COP - Earnings call transcript Q1 2018

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Operator

Welcome to the First Quarter 2018 ConocoPhillips Earnings Conference Call. My name is Kristine, 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 R. DeSanctis

Thanks, Kristine. everybody, call. Good morning, quarter our earnings first and welcome to

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

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

to are measure to course, across be morning's today's this estimates or to and release periods on will We actual some could as in that's that results found call to well make website. and that today, our refer press some filings. comparisons again with GAAP our forward-looking facilitating refer Reconciliations peers. of the the can differ slide this non-GAAP periodic due and to And measures non-GAAP in described We'll statements of factors during for as plans. also on financial our also measures purposes corresponding nearest SEC

going to to we're callers. all Q&A, get morning's to of can to this limit one that's we try During our so and questions

free additional to the feel And Don. obviously, over please now back turn jump you have to the If I'm into questions, going to call queue.

Donald E. Wallette, Jr.

morning. X.X%. We strategy, off good of to this $X.X the all with and on debt delivered first of at quarter. down our on Ellen, We've Starting strategic start dividend on priorities. paid again end gotten execution. by the of we our billion increased strong debt, you, Thank We by demonstrating X. billion of side to $XX chart total bringing the quarterly the slide start good quarter a I'll year another the left

the a debt billion set in to November, know, you AIM before at XXXX. to reduce As of out target $XX we our end Meeting

achieving total about intend the accelerate thus debt improved billion year our quarter, we're signal Since during by that buyback this This of to quarter, XXXX. we in discipline. we XX% respect time return increased announced shareholders was capital share the believe current business balances, our by a of XX $XXX in this $X for this priorities, to the program With count outlook to November. strong it is repurchased shares This additional year, leverage buybacks, in early. our our began a sends our target XXXX, target $X and track on another with and our shares Given billion reduction another from and price we late $XX repurchased cash buyback average of an of X% commitment a is we've about our the consistent at to share. about for of million or million

stated flow our to XX% to of to cash return operating One of XX% shareholders. is priorities

to again This quarter, XX% through dividends and of shareholders exceeded buybacks. that, returning we CFO

following our and our So, We're on plan. continue all priorities. hit we maintaining discipline strategically, game to

dividend and middle in Free capital, Moving billion. spending share. to a billion funded earnings Adjusted $X.XX share working column. that or capital for excluding more were of our the performance We than for by $X.X flow quarter. from financial operations, $X.X quarter cash our cash $X billion the exceeded the and repurchases the generated

$X.X billion hand. ended the of with Finally, on we quarter cash

of liquids-rich basis. Alaska. a well Play to the X.X underlying Moving Montney production Production unconventional Adjusting of to up year. excluding X% and last for share the the was North and of the the the Anadarko's as right. Louisiana results had day. quarter a the XX% was the debt-adjusted We per start Libya, dispositions, our strong We've for first Austin year, our operational bolt-on also on over western quarter, as BOE to grew million compared a acquisitions acquisition in the of position on acreage Chalk in announced Slope

active also an Alaska. and exploration successful We program in completed

delivering while reinforces again performance our discipline plan. our quarter's this recap, to commitment keeping So our to

MMBTU, to If $XX Hub you realized a BOE. first $X I'll slide and $XX barrel averaging in a was WTI results. average Henry through about about walk X, financial turned our quarter With price the around

on XX% a bar by due costs. seeing I million The year quarter, XX depreciation to in breakeven ago bottom Lower quarter, where breakeven earnings adjusted above first earnings barrel. earnings operating years our ago year-over-year for almost adjusted to prior and left, Compared now to quarter. can compared the the of we prices, by reduced a our about you expense. adjusted earnings depreciation improved bottom graph in the right $X.X two had improvement realizations the barrel. on a $XX table than earnings an at by only line the improved attention draw comparison the the As shows driving billion, would to higher engine see segment a unconventional lower and the with We're Lower driven less XX of $XX over the power earnings results, your $XXX XX% in a reduction commodity expense

and If to put expansion you slide earnings as high-margin to same of our including significant increases natural as on Canadian improved flow we've shift left Through the strategic higher-value exposure investments such flow XXXX. the the perspective. chart earnings illustrates not and gas, crude our U.S. cash mix product our our production, quarter The oil driven shows first turn on targeted to products and such price lower-value we've in and products dispositions cash I'll by LNG. improvement At alone. time, increased the are our that since bitumen. right gas the the and in in chart reduced The and X, exposure significantly international into portfolio

XXXX improvement XX% about that improvements the a of how product realizations The from from the to came in $XX price gain BOE. came much mix and of from compared increases. from boxes green much to indicate quarter Over first $XX came realization how improvement. show we mix Here,

rising we prices. is capturing Brent price, XX% Brent to now how indication a are slate product of Our over the of further leveraged

sources the quarter. up during you look our slide If to I'll cash uses X, wrap turn at and with a

looking repurchased red, billion $X.X cash of billion the includes Montney in to combination $X.X and capital, and of for retire shown $XXX debt, be cash sources $X.X of of used operations green, approval. paid the We Other, once the for transaction we acquisition acreage dividends of from First, we which billion. In about Alaska quarter. in which spent dispositions was XX% Canada. the shares, at labeled we million cash bolt-on In and shareholders first million $XXX of receive to red our returning back final million box $XXX million, capital in operations from will moved $XXX in regulatory to we included the

the emphasizing, while the done Again, free than of As cash $X dividend generating financial I repurchases. start all and said in this before flow and it billion strong which worth more quarter, was our year. to a is funded

hand I'll to call Al Now cover to the operations. over

Alan J. Hirshberg

to I'll year, Don. a rest turn so top overview day, please quarterly barrels outlook as the production, equivalent Thanks, our X. end of for X,XXX,XXX Don and our of range. of production oil brief our averaged the mentioned, excluding the beating provide Overall, quarter first operating slide per highlights Libya, guidance

reflected to KBB in as quarter Now outage. an remember, third-party guidance due a you'll shut-in our of assumption of pipeline Malaysia export production full a prior

XX% asset. but in with our portfolio, and were operational improved barrels per and was the a from improvements had day the Bakken day; timing Big day; Indonesia, unconventional representing a Delaware per X quarter barrels the performance the X, in of XXX,XXX produced production Eagle production assets. from majority We XX,XXX Ford strong diverse driven our UK, Big completions the and Eagle per Production came contributions by per That adds Our barrels for year-on-year. XXX,XXX for increase power to Ford Alaska our equivalent the produced XX,XXX day. barrels in

encouraged year. going in synthetic the the far the our of the we unique appraising In Don and currently later believe unconventional the at where the forward. acreage of expect in the acquisition position. announced improve during XX, in XX,XXX central mitigate an In acres net in to condensate provide the early position We're lifecycle ongoing WCS drilling by first to addition first development quarter quarter, the of so Also to Lower result of piloting capability begin alternate Austin to steps diluent wells Canada, we of the exploration and Louisiana. took by impacts and Surmont. mentioned, currently use in process operations the we're crude netbacks We're the differential the a as weak we this will our Chalk in in of announced valuable diluent Montney flexibility us bolt-on liquids-rich Canada, this as permitting

Asia-Pacific on the conventional slide. many add a also the Alaska, to those in about acquisition five-well one. Europe. we This appraisal projects the largest and quarter, in after appraisal Anadarko's an in next further During allowed drilling six I'll exploration exploration and completed earlier wells. program our to on drilled In interest efficiency talk good our Alaska, made announcing the successful the of acreage progress exploration drilling us Increased since We Alaska well quarter. scope. XXXX and was program original additional we

tested with recoverable We than a So more line our Willow barrels. resource are four that expectations. and we've appraisal of the of Willow results in wells, the and far, XXX has discovery confirm potential million

discoveries, Hill, three were Slope. all drilled western and on room Putu we new have also exploration West which confirming We the running Willow, of additional Stony wells, North that

second we slide discuss on I'll XX. outlook as Now operations move quarter the into the

unchanged. billion Our $X.X capital guidance is

and the excludes acreage announced the As bolt-on acquisitions. capital this previously you know, the for Montney Alaska

scope we November, billion activity. outlined the to and and pressures exchange program partner-operated we're increased last continue mitigate fluctuations from execute We the to foreign inflation, on $X.X working our

we've guidance will production to export entire and barrels words, to barrel quarter in a from diverse For expected strong despite than the around strong full the confident year, will we're increasing KBB that that our world our roughly more X,XXX,XXX the performance year. for disposition U.S., reflect XX,XXX increase X,XXX,XXX especially per day now due our the portfolio assuming to assumptions. we're be and In down to performance in first the offset the for other adjusting KBB. This the day volumes loss comes production seen

X% and per about deliver growth based X% on we share share. expect per So, XX% production guidance, production growth production growth, to debt-adjusted

of is growth our share the billion about number increase $XX based latter the debt year-end ending at billion that mentioned to that on XX%. Although production number earlier, would based $XX on debt-adjusted debt, Don year per

Lower X,XXX,XXX We're said Big above but in growth the from call, plan. Alaska. we'll I growth of day. deliver at per And Big high-margin the quarter exit assumes barrels the the X X,XXX,XXX to remainder season confident growth XX, throughout quarter-to-quarter, Europe expect continue year production XQ Big APME, day barrels lumpy X XXX,XXX last to equivalent per may turnaround in be the and typical In X. guidance second is XQ, production the the as to our year. This in Our our in we

business conventional executing well. we're as So, the well Big also programs, unconventional but strongly X executing our on we're in

continue expect including Before we the Bohai from X We'll GMTX Chalk production appraisal the in program. the Austin UK, in continuing beginning Phase gear feeding the Hansteen Australia. our Norway, for and drilling, will appraisal China, exploration Bayu-Undan We'll plant be end of Darwin LNG continue final several XXXX, in XXXX projects, achieve to our the Alaska phase development Montney Alaska in appraisal and our and work Louisiana in central of up Aasta in program. also Ridge first to winter which Clair

So, free a plans financial billion quarter, strong executed discipline of operational $X quarter where while to capital generating flow. which we with we translated a had strong cash our

I'll Q&A. for call over the Now, turn

Operator

first of Thank ahead. from Doug you. question Bank is And go Leggate America. of our Please

Doug Leggate

as longer more lot a just to a program. let's early you you're start I Al, give And in term. to on piece what X% just spending likely opportunities it third-party And something more it's been you're really think the lining everybody. increase afternoon, if guess. is probably still more this pressures can wonder a bit to I but Good could Obviously, color activity your have CapEx inflation could revisit, I seeing you'll risk question you. to I up you of say, alluded followers comments revisit about midyear. I there. talked (XX:XX), of the too third thank there, just of if I if that question, little Is a wonder that Well,

And since do your a Day, November? see, buybacks, in So, you got how you in from I've toward the CapEx please. the outlook follow-up opportunity set and Analyst quick that apart guided back

Alan J. Hirshberg

Okay.

which... see, Let's

Doug Leggate

Just a CapEx question.

Alan J. Hirshberg

as we're billion pressure, in our as and Well, CapEx, inflation, guidance. I do CapEx Yeah. at see I three mentioned, still areas, think We $X.X OBO. forex different I mentioned, okay.

partner-operated the about You asked specifically side.

We are in had dominated we ballots seeing our considerably above expected Lower areas, in partners what various XX. from

we choice next that a those come ballots when so, well, until us, money we economic a in reserves. will and is, And of with rights which that penalty we have or get bring it course, it volumes for looks elect as lot the received work, to won't the But year. volumes situation of spend like although or typically does, we those it those into either to lose

that But we're efficiencies to seeing, do pressures to going our as offset So, that CapEx. efficiencies continuing on work increased upward in, in those does with we're to increased the some significant those upward put elect work. comes and we're pressure to

really us that and for could the three-year And I on we we at all billion how around to mean, $X.X we're where so, the we talked November analyst down respect at XXXX. things up the that out that's potentially the scope plan the some horizon period average over early to in expect that too are incremental end about to be forward, to XXXX, meeting this tell With there it's opportunities that the of going going day. XXXX road. still add laid on

You've running our to us We're piece win expansion. in that that we in the of plan you was and about for a able showed That be heard cutter to talk not that in November. the business. hoping

be would that, we're But to going that able that's to that something if invest in. upside. want us win are investors obviously, to So,

Alaska. You've XXXX these XXXX beyond It's upside. that also success going and That's plans November a big area in But of seen are affect and are things in in to out way. the our sort not that could that. that where wasn't be XXXX CapEx reflected exploration another

Doug Leggate

that cutting PDVSA Al. got but him you. wondering are what just situation indulging night got is, Synovis in shares. (XX:XX) know it buybacks, that flow the result shareholding follow-up My the to appreciate have? not you could I Thank question, all thanks this as outlook I'm CDE And piece something if you've really still your maybe still you're step one. for elaborate specifically, change The options is off. in leave the now quick a could another buybacks I'll interesting we what you you that cash on And last similar PDVSA. installed Is in that your of now And ultimately to there. the there. kind you

Donald E. Wallette, Jr.

is this Doug, Well, Don.

ICC of that's tribunal result course, a nice arbitration. question, PDVSA the On the as of a award from our

is. the soon. to be book have another from see one probably not of on all later But we're We year, that's receivable as coming we'll total exit something to what a this well time going that so any able

it's don't think take require I to action to they that part. that, And when lost expropriated aggressive that's that assets be some recover enforcement there. and So, our persistent going time going value that's on but we our intend we to the to something in

Synovis of to terms So, I early little then too thinking it's well. as uses a start cash. of think that in you mentioned about And

also but a an the not got the somewhere of there strategic not changed worth yeah, $X And story equity. we've investor, course, as well. we're for intend there. long-term, We're be seller to Of around billion really, Synovis don't hasn't anxious

we Right So, think the until we that right. is undervalued. company we'll think now, is value the wait

So, someday, put liquidate and that able to work be that elsewhere. we'll money to

Doug Leggate

my you. Thanks indulging Thank appreciate guys. for questions I it.

Ellen R. DeSanctis

Thanks, Doug.

Operator

you. Thank

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

Phil M. Gresh

Yes. Hi. morning. Good

maintain just to question balance inflation the and sounds and prices sheet going bit try with budget. on, offset you talked looking the spending you're capital are – First about spending to to like the now, is a where it capital

great that you a a uses how stock any even about think prices, like or So, at chance might issue the how of do great the back day, just on – obviously, do looks a go the you've but of bit more job now forward? a buying there rainy cash, done what think put you for sheet about balance excess you Don? on Is

Donald E. Wallette, Jr.

we're plan of much questions, Good pretty eliminated reach to debt our reduction $XX live to and say, then accelerate going as With target Phil. two and hard to and capital uses billion, We've pretty the constrain there. this year, work within continue key our our to budget cash. sometime you

the So, are narrower. getting options

mean, months what, couple billion. a two $X.X we've increased $X our said increased X.X%. We I dividends ago, just ago, is, to what we from buybacks our So, months billion

steer our on that shareholders But the can't to I the today stock our distributions will second on to that. your grow or again, part question flow grows. cash and of the the one So, said you price Phil? was What as we've way continue buybacks. other the Oh,

Phil M. Gresh

Yes, exactly.

Donald E. Wallette, Jr.

you Well, is lot stock And look basis. I it. to factors a upside tell the and look undervalued environment, we at production growth debt-adjusted flow cash our you if has on sort then CAGR's our at what, in some a that the we on of take think share this our well of margin of key expansions a cash obviously,

Phil M. Gresh

enough. Thanks. I'll Fair over. turn Okay. it

Ellen R. DeSanctis

Thanks, Phil.

Operator

you. Thank

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

Neil Mehta

morning, Good guys.

I recorded if question had first the first was dividend came the around cash The cash in from you flow the was? flow can to And in, quarter that Am so, associated that that I quantify say in right there was what April? in APLNG. was with dividend no APLNG

Donald E. Wallette, Jr.

correct. a cash in reflected Yes, the APLNG in month. first was it dividend flows not declared for in in Neil. That's not We first from quarter paid the April, quarter. did quarter, this A so was that's the receive the but dividend

we ConocoPhillips. to receive from and $XXX APLNG amount was a So, million did the dividend

Neil Mehta

the just And production great. is as a here bit and Big from for going well? balance profile see talk you question it do the you That's little you. year. just Thank the basin of about X follow-up by Can the where

Donald E. Wallette, Jr.

I And barrels the year-over-year X% of keep impressed day, of was the XX% latest talked the XXXX well quarter going to I Big XXX,XXX the impressive. grow And quarter don't results versus We in all about expect so earlier that the first frankly in up XXXX. November, X time. we were prepared first and remarks seen too said Okay. quarter-to-quarter that very to number. Yeah, X XX% we've per XX%, Big have been and we improving you be by hitting

teams expect that certainly operating beat our to I So, XX%.

So, with better be XX%, I'm we in I not expecting impressed the go forward to expect be as to you and it year.

lumpy said. think as I I it will that be

on that some I just completions through year. second finer some Ellen will that, put of may Ford exit wouldn't until point for we'd call, I table And strong we way see And out it be we into a rate quarter. I the the we Eagle the X. had little would first but I Big – last you get their maybe, smoothed remember me thought But that without under above say a quarter kicking you if to that exit can the we have said per lumpiness think would XXX,XXX day go bit. barrels an the We as numbers thought the sneaked

if per is how latest at rate exit things earlier at think I it's the now performance in that bit for you are barrels well day I going me last to an and the a year. going quite kind calling happen of look to was us, clear that that, XXX,XXX the call

Neil Mehta

quarter Great. Congrats good on the guys.

Ellen R. DeSanctis

Thanks, Neil.

Operator

you. Thank

question Please Générale. of go Société ahead. is John next Our Herrlin from

John P. Herrlin

Yeah. Hi.

ones bringing third then the upstream incremental expect time or production Al. in for quarter kind Chalk, Alaska, Will we talking quick Austin what on North With on Slope? fourth the actually some with Just be start quarter? And you've when success should given you will that that? you cycle of the also about of terms had, that

Alan J. Hirshberg

Yeah.

next the timeframe. at be start take coming we're have pretty GMTX midsize still and start of will up production sort a to in Alaska, is by and then CDX of this the of we that at on would We So, the on got GMTX bringing projects pipeline FID of up one year sort expect of XH on. to year, nice NEWS. XXXX we next. We've up end course, projects, hope

So, pipeline different projects that a are lot there. the in of

start what In this asking about announced What first is terms Stony the all discovery, got the was best federal to the on the up when Willow, new earliest also approvals, where the of past timely, could we said ago call in have the we a and discoveries, scenario you're I would be Putu that that yeah, we get in been approvals case about, I think XXXX. our Willow really difficult year and Hill. particularly

timing past, of than require I still think within case, theoretical more the possible experienced a in but would but it the a that's rapid we've bit that is the federal permitting that's rules.

I of an is tieback program And one Willow. going it'll is, justify for appraisal the should looking timeframe, questions to a like the that enough justify to have of think making which highest value. this be part make think, for what's you that the able sure back can it earliest is new is we're to that. had understand can West see as more So, facility. from our And after in Willow a think so sort we facility? the of as a that's we've west things well in going standalone what right you to then of it's we be is to the Willow appraisal subsurface standalone out And like And I tying more the or decision work and further to Willow, discovery

a certainly taken in yet, appraisal that's the direction. So decision strength points not we've program us that but

John P. Herrlin

about Okay. talking the when Chalk, will about what And you...? then

Alan J. Hirshberg

Yeah.

across fourth And up late timing which quarter we're the about third Chalk to be permit in XXX,XXX a the acres on exploration this quarter, timeframe. we're later the be year, spud somewhere area. it's early on Austin able first I think now the wide in depending So, of we'll position, that permitting pretty to, might so wells, process

characterize I the we into or to time we able from start we program there. have that think be XXXX expect results what So, it'll be have by to actually

John P. Herrlin

great. Thanks, Okay, Al.

Operator

you. Thank

from Evercore next ahead. Doug of Our question Please go is ISI. Terreson

Doug Terreson

on results. your congratulations and strong Good morning everybody,

Alan J. Hirshberg

Doug. Thanks,

Donald E. Wallette, Jr.

Good morning, Doug.

Ellen R. DeSanctis

Thanks, Doug.

Doug Terreson

production Malaysia. even in the like-for-like talked X% that by during with your outage year-over-year, the guys quarter, you And, grew Yeah. about

of expectations X, be you meaning on resilient fairly be Indonesia in the to because could Alaska areas that and other the any seeing certainly to in you're many as of or to the Big that seem the appears the also want resiliency it exceeding such I comment in or really gains areas driver areas. So, the of portfolio see, outside

Alan J. Hirshberg

Okay, sure.

in is good in I of number. We the confidence outperformance think given increase lot first the the correct, versus of the about the question a a the because we growth had our were to part quarter XX,XXX above quarter of it's that particularly the midpoint quarter. barrels that X% first us range we're day And prior what's seeing in you're a was, given full-year year.

Of with loss from of course, that's the KBB. X%

would it it as the at So, had that. in a if you've But been strength kind of comes X% plus from you have XX,XXX we have that of look where if to, XX we of but other from, about was did alluded number XX,XXX areas. Lower

We we performance better both outperform about base as and Europe. and X,XXX plus from to with uptime continue in UK the in and base expectation Norway a Europe to better in were the

As of that project for gas and about higher expected. been we about we strong you've downtime. our plus third-party well talk three there. Alaska, demand X,XXX performance me had plants our up there. our Indonesia, heard has power picked had because in before some In than a more unplanned got coal-fired We We

market and about short Surmont, factors. We other and of we X,XXX at about only quarter We we to really were shortages had was in The better supply in there. also cutter plus at uptime where Surmont. real had had diluent the X,XXX due negative expected got

plus So, all you in total. that's that add XX,XXX up

Doug Terreson

circumstances. a seeking proceeding, damages the then there, I update topic, give think the you steps status Venezuela, in which step a somewhat could to the if have to, on Okay. ICSID and you're Don for alluded next year. I for given to you next going is of your But the taken around us this also all PDVSA from see on want And point's recoverability later

remind with us are proceeding. if you kind that we So, just of could where

Donald E. Wallette, Jr.

just kind multiple Maybe on a going because you there. to we proceedings Yeah. recap is it as well complex give because brief of have

concluded Of course, yesterday ICC. one with

anywhere thing to. our about ICC expected it compensating come course, to that was us it never for value The billion, in losses of Venezuela, $X was close of about award full the but doesn't important

provided a they explain little and to between And when so, that bit. assets. a I our ourselves discriminatory that that indemnity That do to for was and tried took matter had Venezuelans actions with us they contractual the to PDVSA, expropriated

that the indemnity limitation it. out the on spelled And on was caps basically. formula contract had that in a so, And formula in

was our So, always to that would a represent we total knew really award that only losses. going partial capped for be and compensation

we the that's to which is PDVSA that's process against have, of there one but Venezuela, government is – Now against being not we that at move the heard exit. claim the and that other And involved that compensation there, year, and this we in receive award to expect hope a our loss. will represent which that an no that we for cap of value notice later full result, that

Doug Terreson

right. All

Okay. Great. a lot Thanks guys.

Ellen R. DeSanctis

Doug. Thanks,

Operator

Thank you.

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

Paul Cheng

morning. guys. Hey, Good

Alan J. Hirshberg

Paul. Hey,

Ellen R. DeSanctis

morning, Good Paul.

Paul Cheng

For – one. two Don, a quick

is quick one. First Don, for a

as already million the in of the also and that project you're also you're building CapEx the $XXX and financing internal you the such APLNG, the flow in even full cash excess that actually the For of the payback does financing to cash? going project that usage receive (XX:XX) the first quarter, that with or represent a

Donald E. Wallette, Jr.

received quarter, was You Paul. actually did mention first quarter. the That in second

So, wanted correct I that. to just

Paul Cheng

at joint the $XX the or number? a venture APLNG, a if comfortable for Brent, that that understand. that that going forward, looking that is reasonable we're assume be should I that you estimate just means that you higher actually a does saying if feel $XXX Yeah. correspondence I'm million already

Donald E. Wallette, Jr.

reasonable depends can what was million flow joint in is. and that's mean, we the hard a within a saying venture is that April. $XXX cash net say on it all the time I whether just It the have estimate. price what I

Now I can't that... you tell

Paul Cheng

it me Don. Let ask way, another

that first higher end take you the out quarter, balance is If the joint venture? $XXX balance of than million from the year-end the cash by within

Donald E. Wallette, Jr.

that – available to distributed. cash the be available was That that the represents cash was cash was the that

Paul Cheng

Okay. Maybe it I All take offline. right. will

Surmont. you The takeaway operate? you lead that, Al, Any because way the for to that second one, problem change over how issue there, the the of

Alan J. Hirshberg

have Well, hurt we a place of really being out widened that I issue issue been The the really don't that netbacks. mean, barrels. able months constraints is se takeaway in have per our number takeaway a and move now WCS differential our have terms in for the of to

margins pretty then netbacks in other some doing had pipelines, decent pretty second backup. did well. at the create year. cash it on issues a some Our were few We there that folks last were as operational And Surmont of half had

I that been was our And crude over some the past supply repeating mentioned of things so, one a issues oil diluent, synthetic year-and-a-half. been issues plant we've as up and the there, that's set how year, supply of the using number there've also

factors running or process involved to by sorts really And really and mix be by here of piloting attribute is or some oil forward that moving crude back to minor, of a think all things various minor volatility can allow XXXX, those and We the that plant. we're a in back look running at so, go the We a mix. we create we able by a will want us, diluent. of the what third can a run are crude the having forth the unique can going as quarter condensate. be to to make create valuable as of now. to to create Syn/Dilbit to And any by there we're market. we changes flexibility And We oil in Surmont of running the a fairly synthetic all Dilbit synthetic condensate Synbit facilities

Paul Cheng

are So, those guys that market? at local in committed to do the you Gulf pipeline warning you Alberta down existing Coast? all from the Or pipeline selling have any the

Donald E. Wallette, Jr.

at what market. currently, Surmont is, blend on we're marketing blend you on a basis, current a XXX,XXX of tell side there our barrels day moving situation to that we're We're like Let Paul. me the

barrels that barrels that trade best of got around barrels is on And rail. about so, going a we rough about day way day Edmonton probably the And probably cut U.S. going to local the a think day have into market. then the a is XXX,XXX we've basis, XXX,XXX to a XX,XXX by

the into barrels exported So Cushing be And Coast. and that have that well. Gulf would and XX,XXX Gulf balance U.S. the being some as we day then pipe the into Coast a into the into on Midwest is of the

Paul Cheng

Okay. you. Thank

Operator

you. Thank

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

Roger D. Read

nice Yeah. And Good morning. there. a quarter

good. is a about barrels weather restricting a the Al, did the quarter been day, talking some lot We as hear certainly production. of Just, about bragging you've in XXX,XXX the which and

affected your sort a higher was rate the a as is that curious, we achievable just which somewhat, more by was clean growth looking year are XXX,XXX along, your pretty means number? at barrels goes that I So, day as or of

Alan J. Hirshberg

were were We whine by about barrels weather, XX,XXX our January we areas. a day back different number But to of we Yeah. weather. in like don't impacted in about hit a

performance. So, too the four quarter, divide more on to of But impact sort that we to a with not or able by were offset than get our big. five-ish three

really don't math. in (XX:XX) you so, it the need And

Roger D. Read

No, I appreciate that.

the to trying And for rate average Just a the exit maybe there. feel get versus then...

Alan J. Hirshberg

timing Look the for to XXX. going the that interesting be on thing. That's

Roger D. Read

Appreciate All right. that.

certainly kind but at question, in growth both not my then Louisiana, and be frontier-ish will want Kind And about acquisitions, to is pressures look to what of moving Montney it. I I the flow. you watching as and opportunities you're process frontline us talking don't the mean, there them, second production the We the CapEx to return elsewhere. call make decision thought cash understand the maybe of the for of into, help

kind repo, So, flow that some I got you're share your other curious you've acquisitions. like undeveloped making together. and of got was the how you all then reserves additional

Alan J. Hirshberg

Yeah. few different Well, $XXX settlement, last Western from quarters, funded in come from we've opportunities, the sales by of $XXX million – one million doing. including I we've some cash it type been that cash bolt-on really our had the plus these could in that perspectives. think spend we a of on got asset number the smaller money about Ecuador came legal Slope, in the of you of thing, was mean, in for North about we

funded these kind the volumes but that's been million we've or part things of bolt-on immediate. largely this XXXXs. term of $X,XXX asking about, decade, has the exploration Course, natural they're regulatory sort you're not bolt-on budget. of smaller They're so They're costing so $XXX now. that acre once much bring an money of some And that our the are is things not less longer us we things doing. kind other right of Alaska approval, get going a fit within. These or for They are the to in – remember, us

during cycle, analyst in competitive, other to budget the total already exploration things base. So, our November. math resource things like the that we very laid had And them. that of meeting they'll other the are of in was full displace our we cycle part an supply be out opportunity are why cost that in with they That's

Roger D. Read

on flows Okay, to and what then from for that run generated was just payments? expectation the about his on The great. how now, we kind based crude Paul should Thanks. on up of question. rate one crude moved in that the APLNG certainly the And then QX prices to that QX, how if I through think could dividend sneak dividend maybe fact and price follow

Donald E. Wallette, Jr.

there's prices the was during $XXX million amount, had forecast sales you're there on the also the quarter. but building And some based one recognized crude fourth the into prices. cash Asia, trying quarter, got up, your as you've year. into thing you a lag so balances precisely the lag I the to they beginning this been is, if cash great that first think the to LNG they to during not on entered the always that have Well, They factor three-month is

Alan J. Hirshberg

payment lumpiness think that be is difficulty here another We the the a may causes of maybe factor loan quarter. payments. some don't have every loan I

Donald E. Wallette, Jr.

Twice a year.

Alan J. Hirshberg

It's year. twice a

up payment, as build we people thinking. so, as And make ratable next to the loan cash maybe it's not so are

Operator

you. Thank

Howard go Weil. question Please of Scotia next Fernandez is from Our Blake ahead.

Blake Fernandez

question Don, a accomplished, revisited pretty hoping to just that's subject on the or that is good go simply uses target I to billion to flow. we hard kind I can debt the to of Thanks, $XX of wanted be confirm, being much rest going distributed. just just Phil's number? once think back to morning. is was is And cash

Donald E. Wallette, Jr.

That's a number. hard

Blake Fernandez

Okay.

a of of I as more bit getting a pricing talked exposed and et kind quite of Midland you crude are little I'm discounts the could realizing The takeaway down like about second something quarter, opposed And cetera. curious, past talk Permian kind that hoping differentials. what to the was to coast you takeaway Al, capacity piece, to how LLS? you capacity, the actual you the there, have also this obviously, discounts a lot about guess, we've I Canadian, bit in seen and

Alan J. Hirshberg

capacity can don't we Right Permian. Yeah. in I that any now, talk a out Maybe of bit. about export the significant the little basin have

fully the quite we're Midland/Cushing quarter, exposed first So, differential. to Course, in high. Permian the were the realizations actually in the

to second around got WTI, we the but going of in think that, XX% I like, see impacts we're quarter. it looks the of

transport at Gulf term, open entertaining on a are the wouldn't of Coast. companies XXXX longer of And available sort the are the active shipping long-haul seasons midstream looking earliest. be the But we number until half into that. Now of in that second capacity

Blake Fernandez

it. Got

Thank you Okay. much. very

Ellen R. DeSanctis

Thanks, Blake.

Operator

you. Thank

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

Ryan Todd

you're what Eagle the on versus expectations? follow-up. Eagle Is Ford got And to a I've there. there? specific issue thanks. mean, additional in a seeing efficiencies? one Okay, related expectations Any around on better well then per Ford? your be original the you Maybe you've on the I drilling give ask performance today it as how in color Can one talked exceeding thoughts can costs any I your seems productivity,

Alan J. Hirshberg

on the Well, the morning for prize win your yes, best yes. this title note. it's By way, yes, you and

are completion seeing latest test ready Eagle think have the a new us we give even well next yet generation in better we getting performance, per And of our generation may that to design. that I we're Ford, results. better

look last the see look at the you'll improvements had. of wells, that we've pretty four into just go the can and and at different the vintages databases dramatic and public You years

company also we the drilling That place data I handled first the continuing analytics continuing to well barrel. last – that a quicker we've our where It's by in costs. very the very each wells really down our powerful course per well, tools lower we've can the few We're able given drive down to costs below multi-skilled And costs warehouse. of times a built that operator is optimize in that comprehensive well Eagle we've doubled the been field years, efficient. to And in of our lifting because out think We there Data drive be a $X number the has and completion costs. hitting are also was Ford. in the all them.

the jam volumes. been We've and Ford same there've the we Ford less in down great of do Eagle barrels It's netbacks for competition the So the banging had Permian, margins Eagle to in there's less Eagle the get and goods everyone just better improving while that, out been lot has trying their takeaway a not just people matter of to services else been because and capacity. people of Ford. And away the left margins. a

for about us. everything cylinders hitting So, all Ford really Eagle is the on

real think spot I think I to will. be and that bright continues a for us

lot I out Eagle just think not it's going – story volumes see to more that. than Ford really to So, the there's this good are of year the we but a

Ryan Todd

the there? on of potential production And then potential you and maybe potential forward timeline Great, contracting is at thanks. LNG, you're, like thoughts I a to see based going Barossa seems in think a backfill on on It LNG you've on recent moving there. closer on helpful. what FID insights Any there, terms options. comments, That's asset maybe the general Darwin there LNG peak partner's the your thoughts

Alan J. Hirshberg

us to able well. capacity really It's has been keep performed Darwin a want of great. is The the we over plant since plant that the for that jewel it's great LNG Sure. it significantly years We've a We to asset. built, full. performed increase and

sales has is that faster. when current So, same and in with PSC expire. years. said the Barossa contracts they've the when also I've All going not run ConocoPhillips XXXX. schedule some Bayu-Undan for several gas It's We've press things seen where it accelerating coincides been case. been That's out moving the really our us happens on to or when that in been to well LNG expires as of apparent and the

Darwin to I to at We're a for have in we got remarks the XXXX. flow development something my mentioned spud in a ready just of to ago. gas long last weeks we've in drilling we've few phase Bayu-Undan. that time, So known else prepared

call happen the Barossa schedule. steady call, will on I we'd this that gas that And a So I of said feed, from the near been this the last by as the be week. to be and at wells in drain that us allow XXXX. last this thought news then did handful saw or by entering has on you earlier all Bayu-Undan

which pieces. this week different XXXX in our continues that's regulatory take all forward unanimous vote on We've FID to expect feed right to from, schedule had everything tracks. on to – we're So get. the And already thing hand. if down difficult in We partners the late the approval We've we was gotten to a there. into that move got from move

So, everything think I is there. working well

We set forward design very, the FPSO project. competition the doing for efficiency. drive efficiency we're that capital including very way Everything are project all capital designed the really to is is on up, in on feed focused this on

Ryan Todd

you. Thank

Operator

you. Thank

Our Company. next Simmons question is of from and go ahead. Guy Baber Please

Guy Baber

guys back sensitivities. Thanks quarter cash APLNG, the very not I much seemed especially for dividend you to a that generation light the flow, go taking to the did fact relative but this in receive from of the wanted question. to strong cash

bit of conservative more sensitivities, of a think, band the we're XX provided. you perhaps specific I seems XX was enhancements that which upper the on your due it are Eagle the in And example, if as particular of all those the margin as realizations now highlighted, of and Lower to $XX Brent, relative have of or realizations TI a Ford, wondering some sensitivities in simplified barrel specifically? just really cash mentioned. to strong But I'm call your Lower that you you Brent would So, the north flow out quite actually anything because now because you and end are one Eagle improved Ford and have

Alan J. Hirshberg

No.

to was. well. realizations stronger quarters done think I they I quarter, what, of quarters we came predictive the or think, realizations and in, been in precise reasons tracking our XX. back for cash Canada but actual Lower what had ex-working maybe And flow was mean, cash they've say. Guy, then close in I sensitivities those seven very seven eight the since some XXXX, the really overall, the they've also their six in wrong had we pretty been in would November we've or just capacity, low even I first But flow introduced maybe we because capital it

company the So, somewhat I updated by generating The that think understated sensitivities you're be this flow just ability November. past right. may cash the we of

looking what range you sensitivities of are provide And we said good it the we've are look going at pricewise end in predictive the those of as like a at new monitoring We take couple its we say, but for. capability, are of it's and the continue at here still last it. So, has upper weeks And then did it. will longer to if guidance. we we no we're okay, think we feel it's

Guy Baber

Thanks very much.

Ellen R. DeSanctis

Thanks, Guy.

Operator

you. Thank

from Mike Heikkinen. is question go Hall next Our of Please ahead.

Michael Anthony Hall

Hi, good morning.

Alan J. Hirshberg

Good morning.

Michael Anthony Hall

you to sort I ask at what might moment? repair And get creating the metallurgy be pipe? of the a on I pipe factored with wanted and/or KBB the guess, into of more the on first, replacement issues there? that associated the just with into CapEx detail there is costs any Are bringing delays exactly all What little back is on that on.

Alan J. Hirshberg

Yeah.

So, metallurgy. around issue the no there's pipe, KBB

have no It's and the arrangement. cost us. on in third-party no We so just impact pipe there's strictly ownership to a

a is mudslide. factor us. was failure a not the what And so weld by really a had cost that They really caused for

some with sort area on remote the pretty difficult of terrain caused earth a rains and heavy is strain and this So and pipe. moved the excess

get problem areas. a potential to, area to So, for mudslide there's difficult the it's is, a them and very of these number

and when for ownership. and going the it be comprehensive very know have plan to because in the of expect don't And up, we pipeline the not so they have lot we're really no a of pipeline's really middle we we of repair

And whole that year. assuming point, We be for this it know really the sure. down for will so, don't at we're

Michael Anthony Hall

just the Okay. then clearing as follow-up And up. Permian. that curious Appreciate on a

agenda? weigh things guys really is standpoint obviously consider Is realization noted being basin. looking differentials you from are a databases on longer on an the Permian bad get the enough the that that and the not in opportunistic Things on in in or on forward. to a would price tough You the starts area valuations

Alan J. Hirshberg

see but mean, really never I – looking I say not never. always we everything at don't Yeah, that's We're that.

on how just cost paid that you it's of showed you that You the But things the portfolio full the on happened. supply And that our and look struggle compete know. existing works. portfolio at we cycle change, you we've do see the existing being to prices of math pricing on have our see in that recent basis, never could things a and to how hard would

Operator

you. And Thank Pavel our James. Raymond from of last is go Please question ahead. Molchanov

Pavel S. Molchanov

Thanks squeezing in. me for

or volumes about perspective. gas of conversation year question later terms a more gas that of next the one pressure in from in lot possibility Obviously, any year, of Delaware? about capacity the and your you to takeaway flaring are Just in the this sort constraints experiencing gas Permian a

Alan J. Hirshberg

is expect in United we No, U.S. gas the not the marketers of to really and we the either. And ConocoPhillips largest don't one States.

out way SoCal very that border Southwest, large including an the the area very area and is active. the to Permian all we're

So, we third-party of basin gas of the transport out that a and lot across U.S.

we of equity capacity so, a plenty available ever And have gas. third-party gas. our we can for And in if back we got out bind,

Operator

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

Ellen R. DeSanctis

over if day us Thank we you, anytime feel everybody. it. to so. left call free And Thank Appreciate your interest, you, obviously, any Thanks. questions the next or Kristine. everyone. unanswered, I appreciate

Operator

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

may disconnect. You now

ConocoPhillips (COP) 26 Apr 182018 Q1 Earnings call transcript