on what the next set of divestitures would be. We're still under evaluation of that. Okay, yeah, I was just referring to the billion that you've already announced.

Vicki Hollub: Okay, so my follow-up is just on the DAC program. Maybe you can talk about how it's developing, kind of looking past Stratos. Are you in serious or advanced discussions with potential partners and or licensees for future DACs? Or do you expect that those discussions will ramp up once you have sort of a proof of concept out there with Stratos being operational? Just try and understand how you expect the program to evolve post-Stratos. Yeah, maybe answer that kind of yes to both.

Douglas Leggate: The next question comes from Doug Legate with Wolf Research. Please go ahead. Hi, this is John Abbott on for Doug Legate. He's just sticking with the eco patrol, eco patrol, show, joint venture. How much production is associated with that JV? And you know, just out of curiosity, if they did not want to continue in the midland for some reason, would you be a potentially interested in that asset? So the way that would work is that if we continued on beyond the ending of the potential ending of the JV, the interest would just be divided 49% for eco patrol 51% for oxy.

Richard Jackson: I think, you know, one thing we've done is, you know, with the King Ranch sequestration hub, we continue to develop that we're pursuing really across all of our sequestration hubs in the Gulf Coast, our stratigraphic wells that prove the subsurface storage capability. We're going through permitting for Class 6 wells. And so we've really put that sort of front end work together to be able to accommodate both direct air capture and our point source.

Douglas Leggate: So a discontinuation of the JV would just result in a couple of scenarios, one being if if we just broke it off, didn't go forward at all with the JV. We would each just have just like a normal operating situation where 51% us, 49% them. Did that answer your question? Yeah, I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently.

Richard Jackson: And that continues to go well. King Ranch is really what we've targeted for the next kind of development beyond the Permian. And it really has a lot of scale advantages that we've talked about in the past, both with the subsurface and, you know, as we think about it, the balance of plants. You think about key power inputs, emissions-free power inputs, water, or other advantages.

Richard Jackson: And so that sort of engineering work we continue to do for South Texas as it relates to the subsurface and DAAC. But, yes, to your first part of the question, which is we do think it's really important to see Stratos as we continue to show that this great line of sight on cost down, both in Stratos and the construction, and then as it turns into operations next year. And also how we think about the Carbon Engineering Innovation Center and the R&D improvements that Ken and I talked about earlier will roll in.

Douglas Leggate: I believe that's around 40,000 barrels a day. Yeah, that's right. Yeah, it's around 40. That's very helpful. And then for the second question, very quickly, what was the one rate spending at Crown Rock? That was at 900. Yeah, it's been very steady. I mean, I think we gave the guidance, you know, midpoint around 950 and it's been very steady with their five rigs. So we looked at that and, you know, I think that's part of their success. I've been able to be very flat, which turns into a great production profile as well. So it's a very, very deep thing about it. Teddy.

Richard Jackson: So we do feel like as a milestone going into next year, getting this plant online, we're able to incorporate some of these learnings already into that process as we begin ramping up that capacity next year. We think that's a really important thing to factor into that South Texas FID in addition to the continued CDR sales that I mentioned earlier. And the last thing to say, the exciting part about that King Ranch development, that's really a 30 million ton per year hub.

Douglas Leggate: Yeah, I just wanted to clarify on the Midland production, the 40,000 is on net production.

John Royall: The next question comes from John Royall with JP Morgan. Please go ahead. Hi, good afternoon, thanks for taking my question.

John Royall: So my first question is on the asset sale program. To date, you sold or agreed to sell about a billion dollars worth of assets. Is there anything you can offer on the lost cash flow? The effect on these assets, we know the production impact from gorilla draw, but I was just wondering on the cash flow side, if there's any you can give us there. We can't, yeah, because we really haven't made decisions on what the next set of divestitures would be. We're still under evaluation of that.

Richard Jackson: And so you get these tremendous economies of scale that we really think add to the R&D improvements in terms of cost. And so that's really how we see that play out. If you go back to our early presentations on the development plan for the next decade, that's a big part of that ramp up. So let me stop there, and hopefully that's answered. Some of the intent of your question comes from Roger Read with Wells Fargo. Please go ahead.

John Royall: Okay, yeah, I was just referring to the billion that you've already announced, but okay, so my follow-up is just on the the DAC program. Maybe you can talk about how it's developing kind of looking past strados. Are you in serious or advanced discussions with potential partners under our lights and fees? For future doctors, do you expect that those discussions would ramp once you have sort of a proof of concept out there with strados being operational?

Roger Read: Yeah, thank you, and good afternoon. Um, I guess. I'd kind of like to come at the question on the cash returns, comments were made in the presentation on, catch up calls yesterday, get the debt paid down, and then get back to buying back shares, potentially even, after retiring the preferred, and I'm just curious kind of how you're looking at that in terms of what you would want to do. Once the balance sheets are... Meaning, do you want to get all the way back to buying back the preferred again, or does it make sense?

John Royall: Just trying to understand how you expect the programs to evolve post-strados. Yeah, maybe answer that. Kind of yes to both. I think, you know, one thing we've done is, you know, with the King Ranch sequestration hub, we continue to develop that. We're pursuing really across all of our sequestration hubs and the Gulf Coast, our you know, stratigraphic wells that prove the subsurface storage capability. We're building wells, and so we've really put, you know, that sort of front end work together to be able to accommodate both direct air capture and our point source.

John Royall: And that that continues to go well. You know, King Ranch is really what we've targeted for the next kind of development beyond the Permian, and it really has a lot of scale advantages that we've talked about in the past both with the subsurface and, you know, as we think about the balance of plants, you think about key power inputs, emissions, repower inputs, water, or other other advantages. And so that sort of engineering work we continue to do for South Texas as it relates to the subsurface and DAC.

Vicki Hollub: a little more steady with the share repurchases, raise the dividend, and then leave yourself the flexibility to react to the macro environment. It really depends on the macro because, What we're doing today with this accretive acquisition, to me, is it actually delivers better value than buying back shares. So given that, that's why we did the deal we did. But share repurchases still are a part of our value proposition, and especially given the fact that our share price is so much lower than we believe where it should be. So as we get through this period and we get our debt back down to $15 billion, we will then resume share repurchases. And it really depends on the macro environment at that point.

John Royall: But yes to your first part of the question, which is we do think it's really important to see stratos as we continue to show that this great line of site on cost down both in stratos and the construction and then as it turns into operations next year. And also how we think about the carbon engineering innovation center and the R&D improvements that Ken and I talked about earlier roll in. So we do feel like from a, you know, from a milestone going into next year getting, you know, this plan online, we're able to incorporate some of these learnings already into that process as we begin ramping up that capacity next year.

Vicki Hollub: If we are in a scenario where we can buy enough shares back to trigger the $4 per share, then we would start also buying back the preferred. That would be a part of what we do. But we can't ever rule out, you know, the and what the situation would be if we were in a prolonged high-priced environment because I think that although the Berkshire Preferred becomes available to us at a 5% rather than 10% premium starting in 2029, so if we haven't bought it back by then, we would definitely launch a campaign at that point to buy the Preferred.

John Royall: We think that's a really important thing to factor into that South Texas FID in addition to the continued CDR sales that I mentioned earlier. And the last thing to say, you know, the exciting part about that King Ranch development, that's really, you know, a 30 million ton per year hub. And so you get these tremendous economies of scale that we really think add to the R&D improvements in terms of a cost down. And so that's really how we see that play out if you go back to our early sort of presentations on the development plan into the next decade. That's a big part of that ramp up.

Vicki Hollub: Yeah, right, the 10-year, Okay, and then, as an unrelated follow-up, just your guidance on the midstream business and gas trading. What is the expectation that you have on Matterhorn in terms of startup that's built into your expectations? Is that it?

Vicki Hollub: Middle of the quarter, end of the quarter. I'm just trying to understand, like, maybe upside, downside. That would probably happen mid to late quarter is the last update that we've had. The next question comes from Neal Dingmann with Truist Security. Hi, good afternoon.

Richard Jackson: So let me stop there. And hopefully that answered some of the intent of your, question.

Roger Read: The next question comes from Roger Read with Wells Fargo, please go ahead. Yeah, thank you, and good afternoon. I guess I'd kind of like to come at the the question on the cash returns, you know, comments are made in the presentation on the catch up calls yesterday, you know, get the debt paid down and then get back to buying back shares potentially even, you know, go after retiring the preferred.

Neal Dingmann: Thanks for taking my question. My first question, Vicki, is just about the Gulf of Mexico. Specifically, could you give some color as to how active you might be with tiebacks through the remainder of the year? I think you've got a lot of opportunities there and then maybe even, you know, look at all the exploration opportunities. I'm just, you know, given all these opportunities you have, do you anticipate a bit more startups there on the exploration side starting next year?

Roger Read: I'm just curious kind of how you're looking at that in terms of what you would want to do once the the balance sheets where you want it, meaning do you want to get all the way back to buying back the preferred again, or does it make sense to be a little more steady with the share repos raise the dividend and then leave yourself the flexibility for acquisitions. It really depends on the macro because what we're doing today with this accretive acquisition to me is it is actually delivers better value and buying back shares.

Neal Dingmann: You know, the exploration won't be as aggressive as it has been in the past because of the fact that we've launched an evaluation using data analytics and AI. And what we want to do is give our teams the tools that we believe will help them even further understand what's happening in the subsurface of the very complex deep water prospects within the Gulf of Mexico. But the exciting thing is we have numerous other things that we can do in the Gulf of Mexico that Ken can describe. Thanks, Vicki.

Vicki Hollub: I think overall, the teams are performing really well on all fronts, the base, including primary exploration and the water flood designs. On the base, for example, as a result of recent OBN seismic data, we moved further northwest of one of our fields and brought on a 15,000 barrels a day well, which came on in early May. From further analysis of the OBN data, we're seeing more potential in that area and others. In Exploration, we're currently involved in two recent discoveries in Gaum, Ocotillo, and Tiberias. Ocotillo, Ocotillo, Kentucky Back to Marlin, Tiberias, Delucious. These are like three and a half mile to eight mile tiebacks.

Roger Read: So given that's that's why we did the deal we did. But share repurchases still is a part of our value proposition and especially given the fact that our share price is so much lower than than we believe where it should be. So as we get through this period and we get our debt down back down to 15 billion, we will then resume share repurchases and and then we're really depends on the macro at that point.

Roger Read: If we are in the scenario where we can buy enough shares back to trigger the $4 per share then we would start also buying back the preferred that would be a part of what we do. We can't ever rule out the what the the situation would be if we were in a prolonged high price environment because I think that although the the purchase preferred becomes available to us at a 5% rather than 10% premium starting in 2029 so that if we haven't bought it back by then we would definitely want to campaign at that point to buy the preferred. Yeah right the 10-year kind of change.

Ken Dillon: Both projects are going through our process to FID at the moment, and we can discuss more after sanction. Continuing our water flood project designs, we'll be capable of commencing execution next year. These have the potential to add substantial low-cost reserves, and these projects are in our wheelhouse as a company where water flooding is one of our strengths. And operationally, we've safely completed all our major turnarounds for the year, so very positive overall in GOM as we lean into the AI pilots that Vicki highlighted earlier. Great update. And then just a second on OFS services.

Neal Dingmann: I'm just wondering, have you seen any recent softness and just wondered how different prices, OFS prices, might be trending onshore versus offshore? Let me just start and then Ken can provide some better detail. I just wanted to make a mention of certainly seeing improvement in overall capital efficiency or well cost. And we wanted to highlight that on the slide, mainly because the teams have really been engaged this year, you know, upfront improving operations, but also engaging with our service contractors to find how do we drive utilization up and how do we create this sustained kind of program. So we highlighted the 10% year-to-date on well cost, which we think is a tremendous value add as you roll that into 2025, in addition to the OPEX improvements that Vicki highlighted. But let me stop there.

Roger Read: Okay and then as a unrelated follow-up just your guidance on the midstream business and the gas trading. What what is the expectation that you have on Matterhorn in terms of startup that's built into your expectations is that middle of the quarter into the quarter I'm just trying to understand like maybe upside down side to the to the guidance. That would probably happen mid to like quarter is the last update that we've had.

Roger Read: The next question comes from Neil Dingman with true of security. Hi, good afternoon. Thanks for taking my question. My first question, Vicki, is just on the Gulf of Mexico. Which is, typically, could you give some color to how active you might be with tiebacks through the remainder of the year? I think you've got a lot of opportunities there, and then maybe even, you know, look at all the exploration opportunities. I'm just, you know, given all these opportunities you have to anticipate a bit more startups there on the exploration side, starting next year.

Richard Jackson: I just want to say thank you to the teams and turn it over to Richard. Yeah, same as Richard, you know, onshore US, from a supply chain perspective, we see deflation continuing. Between say last summer and the end of this year, we see north of 10% rolling through in our drilling and completion basket. We also see OCTG significantly higher than that in terms of deflation, which also benefits all the other functions.

Roger Read: You know, the exploration, it won't be as aggressive as it's been in the past, because of the fact that we've launched a valuation using data analytics and AI, and what we want to do is to give our teams the tools that we believe will help even further understand what's happening in the subsurface of the very complex, the water prospects within the Gulf of Mexico. But the exciting thing is we have a numerous other things that we can do in the Gulf of Mexico that can can describe.

Ken Dillon: We see continued focus by the contractors to improve efficiency and technology, so E-Fleets and AutoFrac. They're really pushing the technology aspects, and they're working with us on utilization. And it's not only the efficiency that comes with utilization, but because of the planning that Richard's teams are doing, it releases those contractors to use that equipment in spaces where it is not, so they can maximize their margins also. Having mass matters, so Crown Rock will enable more value in that space in the Midland Basin, so it's definitely accretive. Jovanne Fattou

Roger Read: Thanks, Vicki. I think overall the teams are performing really well in all fronts, the base, including primary exploration and the water flood designs. On the base, for example, as a result of recent OBN seismic data, we moved further northwest of one of our fields and brought on a 15,000 barrel a day well, which came on in early May. From further analysis of the OBN data, we're seeing more potential in that area than others in exploration.

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

Roger Read: We're currently involved in two recent discoveries in gum, Ocatillo and Tiberius. Ocatillo, Ocatillo can tie back to Marlon, Tiberius, delicious. These are like three and a half mile to eight mile tie backs. Both projects are going through our process to FID at the moment, and we can discuss more after sanction. We're continuing our water flood project designs. We're capable of commencing execution next year. These are the potential to add substantial low cost reserves and these projects are in our real house as a company where water flood is one of our strengths. And operationally, we've safely completed all our major tolerance for the year, so very positive overall and gone as we lean into the AI pilots, the key highlight to the earlier. Great update.

Vicki Hollub: Afternoon, Vicki and Dean. Thanks for taking my questions. I was curious if I could ask a little bit more on the Crown Rock progression into next year. I think you all still stand by getting towards that $170,000 a day target and perhaps growing it from there. So when we think about CapEx for next year, given that this was a highly graded transaction, do you see the crown rock assets sort of stealing some capital from some areas that you were spending money on in 24 as we think about that program? And I guess that's part of that. Is there some savings on the CapEx side associated with selling Beryl Adderall?

Vicki Hollub: I would say that we would keep the same activity level with Crown Rock going into next year. They've had this, as Richard said earlier, this same activity level for quite a while, and it's worked well for them.

Richard Jackson: And then just a second on OFS services. I'm just wondering, are you seeing any given sort of the recent volatility or maybe downturn, a little bit downturn oil? Have you seen any recent softness? And just wondered how different prices, both as prices might be trending on shore versus offshore?

Vicki Hollub: And we think that with the capability of our teams working together, we'll actually be able to maybe do more with less. And so we think that's going to be a good news story. So, probably, there will be no increase in activity in Crown Rock.

Richard Jackson: Let me just start in the kitchen provide some better detail. I just wanted to make mention, certainly seeing improvement in overall capital efficiency or well cost facilities. And we wanted to highlight that in a slide mainly because the teams have really been engaged this year, you know, upfront improving operations, but also engaging with our service contractors to find how do we drive utilization up and how do we create the sustained kind of program. So we highlighted the 10% year-to-date on well cost, which we think is a tremendous value add as you roll that into 2025 in addition to the op-ex improvements of Vicki highlighted.

Vicki Hollub: In the Barilla Draw, part of the reason that we divested from Barilla Draw is that we weren't investing capital there because we had development going on in other areas that was taking the capital away from Barilla Draw. And so our philosophy has always been if we have an asset that doesn't compete for capital and or would have competed under different circumstances, but we're not going to get to it for five to ten years, then that's probably the best of it. I appreciate the cover art there.

David Deckelbaum: And then maybe my second question, just on direct air capture, just following Stratos. I know there was some enthusiasm, especially last year, around AdNoc and their interest in direct air capture. Would you characterize most of your conversations with most parties at this point as sort of being in a wait-and-see mode around Stratos and how some of these first projects performed? I would say there's a lot of interest in Stratos, and it's now, I think, at every conference around the world, and companies around the world are all talking about Stratos.

Richard Jackson: But let me, let me stop there. I just want to say thank you to the teams and turn it over to. Yeah, same as Richard, you know, I'm sure you asked from a supply chain perspective, we see deflation continuing between say last summer and the end of this year, we see north of 10% rolling through in our drilling and completion basket. We also see OCTG significantly higher than that in terms of deflation, which also benefits, you know, all the other functions.

David Deckelbaum: In fact, we had a major operator, an international operator, come and visit our site because there's a lot of interest in it. As Richard said, first of all, we want to get it up and running because we believe that as we prove it, as we make it better, it's going to be much more valuable than what people realize today. Richard, did you have something to add? No, I just think that's right.

Richard Jackson: We see continued focus by the contractors to improve efficiency and technologies of e-fleets, autofrack, they're really pushing the technology aspects and they're working with us on utilization and it's not only the efficiency that comes with utilization, but because of the planning that Richard's teams are doing, it releases those contractors to use that equipment in the spaces we're not so they can maximize their margins also, having mass matters. So crown rock will enable more value in that space in the middle of the basin, so it's definitely a treat to the answers question.

Vicki Hollub: I think we should continue to talk about our ambitious plans. We think that there's a lot of scope in terms of development. You've seen some of our development plans, and as we prove it, as we give line of sight to the cost down, we're very confident that both strategic and capital partners are going to have an investable development that will be able to help us. So, that is our strategy, but we're doing a lot of engagement on multiple fronts, both from offtake and future capital partnerships.

Richard Jackson: So, appreciate that. In the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Vicki Hollub for any closing remarks. I'd just like to say thank you all for your questions and have a great rest of your day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

David Duckelbaum: The next question comes from David Duckelbaum with TD Cowan, please go ahead. After Dan Biggie and Dean, thanks for taking my questions. I was curious if I could ask a little bit more just on the crown rock progression into next year. I think you all still are standing by getting towards at 170,000 a day target and then perhaps growing it from there. So when we think about CAPEX for next year, given that this was a high graded transaction, do you see the crown rock assets sort of feeding some capital from some areas that you were spending money on in 24?

David Duckelbaum: As we think about that program, and I guess in part of that, is there some savings on the CAPEX side associated with selling barrel withdrawal? I would say that we would keep the same activity level with crown rock going into next year. They've had this as Richard said earlier, this same activity level for quite a while, it's worked well for them. And we think that with the capability of our teams working together, that we'll actually be able to maybe do more with less. And so we think that's going to be a good news story.

David Duckelbaum: So likely no increase in activity in crown rock. And the BRILA draw, part of the reason that we divested the BRILA draws because we weren't investing capital there because we had development going on in other areas that was taking the capital away from BRILA draw. And so our philosophy's always been if we have an asset that doesn't compete for capital and or would have competed under different circumstances, but we're not going to get to it for five to 10 years. Then that's one of the best of it.

Vicki Hollub: I appreciate the color there. And then maybe my second question is just on direct air capture, just following Stratos. I know there was some enthusiasm, especially last year around ad knock and their interest in direct air capture. You know, would you characterize most of your conversations with most parties at this point is sort of being in a wait and see mode around Stratos and how you know some of these first projects.

Vicki Hollub: I would say there's a lot of interest in Stratos and it's now I think about every conference around the world and companies around the world are all talking about Stratos. In fact, we had a major operator out of international operator come and visit our site because there's a lot of interest in it. We prove it up as we make it better that it's going to be much more valuable than what people realize today and Richard, did you have something to add?

Vicki Hollub: No, I just think that's right. I mean, I think we continue to talk, you know, our ambitious plans. We think that there's a lot of scale in terms of development. You've seen some of our development plans and so as we prove it as we give a line of sight to cost down, we're very confident that both strategic and capital partners are going to have an investible, you know, development that we'll be able to help us. So that is our strategy, but I mean, we're doing a lot of engagement on multiple fronts, both from off take and future capital partnerships.

Vicki Hollub: So appreciate that question.

Jordan Tanner: In the interest of time, this concludes our question and answer session.

Vicki Hollub: I would like to turn the conference back over to Vicki Haulib or any closing remarks. I'd just like to say thank you all for your questions and have a great rest of your day.

Jordan Tanner: The conference has now concluded. Thank you for attending today's presentation.

Jordan Tanner: You may now disconnect.