COP - Earnings call transcript Q4 2017

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Operator

Welcome to the Fourth Quarter 2017 ConocoPhillips Earnings Conference Call. My name is Christine, and I will be your operator for today's call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. the Communications. to turn Investor DeSanctis, now and Relations will call Ellen over VP, I

begin. may You

Ellen DeSanctis

Thanks, Christine, everybody. and hello earnings call. Welcome to today’s

speakers and of Ryan Don Our Al Hirshberg, Chief be Chairman of and will CEO; Production, EVP and Drilling Financial Lance, Officer Wallette, Commercial Finance, our EVP our and Projects. our our today

presentation. Our is on shown cautionary Page statement X of today's

factors estimates differ statements We this morning’s periodic the to some due refer could results forward-looking our during on as or make slide Actual will that plans. in this well described to call as filings. SEC

refer some company GAAP morning’s be found with also our will website. to Reconciliations measures press We and facilitate measure can release E&P and measures to corresponding peers. today to and nearest this as our energy periods in of financial on across and comparisons non-GAAP non-GAAP the

just turn Q&A to follow-up. efficient morning’s to happy limit this over to our going And one questions during to and a to Ryan the time, I’m we’re Lance. be Finally, call now with

Ryan Lance

everyone and you, Ellen, call. to today’s Thank welcome

very XXXX, our the deliver should excited and our actions morning, provided proposition. we we’ve it value several XXXX issued taken to also summary we commitment of already to in We’re saying in a performance, a significant about this send but release strong continue about message announce that discipline returns focus

cycles superior through approach E&P with business returns delivering chasing the performance is to ConocoPhillips, our value and an proposition For same that the predictable not cycles.

what cash in sector we’re to for not hear disciplined to long. you’ll building middle only And we’re a earnings investors what and having but cost proposition point of that’s low right sticking back focused listed are out In on company differential from we’ll balance the of season, generalist to far returns, a shareholders, strong the top to slide column plus too that value Industry we’re it. in we’ve is portfolio, barrel growing payout for of XX certainly maintaining much tier strategy you demonstrating The below growth per via today underperform long-term on energy X. per but creating a leadership that ConocoPhillips per generating of both were debt as innings they the are they XXXX ESG. works share distributing $XX a value cash things on is sheet, and flow flows this on early focused Our not free and when barrel last is namely lease winning a prices our slide number like production supply and like or has the adjusted now. plan

step we’ve me to this us left the let chart, fully across achievements key these now. through XXXX proposition listed focus those side On areas, that activate of the of value our allowed some

a know, of exposure North we portfolio with significant gas and billion in American substantially $XX As dispositions had XXXX. to sands generated you about reset We that very reduce proceeds. our oil

we replacement disposition Excluding XXX%. organic impacts delivered reserve

and best metrics, achieving average can proud print our on production tier enabled XXX CapEx XXXX to operations per for year I’m adjusted grew about flow production returned expansion rating. with take from crude continue of importantly, sake. demonstrating extremely this, operational ever million. to reduce safety the cash less. to and we prices dividend leading growth prices basis of X to or long-term us and cash announced much XX less debt a more of for shares. a per gas and that or by and CFO profitability to our billion returns reduce credit adjusted we price we X% capital earnings more XX% And full our cash step flow to of a our target billion We X% on $XX deliver deliver a sustaining of grew financial And corner our We XXXX, year, Last flow. to not on are while improved barrel repurchased from we than to improved our cash top Underlying organization lower buybacks. emphasize Our one growth's than debt $X.X never and the ball. our eye shareholders $XX emissions position delivered years of via free our per we stronger greenhouse operations XX% forward in almost by We of at our of even commitment dividend share and Return in significant pure our barrel, At ESG. by XX% sustaining our exceeded million. on

WTI So XXXX plan a fair few matters an and is but prices. that’s wasn’t year we past ConocoPhillips, based was per that a We exceptional $XX for the now next. to XXXX know argue ago laid barrel what's what out on that months

then. have bit since So, a quite the moved higher prices

question is our obvious change. The no, will So, plan. not the organic answer our to respect is with plan investment

outlined Our what unchanged in is we X.X capital billion November. from plan

on the excludes we flow an on that’s morning currently North to and believe a underway. cash critical higher prices This our Slope today million. allows Alaska through Even returns. a Of activity it's that free is Western program, XXXX have key capital bolt in XXX we the generation very consolidate the transaction course, attractive exciting us very discipline for maintain that and to this where existing position we transaction announced program why, cycle to development with our an ongoing exploration the because on

our prices buybacks. activity. higher of following our capital we CapEx cash are flows cash increasing dividend, increasing would Instead share excess priorities to by allocating flow balance toward we our we significantly While expect current be and our at not are sheet XXXX

X X.XX to billion. when XX% of XXXX billion to just We way are announced sizing By in have with up dividend combined already re-purchases. in quarterly the year, paid represents and of buybacks XXXX our our we down total by X.X% our an additional debt X a this billion re-purchases increase this we share plan over a

our We the production margin high high say. are for on growth volumes growth deliver Again, on will XX goal from margin from not to plan. And our adjusted on cash ESG leadership largely lower stay per expansion throughout track debt is we activating share XX% flow a year. focused our basis

while plan. the outlook we for than So, ago few the better did just business a our looks not months changing it are

executing outlook year deploy was for XXXX shareholders. We in are taking the staying a our the another we to plans. company XXXX intend safely and delivering make on our year strong very to early strong committed to certainly cash and steps our priorities to additional stronger from the and year by

me and highlights. of will call Don to the turn discuss let over So, some he our financial

Donald Wallette

November debt stock I balance and to we XX.X tax have $XXX recap of the debt overall the debt December investor target January. also buyback Also, Ryan billion. the further I XXXX Today quarter in re-purchased been Before In fourth recover successful X.X legislation we and our our conclusion us impacts debt finally, million. In quarter sheet as December company. and mentioned our which of about paying results front billion. update. X billion to in a And since we our recent to billion the end loaded U.S. we allowing to XX.X we of over our notable billion. just milestones a retired of reached some arbitration billion $X Ecuador, And summarize its analyst yearend with want down our have X.XX is completed evaluating fourth XXXX reduction the took

of rate. million, approximately lower news the U.S. capital $XXX our As deferred core unconventionals XX earnings recovery tax recognized lower a primarily program, noncash further also associated We’ll the benefit programs. the of improvement our you going have because Alaska the lower of With development an those rate we rate. of and forward lower being in U.S. our to see release seen capital will enhance effective tax with revaluation in investment attractiveness our taxes to and enhanced

So as with our strong the proposition. about finish we're active XXXX conviction XXXX to same value an and entering

quarter realizations segments. volumes, segment our higher provides and last year, Slide $XXX financial prices, supplemental This was cost. higher fourth on you higher increase earnings lower $X.XX this adjusted Compared detail compared price million $XXX $X $XXX was I’ll compared to about Fourth to an X, around shown right. quarter, are The to an fourth of additional of offset were earnings adjusted full-year website of million, earnings improved the a the to on improvement by share partly by on $XXX about the cover due were If earnings adjusted adjusted about underlying and earnings to quarter the depreciation million million. by to higher quarter. XXXX prior quarter adjusted turn higher operating commodity XXXX. data expense. Fourth for our lower production billion by or driven

during turn the cover If now Slide I'll to quarter. flow you X, cash

capital First, This of looking working with in cash shown benefit sources was excluding associated at the arbitration. $X.X $XXX the operations cash million about billion. includes of Ecuador green, a from

we right capital, already included that On red Al land cash note in few debt I billion and cover $XXX this we've the about published will in shown Excluding minutes. acquisition costs, to are million were The uses line with which in benefit, our sensitivities. the a reduction. of covered in want $X.X

shares and quarter dividends XXX short-term We $X.X we of through cash We investments billion the $X.X also buybacks. distributed billion hold of with share Cenovus. ended shareholders million to and and also

look a to moment the the much U.S. in of a to premium the The they differential our basis QX realizations. to Before upside. weakened we correlated Brent barrel. evidence priced to not markers. closely of our the our to to by in I realizations our $X.XX and partly than a exposure a is pricing oil that a do and certain diversification realizations was leaving at to fully increased take due increased rent premium If Brent production barrel WTI production, and on crude by Partly XX% whereas $X.XX few We're make from and leverage pricing advantage over marker global fourth quarter by want to about QX our about appreciates U.S. to or our closer price our oil quarter, of due Brent to our more either comments Brent. $X relative realizations similar global Brent shown slightly WTI. that market that’s quarter correlate a oil

other the AMPs You can WTI that do. weakness relative exposure don't we have see that to same

the intact I from to are because as we today, heavily recent predominantly the with financial with first generation, in focus X, of benefit averaging want the Slide cash free emphasizes in believe Brent un-hedged, and illustrates regimes, transactions. We a our free resulted commodity of very differential bars priorities. we just our also on over financial upside to our of set disciplined $X.X XXXX a with and slide capital. working barrel Starting X.X on prices. that portfolio and our at priorities We position left leave a Brent, flow So, review result we on royalty have contingent operations XXXX the capital flow. payments excluding generated billion significant we leverage in to in weighted with to strong billion which of $XX rising cash from a is prices X.X of billion cash work. spent

low is flow free leverage power result our intensity, things upside. and sustaining price, price generation do. to Our of don't and a have these or you we cash low Either capital

this used The short XX and We time. balance sheet distribution set billion in made significant $XX to our in buybacks. the billion progress generated of second of a In we fund XXXX priorities cash to on bars cash of reduce we shows debt of proceeds, proceeds. cash period and

of in transformed balance and of and from the the significantly XX% than operations. year our more cash sheet our were course portfolio received shareholders So,

earnings items appendix the Lastly and sensitivities. provided cash a to I sensitivities deck. your that we well have impacted want of in our XXXX to two draw positively as guidance reminder attention the income as

improved XXXX XXXX additions the by Al our the X.X actuals. The primarily reserve is versus XXXX our DD&A guidance reduction First, is will dispositions and that billion result billion of of X cover.

operational income lower I'll discuss Second highlights. call hand rate. and With XXXX our over benefits the insensitivities to that the reflect to of U.S. tax the Al new also reserves

Alan Hirshberg

barrels XX Final forma with our for sold barrels barrels. and reserves booked primarily barrels. a We in We of will produced details reserve We Don. of barrels started year-end reserves. begin North Adjusted XX-K in with year on I'll gas bitumen XXX,XXX review the billion XXXX our American published XXXX. February. Thanks of reserves. our were late billion X.X reserves preliminary XXXX X.X pro Slide of and XXX,XXX additions X.X in dispositions billion be

barrel. Excluding less factors from a market rate a XXX% represents FND of net this with replacement additions $X cost than an of

a for disposition with factors XXX million average high resource project reserves supply below barrels XXXX not market year addition, year, increased to by excluding in of a reserves reserves organic performance was addition billion This any replacement did X barrel. over quality barrels ratio XXX% impacts. We as total that of we X over reserve major barrels. In billion a exited end of XX-billion-barrel our an of base a cost has good have from sanctions. part This equates $XX additions when

I’ll was had exceptional slide underlying our our billion an delivering cover ever capital. $X.X to environmental some safety and operationally. highlights operations. XX, while turn from We XXXX you of best If for X% year year on performance, production growth XXXX

Three acquired of inflection averaged different unconventional the leases me In XXXX, fourth XXX,XXX in cover hit fourth a and Lower XX let So, the growing stage from we early of Big barrels XXXX. a production quarter, million. unconventionals and the XX% Also, highlights. $XXX quarter XX quarter acres XXXX Three an XXX,XXX In few net day, again. Big Lower the point the of fourth X plays for increase about per from exploration began

coming still up still -- We’re we’re these positions. coring

going to a make are point more that much included say it capital. I’m today. we quarter fourth mentioning about CapEx So, this partly them our to

of CapEx second quarter and XH in advanced XXXX. November. a Alaska’s Hansteen well achieved Norway, fourth rate for assume major including spud be offshore November, the we In Across projects towed in in was Aasta that will portfolio, spud oil don’t first run represents So, first the the quarter news XXXX. the several

the of first production the We’re end still before achieve year. to track on

exploration of two ESG our by X% step position completed announced our early work the in grew maintaining Canada. winter. encouraging and in permitting acres by in we the exciting wells In Montney part to to preparatory drill greenhouse liquids-rich play in Alaska This wells. XXX% And We XX% gas our advanced and X Alaska efforts and intensity also results We finally, target to to in our is to exploration reduce over achieved Canada, emissions equity areas the we XXXX. important the the an XXX,XXX leadership. this

that So of quick was XXXX. a very recap

you If outlook coming in to for to XXXX the outlining key XX, slide I’ll the catalyst watch turn year. some cover

discipline. the beginning at said Ryan to call, of As committed the we’re our keeping

those with sticking capital plan if announced on $X.X and they pressures We’re inflation billion we to an while keeping November, come. eye in the hard mitigate working

The per a XXXX the over for about debt-adjusted X,XXX,XXX on basis deliver right X,XXX,XXX target per well production shows to for expect growth expected underlying We as X% as of underlying the or XX% on barrels basis. range share day. bar the year full to

increase Analyst than notice of Some we per may higher higher for assumed day that what November. than midpoint the Analyst That XXXX on is Day you of underlying our fact barrels was this range production at day per have showed accounts XX,XXX we the in had the barrels that XX,XXX day.

year, attention. first and for assumed We about the is X,XXX,XXX I on between In Early production item offline first net shut X,XXX,XXX caused range, remainder equivalent outage. not for couple your to we we comments in, be one quarter this outage to per in Malaysia this oil profile be the adjusting to to KBB year. production of of KBB's the in. barrels for the field shut bring third-party year gas to our the KBB production our range XX,XXX guidance have the day full want quick quarter. day. expect quarter production the A per prior but barrels the was pipeline are

you XX and three Alaska XX% will to the that for not ramp growth from of expect will the middle rebound APME, year to November. The usual big and we turnarounds our in dip so lower the include quarter. this in Europe have morning. in does segments deliver year and provided guidance volumes production showed that up Meanwhile in the quarter just those we the Alaska capital production announced fourth second this and we I transaction impact We third the the

million now including saw assets million XXX operate remaining acquire our of on day already acres expiration interest XX,XXX to Western gross gross in the gross the the that Slope million the paid XX% about working in the discovery. X.X about development these in As a we we area, and XXX $XXX you North leases risk of and containing gross XXXX. production resource with barrels assets reserves Willow XXX% We own of million barrels about barrels of per of release

in XXXX are online year GMTX will important Ridge Hansteen Aasta busy and reporting this and the including regulatory will get from in in be approval. are UK, the begin Norway we end in Bohai expected once to We capital come there of X Phase and ahead. some milestones Several before China, the projects another year production Alaska. Clair asset

these keep the will year. informed you We throughout on

We important early is an to also next LNG expect feed Darwin the on step backfill, for which decade. production enter

several forward in exploration the Montney look low XX Alaska. to have We and programs underway and progressing those

close we you goals delivering the focused So, the executing informed November on in laid remained on out keeping plan during we disciplined and our safely to year.

over the will we Now call turn Q&A. for

Operator

[Operator Instructions] ISI. Evercore go ahead. And Terreson question is first of from our Doug Please

Doug Terreson

based these maybe rather acquisition comment in to Al's think QX Alaska program, and sounds to about the spending way consider expenditures type you that normal is which be correct early-stage opportunistic on the it seasonal in like made I or the increased expansion of past differently to and pledged being shareholders, with so this on and return noticed strategies spending few flow manage on rose or clearly stock rewarded in as market. value-based is year model During a and And ConocoPhillips that capital the well as to an a but to returns cash your you strategic than this peers point, it?

Ryan Lance

way about Yes, the Doug think to it. right I think that’s exactly

more that have. really But Alaska an opportunity with base we questions. if people our have had in $X.X we can We is opportunistic Bolton base that We separate that talk are the billion a item from about sticking plan program.

acquisition $XXX talked In the about XQ in the had quarter. million land the we terms of of that spending, we

And hot, and quarter so if fourth multiply that get that brought in you $X.X by billion. quarter and that fourth out take you subtract the back four

that that, the the were was ex So, pace in we on quarter. fourth

Donald Wallette

hasn’t we're sticking Our in as changed billion. we to release, $X.X sticking our plan our said Doug, we're

Operator

Thank you.

Neil from is Sachs. Please Goldman question go next Our of ahead. Mehta

Neil Mehta

think level cost how talk curve? will of the So, you bolt-ons a about a From about investors, context you've with little supply can your little or about detail to around Alaska? I opportunity asset Alaska still others portfolio skepticism you the bit a to conversations set. the you portfolio a then cost or that in about supply want into the whether the And it's talk of bit bit today? existing your of Alaska these little more more built of

Ryan Lance

Yeah. Thanks, Neil.

in Although, been lowering company. we the a has investments up there as as set business to tremendous some look and opportunity legacy well of for other for the base of for grow the our at to Similar areas for supply one Alaska the portfolio, develop. cost long progress time of Alaska our has parts when made

can is and investments very and that supply in opportunity. that's that us discovery despite see growing portfolio, their like by producer since and years, we the of we that well around still in it largest competitive have there, at out the to world our flat to willow fact cost to piece driven production the look over five years, forty lot of a a So, lot Alaska very is next a we being for XX in things the at of when opportunity an

-- those. and was expressed Anadarko had or did some some they're company sell to think assets things of to what doing. desire They one improve a listed Alpine I their for doing

we I have we’re the in buyer area. majority the the we because natural interest and think operate

to to with able companies So, they're we terms we're it's attractive were both in to for think do. and come them of go trying -- what what we terms each

XXX% So, and us complete and make sense pace heck that capital there. owner of made interest the and in for it up lot control a be a destiny over pick control, of to

of for made sense opportunistic. So, was yeah, lot a and us it it

So, and doing with them. the chance we took in terms came

Neil Mehta

just It off a rebasing was follow-up of Where The sounds raised appreciate like any is guidance just there? lower was comments a level. day. the if comments. and that’s XX,XXX production the outperformance, XX, XXXX higher I the barrels that

Donald Wallette

Yeah.

for That delayed back right. increase, we just supplement There you're built that asset slide math at were on timing the rebase. in. assumed a So, XX in XX is the that you, that but does was that Analyst sales a of of is Day it

quarter in was underlying XXXX And just the off saw little it get bit so, on production of of the mainly we'd higher you volumes at Analyst a production performance and had that a base were what above rebasing assumed a fourth XXXX. little little different in you But bit the it's higher in time bit a that of as our just we Day.

Operator

Thank you.

Our JPMorgan. is Phil question go next from ahead. Please of Gresh

Phil Gresh

just is capital will question First the for this allocation, be on Don.

in just the at the WTI of $XX amount assumption the so you is that and But on Don, guys million. about is that the it everything here now. you analyst well So, even based buyback incremental, or if $XX more $XXX X day were obviously that going above is up on billion WTI CFO call scenario

or like you extra So, it of be cash particularly increasing if activity available there going are not still CapEx. seems a lot to is

you about a different the think to decision number? raise So, why you how about just flexibility? And that million talk versus could XXX

Donald Wallette

note the is excited I about like get the right going feel commodity thing not that highest we maybe to are important its now. overly to prices

days since broke is $XX Brent been only of so trading barrel the it's as or lot are XX seeing. in about you a volatility think there XX market I a

I think period. are of that the over with the had We on still type same you the price. we bills cash baseline; showed at there the changing plans based even we we that our $XX in are back plans surplus not showed the three-year WTI -- you And November our end

a this our to So, morning we or have we dividend increase XX% as capacity increase have announced XX% the and also buybacks. the to certainly in increased

Alan Hirshberg

re-demonstrate potential above were top. and meeting we we commitment analyst that I generation you flow to I our up at there's showing wanted we beyond some cash shareholders think would Phil, to and what the add recognize

in right people from of So, company follow and $XXX through the flow our the as the the call incremental the incremental remind to XX got cash you number of increase buybacks. billion on I'll first our dividend XX priorities. got $X shareholder share you and go million that just

clear are and then we doing. we outline as that’s what pretty We are

Phil Gresh

Very XX fair in anything the like is are just about and where balance we billion in guess below there desire no put clarify cash to or reduce year. to more debt the I sheet that, correct?

Ryan Lance

No, not really you on $XX it feel Phil capital target also going do of We that’s clear sweet I adjusting lower expensive. we inefficient are kind billion think becomes XXXX. that like and pretty the end start the structure the really by spot, than

pretty are XX, balance with for the of right strikes we So, kind the us. happy

Phil Gresh

on is second the then lower question And XX. my just

could XX% to for will greater that. numbers clarify areas that the as to that XXXX through I you of the year? or unconventional of guidance just three you I and If mean ramping give through look have Does the then wanted are growth a than of each growth year. ramping the is level that you at XX%

Ryan Lance

a going he will are question field the which breakdown Paul something first different. to the have We piece so there ask by for is

XX. and added first at -- the I quarter is the XX Eagle three XXX together, for Bakken So, Delaware was Ford big for XXX, mentioned

to on quarter. relevant XX% those ’XX think is the I So deficit because we sequentially had a it but in about over ’XX. to XX third were focus notice But XX% that fourth the very quarter third number versus or Harvey of quarter quarter-over-quarter, that’s together it up was up good not

what XX% a at year year versus ’XX question about going number In will exit-to-exit Analyst the were move full we’re course than a how about that. of talking terms through of year, higher your full is to that’s ’XX number, The the be this Day. we

pad the wells really fact, per say curve, look make now X than than greater pads expect year we as doing a we lumpy. and were lot timing the In that and the a production I were more bigger of X per ago shape of the at I

barrels would an And ratable the give to the expect But over idea, year. don’t expect so, Big exit XXX,XXX I you day. to be at I to Three our year through a

eyeball and that kind where just that I though, of were XXX we So, be with kind pace will if see you you you expect of number can kind year, to the to That fourth in if of rate, of that look last the will math on. quarter can Even exit a be see that than at exit-to-exit, bigger -- it’s don’t linear do XX%. be you considerably year. the

Phil Gresh

Why the down in was Permian quarter?

Ryan Lance

Permian When you’re those multi-well you of of just one when every wells, to and those of to of complete every to is and you other before got just on come back multi-well so turning wells. wells course doing to you different while your lumpiness, the wells wells those are declining you’re doing. timing this -- as doing pad, pads the a we’re got it’s drill one

just was through lumpiness that down going see just, a X,XXX to the quarters I’m day, you’re barrels kind about. this that’s it So, of talking

-- number. head since trying there our I’ve been investors heard about analysts, doubt my don’t quarter doing. we some messages and the first I Analyst in of has along, of this scratching And XX% a figure I how Day comes when from expect So, that’s to know over-interpret one it fact, out. been lot

to tried I of analyst the would playing I you through said, to So, ’XX to quarter ago I XX% be look and and we of of to I fourth the to were confidence. hit fourth data come what go pull And ’XX I Eagle are can range before very the XX% a back and of fact, back we’ve and they that considerably wells And I rates, the there script same The doubt trough public Ford, in for production we thought look and in a then one well high us? reason in to Bakken XQ went give back on year did the give significantly. so continue the higher you call look into at in things ’XX than that going would can the data. X% and ’XX, you some the improve rates ’XX, per you the up. public were then said as then. and Delaware, quarter production see that And our call at that and clearly day see because ’XX said at we

up rig gotten at our then. even even AIM has since Dakota so moved we And you that showed better that’s

going And we that says feel year. good prove But there confident. later in not it’s to you so not any be for so data okay, there’s guys to the I’m I wrong skeptical you we’re just just, make can out it,

Operator

of Doug next Bank from Leggate question go of ahead. America. is Our Please

Doug Leggate

oil, So, Ryan, asking standing year a horse a to be are want why where money. could still going more what's it’s I to happen you beat people not to I you’re right spending now, now. going know obviously but here, from hear dead don’t

So, bit Don maybe your little I in would where to plans ask opportunistically I with on months of you the otherwise? three-year Should that kinds we about you ago. just put the balance I an go the spot backend acquisitions the Should if over period incremental share said fit but guess, and have you we buyback? may what windfalls just be led through anticipate on next comfort two, sheet? continue three can these And a given us the his to

Ryan Lance

disciplined XX is capital much we are think our Well I get and out that laid there company. going going the Meeting I our Analyst over are you so are we approached pretty to laid the within the and plan that scope said to but think since plans [skews] out too assume we and that at the Don days market trading we should follow not $XX, and the firm we

to we scope. not So, planning are that change

become of opportunities are million $XXX to in And they incremental on what and as isn't billion. look that's we available did the course, going $X.X opportunity. Alaska that the at exactly included we So,

the of as may you year, we growing and to when company there, that. is three So, our execute then we we we what do over the recognize you how how that at how the we the guide prices plans, is back to putting follow priorities see have and on what developing priorities money the we two depending act. as go about through next delivering to if go are priority do company will you or are our the think and years look will into course are prices continue With shareholder, evaluate you our you the will we back we hanging

Doug Leggate

Delaware, get thinking everything? follow-up, into would if you or place be be Ford is this to a would where some to of sellers has asset and this color I look know because if answer to you there or has or like do acquisitions price attention a its oil probably stage million holders will acquisition described this this it So, any answer whether asset Eagle around are as the of higher been the Delaware. an but kind they I going what be at guess it you My you sound you you scale add-on likely of or opportunistic seems doesn't $XXX is lot opportunistic to are Can able environment? whatever, don't offer an ceiling have so land is it there early to as like as really this,

Ryan Lance

life exploration the in around unconventional plays acquisition acreage is early the some U.S. So, acreage

We as are call still that to up, really talked trying about. actively I

So, because today those to talking in I'm we trying build market are some about positions. when on of a --

that. not today speak we So, just going to to are that do

competitive On cycle a on lot our in a look the just on look at lot we basis. sense M&A full the creative got to make and we look and of it at opportunistic lot, of and assets, we side be a side portfolio stuff a

So, look cycle forward we it. including think going pay acquisition we the to at have look basis full have that that when spend at an we just on is to a We we kind what and take it's -- for that we competitive. look at of don't

sense. are So, the look $XX,XXX at these buying some of lot competitive obviously Delaware of the an they the are of in you hot portfolio, it, know stuff -- just are there that it's Permian opportunities in in a portfolio not while we acre. expensive, make some and very that we not competitive and we the But at is basin

are to we do to do have up that. that we we [acquiring] often and got positions We if that existing opportunities look more

Donald Wallette

here the two do you to $X,XXX acre when less able numbers than are that it's divide we an Right obviously. if

Ryan Lance

company. of amount an the make incremental for growth development the sense they and so Yes, long-term of

Doug Leggate

guys. I but the stretched Thanks, the location probably that just in wait to for get future. we will

Ryan Lance

competing are are maintain we our come, will to competitive -- there we just Doug, we It out want advantage. and

Operator

Thank you.

of go from Our Please Paul is question Barclays. Cheng next ahead.

Paul Cheng

Hey, guys, good morning.

Ryan Lance

Good morning, Paul.

Donald Wallette

Good morning, Paul.

Paul Cheng

Maybe, on able will productivity nominal pause you costs the are per this do unit gain, when operate maybe think Al are you or X% basis with Al. that the increase? the going we see is but your or we seeing some you that a X% to for that that unit onshore, are to looking at is be inflation, U.S.

Al Hirshberg

Yeah.

So…

Paul Cheng

And you can also maybe…

Al Hirshberg

You asking specifically are about…

Paul Cheng

you going think I is any so actually international, dropping, comment international you unit say, being but I be the was cost can no have rolled on spot contract do cost down. your longer may that to also

Al Hirshberg

Okay.

asking where or Is interested inflation not XX are your I'm guess. the So, question you focus really Lower you just an I that onshore sure in are main was. costs? focus

Paul Cheng

the that combination. think we market, I Yes, international mean the we've inflation and seen but… don't the in in onshore know I any inflation

Al Hirshberg

Right.

Okay.

Paul Cheng

project the how understand, costs gain trying ramp-up also XXXX result? own just your and in XXXX-unit But versus all to as of productivity [overall] terms that a

Al Hirshberg

Right.

$XX deflation, add internationally when year Lower look some did remind and to all with we the a inflation where year it you been full some inflation that just for do it we kind as the when to we've and -- that when of math back deflation So million. in comes negative XXXX, XX and with

$X past had of that you of in and deflation, billion it over about -- compare so a but XXXX, XXXX. billion had we versus but a was $X then and two compare deflation years to deflation that we So, million $XXX it slight another in even wash, versus XXXX the XXXX after net basically

during into into inflation a built from our the in $X.X we billion. change even. have inflation was assuming we WTI plan of of that's $XX quite Analyst the we this amount come XXXX, So, remember Day was that billon out level some in the are roughly $X.X that that the inflation years we is as world, there. two said last a that In But was built built for set to

Paul Cheng

but CapEx talking are the you And on costs? about operating cash side

Al Hirshberg

Okay.

core XXXX. doing Libya cash talk kind XXXX pro-forma you then we're after take with the in versus XXXX and in costs costs Basically, to holding is XXXX. volume our excluding is of then XXXX sort operating our and year is one-time flat that unit have unit versus operating more doing a alone costs Libya tenth is and get more that pressures. costs our dispositions to a to and we're is producing me in billion, of our inflation what what be is have means that of about to accomplished for let to we've what we're getting been and it's adjust items of So, Libya significant out turnaround XXXX to also, XXXX. versus getting to and What going rounding where $X XXXX ForEx heavy any OpEx offset we're we has and in

flat. our XXXX pressure So, all overall in XXXX versus of of offset our those all greater worldwide costs to is hold efficiencies plan those unit costs are to and with on putting unit our things

Paul Cheng

a why cost are price? price on for that any of to follow-up, Is other numbers? the is to recovered it but million pay am hidden I when of gross. are you per Those XXX any Those or that capacity seems in are that Okay. willing bolt-on pay bill barrel we production that sell we this A for $XX,XXX follow-up if looking we that's about quick to thing need about seems using at numbers. there barrel very those low trying consider you great Anadarko actually, if maybe acquisition Alaska, I a the look at daily cheap at number. understand such like the question book no $X

Ryan Lance

get. deal, is things see the you is you there no hidden in what what No

I us core strategic us this think a in is clearly for position Alaska. for

We [Technical a out acres X lot a seismic a compressive got of but Remember seismic compressive that winter. and talked at about prospectivity forward. scheduled evidence things the exploration over have have million drilling there got and our going going in that, us to Difficulty] are of there bring we of Slope a early analyst going North teams this got lot in Willow I with Western forward. day was have shoot we

we So, interesting that see is a asset there is us core wasn't a Anadarko for core to I things for it them. upside just that lot think of are that

So, property. of it's just different little the a view

Operator

from Sankey next Wolfe of Paul Our is Research. question ahead. Please go

Paul Sankey

project expansions [approximately] reserves say hear relation in very I had last major you did year? to the Al strong you booking no

Al Hirshberg

yes. That's correct,

was when the the performance. year major have sanctions over didn't to is a really projects So, in it XX. come driven XXX% by in And excluding Lower we factors market any good

in more. that these continuing combined book recoveries how time rates, unit little wells in just you and takes more and see to out improved improved allows have And history and you on well in since only lowering improved the particularly wells these you to additional Lower of much allows the we us given us And us about book reserves also go unconventionals, with recoveries. that look that's got not design will further data getting think Ford I changes. have talking so a mature costs XX higher our our latest the our more of given public it's Eagle completion life the economic

us that wouldn't XX do in increased what without been those have you allowed to Lower have is thought to major we bookings So able project really any when adds.

Paul Sankey

Al. changed Yes, times have

CRMs for So, for the stuff give is just may in the three sanctioned be there an on maybe guess to able of next if you pipeline? update the the two us outlook I other

Al Hirshberg

that meeting We at showed you pretty pipeline that's the analyst lumpy.

next things have for we so, expect that sanctions we would the coming some GMTX year. years, like And will over

backfill that. Darwin the got have should that come You after

it November will those we we to the expect given was said out analyst average any we didn't in we of we and And the meeting at 'XX make so, recall know what this anyhow. might year that have that case, but years any not look XXX%. at five don't you when -- over we you over I in next over that major when those projects were would -- lumpy XXX% any be have for adds In XXX%

Paul Sankey

try sort price OpEx oil and a higher effects are understood don't fees ForEx I somewhat sense? there makes parts that. that hope mean down type gains the by of in you of and And be I keep then where I if the view Could for I think but you all to to of negative let's your can moving say pro if get give micro you it a rata I cost that you follow on could us commentary XXXX, want guess. up. I can just ask your without relative driving

Al Hirshberg

that teams costs is our production continue we offset pressures, I That continued that. grow we ability going our do to are with to improved as my as flat unit Well, have our maintain are the we demonstrated operating efficiency, expectation pressures. we to going to ForEx mean that those experience inflationary

I do a is trying my bit don't The to continue Libya unit So, costs the that expectation barrels we be count that. little able I'm Libya to we deal, thing a to in because of is hold tough barrels costs in But the they my total the production. am corporate now Libya bigger not bigger X% our and unit But calculation, get flat. is the using costs. in but my as including producing about of I'm cost

our how like are we getting so -- unit come So, to of be to see think said, calculation don't billion to point. us that been that's -- some we hold a in I that's doing to to may now going anything a about keep it's production But able tenth flat. it's from I continue

Operator

is question of next from Citi. Alastair ahead. Please go Syme Our

Alastair Syme

is underlying in the Paul, with in pretty impressive agree XXXX. achievement movement a absolutely I reserves

would you think right do a constitute for the a or reserve post, even did you loss view have what efficiency around the measure Or an life on it's As efficient reserve metric? realistic to as business?

Al Hirshberg

lot RP what selling assets drives of high aiming guess, mix we are or if We your I the SAGD our A now XX, some latest, think not a is of place at this it's way that to other. the of one our its of north but with to were reasonable By of to XX that range. we tends something mean, I developing. be, of look RP, those Well, for kind XX kind shorten assets. that more that's RP are you because assets,

trying manage that any from So, we or don't I meaning we not number, are another. that it grand take to think direction particular one in

Operator

Our Todd next ahead. is Ryan of from Deutsche go Bank. question Please

Ryan Todd

use impact on -- repatriate the reform there effective to expect any will Is be to clarification and mix a corporate or tax there in go Would cash use Maybe the so of tax balance the if point proceeds? had proceeds? is into of sheet the foreign those and that stuff. rate whether the you an your just of there

Donald Wallette

Ryan go see the down tax effective rate. The on effective effective the or will U.S. rate, tax tax sure, XX%, we'll rate lowering a of about so. XX%

X% a on maybe probably basis would global down push So, that say. I it will

Ryan Todd

any impact your have in on [pays]? that Will cash actual XXXX your taxes taxes -- on

Donald Wallette

are may recall as a be won't U.S. position tax not we course. you of the Well in in and until price XXXX, paying it's probably on early so dependent

small recapture see or we historic are any until cash impacts we cash to going losses. impacts not very those So,

Ryan Todd

then… And

Donald Wallette

other on… the question Sorry was

Ryan Todd

Repatriated cash?

Donald Wallette

-- of sort two cash. repatriation there aspects is well right, don't of of that. to Repatriation do to expect see We the

been accounts our foreign without consequences. always tax have to able access adverse We

repatriation have credits there's on a deemed change And the foreign foreign tax but tax we as offset they course have. have repatriation but far will deemed of really we then that earnings So, on impact as earnings would historic no foreign lot got that ample be of to there. any

from So, the impact repatriation. net-net result deemed is no

Ryan Todd

the the during a analyst some course ask just Can few know -- I can acres up the you over the the day times there a I the incremental you out Montney, to a like of maybe XXXX on talk highlighted one XXX,XXX And presentation. know acres. this I in of come course it's in the at Montney mean [indiscernible] on that of different looks the maybe just you're what's general that? thoughts is there year? I plan at this year? And on around what going looking test the timing Montney the spacing over what about little the over

Ryan Lance

so wells wells on comes spacing bit gushing with infrastructure a that if where just great there got you work. want test of have you would Montney is quite handle that Right, to stacking handful there that lot all to do going you a they production characterize appraisal problem The is the are and a 'XX out. to okay, a in build to work these as I 'XX of

we're treatment worth a plant to a just build stacking our kind do test be a on testing. build got we build it's OEB that XX,XXX spacing plant, the a pad appraisal water to from of day -- and we got processing have to we production about single to thing hand we XXX plant got million a is which day able have so headed crude basis, So, condensate capacity gas gas to where and plant, to barrels have about to a of

on. So what we really that's focused are

next those and start year will this of We facilities finish construction the construction year.

there get And really round the our on us will guide be so Montney will that. data too on more will to next development solid so of come that work, into that

Operator

is question Hanold next ahead. of go Markets. from Our RBC Scott Capital Please

Scott Hanold

I talk APLNG distribution, in XXXX? through to just where was with wondering partners through decide process timing going appropriate oil can you with when the and if in you prices the go are, and is your are to

Ryan Lance

take Sure, that. I can

balances where the we distributions they made position are is that through the where prices we that would from a whole and at last they dividends -- prices regular during quarter. build through fourth would and will their I current would have APLNG in the that consider that were no distributions at APLNG we year. But company expect say mentioned think quarter cash that continuing I quarter time to they was did

Scott Hanold

the the And of call of or type better is quarter when visibility the would of it event? we back next of a year timing more that? half get this on Is

Ryan Lance

any to call. at prepared be discuss we'll taken think quarterly action I the next that's been

Scott Hanold

invest And well as is Okay. that have guys year. here cash And appreciate these to it firm, lever say, that. prices if organic this oil prices discus a this some circa pretty hold you I my year. to to are you oil at time. flow in organically point priority some And question. of Where free year lot if add Obviously, say especially extra prior follow-up $XX first to obviously could activity? a positioned, are be your would look

Ryan Lance

plan. our on staying we're Scott, Well,

at of capital and think this that year investment scope prices. our We what a can set on about on least we're you side So, scope that happens year. executing this independent

Operator

Our next question of go is Please from ahead. Roger Read Fargo. Wells

Roger Read

that a is how wondering, or forward There more in on has 'XX we whether or is? in the Australia, here accurate the bit and it? looking that field of been just can follow-up where in how some Barossa chattering at development I may not you're press about kind move was little that aggressively

Al Hirshberg

the call talked I last results the in contractors, to impressive engineering marketplace, feed, front the think, been getting Barossa the design about making. on key the and We're the latest we I project. progress end talking at enter got -- from we've the we've in ready to been appraisal

track will the -- so, this, very that call we to I will on close it, the feed by move our on we to And to to have to to our so or But that it's point. schedule. to will get have we're course through expect we getting entered continued -- make next And of then be way we'll process. time, we next be close

Roger Read

of how then And your flat. a unrelated the talk lot of per keep follow-up, on basis about, to kind OpEx unit

not focused like couple quarters costs leave efficiencies savings of the of pull of it. maybe everybody and it's that years? I'm maybe What the sort Libya coming last just let's over out next or curious, cost couple on can the out you of of hasn't years. identifiable sort are say been Let's

Al Hirshberg

ways names very every Yes. all kind challenge is these and processes $XX is an each us But scooping a What really analytics countries. drive sometimes, it's our they're got where, and process and way have we ideas. one got have of they've that in it's course Data we a down ideas up, up each and different to money them going, And in regions $XX,XXX have of units helped for been costs. suggesting we've doing organic the been of them people ground-up organized our they and has a ground different sometimes million business save our powerful process. of

costs a silver been bullet process there things track, driven would up small of fruit a continuing our kind been some hanging we're forward. someone is found have really, that. process But now that have adding might you thought down. that operating And built and thousands we and as sustainable was of It's units our as it soon so, of there thing that's it's -- low going not we in to

to that So we offset continue that's tool using the are upward the to pressures.

Ryan Lance

that about to over also the kind the the Al referred In when day costs talked of that margin we years, noted just three single lifting addition investments we are making to to, them costs Eagle back lowering the was going Ford where next cash hard in the work and we making contributor X% of where are to the annually analyst places expansion that that we really largest we are of like ultra-low.

investments to that next that we unit three making And are accretive areas going cost. into this are corporate so, years the year the are our over extremely

also And investment as well. so, there's effect that

Operator

go Generale. John next of question Our Societe Herrlin ahead. from is Please

John Herrlin

U.S. completely? year up Two this this the for acreage Do Al. to you expect in it shell new on clear

Al Hirshberg

of a so. think process. sort think Yes, fairly I I mean it's near-term I

that's think I right So, this year.

John Herrlin

was Next your disclosures have of one, put a you I proven could supplemental your percentage percentage of reserves that know but total? the out don't as give you were the what -- percentage

Al Hirshberg

that have you we with to follow to Yes, you on numbers. will up those detailed give

Operator

from ahead. And Howard our question Fernandez Weil. last go is Please of Blake

Blake Fernandez

me though. trust be you sell you side realize been just and analyst your made listening would Al corporate you analyst, you me hat put quite side a to on [indiscernible]

Al Hirshberg

have It's always plan. a backup good to

Blake Fernandez

if to Don couple ask wanted of I I could. a

add Just I to EPS was the under guess with $X and a surprised numbers on going that's I our magnitude. just share based on DD&A to the

asset so I elaborate $X sales to the move been post billion on previously, have that? like you would we whole reserve had just think it guess just Could revisions. seems I us

Donald Wallette

it's in is, in XX. really the the improvement the No. primarily reserves That's Lower

Blake Fernandez

$XXX revaluation, aligned And on with it tax that's revaluation then confirm or U.S. reform. took million wanted the to so I deferred on like fully the the basically tax just the seems negative you

that you that? wanted a do either I onetime be is forward to right to the event forward just positive going like way So, that's that to confirm about or expect going think flatter

Donald Wallette

the say onetime event, was SEC ability revaluation Yes, but to the would adjustments the companies I deferred onetime numbers to reform given tax tax provisional a those make and because it has point. but that's work might tweaks go of we the takes they really realized liabilities, through assets not and company's revalue be the amount so there minor as year to the the

million source round wash. So, and believe maybe effect in if tax you $XX you terms balanced slight kind sources is so say of of strip quarter then of would a the deferred fourth that I basically out a

Blake Fernandez

Okay.

Donald Wallette

would to that's to we So, would it that expect about be. -- where we expect

Blake Fernandez

it. Got

very Okay. Thank much. you

Operator

Investor will to I closing remarks. over Ellen you. now and the Thank call Communications VP, back Relations turn for DeSanctis,

Ellen DeSanctis

thanks and listeners. Thanks, all to of Christine, our

We you and answer time that over we are appreciate follow-up interest. obviously more have. Thanks to a really any bit than and happy your staying time again. Thank for you questions

Operator

and ladies gentlemen. Thank today's you. Thank participating. This And conference. concludes you thank you for

You may now disconnect.

ConocoPhillips (COP) 1 Feb 182017 Q4 Earnings call transcript