Q3 2024 ConocoPhillips Earnings Call
and the other.
Liz: Welcome to the third quarter, 2024 Conagofilips earnings conference call. My name is Liz and I will be our operator for today's call.
Liz: At this time, operatives have been thrown on a listen only mode.
Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1-1 on your touch tone phone.
I will now turn the call over to Phil Gresh by President Investor Relations. Sir, can you maybe begin?
Good morning, thank you Liz and welcome everyone to our third quarter 2024 earnings conference call.
on the call today are several members of the Conoco Philips Leadership Team including Ryan Lance, Chairman and CEO, Bill Bullock, Executive Vice President and Chief Financial Officer, and the O'Brien Senior Vice President of Strategy, Commercial, Sustainability and Technology.
Liz: Nick Holds, Executive Vice President of Labor 48, and Kirk Johnson, Senior Vice President of Global Operations.
Speaker Change: Ryan and Bill will kick off the call, some opening remarks, after which the team will be available for your questions.
Speaker Change: Today's release, we publish supplemental financial materials and these live presentation which you can find on the investor relations website.
During this call, we'll make four-looking statements, is encouraging expectations.
Actual Results may differ due to factors noted in today's release and in our periodic SEC filings.
Bill make references of non-gap financial measures, reconciliation to the nearest corresponding gap measure can be found in today's release and on our website.
As we move to the Q&A afterwards, as a reminder, we'll take a one question for caller. With that, I'll turn the call on which Ryan. Thanks Phil, and thank you to everyone for joining our third quarter, 2020 for earnings comes from call.
Ryan: Let me start with a few comments about our results in the outlook for the rest of the year and that I will provide an update on the marathon oil acquisition.
Starting with the results, the company demonstrated strong execution in the third order. We exceeded the high end of our production guidance for the quarter and raised our full year production out, out and largely driven by lower 48 performance.
Ryan: On Return Up Capital, we remain on track to distribute at least nine day into shareholders this year.
We have officially incorporated our V-rock into the ordinary dividend.
and consistent with our long-term track record. We are confident that we can grow our ordinary dividend at a top court-del rate relative to the S&P 500.
On Bibax, our plan for the order share repurchases will approach 2 Bayon.
Liz: and we have increased our existing share repurchase authorization by up to 20 billion.
Liz: Shifting to our planned acquisition of marathon oil, we're still on track to close this quarter. In the meantime, integration planning is progressing well.
The team is now fully mapped out how we plan to achieve the initial guidance of at least 500 main of synergies primarily from the overhead and operating cost reduction categories that we have previously talked about.
Liz: and we now expect to double the initial 500 million target driven by capital optimization.
While we are still finalizing our 2025 budget, and we'll provide formal guidance and February. We are confident that the combined company can grow at a low single-digit rate again in 2025 with the Pro-Former CapX of last 2013 day.
Liz: So to wrap up, we're pleased with our operational execution and we look forward to closing the marathon oil acquisition later this quarter.
Now let me turn the call over to Bill to cover our third quarter performance and 2024 guidance in more detail.
Bill: Thanks Ryan.
In the third quarter, we generated $1.78 per share in adjusted earnings.
We produced 1,917,000 barrels of oil equivalent per day representing 3% underlying growth you're over year.
Liz: and that's despite having an estimated impact of 85,000 barrels per day of turnaround during the quarter, including approximately 55,000 barrels, or a sermons once every five year turnaround.
Lower 48 achieved record production of 1,147,000 barrels of oil equivalent per day, which represents 6% underlying growth year-over-year.
Now by Basin, we produced 701,000 in the Parmion, 246,000 in the Eagleford, and 107,000 in the Boccan.
Moving to cash flows, third quarter CFO was over $4.7 billion.
which included over 400 million of APLNG distributions.
Operating Working Capital was a $1 billion tailwind in the quarter.
Capital Spendritures were 2.9 billion and we returned $2.1 billion to share holders, including 1.2 billion in buybacks and 900 million in ordinary dividends in the V-rock payments.
We ended the quarter with cash and short-term investments of 7.1 billion and 100 and 1 billion in long-term liquid investments.
Now turn to the guidance. For the fourth quarter, we expect production to be in a range of 1.99 to 2.03 million barrels per day.
For the full year, we now expect production to be 1.94 to 1.95 million barrels per day. Up, 10,000 barrels per day from prior guidance.
on cash flows were increasing full-year guidance for APLNG distributions by $100 million to $1.5 billion and we expect over $200 million of distributions in the fourth quarter.
Liz: All other guidance items are unchanged.
and as a reminder, Ghydes excludes the impact of pending acquisitions.
Liz: So in conclusion, we continue to deliver on our strategic initiatives. We may focus on executing our plan for 2024. We are committed to staying highly competitive on our shareholder distributions. Inward, our progressing forward closing the marathon transaction.
Backing please our prepare remarks. I'll turn it back over to the operator's start the Q&A.
Thank you. We will now begin the question and answer session. In the interest of time, we ask that you limit yourself to one question.
Speaker Change: If you have a question, please press star 1-1 on your touch-tone phone. If you wish to be removed from the queue, please press star 1-1 again. If you're using a speaker phone, you may need to pick up the handset first before pressing the numbers.
Liz: Once again, if you have a question, please press star 1-1 on your touch-tone phone.
Our first question comes from Neil Mehta with Goldman Sachs.
Good morning Ryan and team. I want to spend some time on the synergies, because the comment on the call about the doubling of the synergies is notable. Can you just unpack that? Where are you seeing it? Should we think about it as an op-x item? As capital items?
Liz: and when we could actually see it in the numbers, is this something how long to take to be realized.
Holding nails and I can take that question.
So just to unpack it, I may be very go back to what we felt on the second quarter call, this will be, we stood up a team, we've been working the bottoms up integration synergy capture detail.
Now that team is already fully mapped out how we're going to achieve $500 million to be initially guided to on a run rate basis within a year of closing.
We've also now finished designing the organization, we've identified non-labored application.
Liz: and Prost is aficiency to optimize costs.
Also, you might remember during the acquisition announcement call, I mentioned that if you're additional upside from rework in the combined drilling and refract programs of the asset level.
We've now completed that detail modeling across all three basements.
So, versus 2024 capital spend, we plan to reduce the combined, Conical Phillips & Maathon program by at least $500 million in 2025.
Liz: Now these reductions come from early from Ego for embarking
Where confidence in our ability to achieve an output plateau level at lower level of activities versus standalone companies, or simply put, we need fewer rigs and fewer track crews to achieve the same outcome.
Liz: So when you combine all of that with your original announced synergies of 500 million dollars, we now have clear line of sight of doubling that to a billion dollars.
Now in terms of the timing of those synergies.
So you can affect the effects happening immediately as we get into 2025 in the reduction in the capital budget. And as I said earlier that the all-bex in GNA, that's going to ramp over time but we'll be there on a run rate within the 12 months closing.
and Neil I would probably add the...
Neil: You know, recognize this is all done pre-closed. So we haven't closed the transaction and haven't really gotten a complete look under the hood.
So I'm guessing you're expecting that we'll have additional aspects, opportunities we'll have.
Additional Capital Opportunities, Additional Commercial Opportunities, is we're able to dive in post-closed and look a little bit closer at the contracts and some of those things that we have going on. So, you know, stay tuned in this space.
Our next question comes from Doug Lugett with Wolf Research.
The thanks to God's dividend growth for share, Ryan, look at your stock price today. Congratulations on getting the beer off well, up.
Doug Lugett: Okay, so dividend break even, can we, the building, all the number, very, very impressive, obviously, but what does that do to your portfolio break even on a pre-imposed dividend basis sustaining capital if I could take that as my one question please?
Tony Dye Gandhi here. Maybe I'll take you back to sort of what we said back in our aim presentation and build it from there. So, a name we said the long-term habits free cash per break even if food and the dividends within the mid 30s.
So obviously that's a little high in the early years as we invest in Willow. Now with the mouth and transaction, plus the increase synergies we've announced today, that's going to further lower the number by a couple of dollars, so to the low 30s.
And then of course you need to write the dividend on top of that but that's about ten dollars
So having such a low-free cash flow break even is really one of the key reasons why we're able to increase the ordinary dividend by 34%. And very importantly, that's how we can continue our commitment to the S&P 500 Top Court Algrote.
So I hope you don't unpack, you know, Doug, the sort of strength we have there
and hopefully you'll enjoy the 30% praise to the ordinary dividend act.
Speaker Change: Our next question comes from Steve Richardson with Evercore ISI.
Steve Richardson: Great, thanks. I appreciate the comments on the 2025 capback, so I was wondering if we could...
Steve Richardson: Maybe take in a little bit more Ryan, you got an external environment, you know, gas looks like it's
Steve Richardson: and Professor Leon.
Contango and oil, the opposite structure and you've also got some long cycle capex, levers you could pull. Could you maybe appreciate the comments about the 13 billion and below that and everything was just said about Marathon, but maybe we could just talk a little bit about the other pieces of the portfolio and how you're thinking about capex location in 25.
Yeah, I can let any provider feel more detail. Certainly as we go through the course of the year, we're looking at it. We've got some...
Steve Richardson: Spending, continuing and wrapping up a little bit, it will, but we've got some other pieces that are...
Steve Richardson: that are coming down in the portfolio and just wanted to make sure that
People understood the below 13 Bay and Guide. We're going to work through the details of that and come out, you know, late this year, early next year with our actual.
Capital number, but we're feeling pretty good where things stand today and there's some moving pieces in the portfolio that Andy can describe a bit further. Sure, thanks Ryan. As Ryan said, we're saying, our expectation is less than 13 in 25, but just put that in context.
and that compares to 13 and a half for the combined clinical Phillips and math and guidance for 24. And the primary grounds that reduction is really what I just covered in the math and the synergies that I comment across the level of 48.
[inaudible] the world for the A and A and A and A and A.
I was Ryan mentioned with our major projects of Willow, Port Arthur, LNG and the Caterer Expansion Project. We serve a few moving parts to work through.
Steve Richardson: But we do expect caught out the capital spend to come down as we previously communicated will be in the project financing stage.
As you saw on the second quarter call, we expect 20-25 to be the biggest construction you ever willow.
Steve Richardson: but that will all back it into when we say the last and 13 and uh.
You know, as we sort of get all those pieces now down we'll be in a position to give our guidance sort of early next year as we do in the February timeframe.
Our next question comes from Dev and McDermott with Morgan Stanley.
Hey, you're more than just taking my question.
Speaker Change: So I wanted to build on some of the comments so far on 2025 but shipped over to shareholder returns. I think at the time of the marathon, trans action you talked about in over $11 billion.
Target and commodity prices have been very volatile since then, but you're also messaging. More capital efficient program and better synergies is for the prior few questions. There's only to be kind of put this all together and higher thing about pro-form shareholder returns once the transaction closing some of the movie pieces around that number.
Yeah, the building is yeah, a lot of living pieces as you might imagine coming through that I'd probably start the answer by just reflecting a little bit about how we've done in 2024.
So I think it informs how we think about this and how we might approach 2025, I think it's a little bit early to give an indication of what 2025 is because some of the pieces are moving parts that Steve just addressed we got.
You know again, backwardation in the old curve, continuing the gas curve and a lot of volatility happening in the commodity price. So as we get to the course of the year and in the next year we'll all be kind of trying to assess what our CFO is, but you look at our past history.
6-7 years now we've provided about 45% of our...
Steve Richardson: CFOs come back to the chair over informant distributions through both the dividend channel and cheer by back. So we'll certainly plan to continue to.
and get off our shareovers a pretty compelling value proposition for the company. But you look at, you know, as we got into 2024 and in 2024 we were thinking.
Know arguably an $80 kind of price deck it's been softer than that.
We paid off some debt, we stuck to our $9 billion, just with a distribution target, we had a little bit of it.
Steve Richardson: Disposition, money is coming in, we paid off some debt this year, we got a strong balance sheet, we've got cash on the balance sheet.
and look, we're made for the kind of volatility that we're seeing in the market today. So, those are the pieces that we're going to take into consideration as we go on to 2025. We've got a lot of levers, we've got a lot of ways to think about the business, we've got the synergy.
Steve Richardson: It looked the operations are running really well, both in the international space under Kirk's leadership
and the lower 48 under nick sladership. So that's resulted in the...
The extra production that we're getting out of the year and the efficiency that we're driving through the system. So we're going to put all those levers, all those pieces of parts together when we get to the end of the year, taking assessments of the commodity price market, what we think the market will give us.
and 2025 and come up with a distribution target for next year, post the marathon close. So we've got a lot of moving pieces in it, but you know, the shareholders should expect to get a significant portion of our cash flow coming back off the top and probably something it exceeds our...
are a floor of 30% that we talk about. It's going to be something probably significantly higher than that.
Speaker Change: Our next question comes from Arun J.A.R. with JP Morgan
Yeah, good morning, good afternoon. I wanted to get your thoughts on just capital allocation to the marathon properties and I know you're probably thinking about capital allocation to lower 48 as a whole, but I wanted to get maybe some insights.
on just the marathon properties because if we look at their activity trends, you know, they ran about 11 to 12 rigs on the properties and the first half and they've downchifted to 5 or 6 in the back half. So how do you plan to manage those properties and go forward basis?
Yeah, I can let...
Gladandy, jumping a ring, but that was one of the...
Speaker Change: bit of the surprises that we...
Speaker Change: We saw when we got into the data room and it's really one of the attractive features that...
We solve it in the marathon properties, in good low costs and supply resources, they compete in the portfolio
Speaker Change: and it looked with the scale that we have in our company and combining with marathon we can run these assets differently.
Steve Richardson: and I'll tell you our lower 40 teams dropping it to get hold of these assets because we won't have an execution plan that looks like what you just described, where you wrap up early in the year and you pack off later in the year. With the scale that we bring to the combination.
Steve Richardson: We can just refound it running at a consistent pace as much better than trying to ramp up and ramp down which you have to do when you either don't outscale or up.
for the capacity to do those things and we're just going to run the assets differently and I can let Nick provide a little bit more.
D.C.L.A. on the competitiveness within the portfolio.
Yeah, Ryan, just kind of building on what Ryan just mentioned. You know, we've looked at run and level loaded and steady state, state sense mid 2022. Clearly we've shown you that through that approach that we've improved operating efficiencies.
on the drilling sides, well it's a fract side. And so as Ryan mentioned, we're going to apply that methodology in that strategy on the marathon. A crjure actually really excited to bring that in.
Steve Richardson: As you've seen before traditionally they have been really heavy on the front end the first half with rack and drilling.
Steve Richardson: Activity and then they level off as Ryan mentioned on the second half. So we're going to run at steady state level loaded.
Steve Richardson: We've seen even this year to give you a proof point
We're delivering with flat activity, 10% more activity than 2023. So that means more feet per day, it means more well. And, you know, for the folks on the phone, you're clearly seeing that in the bottom line, production performance.
Steve Richardson: Ford Lourge 48. The marathon asset, since we've talked about in the acquisition case, very competitive and cost to supply across all the basins.
Steve Richardson: We got 2,000 wells, the bulk of that's in Eagleford, we know those assets well
and LePore to capture it. So overall we'll see activity rationalizations on the rig and frack front.
As Andy mentioned, we'll go through and really determine the optimum plateau, look at incremental costs to supply to run these assets going forward and still get modest production drugs.
Speaker Change: Our next question comes from Lloyd Burn with Jeff Rees.
Lloyd Burn: Hey, good morning guys, thank you for all that. Can you guys just comment a little bit on the differentials that you're seeing, gas, maybe wah-ha and what you expect from out of matter-horn in them.
Lloyd Burn: Take that one step further and any additional Reyes progress or targets you guys have going forward internationally.
Hi, I'll talk about where we are with that. As you saw, Henry Hub prices did improve in Q3. However, it's expected, more 48 gas organizations continue to be depressed as a result of the Pyramium pipeline constraints.
So I'll lawfully aid gas realization as a percentage of country hub dropped from 17% in Q2, to wait for sending in Q3. As I said, this is primarily driven by the Permian War Harp Rising, which declined to negative 25% in MMP2 years.
Lloyd Burn: Now we have seen some improvement in October with the ramp up of Matterhorn. This has been somewhat offset by some pipeline maintenance elsewhere in the Pemian. It's difficult to forecast exactly how the poor court is going to play out. But the forward curve is suggesting that we should see some improvement.
and then specifically to your comment or your question on Mathiporn. We expect Mathiporn to be about 2 BCF a day in November and then with compression that should increase capacity to 2 and a half BCF later in 2025.
Steve Richardson: Um...
Steve Richardson: I think the second part of your question was...
More on the Allen G-Sides and the progress we've been making there.
Steve Richardson: Nothing specifically new to announce on the LNG side, in terms of new regas, but the one thing that we know we have mentioned is there has been some...
Steve Richardson: He also we've done in Europe, we've excavated three agreements during the third quarter
to support the expected increase of gas.
and we're going to have to come to the formal engineering. I think that's going to be a great opportunity for the company. I think that's going to be a great opportunity for the company.
So, you know, these new agreements will give us down the ability to play small units sort of more efficiently into multiple markets in Europe.
Steve Richardson: So, we can do an update of where we are on the progress we've made this quarter.
Speaker Change: Our next question comes from Betty Jann with Barclays.
Betty Jann: and I'll thank you for taking my questions. I want to ask about ask-a-sales and
Betty Jann: How you think about the use of proceeds? There's a headline yesterday about hail, mancore, permeant asset, so wondering about that, but perhaps more broadly.
As you look at the optimization of the portfolio today, what are the areas where you think there could be more value for others versus where they sit internally?
Morning ready
As you know, we've been actively high-grading our portfolio over the last several years And the math and transaction providers, you know, continue that process
and you say we've announced.
Steve Richardson: Target around $2 billion in donk or after this position over the next several years and we're very confident with achieving that now. We're not going to comment on the specifics of where they are, or in the activity in advanced to commercial sensitivity but activities are well underway on multiple disposition candidates at this stage.
Our next question comes from Bob Brackett with Bernstein.
Good morning, and we've been hearing a lot of questions around this idea of a wave of global LNG hitting the shores in 25 or 26 or 27.
It's easy to put an LG product into a spreadsheet, perhaps harder to bring it online Any thoughts around should we expect a surge of liquefaction capacity? Obviously you've got it for mostly to that.
Speaker Change: Yeah, Bob, I think...
We've all been kind of looking at your right, the spreadsheet presumes a lot of FIDs get taken and it's pretty tough take up IDs in the space
Speaker Change: and things kind of shift to the right, but look, if there's a little bit of supply overhang coming later this decade.
You know, coming in the 27-28 timeframe, we can see some of that if these projects progress as designed, we've already seen some that are even in.
Construction today that are moving to the right, but in a long, whether or not they're going to take FID. So that's going to be something that...
Speaker Change: Continue to be pretty evolved on the marketplace, but
Yeah, we would expect a little bit of extra supply coming on later this decade.
for making these investments for 20, 30, 40 years and we're pretty bullish on where the LNG demand growth is going over the next decade and beyond and that's what we're focused on is the opportunity to get access to those.
and the premium gas markets in Europe and in Asia. And to be that you have to be in the full value chain, you have to be in the regalf side, you have to be.
ships to move it around and you have to be in the regas or the local faction shipping in the regas side as well.
and Andy just talked about some of what we're doing to expand on the marketing end of it and linking all that together. So we feel it's a right move for the county right thing long term to do for the county with there will be periods of time when it's...
Over Supply, just like there'll be period of times when it's under supplied in the price full spike.
So we and that's what we've seen over the last 30, 40 years in this business and we expect that will continue over the next 30, 40 years.
Speaker Change: Our next question comes from Ryan Todd with Pyper Sandler.
Speaker Change: Thanks.
Maybe, can you talk about how you think about the supply to man balance for crude over the next couple of years? And you guys always have a view on this. And how much if at all does this factor into your outlook for activity levels and your willingness to grow production going forward?
Speaker Change: Yeah, Ryan, I think we'll, as we do every year at the end of the year, we'll do our bottoms up assessment of where we think supply and demand is, look week.
is we look out in the 2024 coming any year. We were thinking more like 1.21.3 million barrels a day of demand growth.
It looks like with the primary China slowdown
Speaker Change: So the other place is around the world that the man grows going to be closer to around the main boroughs a day so it's a bit softer than...
and what we have said, there's still spark capacity sitting within the OPEC plus group and...
Speaker Change: and anybody's bad, whether or not they decide to continue to delay pulling any excess supply back into the market. We'll do that assessment, but look, I think we're pretty constructive in the market going forward over the next few years. Constructive being above what we would call a...
Equilibrium Mid-Fycle Price, and still be probably above that, so pretty.
Pretty constructive in terms of the market going forward, but we're not going to make our assessments. You were our cash flows rat, you know, we're our capital programs going to go be and we've got lots of levers inside the company to make sure that we're competitive on our...
and our distributions back to our shareholder, which we've demonstrated over the last six to seven years.
Speaker Change: You can judge us by the past and that's how we think about the business we're going to be
and Max Wising returns on our investment. We're going to be investing in the company for some growth and the long-term growth in development of the company. I recognize we're spending some money on some pre-productive capital.
but we're doing that for the long-term health of the company picking about the next 10 years in beyond.
Speaker Change: and these are really good projects that compete on a cost supply basis and that we want to make investments in for the long-term health of the company. So, we factored all that together, but we got a lot of flexibility, we're built for the volatility that we see in the market with our balance sheet cash.
and the other things that we can do as a company.
Speaker Change: Our next question comes from Roger Reed with Wells Fargo.
Good morning. Maybe to follow up on the...
Roger Reed: Pre-productive capital and just ask you about Willow, you mentioned spending goes up in 25. What are you know, given the compressed time of the year for working there, where some of the milestones we should be thinking about?
This drilling season and then you know what you would be setting up for in the winner of 2526.
Good morning, Robes, this is Kirk. And certainly we would describe on third quarter progress, it's really being on trend, fun with prior quarters. A project team really just continued to make some strong progress through Q3 and that's...
Roger Reed: What really across all fronts, engineering, procurement, fabrication, all of those are on track and certainly you heard from me in the last call.
that we were able to transition a bit earlier from fabrication of the operations center into fabricating the process modules. And that ultimately enabled us to see lift those modules into Alaska, certainly not just on time, but a little bit early in that playout quite well for us.
Most importantly, the team is really...
really sharpening the pencil right now on preparing for our 2025 winter construction season, which is what you're alluding to. And we do recognize that the scope here next year is going to be larger than the past winter season that was really quite successful for us. In 2025, we'll resume.
Those critical activities that of course you have to do for my roads and so that consists of gravel placement for roads and paths, walls and pipeline installations. And then we'll also start to begin placing camps out at Willow.
Roger Reed: and then lastly and very importantly again you know now that we have those operations center modules.
Roger Reed: and the team's are hard to work for doing some.
and some great work in their planning and refining the logistics required for this next year, recognizing it's going to be a bigger win or season for us. It's a bit early for us to guide on capital for Willow. We'll be ready to say more once we're ready to guide on to our company.
Speaker Change: Our next question comes from Scott Handle with RBC Capital Markets.
Scott Handle: Guy, you know I may be on mute.
Sorry about that. I think this one's for Bill.
Last quarter, you guided us to a bit of a working capital drawn to EQ and we saw a bit of a pretty big tailwind. Can you give us a little bit of color on what occurred there and what do you project for EQ?
and if you also could add into that any expectations for other outflows that would be a related to marathon like Severance and other costs.
Yes, sure. Your right last quarter, I indicated that we were expecting about a half billion dollar working capital headwind during the quarter. Well, as the turn down we had two items. The first was the IRS provided a deferral opportunity that allowed us to push the second quarter tax payments and remaining tax payments for the year out into 2025.
and the second item was pretty normal that your normal movements on a council receivable in council payable with falling prices. That's that's the explanation for the reversal on working capital expectations.
Scott Handle: Now, looking towards the fourth quarter, it is a bit difficult to forecast for where we expect to be for the fourth quarter with a pending marathon acquisition.
As you know, there's in O.L. and some other tax attributes, they'll come to us with a marathon acquisition and we'll be providing the update for further after closing.
Speaker Change: Our next question comes from Neil Dingman with Trueist.
On Monday, on my questions on, you're strong, third, quarter, 24-welf, performs specifically in the lower 48, right? And I was just wondering, is there a particular area or maybe a key operational driver you'd point to for this upside such I don't know, maybe the been improved logistics, I will fracture in the light.
Yeah, I can make China, and it's just really good performance across the whole lower 48 teams.
Running on all eight cylinders so Nick can provide a bit of detail on that.
Speaker Change: Yeah, you're right, we had obviously a very strong core.
The number of attributes for three cue. We have strong base production come in from two cue into three cue obviously to build off of.
And as I've already mentioned we continue to focus in on those driving the operating efficiency.
We've seen more feet per day, more stages per day, in fact, in three cue in the Delaware Basin we had our best ever feet per day for that entire quarter with the program. So, and that's the testament of using technologies like...
The drilling intelligence group where we can do 24-7 monitoring of wells, we can troubleshoot, we can optimize the Ford plans and then shared learnings across all the rakes and so that lifts all boats.
Speaker Change: there. And as I mentioned earlier, just to reiterate, you know, we're a flat activity level compared to 2023, but for this year we got 10% greater than 10% more scope.
Roger Reed: and so, same activity level. On little more granularity, we had two production records in the assets we had Permian as well as Eagleford.
on the Eagleford front. We had our barge turn around. That went very successful. We're ahead of schedule and blow budget so we had less downtime, meal and that. And then as we typically historically see with Eagleford, we get flush production.
as we start that asset back up to an out of maintenance and so you get to see his BUSC flush production in three cue, bolstering that. And then we waited to start up a number of wells.
and tell Post Turn Around in Eagleford and so you're seeing some lumpiness.
and overall number wells online there.
and the Permian side, really good production there. We got 8% year over year for the third quarter. Philip at for the full year of these 6%
and Great Wells and Delaware in Midland Basin. We had a number of three mile out of those in Midland Basin that is very strong performance in three cue.
Roger Reed: and in three-q itself, just to remember the high number of wells online and that's going to create some lumpiness.
Roger Reed: and then if you look at kind of 4Qs, it's going to be more rateable like 1% quarter of a quarter and then total year, we'll be 5% overall growth for more 48. As Ryan mentioned, break quarter to shout out to the teams we're running extremely well.
Our next question comes from Josh Silverstein with UBS.
Thanks guys, you made some working interest acquisition in the last bit of this quarter. You just talk about other opportunities like this that exist across your asset base. You've done it in Sarmon and APL and Gere over the past few years. This year's what else may be happening next.
Roger Reed: and Josh, William.
Speaker Change: Look, we watch all this and I can have Kurt describe what happened in Alaska. She quite never know when these things are going to come about, but we have...
Roger Reed: Rhofer's are right at first refusal across a lot of our assets and you never know when decisions made by partners to make a change and we take advantage of those when they make sense for the company and Kirk and describe what happened up in Alaska with a bit more detail.
Hi Josh, this is part of the circuit. Certainly, many of you on the coal matter seen that we released a statement directly out of rural Alaska business.
that we did exercise our prey into right-through part of Chevron's non-operator and interest in both part as well as as well as Prudo for roughly 300 million.
Roger Reed: and Chevron was preparing to sell to a private entity and instances was grind described. We have the right to take a look at proposed transactions of that nature and before they close and take the option of choosing to preempt them.
Speaker Change: What's the ventrister on this one was the transaction pro, I sexually implied.
Speaker Change: A PDP only valuation and so naturally it expects the season, it's opportunity. You saw this as a great way to increase our ownership.
Roger Reed: across the set of assets that we know very well. We have a legacy position there in Alaska, and we know that the competitive cost supply that exists for us on GoFore Development Plan.
Roger Reed: and so when you think about a P.P. only valuation or transaction price.
Coupled that up with the fact that we have our known operated development plans around Nuna and Tiodi in the greater part area specifically.
You put all that together with the fact that Alaska has, you know, they've got high margin volumes, nearly all oil and we fetch a premium to brand up there. So you cut all that together with a low cost applied development in that.
provides a pretty compelling return opportunity on that additional interest we picked up. So as Ryan said, we don't know when these are cop who are going to come at us, but for a third compelling, we're going to capitalize on an opportunity.
Roger Reed: We love Roll First Drop Josh
Our next question comes from Alister Sime Smith City.
Thanks, I wanted to return to the issue of law 48 volumes and I mean you clearly are pacing the rest of the industry this year. At a spoon, Rift, you think they...
Speaker Change: The slow down of the recipe industry is surprising, and to what extent do you think that takeaway issues are perhaps holding back, growth in the recipe industry, or is it just a natural maturity? Interesting, you've perspective.
Yeah, I think Alister is operating in this stable environment where you can get into this efficient frontier with your...
and we're there in the scale and the scope of what we're doing allows us to get there. I think other operators with...
You know, left inventory, left quality inventory, or frankly left, balance sheet strength.
You know have to do these ramp up around down kind of things and we're kind of seeing that a little bit like because we go into the fourth quarter we We noticed that in our OBO or operated by others
piece of it and we see it kind of playing out across across the industry a little bit.
which allows us to maybe differentiate ourselves a little bit. I don't know Nick, if you ever even more to add to that. Yeah, nothing further to add. I mean, we've got a fairly large not operated portfolio within lower 48. We look at a lot of balance and as Ryan mentioned,
When you look at what's coming in the door for fourth quarter, there's slowing down. We've typically have seen that in years past, kind of more seasonality is.
Foxtrop, Reagan, Frac activity, and then wrap back up.
and he won up the next year. So very similar, yeah, drop him activity. Thank you.
Our next question comes from Kale Akamai with Bank of America.
Hey, good morning, guys. Thanks for getting me on.
This one is a little bit new on.
Speaker Change: Kind of thinking about APL and G, some vendors have the upstream piece to clenic from 2030.
Speaker Change: I suppose that means that you guys should be thinking about back till today.
Speaker Change: So can you discuss the outlook for that asset and any backfill plans please?
Yeah, you've got morning, this is Kirk. First off, it's just Kirk by acknowledging the performance this year coming out of the JV production operations.
and certainly distributions have been quite strong. The upstream production is supplying our LNG facility, both in long-term contracts, pod, and especially a large supplier of the domestic markets there.
The calling is largely as per most of the Colbed methane gas fields that are out there and so you can expect similar performance from us.
from the upstream operator and certainly from the JV and whole. And I'd come back to the fact that 70% of the population is in the same area.
of our APL and G production is sold under two long-term contracts. And those extend through the mid-2030s. And the supply forecast, the production expectations that we have coming out of that on-stream or that on-shore gas field gives us a lot of confidence. We're going to be able to meet those contracts through mid-2030s.
and naturally he started to begin some two, as you see some decline, a bit kind of late 2030s, 2040s.
Speaker Change: and so naturally the JV is focused on opportunities for continued back fill of that facility. So that's within the purview that's go for the JV to be thinking about future opportunities.
and we're happy to be a part of that just given the fact that we understand how and she's going to play. Really important role for the energy pathway to man looking into the future and it's certainly a growing opportunity for us inside our strategy.
Our next question comes from Charles Mead with Johnson Rice.
Good morning, Connor Coat team there. I appreciate you guys running deep into the Q&A queue here.
Charles Mead: I want to pick up, but you guys made some comments about the eagle for turn around, but I want to be talking more broadly about the big turn around the quarter you guys had.
Maybe starting with the one up in Sirmont and if you get out of here in color on whether better than expected results are one of the drivers with your strong 4Q guide.
Morning Charles, this is Kirk. Yes, certainly as mentioned in our release and by build this morning in our opening a comment here, we did in fact have...
Charles Mead: of Wantsen every five year full facility turnaround there in third quarter.
and I really, I wasn't really quite well during these large turn rounds naturally, you expect this to turn required.
and Regulatory Driven Compliance Activities around testing safety systems. But we also tend to...
and then went really quite well. In fact, we were able to transition a number of those tanks.
to be able to work on those during operations going forward. So, you know, really positive outcomes on that turn around at 30 pm.
and now being on the other side of that turn around, having it behind us, we are seeing...
41 rates now compared to 6, 7 and that just continues to come in.
and really very strong. In fact, the ramp up coming out of the turn round was very strong. Came on line a bit faster than we originally predicted, and so of course, always pleased to see that.
and as you've heard from me before, we do in fact, intent to begin adding new paths even after patch is six out of that one. The first path to resume after, you know, the first two commissioning sequences of...
Charles Mead: and Sirmont and so now that we've restarted those, the sustaining and the development pad.
Manfacturing program, you can expect, we'll add a new pad about every 12 to 18 months. I mean, that's a pretty fair average assumption.
Speaker Change: going forward over the next five to ten years. This next pad is one of four.
Speaker Change: 1 or 4 West A as we refer to it, it's smaller than 267.
and we plan to start drilling here next year.
Speaker Change: Our next question comes from Paul Chang with Scoshabank.
Paul Chang: Hey, good morning, guys.
Maybe this is for Ryan on Lake.
Speaker Change: You are already close to a 100,000-day journey in Termin You have a lot of assets, that's from me
Paul Chang: The best capital allocation or efficient use of capital. What kind of capital way would it assume for perming in your operation and when that you think you may be able to achieve it and also along the night if you can give us a little bit of the...
Speaker Change: May be Wednesday House the Wanda Supply Course, look like for 2025, this is 2024. Thank you.
Speaker Change: Yep, all this is Nick on the plateau question, maybe just take his take hold group back to just the inventory that we have in the Permian.
As you know, we're talked here in inventory.
If you take a look at what we currently are drilling at rigactivity levels, we've got two decades, two decades of inventory in the Permium.
Speaker Change: So we can grow at modestly as we've talked about the aim, that's 4 to 5 percent for the 10 years. We don't plateau until into the second decade. So significant amount of opportunities there and we'll bring in the marathon assets as well.
Speaker Change: You know, that very competitive cost is supply when you, if I'm just looking at the permeant, the cost supply that we've been drilling in 2024, really good results. You see in the three Q, very similar in 2025 as well, very robust, very durable out there.
Speaker Change: M.A.B. Supplier B.A.
Speaker Change: We're seeing, you know, kind of mixed results sort of in the subliking and the categories of spend that you're talking about.
We see some bit of drop-off in Rakes the cease-a-Metficion scene, maybe drop-off in pressure-pumping sand. We see some increases largely maybe on the op-X side, chemicals, fuel.
Speaker Change: Labor.
Speaker Change: So it's kind of a mixed bag. We haven't sort of, we're in the process right now, Paul, of putting all that together to try to come up with an inflation deflation estimate as we go into 2025.
Speaker Change: but it feels somewhat similar year to 2024 but we're in the middle of doing all that front-end work right now.
Speaker Change: I don't know if you'd have any more to add to that next Yeah, I think Paul, you know, obviously we continued to see deflation capture through 2024
across all major spin categories. Two dealers as it was largest as we've seen that.
Speaker Change: Up to 30% reduction.
and the C-popists are going down.
pressure pumping going down and rig rates.
Speaker Change: Even this quarter, you know, we're seeing some modest deflation capture on rig rates as well as pumping services going in there. I think that's going to level out to some degree in 2025. Just depends on kind of we'll also apply demand of those services as we look forward based on what commodity price they're going to be out there.
Speaker Change: Thanks for watching.
Speaker Change: Our next question comes from Kevin McCurdy with Pickering Energy Partners.
Kevin McCurdy: Hey, good morning. I appreciate all the details on the lower floor.
48 production growth, it's certainly differentiating.
Speaker Change: My question is on oil mix, company oil milk
Speaker Change: Cell Little bit quarter of a quarter. Should we assume that was mainly driven by Sirmont downtime? And what are your expectations for that oil mix and for Q and going forward into next year?
Well, yeah, this is Nick. I'll talk a little bit about oil mix for Lord 48 and if there's any comments on
Speaker Change: the last international turnover to Kirk. Y'all are all mixes really been tracking around 52 to 53% for a number of quarters if you've been tracking that.
and third quarter is very consistent with the previous quarters and so, oil volumes grew around about 5% year over year.
and as a reminder for the group, I really depend just to the vast and deep and durable portfolio that we have in the lower 40, depends on where we're drilling and bringing those new wells on related to its oil mix.
As you look forward into the few years, it's going to be again pretty consistent, 52, 53% overall, very satisfied with how things are tracking and as a reminder to, for a lower 48th year we grew at 5% year over year.
I think you sort of answered the question for us, there was nothing particularly unusual in the old mix, this quarter, we just had the large turnaround activity in an asset that's 100% oil.
Our next question comes from Philip's Johnson with Capital One Securities.
and I thank you for the question. Just wanted to follow up on earlier question and I'll ask you to translate. Just wondering how much production is associated with those deals and I also wanted to confirm that the impact is an included in your full quarter production guidance. Thanks.
Yeah, morning this is Kirk.
In fact, we expected to be on the margin of several thousand barrels that I associated with those transactions. And it's a good ask, certainly less that off, which is what we're currently expecting those transactions to close in four quarters.
and we've been doing this for almost a year.
Speaker Change: Our next question comes from Leo Mariani with Rob.
Leo Mariani: I just say a couple questions here just around the guidance here so I wanted to get a sense if you guys could quantify what you're expecting in the fourth quarter in terms of production turn around as well as cap X and as well as opXer.
Hi, it's Andy, so in terms of turnaround, it's both quarters are very small turnaround quarter for us. It's about 5,000 miles a day, but don't only in Norway.
I think we've given guidance for our effects, sort of, our guidance is unchanged for the year.
Speaker Change: I think one thing I would add to that is that we did say on the last call that the third quarter would be the high quarter due to the heavy turnaround schedule and that's exactly how things play out.
Leo Mariani: It's also worth mentioning that we have...
We've beaten production this quarter by 27,000 miles a day and up the annual production by 10,000 miles a day and importantly we have not increased the operating cost guide as a result of that production increase So we feel we feel really good there
Leo Mariani: and then the same thing with the CapEx for the Ford quarter. That's playing out really exactly as we said on the last call. Most of what we suggested on the call of come-to-perition. We've covered most of these already, but...
Leo Mariani: We mentioned the lower, you know, the lower 48, normal productivity.
typically tells off in the fourth quarter.
Leo Mariani: That's exactly what we're seeing
We mentioned that pulled out the...
and Alan G. either the capex that would go down as we go into what happened in the project financing. That's exactly what we're seeing. And that, as we talked about, we've seen some deflation in the lower 48. So that, you know, that all factors into sort of the lower capex number in the fourth quarter. So think that covers the...
Leo Mariani: Production Olympics and CapEx and Turin Rans, so I think I'll go to all the drivers there for you.
We have no further questions at this time.
Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.
Leo Mariani: and the other one.
and the other one.
Leo Mariani: and the other one.
Leo Mariani: and the other one.