COP - Earnings call transcript Q2 2018

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Operator

Welcome to the Second 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, to earnings and thanks call second joining today. quarter our our participants for

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

page statement on today's two cautionary Our shown deck. of is

SEC. here financial the across One peers. to filings due to differ call, results and could periodic point, administrative we During final and facilitate with some our factors more will really and noted we projections with refer comparisons in make help and to the measures some forward-looking also that's also the periods may today non-GAAP

found use, reconciliation with corresponding measures And the call non-GAAP that, I'll we any turn For to a our on Don. the website. can to be over nearest GAAP measure

Donald E. Wallette, Jr.

the on us Thanks, X. a but to Ellen. advancing oil add slide some through allowed performance prices Starting and solid I'm our higher operating continue going of on I'll morning to this all. go quickly on the priorities. want points have Good color strategic left, to the slide. start to few

to This buybacks component our And shareholder have in coming important our dividends Achieving $X plan our we sheet since shares $X plan where billion recent financial this we During buybacks achieved to additional shareholder an by $XX year a repurchase going will reduction highlights distribution debt announcement, reduced don't debt and And our we're allowed debt the years. billion now further. position distributions. XXXX. to XXXX, billion. target balance be half the debt balance so target. to our our of program completed our nearly into sheet, seen We're to in that We've strong philosophy. us increase and to debt up the quarter, a addition over we'll of expectation continue any we with consider remaining happy authorization you've to reduce to

ninth Cash our to to running the from of the column, flow flow. Moving Cash we been main earnings to are adjusted than we debt. the lower and high financial as production of draw billion. in cash the But provided want mainly to is high production accelerated that the margin, relative reduction last adjusted were expense growth. increases sensitivities $X.X interest November. have your cash tax. has unconventionals attention operations in $X.X are currently The reasons result consecutive was quarter quarter billion, earnings in that higher from projected the Also, coming no a is I

So to out translates XXXX last than you which $XX reference about at billion. a That's turned for at too to be bit $XX a low. CFO November WTI, gave we I higher of generate $XX point $X billion, that WTI

on current of billion we've flow WTI, So, $XX generate new based on $XX sensitivities unchanged it point, you billion. that you'll prices that then remain CFO forward see this The at $XX outlook. on that cash new a And point. give and reference for apply CFO in based if light appendix we'd sensitivities to reference the over of $XX.X recalibrated estimate billion using XXXX point is these between The in I'd reference our differentials. depending you implies expect

of yet assets. our think capability I appreciated cash-generating market that hasn't the the fully

price to reflects net leverage So financial company's these strength, debt by the to the we and And refer back an the our way, wanted provide X. better based environment. estimates, would be CFO just little higher ratio performance to considers a our on to under update that

making quarter. you milestones get Al a when to to during operational take to adjustments and items. of the number the right achieved operational Moving guidance the review we the we're cover far also now see to going column, is you'll our through these the

strong Let's the X year billion, earnings by realizations. to impact mitigates side linked on year-over-year our dislocations. operating realized adjusted operational I'll having from maintenance earnings not activity. large of improved disruptions the up in and almost of quarter, The the diversified driven turnarounds table earnings by market comparison costs adjusted the driven Compared touch $X.X by and a higher XX% partially on Sequentially, only Brent bottom ago prices by the go slide primarily by table over to earnings. slide were benefit XX%, a also but offset portfolio, portfolio, associated the which and right quarter's shows corporate of regional demonstrates and The with segment. seasonal of a the benefit improvement

X, slide look quarter the wrap billion. with investments the talked short-term about strong quarter. to the with cash and cash We cash turn you during began quarter from $X.X up second at a If operations. of I'll flows We've

acquisition. billion So $X shows moving the to North the capital. Western million Alaska red right, of bolt-on includes brick the first Slope this $XXX And

debt from of and CapEx used which share of million investments. ended about quarter of $XX flow We our which a represented dividend This operations $X.X to of cash the of short-term over $XXX and we together than million repurchased more with The $X.X capital to repurchases, billion. billion free and XX%. return bottom exceeded by target funded $X $XXX and line, cash cash shareholders retire debt, shares dividends billion achieved Next, paid the of billion.

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

Alan J. Hirshberg

our X Western but of for Thanks, for the from driven Total equivalent the Ford turn X. quarter an equivalent day, our On X,XXX,XXX Eagle in Don. combined Eagle the barrels primarily the on of above we just absolute at outperformance brief the barrels day exited by XX% averaged operations was acquisition. averaged Please by slide Delaware the barrels second quarter, and Slope X,XXX of the provide and day; second I'll well second also in quarter, share grew per year. the range, per this from XXX,XXX the per day a quarter per of the North discuss additional debt-adjusted year-on-year basis, XX,XXX averaged Bakken excluding XX% and production and from In a remainder production good barrels and growth XX,XXX Big an result unconventionals. basis a resulting had benefiting high oil to per outlook over highlights they XXX,XXX guidance We quarter a quarter per on basis. per X, a day. end Ford Underlying This Bakken our play, day. X% barrels barrels achieving overview Big averaged Libya, second barrel day; plan. of milestone ahead XXX,XXX

each we seasonal know, turnarounds the year. have you second third quarters and As in

completed and budget shutdowns were on on Our second quarter safely time.

amount to outage to the resulted diluent Canada, these curtailment We're and not also party This also implementing the the third only outages an and reduce run and capability the a of synthetic plan. synthetic improve impact diluent quarter ongoing mitigate Our party capability continuing netbacks. required, In condensate of oil third third to quarter diluent. turnarounds alternative actively according are underway but will in kinds our production of as July. by an crude in going into of to working our flexibility late

During Pacific Europe. on the and good conventional Asia in projects Alaska, multiple quarter, progress we made

confirmed further that Once our to up Slope announced of we the We season significant week barrels the we of we between will us discovered Alaska and investments core with business billion our XXXX bolt-on. X.X Western billion flexibility equivalent, transactions. Kuparuk last our timing there. of the pace, future oil these upside drilling remaining. winter in and announced July, in resources gross transactions North Clair and receive Greater X.X the Alaska manage level also undrilled regulatory give approval, And completion And announced to

hub. standalone and We appraisal now as work to to also underway development expect program. XXXX announced that develop a evaluate we the exploration Detailed and Willow is plan to options drilling

strong another execution. So of quarter

operations the continuing remainder reference year operating performance $XX price significantly of prices We're Now I'll to adjusting to barrel see the on budget slide to XXXX for plan time. the nine. our compared higher WTI discuss of and we're higher our for a the account at our production outlook

Our billion, excluding to being year adjusted $X capital guidance for the acquisitions. is

the in other actually offset supply XX we stronger price is the maintain the conventional would and of of to increase to the impact differentials by inflation. and three, at is the efficiency operated all than return a chain above some two, business project discipline leading parts is rig the we're but in Midland, our to additional roughly leading one, continued comes less number to our Basin. reasons, and and With LLS on to move and production participate online our with because inflation a our based net projects $XX from The partner-operated have with to rigs; to driven decision one and predicted in the flexibility The with in increased our increase wider also three both completions increased continue down we the above wells in coming strategy more operated business. expectations. to assumed of Eagle pricing Lower assets unconventional with $XX XX% Delaware operated activity; reflects our have a operated partner pressure additional oil $XX no in advantage scope. strong Ford. rig an in Gulf same that's increased shift the our The we're And The Basin capital laying operated to in We completions contributor taking Permian increased drilling Coast XX: production. of increases in Lower efficiency

incremental bringing Our it. at we've production the barrels year adjusted by increased day midpoint. to a is with Since XX,XXX of year, also full the midpoint guidance capital production plan beginning our the

repayment year margin in and equivalent now guidance, X% strong and deliver and to that to XXXX. X% debt XX% underlying share Based growth good Our production production about our are growth expect debt upsized contribute momentum full barrels day. production per share guidance updated per barrels this X,XXX,XXX our including on repurchases X,XXX,XXX translates XXXX, into adjusted growth These production going share. we new to all is per to

X,XXX,XXX of the growth third of is production X from unconventional outage day, guidance which range barrels per also Our third quarter continuation our partial a plays. high to the for in X,XXX,XXX season. is turnaround additional Big guidance by accounts Canada, continued party The offset reflecting quarter margin

some have XXXX. coming year-end good that catalysts momentum before going into provide also We will

where interest, of Aasta Before Norway, Phase GMT-X in X the X.X% China, production Ridge Australia. U.K. and still phase the to end in in the retain of the year, Bohai a expect Bayu-Undan Hansteen achieve we final Alaska, in development first Clair we in from

front, the to we're we Louisiana third four-well quarter. in of work Montney appraisal program the in first Chalk spud a Austin continuing the On the and expect exploration our

Finally, planning is exploration underway for the season. XXXX Alaska

priority and Area our on focused is Greater the successfully testing a had our in Willow order year of half half We will entire the first be executing strong the to team operating plans. further of advance Our development our on appraising plan. and XXXX second

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

Operator

you. Thank

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

Philip M. Gresh

afternoon. good Hey,

question First two Maybe has the you've Obviously, be target early. little hit to of things. elaborate can more you a just side Al. bit here on for unconventional your quarters

could you And rigs because refresh level. if at you maybe a high color around. also that us for us some maybe just So shifting some give are then

and the how November. extent Ford's in a XXXX taking little in Eagle fits outlined the you the Permian from away with So back more this guess, to broadly bit plan I

Alan J. Hirshberg

guess, we exit of going first unconventionals vintages mid May. efficiencies Phil. I up in by in the indicated I XXX,XXX rate and then then end XXX,XXX we would we day – based And latest XX Thanks, the that year. considerably we as Big guess, call, Okay. that had our hit looked call, foreshadowed the I in XQ last And completions the and on hit the I year. an seeing earlier were XXX,XXX of X actually over on thought happen back was January you the the it ended we did above mentioned, what like is back to were our on that Lower

– we and above May XXX,XXX. June So both were

and come all did earlier you driven about by it efficiency So of our and the effectiveness things talking bit hear really quite of us improved in terms a completions.

expect impressed first we in XX% told a So by you Big year-over-year we were to wasn't didn't were that you I of and X when number quarter, also production. up really on last promised I be we or better. the quarter, had XX% were And proud – said that we I because

So, now, we're at XX%.

XX% more number of. on for what Big full year-over-year a we I of And quarter is number. year expect proud that up were kind is a I'm the X. think in like you That number production should Second

I think by XX% beat going to we're much. the that

extra an growth XXXX significant the XX%, XX from XX% X say. So points I of in progress pretty to is percentage would Big

Philip M. Gresh

out this you're this, guess, would huge tie Analyst to the into Ford but any expectations. in slowing a had XXXX maybe Day little growth you And, of if just terms I your ahead outlook – plan you you Permian could of well from if but Eagle for going business? color have your how you on is Obviously, unconventional the

Alan J. Hirshberg

Yeah.

had was rigs an that with the rig plan plan at laid one in shifting, The that the in we're rigs in activity So out for we Big Ford that X the Meeting six the two Analyst the rigs XX-rig three so six in we Bakken. and was and program. And Delaware the Eagle rigs.

we're And seven so the doing in two those the and Delaware in Ford, so we'll now Ford Delaware. what shifting rigs of is one to the have three Eagle Eagle

year. as the into year. And obviously, so wide well, that volumes we to through differentials a going next shift we go particularly Midland are little will bit that expect as next And last

will just you remember with us of will we set on ready XXXX. this next higher Analyst XX But, the that And our Meeting and for growth increased even so with this obviously, And to same carry getting XX, the number had, plans allowing our of our efficiency rate so when more I change impact into is of we'll another running again. volumes. the totaling that ring do had year obviously, update that We've rigs, and still we've rigs, to year that rigs. that expect considerably Dakota is, from shifting

think, see expect improving a you're there. I you so, And going can story continued to that

Philip M. Gresh

Okay. Thank you.

Alan J. Hirshberg

of at that you completions story add we've on Eagle November our one Day piece laid Ford. out about we plan And just we vintages might was. we how Analyst guess X our Vintage last a a Ford. is based started Day, the X than more I different the that completion when Vintage of last I we at thing quite we talked was that's enough see, Analyst the And what – was runtime the can had And third by quarter good using Eagle Vintage just better it the X. see but year. had bit of hadn't But it of in to call

the that's us completions one time what of than assumed the So, allowing is the we that outperform key I Day. are to had X that giving Ford the think better things is at performance Vintage of Analyst Eagle

course, Of X, so see Vintage now we're we'll next. takes us that where testing

Philip M. Gresh

When results? would expect those you

Alan J. Hirshberg

Vintage any few one here in production We've But going X drilled couple and a the couple have on first don't of to wells a – data we come completed of so production soon. it's is yet. next weeks, we've the coming

Philip M. Gresh

Great. Thanks a lot.

Okay.

Operator

you. Thank

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

Neil Mehta

Good morning, guys.

Alan J. Hirshberg

Hi, Neil.

Neil Mehta

I realizations? of the what should cash to price Helping Hey, us of higher changed framework we cash would versus of want anatomy down a through much numbers thought rattle and color. Al. all be sensitivity? that that what of baseline flow because you break be Could in How incremental. anchoring sensitivity helpful. baseline result the versus as the for that cost Thanks moved production those and was the to start flow the to you from I on again that

Donald E. Wallette, Jr.

address But, in morning? I from you in Don. went first want I billion This I Okay, would cash told that November Neil, was through think, WTI, expect as math to referring the $XX just question operations. of I $X on you, to, that your of outlook is based are what our opening on the how we section. I this

you, $XX up giving was the new to I moving And WTI. baseline so the price

only billion you would Now had the that and the you sensitivities at about reference point $XX we and if with published, we're $XX November used flow that $XX.X cash seeing come between billion, up billion. applied have whereas

of we've low date think that. we update that because some it's to noticed you that's that's has and wanted been analyst why guidance we So given running and we've out every

and in reference the billion that as we I'd consistently the And Brent-WTI about, of baseline been dynamics we it's $XX midpoint. So there production where XXXX range the far flow. WTI, rapid of new a very that update billion obviously, to pace, XX,XXX new This point today, but differential. cash at the above should the added I $XX point, be on a depend $XX.X company as I'm guidance to for mean, And so because right? guidance anatomy, the to has point another to running to to is going talking is lot had changing here, the

driving reason one that's higher that's So the cash flows.

we're for where years, few production. the for that cash wells. is are taxes. cost, And But extra time the other getting no high it's these The unconventional high margin and the netback. low being importantly the the next They're also

contribution tremendous that's and to early. we expected, debt the year we a than that cash down the other So contributing And operating a paid flows. lot then a is half earlier area

our come that been that and bit a quite – built so sensitivities. into down built acceleration And wasn't into previous the or rate reference interest has have point wouldn't

Neil Mehta

partner-operated that, this I I $XXX then appreciate good cost kind was three increase. completion, And of here? call, go-forward then CapEx different million on another this inflation of million item, Don. buckets help you've morning breaking And Can buckets: CapEx? and XXXX inflation gotten and the the you of volumes. job we've it relatively think to Well, piece small where for done a us this just questions on and frame And color some what the down out increase that portend in on $XXX you said a does the

Alan J. Hirshberg

take I'll one. that Okay. Sure, Neil,

operated on in that it and out that Meeting plan exactly laid at are we activity higher the As prices. advantage I a XX. Lower way. certainly wouldn't all following not of I really we the discipline and up characterize to Analyst CapEx November. activities maintained take $XXX We've our our said, ramping it's the we're that drilling increase CapEx But million sign to the is in our

at our online CapEx all billion. could faster our we But our and more year we've ballots volume almost activity in, efficiency to our chain supply the we're just above have we've given and our shareholder and as given on target increased talked increasing last had Analyst target strategy higher and above more about, versus our drilling ROCE improving to that, and beating finally, for and and debt or reducing as to not we've this CROCE at because completions to our allowed work our at as activity are our and kicked in for all contracted that acceptable wells very we these partner-operated due was targets reasons, and prices our on it has all restrain times talking chosen prices, as inflation allowed $X.X distributions, try the services dividend, us high-margin been those due to XX% As has our budget. continue to we've have reduced access good increase adds, keep Meeting, and the to priorities, reduce about offset Don offset early, this tripled

an something is let in Eagle about But the to only higher as we're billion. $X.X pieces. quite $X.X we increased and operated said, billion. a And, the said that even me Ford, the of down extra one-third two-thirds characterize as bit increased to inflation, piece you that you and online wells is high seeing million by that's to then the like world, are might smaller due So give the – about We're, managed keeping in in million $XXX international expect. is to world would or $XX year, also CapEx Bakken, a $XXX seeing offsets number Bakken. from would in seeing piece both inflation. we a that it last biggest chain is And area about earlier where efficiency that. price our in we've that than tenth. a that the completions than Earlier of And million. from others we're I more is expect The business course, supply I keep an also in $XXX we're $XX The And primarily in our strategy the increased that.

models – it's than this lower for And our inflation projected is actually price would have what with so we environment.

Operator

you. Thank

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

Doug Leggate

that guess, activity? else would given But the in morning. just Delaware Delaware. production still the this curious kind change Good still the lower consider, to everybody. what activity rate with core given wildcard Al, to Delaware And the a in you everything is the in the of question, portfolio, is Thanks ConocoPhillips? happens in I I'm the

Alan J. Hirshberg

obviously, where there across mode it's we We early still a days Yeah, big relatively efficiencies I and places haven't like obviously. the differentials we're think the a don't us. temporary the like we full situation Ford situation, mode we to have view see there in going manufacturing gotten Bakken. Delaware and for as manufacturing the Eagle these the the price – But time in

to continue And fourth earlier do drill we drilling Delaware, that we Permian had a conventional two to headwind it. And spend you rig. run that in one flexibility have have we and It's There's rig than point it it rigs. need any into instead try we need that to when the The we that and Eagle grow we'll rigs of to mentioned it moving extra that at pads barrel I keeping still and this lease and rigs have Eagle two really down less we that rig won't so should Ford margin, we us. to remember, Permian we two taken have still the no kind for exercise that's the Permian year. but production in easy the there. do. rig we makes laid rest so the an to with is, And adding conventional cost that to also maintain not reason do And in prime and that is hard be when and the we're do need run money reason for efficiently, that high acreage super leases the is flexibility quad Delaware obligations, really maintain our sense lifting of our just to Ford $X frankly have rig. drilling rigs a to

Doug Leggate

core Delaware just be ConocoPhillips of So clear, portfolio? a part still the to is the

Alan J. Hirshberg

it'll be and rig, even hit Obviously, XXXX. the still roughly Analyst volumes for Delaware absolutely. Meeting. at think what will Ford of one XXXX I we'll number our production Eagle XXXX. less with the than had volumes Yes, we higher in time impact And lower

Doug Leggate

My tell in will going first if all, cash you exception longer My the no for of flow. I to you, about numbers follow-up, Thanks. Don's analyst look (XX:XX:XX) stupid, may, with take as so comment I'm is, every Andy thank that.

Donald E. Wallette, Jr.

(XX:XX:XX).

Doug Leggate

do I beyond Don, embedded a ask want of a the at CVE commentary going a rate, well. because you're even is do this you cash as – that equity my strong do buyback What plan. forward? ton run – question, But the about your How think situation, of should to that redeploy cash use Venezuela from flow. that good cash generating on think clearly run And, the you update a from to potential, get an Venezuela potentially what's the them in buyback on I is we plus and rate guess, the maybe proceeds about potential

Donald E. Wallette, Jr.

on about Well, buybacks, rate talking were run the Doug? you the

Doug Leggate

but Yes. then got It's Cenovus flow, then in settlements stock really because this got you've organic potentially you've you've Venezuela. got cash and

Donald E. Wallette, Jr.

Yeah.

Doug Leggate

next wall cash over then, it And prices looks or three these oil there's levels. potentially like stay if a obviously, the at of years two

Donald E. Wallette, Jr.

Yeah.

Doug Leggate

annual look we a $X run should rate? at billion So,

Donald E. Wallette, Jr.

of we're yeah, run we which on meet a targets distributions shareholder philosophy But our exceed Well, our can't you sure percentage CFO. rate. that one, is, give you as basically I that is, guidance what the or making know on

we of we on peers. distinctive yield E&P the I know what as Doug. want billion to And we'll But majors with buyback to this to in we're mean, year. And it stock time. and anything average current these XXXX. to back agree year. not at out as competitive $X suggest to these we're time the a environment the But market. the try just reasonably shares you to I We be and want that on and to be to that to of philosophy want ton distribution $X hang shares things cost doesn't with is. see mentioned, have you We You dollar the at really the We're like bought there, billion far market we rate of on flow Cenovus a other not we've be over last cash the going going steady forever. you, know prices, generating got

there's choices going to of and forward. lot opportunities lot So, a a going yeah, be of

about the really... There's situation. Venezuela asked You not

Doug Leggate

of come any call Yeah, I the to in don't but be been around probably. this lot near want some, know appreciated. but, would news realistic obviously, I there's more term, perspective cash get don't the you there's to chance from and a if hog that your obviously, any

Donald E. Wallette, Jr.

Well, discussions that's we fairly we've we're, can PDVSA accurate. as that. owed PDVSA a few intend said confirm And the in weeks are recover the us of to and Energy what's fully. before, and like what I seen, And said to I been and Minister you've be aggressive ago will persistent in Head publicly that and ConocoPhillips

have to don't in that. add discussions. I further are to really anything But We

Doug Leggate

Appreciate it. guys. Thanks

Operator

Thank you.

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

Doug Terreson

Good morning, everybody.

Donald E. Wallette, Jr.

Doug. morning, Good

Alan J. Hirshberg

Doug. Hey,

Ellen R. DeSanctis

Hi, Doug.

Doug Terreson

spending or disciplined guys what just only spending to meaning Al, while you I in XX% on them Al, consider or less of differently, are becoming manageable be do more Or you are the aren't that and same? to meaning, do spending really else can't the you wells, on spending wanted that point a are of somewhere than minute a maybe made anyway? less ago I get that plan. XX% perspective you the is factors your talked positive onerous something to onerous, you just they economics so to meaning years you the even the still that a the offset clarify the how about that about are the you're ago drove trending, on wanted kind increase three of spending this want bit a that about and few factors depending economics

Alan J. Hirshberg

me... onerous word the mean, doesn't I come mind for Yes, to

Doug Terreson

Okay.

Alan J. Hirshberg

I money ...because it. big benefits flexibility. that really we – mean, with This is I bringing have is

money. we want so us this spend And shareholders to think

help beat the it to those (XX:XX:XX) and volumes two our if that how CapEx tie maybe – about relates XXXX to me Let would talked together. I and kind of

Doug Terreson

Okay.

Alan J. Hirshberg

moved from there's XQ drive we've XX,XXX year, Since pieces a X,XXX,XXX barrels guidance for And day midpoint, midpoint's to during that. barrels call kind back big per original in the a few day. X,XXX,XXX on that increased of just our our January the so

know that KBB negative big – a pipeline offset You leaving the aside, numbers roughly and but at XX,XXX is outage. third That from in those XX,XXX negative about there's Xs the we have party the is Xs of and Europe in Xs of uptime. having you've XX,XXX Europe that we're acquisition about and there a that me activity. in base And offsets plus kind plus talk by our good from That where our production A&D heard before about XX,XXX year lot XX,XXX. on

you from The takes and plus zero. the Eagle XX,XXX is XX,XXX all Big Big the So Ford plus X It's plus XX,XXX in then the X. really to in back Bakken. from that coming

And math cash get and do from we very those of flow a extra that high from barrels. that can so XX,XXX you margin see the lot

does that year primarily number held higher XXXX down coming come getting is drive CapEx. third, that of our XX,XXX A a And OBO that of effects. a think the X,XXX, third, XX,XXX in is the It's in with third from where matching partner-operated, roughly Bakken. spend. up third a an from? some the So is Actually by number we the – partial extra reasons about extra that from same we're

this about kind at money. it's but or better to get from increased amount XX% these You're so million so ballots, spending volume investment. X,XXX, the very of so would we ballots during twice IRR you $XXX XXXX that partner it's XXXX these money in of speaking, generally calendar get expect but are extra OBO WTI effective that and typically spend, $XX It varies

Doug Terreson

Okay.

Alan J. Hirshberg

on the the side. next is third then And wells operated on online on

earlier about you million thing So last we the could And higher complete the don't a These Ford Vintage are makes X,XXX one-third we great from we is Eagle extra that's down more XX completions. of the well, and that more – spending the we're see then drilling that a the is on we about We Ford, that's two. well. was this about three. there. we're there could when two-thirds think really rig smart. the we drill from XX,XXX, Bakken. completions last We're efficient, X,XXX build I Eagle a X X,XXX $XXX efficiency. third, with an It's think wells It's outperforming. so wells, the we're getting extra the could so should DUCs. We or talking that But in the And or plus rigs lay

All of Ford. that Eagle X,XXX coming is the from really

the in and you the plus effects. the Bakken, those three kind it's get plus Ford So in XX,XXX of that's Eagle XX,XXX how a

Doug Terreson

Okay, that's a too. Greater suggests also very helpful next crosscurrents agreement Al. but that on project there phase boundaries, And which having about recently that on then the maritime progress there's lot was we're Sunrise of of an

of status progress us several So if what the and needs see for see I that project could the on to update to wanted years? this ConocoPhillips project you to over specifically give an next

Alan J. Hirshberg

I'm sorry. beginning. I missed the very

Sunrise You're talking about project?

Doug Terreson

was, I yeah.

Alan J. Hirshberg

Yeah, yeah.

potential it competitors true. one an is in That in was of to maritime And well, two of right plan of there's there reasonable Darwin. involved, the governments forward, one And but be But even governments boundaries, to – boundaries. Sunrise part's kind – some is that to government have the now. for the move really progress new two option on interested Okay, in there to backfill reach still the order agreement development isn't Sunrise with economic. will involved that the

Barossa to the – is It's future. anytime has lead project. that so the entered FEED it backfill. in near in wants into develop about for it position a to the it And And that's ago going difficult make for government uneconomic makes the way Darwin and move to a quarter moved ahead, development Sunrise

move going to to it's to something And going so is have there before forward. change

Operator

you. Thank

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

Paul Cheng

morning... Hey, guys. Good

Alan J. Hirshberg

Hi, Paul.

Paul Cheng

you my (sic) and still that expecting we about could by [KBB] ...for put time Are (XX:XX:XX). out that – any talked for being your further or – there respond there talking Is Al, time. year-end now? you ABB earlier good update? afternoon

Alan J. Hirshberg

new the – little for on assuming volumes those in KBB a that we progress we're down essentially Yes, the could has guide, guidance that year KBB volumes the back. is don't be of There get steady gave repair work. there been we the rest ago, while

test line of and we're into fourth the year that now quarter line uptime ready that while. in significant have where get of this don't not that. volumes now, for we But – it's mode get for just certainly year. the on say, be, operating out the of they between mode, we're any of end counting a to Right assuming once some some the testing could a there so, back kind And they're

Paul Cheng

they other I year-end even and the – by actually (XX:XX:XX). the that think way, there was I'm risk restart won't

Alan J. Hirshberg

a Oh, there is I of see. Well, that. risk yes,

Paul Cheng

think you do But – mean, when is one that I or at... – big we're looking

Alan J. Hirshberg

Yeah.

Paul Cheng

KBB ...the next year, back assume is should that up? we

Alan J. Hirshberg

get and this it's the are is what of direct we have ownership put on party, back and But its me address I It the providing see, control progressing little technical we think like year mean, Yeah. no think third or it that numbers schedule our out we that late signs by up assistance next I ready until for we're a looks well be early. to get Xst year we'll course, some really, to insights. XXXX, some so further just as no get I of in to I the year. knowledge

but and a it's there a think big risk. it don't could certainly risk, so I surprises So still is be

Paul Cheng

year to quarter, production of XX,XXX from from in billion the about or any a asset full purchase up latest BOPD. guidance And that your BP that like deal Anadarko? the Is comparing last swap gain – (XX:XX:XX) the recent you're

Alan J. Hirshberg

to And, numbers. approvals, up Paul, versus The regulatory midpoint on that's actually which not But any deal the last are if we're It's that volumes be we from midpoint it. BP Yeah. on no, plus quarter. in you assuming included a waiting anything. from XX,XXX, year, full about including not XX,XXX a would actually these

Paul Cheng

Okay.

organic, related all it's to activities? is volume not this M&A So,

Alan J. Hirshberg

yet. in not well Well, ago approval We gotten May. there regulatory approval regulatory the which WNS is quarter got one had deal,

those that's we now have X,XXX. volumes And a number the included so, year-end in about and

Paul Cheng

Okay.

XX,XXX is the of X,XXX, now is So, that?

Alan J. Hirshberg

Yeah.

Paul Cheng

next for you XX% is the that retirement XX% the That's range Don. then Don, to a And Okay. price on guys probably you gave two on (XX:XX:XX) lower much based cash target probably payout. go as will will be we $XX, that range assume are price argument's using. for the should changed be if just also, And something we into to $XX that sake swing, with guys higher?

Donald E. Wallette, Jr.

think Well, no, necessarily so, don't I Paul.

a kind and think to I year. not, a this by that we is because minimum the I to a of good, flow but chance We suggested that kind to had XX% consider of stronger year what great hope XX% XX% cash still exceed that XX% sort means exceeded be amount target. I still the is of good that there's last than earlier. our we'll even

Operator

Thank you.

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

John P. Herrlin

Yeah.

quick so some Al Just much since for has been asked. ones

With recompletions? with is the two, is any new Chalk, quarter or one. Number drills the Austin a activity you that more are given start? doing quarter the first That's Eagle postmortem or all third Ford number the less

Alan J. Hirshberg

Okay.

but for do September. a zone well next But On in four-well well the Eagle rig a drilling thing. expect that not probably driver refracs, first we is we in question, well one have that's have on defensive driven call on. then going Austin some that where in four an and plan area what is spud the Chalk the are particularly some we by parent new volumes doing the (XX:XX:XX), to appraisal. a the And first well beat – a drills, key we're I we there sort have we where really where Ford the Louisiana mean, we numbers of recompletions, new – of to And activity we pressure a child situations are depleted but

not then drilled before a well back an the assessed I we have have or year, you. be those quarter it'll for first maybe – all and next have four of by yes, So, report think and maybe into wells completed be might even and assessment,

John P. Herrlin

Okay. Last Al. me, for one

at completions you vintages the about for Eagle is it mentioned IP of decline getting or it all flattening rates? still You same? the more Clearly you're Ford. your recovery. with What Is

Alan J. Hirshberg

back higher IPs, those higher part higher Yeah, you wells what when I But decline that of we've with as mean, we rate them on didn't few only of months from you are profile early time we get we when getting and a is learned well. also. a Analyst IPs are typically at had that runtime get getting we know Meeting overall a better

And that that's so the the production. That's that's helping our from Ford. extra barrels kind a X,XXX day us Eagle driving of with thing

John P. Herrlin

you. Thank Great.

Operator

you. Thank

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

Alastair R. Syme

Hi.

question for quick very a Just Don.

would years North you On America? around good say estimate the two clarification the think probably the tax, a using up did be cash position tax in for you

Donald E. Wallette, Jr.

is and try Yeah, Alastair, to prices. lot to that of forecast. really especially moving hard parts A

So maybe range. going if I forward, prices looking the in it assume you that XXXX prices somewhere like or way XXXX then it's XXXX, constant think beyond XXXX at now, continued we're probably that

Alastair R. Syme

Okay. Well, that's all I had. Thank you.

Donald E. Wallette, Jr.

Okay.

Operator

you. Thank

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

Roger D. Read

Yeah, good morning.

Donald E. Wallette, Jr.

Hi, Roger.

Alan J. Hirshberg

Roger. Hey,

Roger D. Read

into out sensitivity, was there? lot how no discussion there. the of remind a I APLNG flow flow before the guess, that. here. here down needs to have paid could hit has fits But get does it maybe that out joint I curious dividends cash the of pay venture been real maybe it how get of us cash even debt better And any Maybe

Donald E. Wallette, Jr.

Yes, Roger.

we record dividend two I but we about during first So the been the call one ended during up in having the quarter. declared. it had it the because talked second first payments quarter didn't quarter the first

I like And I was needed just so be disclosure. talk going since going be to felt event, a so it's a it subsequent to to that about

$XX the $XXX had later had the million we quarter. then just in we and So the million

$XXX bit So million. under a little

talk designed some think because dividends occur I we the financing quarters. they the of make, the that tend do – occur payments let the in me to too around about they – of which and first timing obligations, the are third

we're with making towards dividend from and that the So us really then fourth combined tax period payments a quarter quarter. when the distribution being APLNG point second

third it's important the won't the that We I quarter. second that in looking flows, $XXX So quarter. at quarterly million at guys when in to seen the or start think see see you're million $XXX all you cash the going you've

what flows they in the expect the distributions then to need quarter. we've adjust mean, in And, for seen prices to fourth you would cash where are then that. if similar come your we that quarter. quarter stay today back second the in And So fourth they I

been Now to at constant pretty XXXX in even on joint in side going increase this having reason prices. And forward, reducing is distributions that there. significant venture a impact the aggressive pretty year in operating upstream costs, particular the I for expect the has that do

the then be won't being that we plus with the at the we year item interest reduce have reductions. as offsetting of full potential this we APLNG of to year, are able other some see that associated severance the financing. that expense is year of that with we'll for the are And So costs project benefit as the next part

be much distributions know And under will pricing constant would XXXX, how more be higher. so they in but the don't

Operator

you. Thank

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

Scott Hanold

there, well, technology of point, is capacity you there? it at any kind is in or guess, recent plenty type level of near, saw some improved on I then the guys. context Thank have Both areas with as for the there talked And seeing both (XX:XX:XX) Eagle ramp could similar bit a obviously, you about in obviously sharp Bakken areas? level are as net completion the little this Bakken maybe guys that at in and completions. of from Eagle the talk you basins, a Are you improvement generation the And or or the Al, for seen that peak there levels you just a non-op Ford production in you higher – is you. the activity about question Ford, production well? to of constraints really those highest

Alan J. Hirshberg

Sure.

two XX,XXX Well, Last XX,XXX day. Okay. quarter, to the quarter last during our run we start yet Big came hold in barrels day. we of Analyst back told And flat Meeting, the you Bakken rigs at to at the we roughly and we going was barrels one remember X, it Bakken. try with the a were a

XX% wells. (XX:XX:XX) it definitely also here another step on the improved up a drilling on our is obviously change our So just yes, times. production. performance deke and We've the faster of recently some cost for Bakken to completion down designs significantly is year-over-year outperforming. progress of made of That's kind part that well And,

other coming from XX,XXX the the outperformance, of that kind Bakken, OBO of half is the on coming versus from order XX,XXX be and the might outperformance. maybe half is so And of it the

In of that Ford, OBO And Eagle quarter. up outperformance some as well. on is OBO XX% year-over-year from the the we're

see drilled, Vintage for next a so as just has outperformance The having have X also will out. us. of Ford We'll Eagle up. more could having into given impact part wells So of drive about us I key strong take that that's well. and how X momentum there XXXX. significant talked greater that to it's this that continuing We're that step and – efficiency a really are to a all But Vintage turns us

that XX see XXXX. the to points into extra the strongly that's really can here we're going and us strong of in growth a how give With Big us seeing X, rate you carry exit

what with half. running first of of work little constraints, for completions in had the a even we in not have catch bit doing, anything half And than kind we're terms the and less In second first state steady the did will we're seeing we're because of up in to mode. in do crews our on we actually the half

seeing enough constraints in we're have don't not production we takeaway so the Ford, And the of our is type that Bakken. it much matter any a running to into the faster the services. We're is on really. Eagle we expected. us we're So Permian growing our issue In in constraints, in of problem than getting the certainly terms for production in to not kind

additional there's out some the been third of but up for sign prices had for that. great get plenty available. to We've to export party have capacity, We in continuing market

additional production. are we the higher commitments some so the having add takeaway to in for And Ford given Eagle

Operator

Thank you.

ahead. Morgan of McDermott Our next question go Devin from is Stanley. Please

Devin J. McDermott

some the of Hi. Thanks on on just had for earlier a question. follow-up CapEx. quick taking questions the I

forward? on could the guidance to and on context rate level. about the on How helpful we that any that should for additional for run very per multi-year know at think context as new billion a it year billion in Is in which this about $X.X the bit of would I that helpful. about but this be we a of color of year? you the was the out the Day, should the you plan XXXX think asking How laid guidance, referred I environment? forward color roughly Analyst based I'm just $X think provide front. is the targeted spend good thinking number I pricing current carrying

Donald E. Wallette, Jr.

as some certainly to But Analyst talk about been make me out let no well. philosophy Yeah, laid that and pieces the the comments we there's Meeting. high change at the maybe level

the a Although CapEx plan said out laid world. we we $XX was clearly for there,

stuff XX and in to are turning for inflation Lower to and OCTG spend haven't kind hot we the since the steel fittings, So the – manufacturers even we year, in $XXX of continue us. U.S. prices of pipes, are steel U.S., have million of fairly this going out though going tariffs of to and Xst the the be that significant including XX%, coil is made of We been U.S. see about Alaska a item plus the steel up valves pressure, the year the cost some a that's in to which steel. out And rolled on input all changed.

And the supply move market. us going so our in insulated there's next year. a to We've but into to chain significant been been that from that somewhat on position from is going continue grow

is next inflation that for We, December. we're It's continued can that haven't early. you our budget going year. one in too And to the as pressure announce in expect we'll set be piece. So obviously, price it is capital higher world. there But that

on in, – half we like want pressure, of ballots you activity. we spending to what this ballots first the last non-operated last spent this That's capital them. we've operated on spent the approve year. that XX% us Lower others year more at the these by they get triple year, we XX In economics than all in year already I look We good terms In of mentioned we're versus earlier of almost if looking the do.

it a so significant is And effect.

a been there's So big shift year-to-year.

don't into this year, would the terms expect I same. In of I year next that know

see number I those off Permian we'll a those area. – in ballots some probably expect will have some. think cool the I of been

some the other And could so way. be effects there

so would efficiency option run of terms costs, the In have be greater rigs. to less one completion would and more well we

We that in meet volumes obviously the out XX now we rigs. – could those at accomplish the could could goals shift said accomplish with we the we So would take volume less of the kind we laid Dakota of ring, Meeting rigs. with Analyst volume kind that

And that well. be we'll option as so considering an that's

all on that capital an we'll on of December announcement we're working So bit that's little and a the what color current anyhow year have is next but in plan our thinking. for

Operator

Thank you.

go Securities. Sankey Paul Mizuho next of from is ahead. Our question Please

Paul Sankey

lot, for very be update Hi, parts. Qatar, say, incremental One let's us and much very be assume Al, been at of oil change if trip. $XXX wouldn't things. up how outlook CapEx then obviously, also also firstly, there's your a would it after would regarding whether high guys. differentiated. the that how CapEx level? the Thank you few Thanks. change, was would It you goes changing but informative anticipate and Willow you would on costs And barrel, perhaps, moving couple Alaska Can that a your incremental? then, not that There's a a a or is strategy?

Alan J. Hirshberg

Yeah, okay.

Paul Sankey

Why are you laughing?

Alan J. Hirshberg

why. track trying to were because different of it's questions That's Well, that four in – I'm embedded the keep there.

Paul Sankey

outlook. CapEx

Alan J. Hirshberg

Yeah.

I and is like Willow things to XXXX, outside Willow Meeting, expansion, was XXXX. XXXX, Analyst the the Qatar really talked that regard So which we with about mean, period at

anticipating significant when we're that's spending. Willow, see So, a and start to FID XXXX would you

are future other as out. We'll And their going or so been period deal the be Qataris that to of we by year. to partners we've strategies. that's who year pick on we've expect around laid on the period forward Qatar early this really they the end move with next outside told the that expansion hand,

selected XXXX would in increased companies in enough the participates we XXXX as so get one And spending in that, expect fortunate to and to some I of are XXXX. that period, so if this then in XXXX

additive to unknown in the be. It it's And on be last what kind imagine, plan might would to so predict of in we get that those that's numbers us And period. out now. just you working hard what deal would laid November and the the we to depends can that really interest

as far $XXX barrel a all that... and As

Paul Sankey

outside mean, just is incremental? the more? anything the stuff, (XX:XX:XX) plan, else thing? to second. we done Qatar Willow there basically it's some would on can Hey, for is you've Hang acquisitions, and It's example, CapEx know back $XXX? – just I So I do a you go

Alan J. Hirshberg

opportunities so get did a mean, think, with couple Western we've values an had very of special at what the had was and partner where differently we I than were viewed I Slope could thought deal. we and to that, able advantaged that special Well, really a North – we both we these situation Kuparuk,

that we and few But has like if we'll experience. can so find our are And deals that been good between them. take there are that far

those wouldn't So, coming no, project of I more per any se.

Let's that question? the – see. Was what that rest of was

Donald E. Wallette, Jr.

were the a $XXX We barrel? at

Alan J. Hirshberg

in Oh. you what Yeah. I right at mean high you're said. prices,

Our it is we is about won't change. likely price back think the down term, way more goes philosophy the come it basic The going oil in near enough. the higher that's to the soon crashing

And not to we're so not rigs. to plan that do. out to by That's It's do thing we sort staffed plan we more and of out running not splashing what what chase do.

Ellen R. DeSanctis

top Kristine, this of last hour. at the Ellen. the our We're We'll is take question.

So we'll one take more please.

Operator

Thank you.

Our go question Please of Molchanov Pavel James. Raymond from last is ahead.

Pavel S. Molchanov

in Thanks for guys. me squeezing

that getting the are Midland rig take dynamics regard? other would normalized to Or for you me. Just conventional be off? it of watching it more matter add there What Permian Is you'll to back back levels? one a you pricing from that one took in

Alan J. Hirshberg

midyear hard year our our it were that for have planned economics completed with plan timing. was followed actually the of had we the had as that the this pads laid running about of at for it. We that – year disconnect disciplined well ahead have at Pavel, good only even big we year, the the had could is, the and kept we conventional. we've And just as prices, running so we and of and work roughly budget the approach CapEx part planning been rig running on and it rig But half the going a and that we Permian in had went we down with Well, it. beginning

could there there seem great one not additional a year We plus significant capital attractive do other. doesn't to our it's volumes like way we a it to. do or to so timing. some or to And if choose But work the minus work and put next or back have rig

particularly as the by – by long to problem our doesn't held rig and in as go has putting that a is solved. probably As have a back takeaway like like it opportune and acreage the DIFs, long do as We'll our to the maximize work we flexibility production value that. time been all seem when exercise blowout that

Pavel S. Molchanov

guys. it, Appreciate Okay.

Ellen R. DeSanctis

things wrap And you. Kristine we'll up. Thank

Operator

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

now may You disconnect.

ConocoPhillips (COP) 26 Jul 182018 Q2 Earnings call transcript