COP - Earnings call transcript Q2 2019

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Operator

Hello and welcome to the ConocoPhillips Earnings Conference Call. My name is Sanera, 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. [Operator Instructions] Please note that this conference is being recorded.

the Relations. to turn Vice DeSanctis, now Corporate President, will call Ellen over Senior I may you Ellen, begin.

Ellen DeSanctis

will Don Sanera. to Financial Chief earnings remarks Operating our you, Officer; second delivered Thank Hello, our quarter call. everyone, and Matt Officer. Today’s EVP and our EVP Wallette, and Fox, welcome be Chief by and prepared

Michael of In three regions Asia today. Alaska, Bullock, Bill are of Europe addition, Dominic President’s our call regions; President region. our Macklon, our our Middle Pacific, Hatfield, Canada and region; President East They the Lower are on our President and the XX of

due periodic Page forward-looking SEC. filings release the measures measure this financial on morning's shows and in statements X to measures our of some factors the to this in morning deck refer can call slide nearest non-GAAP some also our non-GAAP website. and today's corresponding on GAAP our differ make refer reconciliation that We'll found Actual to of on to with plans. this presentation We'll estimates described cautionary be and today’s or the statement. press could results

over And now, call I’ll Don. to turn the

Donald Wallette

on financial quarter of Good I'll left Ellen. all. X. in the cover the billion performance, per $X.X our Starting the on $X.XX Thanks, with we share. to realized Slide earnings second morning highlights adjusted or quarter

quarter represents translate inventories the to fully bottom about the share. sales day, didn't roughly building by with outperformance lagged XX,XXX as $X.XX in production Our barrels production line a a which

the quarter billion cash from resulting free in of of flow $X.X year-to-date. cash billion billion $X $X.X operations generated We and in

broad of cash commitment underscoring our flow prices represents seventh of to quarter consecutive capital generation across free a range This discipline. our quarter

on We more trailing In continued timeframe, and the XX.X%. cash return investments. this ended capital short-term cash basis and over quarter our repurchases. than share XX-month seven has returns on strong importantly, And a $X.X employed with of capital, was all dividends, billion covered our operations from quarter financial

the per middle with operationally, quarter. Big turnaround the impacts column, Lower seasonal growth share underlying quarter the oil X.XX the in up equivalent we on day, adjusted to an XX a produced by of from X. mitigated compared Sequentially, debt Moving X% basis year-ago million barrels for per

final for the a our column, complete closed consistently terms. quarter this in several these quarter and on We bullet for low royalty able deals around in Touching the $XXX X the second million. about operational and of acreage to bolt-on in XX core the small Big monitor we and Lower the market we attractive with a kinds supply costs were in/and additions few areas interest transactions

far program the by year's column, billion. shares. to to repurchased In a the X.XX this of we billion repurchase we've share of Shifting planned total increased $X.X quarter, million $XXX strategic second right

of of billion year. X.X purchase the second to expect half We the in shares

closing in with in and second shareholders quarter in dividend, Combined XXX progress the year. realized the so returned the million to we our continues priority. of quarter, second toward to XX% half to capital disposition the we the shareholders quarter, In disposition operations cash a remains UK of proceeds second from returning

gain We before tax billion closes. of expect to a when the recognize and approximately sale tax after $X

$X significant proceeds sheet decrease net be with improvement closing, to by retirement expected liabilities balance will Also a at about with obligations about associated billion. see we'll cash while asset billion, $X

cash X, a look I'll at Slide up to flows. turn wrap you If with

$X.X with we quarter the the began of short-term second cash During investments quarter, and billion.

billion received to distributions, million $XXX right, with in $X which million included the to cash APLNG PDVSA. roughly settlement. from the $XXX million $X.X To-date, Moving was related collected through $XX agreement about operations ICC and billion, the settlement we've

payments a little from we Cenovus this the received in contingency during from receive quarter. or payments $XXX I'll To-date, continued we've transaction. to also XXXX value accrued mention million that contingent over

$X.X on, a capital from dispositions recognized $XXX billion cash we million Moving cash million the excluding leaving operations, expenditures had We of use in cash of from free capital, exactly quarter. and in proceeds capital of working quarter, was $X.X working billion which flow. of half was $XXX during the

cash For the yield X% was first $X an flow half, basis. billion, free on flow cash free a representing annualized

share billion Looking a to of billion in the or of of and the return roughly shareholders XX% on dividends last right, the $X.XX $X.X two to bricks $XXX CFO. million of represented capital repurchases

running slight by and cash $XXX quarter, buybacks build our to ending little first see Total based compared million right despite And increase with recent shareholder the the yield choosing is to in buybacks from a X%. over a current quarters. on the planned dividend on you quarter far the

our recap, value and from operations industry. proposition briefly to our builds on operational generation, free compelling for commitment The sustainable to to consistent, returns, flow financial trend capital cash quarter and this past We reemphasizes discipline, strong a quarter financial of this returning cash is and our believe performance. So shareholders.

over the I'll With call Matt. turn to that,

Matthew Fox

Thanks, a for Don. I'll year-to-date outlook year. highlights remainder the and our brief discuss provide of operational a of overview the

the to to the we So make of year. last end X. towards the continue at Slide Across portfolio, highlighted please we milestones progress turn key

we appraisal of Starting year, of series in quarter. injectivity conducted and season winter both wrapped well, wells Alaska, production interference Willow Greater test. for seven results encouraging been we horizontal the Willow and Area the the Narwhal second Narwhal appraisal half June have trends. successful also and and up in build The the in our the first

year. trend to positive on well taking later Site opportunity results, an Drill an from additional also these Based the existing Alpine horizontal the unbudgeted this we're drill into Narwhal

announced Nuna, Kuparuk transaction quarter. called in we and field Alaska resource second discovered We adjacent directly bolt-on acquired our to expect Also value we acreage quarter, the in that position. the to third to our close the high

completed Prudhoe continue Finally and in of in Kuparuk. Western turnarounds the June, Prudhoe, North planned will third maintenance was Bay the at quarter and Slope

the project. capability addition scope not paved Canada. of to diluent only the diluent diluent amount in our turnaround we require, and of the flexibility way completed safely also facility, improve our reduce to Moving maintenance We processing will central but provide This for X netbacks. which first the Surmont alternative

as the operational of by planned. expect the year have a end fully We to

In June, Surmont to day of year. continue production a curtailment, continues the on the we activities associated still barrels impacting fourth the to of XX the mandatory online, In but for Montney, X,XXX on brought was pad the infrastructure construction completion by be about rest startup track for planned with back and quarter. well subject

the Ford we to a a operational rate XX% XXX,XXX execution X the strong in XX, improved day first the now day, barrel Big at production Delaware increase Lower from expectation day the by XXX,XXX. of was a average day, Big to expect barrels our a XX. In and at XXX,XXX assets XX, XX,XXX Eagle to efficiency. Bakken X represents from performance production XXXX per from XXXX XXXX This equivalent about XX,XXX This quarter year. second due But an for quarter to represents XXX,XXX of up and barrels increase over of growth barrels of initial and

during made As the several interest acquisitions quarter, Don royalty across acreage and Big we mentioned, the X.

results Chalk Lastly, we our the play. continue to evaluate Louisiana Austin in

far, and higher see. that the three to wells were we cuts we first So drilled from hoping water produced a although oil

other is the So date acreage. Louisiana Austin and formations target, primary within evaluating to opportunities the results disappointing. the Chalk also we're are

to Europe. over Moving

the UK to Don continues closing. progress As said, disposition towards

that in We in also July. began a was J-Area completed planned the turnaround

the turnaround redevelopment sanctioned Tor the the In during system we second quarter fuel production X our be at completed turnaround partner operated at expect This of subsea to Qatar, is Greater there activity area and the Field in North In the tied quarter, Norway Norway, participating Ekofisk Ekofisk very Project. will end to in come third project. back on more XXXX. we Expansion that remain In we in the the assets. interested

the Sabah-Sarawak Pipeline full ramp flew ramp to recommenced, but gas through disruptions serve to help third-party up potential late continued through KBB as quarter, delivering floating in facility. began pipeline. in be the the Malaysia, achieved to supplementary up Gas This a offtake mitigate expect we KBB Moving Also LNG production the production year. will until production to and at don't in

a the has Resources extension been expiring awarded Indonesia, the contract the of current and XXXX. in the of Finally, ConocoPhillips this of Ministry Block our earlier in beyond in announced Mineral Corridor Energy participation XX-year month, December

execution progress quarter another significant as portfolio. strong as well the of across So

the me X. for outlook on let the remainder discuss Slide of the year now So

we disciplined and through our assets. approach high our of we're value we're the optimize XXXX, capital As margin continuing to also progress making decisions

We are for $X.X acquisitions adjusting guidance from capital unbudgeted two full-year operating our billion, $X.X plan billion excluding activities. to

appraisal including Narwhal long appraisal In about capital and XXXX lead the exploration well half Alaska, as our scope appraisal long-term conduct well items as incremental program, a I appraisal at test Putu additional and mentioned well additional we’ll earlier, additional the the season. spend horizontal in for to of

count of rig optimization we’ve order up In And next started plans rig just our few towards of as ramp plateau the show until Incremental with in this Ford, more optimize phase the November. a development describe we'll to we rig XXXX. the rate won't in basis this associated detail over the years. in Eagle

play and additions and To to Muerta base. [indiscernible] capital These deals million of XX into our Argentina. have represent both low-cost we closed Our the shale all announced XXXX operating mentioned including excludes Vaca guidance Lower in supply already $XXX acquisitions. entry transactions, the date, a of opportunistic we've resource low-cost

the day. we million expect X.XX per to and equivalent between X.XX third quarter average On the barrels production side, million

half narrowing and X.XXX You'll is year the our day. behind our now, chart notice of the outlook midpoint we're maintaining million a on but the this right barrels the full-year side guidance previous because of in that range us

conservative Now half our first this might look performance. very strong considering

our However, reasons. are at full-year for this guidance not we adjusting and time two midpoint

versus the we the Big second especially the production and because accelerate especially our the quarter the in first is second first The year of half plan the XX of Lower through X. into in from year, half

earlier, rate higher I to we for be overall X planned As said the growth than XXXX. Big expect

we so in levels the the year from growing to production – mostly expect level the of second be quarter. increased growing rate flat, We for the saw to modestly remainder

of in The and Big four below in to where these expectations. the areas. second GMTX the performing two is performance of the Lower lower-than-expected Surmont, curtailments XX through our first that the due is helps one mandated great portfolio. year diversification know offset from of expect wells project the factor factors example of in continue half the X Alaska, the year value production the The we to the essentially production That's year. of another through increased

plan underlying are the carrying and planned UK Also production with to still planned buybacks, bear numbers. these share our deliver We that But ramp all to think the busy clear, prudent this second the time. half the change so we operating of up year with turnarounds $X.X at full-year several billion production, debt-adjusted of be we and X% X% growth guidance have we expect growth. KBB capital per to delivering a mind is our in it's don't of and original

will production disposition. We the guidance close UK at of other relevant update the and items

Finally, delivers the looking capital portfolio. to our dive cash we decade-long a Investor XX of your and assets shareholder show plan in range a into provide diverse across strong are we'll forward free November flow prices, that returns and disciplined Houston. Analyst We'll across and a deep in meeting

the the shareholders. diversity our Our strong the flow performance free in generate our distinctive to cash first of strength and of to highlights to portfolio support ability half year returns

team the on is ConocoPhillips half you in long-term second plans our entire sharing our Our plan of November. executing XXXX successfully with and focused

Now Q&A. I’ll for up open

Operator

session. Thank begin question-and-answer you. We'll the now

go question Mehta from first comes ahead. Sachs. Goldman Our Please from Neil

Your line is open.

Neil Mehta

led ability Venezuela. generation, that and Can about team part timing, and good APLNG flow first items? going the strong guess to question from the quarter you to of talk you difficult had really and about should pull how out was is, morning, on congrats line the here. model a of dividend payment both it of we think cash independently and those cash I by sizing forward? the then They're Good

Donald Wallette

is Neil, take one. this that I'll Don.

the that. strong you from in in helped first a cash did distributions strong $XX We the million. of quarter, yes, to So have flow point the was And quarter. and APLNG I couple think XXX was that items it

first $XXX the million. So about half, for

quite about expect for to I the in up million it the the maybe previously, was distributions million be expectation think was bit, wouldn't of is million last I call, million. to would be It high. the the distributions think but new little going take year. in to to $XXX a $XXX quarter probably $XXX XXXX, I times gave But of $XXX range say maybe fourth APLNG I it in won't I need guidance two bump to the I XXX. on that for that call,

because high. quarter Now before, that's be even aren't when to be do on always but first second just the I'll I’ve relatively The quarters, to low fourth, going going this that, and the come and odd cautioned the third again, readable they're tax it folks and these and quarters, financing across payments the quarters. is the up, payments

So kind quarter should be you highish. fourth as be quarter lowish to you're expect to and thinking quarter-to-quarter, of third

With We probably only the and difficult the modeling the on because, respect to the give I guidance considering it. we PDVSA, we into our for one I that think forecast either. appropriate build that's view don't a to it that's recognize as very cash situation to the think and earnings receive way cash you counterparty. And

Neil Mehta

That's, that's but this helpful. certainly adjustment then small to billion $X.X from look, a morning. CapEx And on billion, attention received it's some $X.X

Alaska, of those So rate projects the $XXX in bit drove million think incremental why Eagle company? when a and and little return cost little good in about, helped more rig that the just a what the incremental lower the can that talk incremental the us are to you Ford give spend you the about about of

Donald Wallette

that. Yes, take I'll

Alaska, the drill though results existing off-ice Narwhal both of Willow appraisals winter. and extend Alpine. And opportunity offerings encouraging, to appraisal taking the sites the from completed our seen season very we're are so some we've really the Alaska from this So in we've to the so

Narwhal test and see decided well And to drill if understand that very go thought we do appraisal the horizontal can and an of the encouraging on example, we extended where we let's a deliverability. test The a well are results for long-term long-term into we've trend.

part that's of So increase. the

drill from drill site. well can and the injection also to We offset same this

appraisal that call get us that. information And further to But So in as saw Narwhal and trend. it's encouragement the in do fit by well. Narwhal, the to that take driven to really on the well what the well will we initial we're opportunity we going the

aggressive feeling And really on to plans in was we're also we're quite We're exploration season and XXXX. appraisal year have for good focused another XXXX, and so about going firming an that. appraisal. This up just our

to that. so do And there's some lead long items

what's give you and of get exactly learning. we've it's we that's what year. once we'll to, to this concluded trying led to But appraisal this some So from the November, some accelerate and details program encouraging

and programs looking optimum should to In that optimize add the this the always Lower to is value we're or unconventionals. an on from the year more Ford. we've working rate specifically plateau And the and been to XX, regular the overtime we detailed latest that unconventional that for conclude establishing to Eagle

seventh and next year. taking the And rig maybe rig an year we're opportunity eighth to the this add

part production So of rig the the that to unconventional what's class establishing that's next plays. – the create year, already of we to course it's rational behind don't expect seventh this sort to all till approach contribute but of the any

Operator

Thank you.

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

is open. line everybody. Your Good morning

Douglas Leggate

everybody. Thanks. Good morning,

XX% the returned talking this later to than but bring seem stay year, more about cash out of away your trying find shareholders. recall the be call, Ryan back last to investors to Let's now I to to and to flow I'm sector

quarter. this exceeded that obviously You've

really of What you how on? think was used thinking about variable when the in I'm relative what was all of that to thinking the along continues sector. are the I differentiate you return? how question specifically share cash prices particularly my your languish in do rest the sustainable. the of might are think, market with is terms the prospect And that a expression to elevated march clearly is times that distribution, differentiate you price

to you extent which manage I've thoughts share your please. can how a you any the And So follow-up own? got on

Donald Wallette

this Doug, is Don.

one. of shareholders. our think are to return I ourselves capital to trying that take me Let we distinguish Yes, with

billion let's our say second just that's You XX% you at $X.X the billion quarter of if CFOs, that something the year of you billion around and buybacks in and something that's right this capital figures planned saw and neighborhood billion return $XX this the $X.X for $X.X of a dividend cash, in then that see approaching of maybe year. around on return shareholders to look

the ways certainly in dividends we're trying you their to capital to on mentioned the the returners and there. just business distinguish we're to the thoughts. the so and best capital from thinking with feedback So investment we community to out talked that other That shareholders ourselves about E&P would I best and the and always with return say companies variable get compete

We some a November. that significant depth and of other buybacks model dividend But talk is common our so do on this return very meaningful a attractive level think a testing model. really current in about writeable indefinitely always of go ideas and capital more in we're we'll

Douglas Leggate

Yes.

question, is second very we a is push all just on. the yield relative want but on return know, Is to cash I quick just as where the back that. but follow-up that comes terrific Just my your comment

So fight. want between dividend a in never was you obviously what mean back put the I'm prior delta and your essentially yourself I high a what just to ordinary but dividend, is curious the if current they'll dividend with buyback position your is?

have And you capabilities. yield with longer free no guess thought competitive flow consequence companies is current similar that your cash challenge as a was I that

be to So have to curious And quick an as do that's observation very I if you a any follow-up. consideration. want I'd follow-up just add a whether

Donald Wallette

always those Yes, considerations, are Doug.

So yes, and the distributions We form about we of distribute how best think of return about to distributions. think of procyclicality. the continuously our about dividends. buybacks our mix periods in also between year we And in think cash level the of

to and the things that the November. to management are this about more So we challenge continues are and in these team looking forward ask talking ourselves

Douglas Leggate

something LNG confidential billion things source you're $X of I'm if be of multi-year can a industry Okay. the curious in that the still funding in plan just one. sub successful. are alternative mentioned capital included Is liquidation right My BF a would you very in or I a Matt, interested potential the but this now, have like case? follow-up, Qatar for Cenovus success that I to stage are I quick you expect understand

Now there. leave Thanks. it

Matthew Fox

The that when isn't actually LNG. already there don't in Qatar a position included the be things in average capture thing That take included sub not in we've presumptuous that billion we to $X in only capital. or are we'll not whether we've want

we captured. So until transpire that and we a to as funding see haven’t does there incremental didn't we but that have if it's you of include want capital, position ways then

Operator

Thank from Gresh comes you. ahead. Please Phil question go And our JPMorgan. from next

open. is line Your

Phil Gresh

follow-up yes. here would be a Hi, guess I first Matt. the question for

long-term you X Big you're assets in a You're Bakken comment the was align about to that flattish rig just on elaborate know could about asset making if I bit optimal the as three spend wondering to trying plateau. the time. an with And counts the for some thinking production a today. how I

Now the Eagle Ford. to you're adding

updated I'd have be have Thanks. you in again So even the interested the very and Eagle if Permian? Ford you thoughts if any

Matthew Fox

gives you this see Big but and life to the we going three then the of the X cycle. We're Yes. and different November, more in stages quite – on

plateau. Bakken now essentially our Just is

the XX,XXX a incremental on to that's of that and to completions But the have growth expect XX,XXX to be depending there. intend been would come. don't barrel long taming But time day Now, going a really range to for in we we surrender. to

there. and we that in growth November. But pretty isn't the of plateau and several still addition life significant phone call, has growth approach we plateau we will service too this ahead this probably so there. be it's the regard will within much on on do rig for reach to for elaborate earlier Ford reaching characterize we difficult is that we the the it few a what Eagle holding cycle, Permian we optimum and explain in something is The have optimum as reach the it of as duration. is in The a the but will that before years, next of and us rigorous to late stage this and plateau years And

Phil Gresh

And specific could on you Eagle Ford, thinking rather would just share is to or target a you that? there you're clarify that of say

Matthew Fox

we'll say wait plateau to now, from years we're share the rate the fair to that I than of yet but certainly more context in November. a few where that for thing, it's it's fair going but plateau, higher think to it's it's is at whole so to the a get

Phil Gresh

on in second is raise the There's follow-up which my maybe you could just obviously fully clarify accomplished in maybe a Don, you little just the quarter. bit. then buyback. And million the Okay. $XXX a full-year,

Thanks. just about Just degree just progression happens intentionally how a the in stepped prices? little there? maybe it have conservatism any about So of what with kind clarity up you're half. back around quarter? of second the maybe more some the Or thoughts thinking took. Is about you Is there you

Donald Wallette

Yes.

think you the kind the revert to quarter years. back couple million run $XXX I expect last a of we've of that us historically to can

in at cash knew And we of the year the bump the second the significant price, able have As And by our in for wanted share correlation far a the pretty do that. $XXX hand we course, least historical Brent X.X. quarter certainly to the to as to up we increase we million, price noticed buybacks dislocation be to or on correlation.

And we intrinsic was spend run November. the quarter distributions that value. what our XXXX we to go a But and discount $XXX over why two was are a rate, expect we'll talk quarters second next as plans go beyond and not as a and million selling in just and far then the ahead about to that quarter. the felt that large We or during good felt like increment opportunity at

Phil Gresh

Okay, thanks.

Operator

you. Thank

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

Your line open. is

Douglas Terreson

morning, Good everybody.

Donald Wallette

Good morning, Doug.

Douglas Terreson

Hi.

consensus and to than for differentiated yourselves most for probably for sustain Don, share credible is are while distributions which but for affecting growth E&P. next you this valuation grow prices years. guys declining to be capital E&P several plans and you've shareholder production on delivered have unfavorably So companies higher and appears And in returns expectations returns with year,

the optimal the to especially maturing. value maybe share be is spending portfolio The message way sector seems if to and in lower prices, that preserve restructuring

as quality historic trying but of on about them given on change you the well? that your think theme, emphasis and you especially question my when your also set, capital that is does opportunity to investment capital So way consider returns future increase it this the management,

Donald Wallette

don't thinking. I Well changes our it think

discipline we a business Doug, late in I very shareholders. in on of flow growth was out back capital high and cash investing between to of continued as came for the with XXXX capital focused well a balance returns our and much level as growth strategy good think that the

that going good forward. that and it's So I a on of we success a think have strategy seen lot on we've conviction one

Douglas Terreson

Don. Okay. Thank you,

Operator

you. Thank

comes from next Mizuho Sankey Paul Please from Our ahead. Group. go question

line Your is open.

Paul Sankey

Good increase The morning, if to find presumably wondered all. concerned have of were doing of I the you why and Thanks. avoided decision been Matt that. you a this hundred CapEx to stick about just optics couple couldn’t quarter could million elsewhere, dollars budget.

Matthew Fox

mean, we that, capital. the then I Paul, top value assets scope, modestly was that that obviously, the to going did to We're of feel should sort out that and we as really we the that. be we – of opportunities scope increase these delivering for the Yes. on the consider but be if adding original laid

value feel appropriate. could just that be So the of sake didn't to we extra if doing We would we here. the think without didn't as stick that add capital for to recognizing that the program

the do. in that the I want the shareholder do. So are of decision not the significant, it's capital. that Ford those believe Alaska X% we increase us – we mean, something in both but that made Eagle to to should It's and it's a

Paul Sankey

optics is such stick for Yes. on simply while that maybe that have would relatively if you almost it's fair a amount. back That will point, which bit running of actually minor Is the growth managed have running amount. work of maybe that minor could is which the amount, to such strongly – a reason I with of but number. just pulling part been you towards it's guess assessment? a the growth, on suggested, I that's you'd just thought better minor spending. saying It's kind again a would that ahead a you're the that

Donald Wallette

prudent driven year we're But call Yes. really significant there's of the schedule my remarks. Yes, the outlook, was outperformance to the growth prepared same as as certainly, a definitely. the us long I by the for in still for because three. said second we it with our full-year, big feel ahead for mean in I full-year quarter

a amount So quarter acceleration significant it and quite in second numbers. then the was of

it. we no we heading of appear real be and the to change full-year. So There's be ahead although to appeared for

Paul Sankey

Understood. I a quick then a ask bigger answer could you that to one not might If want one. and just

is Firstly, there guess? lot. where secondly, on after do timing you here a best Thanks And any disposals North from on Qatar, go Sea?

Donald Wallette

No. this really select to the partners that clear have really they timing timing have for developing We we on new when of This the but insights progress expectations Qatar anything the offer additional that is Qatar. we don't add to don't project, can gas making time. any the is on at

terms have disposition well. In we of dispositions, proceeding yes, and then the that's UK to close

report. few around to that dispositions are significant We have portfolio. something a that if smaller anything But the works front, report to there's it on in the we'll do when we have

Operator

go Please question you. from ahead. Syme Alastair Citi. And Thank comes next from our

open. line Your is

Alastair Syme

couple of on M&A guys you the Permian the mentioned versus disinterested. both I that everybody. A doesn't portfolio cost past, questions, had a to supply complete in of basis you Hi, think really

the weakness any sort in seeing change of you're If in expectations, given equity values? the seller recent

the you follow-up And quite be on in of you've but think that, give going Indonesian discussions Corridor, sort previous PSC, mentioned now, to it to then probably I challenging my to renew. it was

sort changes on supply? So of up I happened want does to what how costs that Thank the you. of have and match

Donald Wallette

then pass extension. PSC for on Okay, first think I'll question Corridor the I the I onto Bill take Alastair, and the details will

sailors the in we Permian really asking are. that So not you're do expectations? asking – market, what we in seller expectations We're change a seen if

for and And time. their that we a of use may assets perspective. we're believe what that can that between, not our seeing We people be capital so expect change obviously still from for there's what capital. over as And competed a change mismatch

past through we and why So on that so vision On Bill? that high acquisition very think of change that's announced small, I few that sort value months, the focused significant relatively the to and over there. really portfolio but no we're the expectations Corridor,

W. L. Bullock

XX-year that we'd the to continuing have immediately with governments by It's our We Hi, XX% of going XXXX December we're Minister been XX Alastair. Bill. PSC. PSC for regulations. the existing Indonesia. of dilution and a on announced is awarded local Corridor the were that's in to really that's that year presence discuss extension. We'll for the XX% working following Block and That the prior PSC a to a required Energy going government I'm that's be Corridor Resources Sure. to expiry pleased begin happy interest Mineral

we'd new definitive signature bonus split term and is it's It $XXX we to ConocoPhillips. got PSC completion expect net a and make And growth documentation. of PSC, a upon that million payment

got a see that PSC. $XXX a commitment of five million that's You new net it's but first during framework a the years commitment, also about

really doesn't It cost it granted extension a start until that and supply been pleased we're that. low robust XXXX. we've So is

Alastair Syme

entitlement Okay. will will forward I going what have versus – ask entitlement be you lower today? net-net be Can production be

W. L. Bullock

Then the then and working terms. Obviously will production bit lower. be it's Sure. XX% on gross is split the about a interest down

Alastair Syme

Okay. Thank you much. very

Operator

Thank you.

from next Howard Our Weil. Please Paul comes Cheng question Scotia ahead. from go

Your is line open.

Paul Cheng

think second Hey, in you think line met. when some yes, when guys, Austin the both you you – have would do about time I there? them question, the a aggressive now, that Permian, become pushing be should more of Chalk. you do that maybe that I good And afternoon. Two make think comment activities In or time one,

this down at significantly that or over what opportunities the is the should see, So their on there? you point, based potential we scale

Matthew Fox

back to Good you call. the on Okay. Thanks have Paul.

we completely activity time we're making the in stacking Once we're essentially and tackle which move plateau. the we'll build well from now, optimizing more over order be and exist zones the the which mode is to Permian they within as acreage. towards will We to in that rig sure count the Permian spacing that we've increasing increase that our just there sustainable our various of then got we

talk going about to are we detail in for And November in sure. more that

So that the work but you if plateau. that the this optimizing the of question, in overall on can context understand want you we

of Yes, that, development to we Permian aggressive more our but position? asking you’re prepared and more what ultimately our become will. we yes, So come on resource

Paul Cheng

manufacturing? aggressive the like I'm sorry, the more it’s not year become that’s XXXX Matt. on maybe or That means or XXXX you next that in more before that,

Matthew Fox

before get the out rig we to years Yes, count plateau. it will the will be that a ultimately few take

Paul Cheng

Okay.

Matthew Fox

are that the unconventional it's dewatered tested as extent Chalk, brought required isn't the mean hasn’t get we we example. water play those on chalk three enough as rates. And – Basin the there. I to that effectively to The petroleum wells the production had would. I Delaware mean higher wells Austin system they we other to yes, working the the plays, and of Chalk we've it high this as for On cuts Austin test produce hoped wells four just

about that shale. disqualifier. So it’s been we've a by oil have The XXX not rates seen XX%. the There just the targets But that It's cut be Marine over Tuscaloosa and development a to day. is water the itself unlikely in part targets Wilcox to a justify bet play. here been a a and the barrels are there of that enough and are

target So the by doesn't that Chalk the Austin acreage is look primary just condemned not encouraging now. and

Paul Cheng

the for the one? On in Okay. second year. final just a Can Eagle real I Ford quick of half the sneak

just being is target your slowing quarter from their second conservative are activity down level?. the you yes, that So

Dominic Macklon

Dominic It’s here. Paul. Hey,

of on acceleration this we've year Eagle an into quarter. the as I basically Ford online wells think second what seen

the So the it's we year, at I expect this online if count look same. total wells

is growth the the relatively of for profile the basically of of Eagle being year. Ford character ramp the an then and flat remainder acceleration for So the

Operator

Thank you.

from ahead. Bob Bernstein. Brackett question Please comes next go from Our

open. is line Your

Robert Brackett

and Mentally Norwell West FID of then thought sort pipeline? that maybe question does I'm that development curious Thanks. timing and the into Willow Nuna fit A Alaska. sense being of and make or of sort still about where Willow. development on we'd of pre-FID Does XXXX kind around developments.

Michael Hatfield

This Michael Yes. for questions. Thanks is Bob. Hatfield. the Hi

You're right.

the as and here the talking an Willow with Its last XXXX oil in timeframe. from when Alaska that FID actually do from We're with time about first very XXXX. about in roundabout we're year. to had appraisal we in Matt that. talked up Willow that encouraged by all was sizing get XXXX, exploration We you see far results to probably the perspective, you’re and of timing As now the facilities expect

it's and million a At place. that's pad $XXX supply on pad very something road low-cost in in acres XXX bit a low-XXs. to in be discovered very we're where Cathartic million pads, XX,XXX color It's to about. Nuna, provide that the adjacent developed backyard. It'll on of there's pleased at for barrels. Cathartic. just exist that both a our of little It's at It's that and to from resource that, It's a immediately gravel Nuna already

at facilities remaining The Nuna road season. can in be ice a single built

itself So completion then part be in and program, the development, so and oil technology we'll incremental be as incorporated development we'll drilling have target won't appraisal The Cathartic to our existing over of the XXXX be next that. couple first of timeframe. will years using the it and

of about low-cost excited supply we're So bolt-on very acquisition. this

Robert Brackett

focus? then And Thanks. program? about the what the XXXX exploration What's Great.

Michael Hatfield

that's in understanding of we're Yes, November. facilities. plans. that that going to extent size that and primary in Willow drilling wells on drill prospect plans also together At so going We're we drilling actually the We'll a to more the focus the Harpoon. the the We're fully now. be can about Southwest, Willow to for talk to be called Harpoon. current We'll the least in several putting is you

Robert Brackett

you. Thank Great.

Operator

you. Thank

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

Your line open. is

Devin McDermott

Good morning.

question, my of bolt-on acquisitions some specifically ask the I to first about Argentina. on So opportunistic wanted and

competes Just a of your set fits term the you perhaps on into how how there cost standpoint, are or that and see that other the portfolio? return from strategy supply it with longer shale opportunity and

Michael Hatfield

there. characteristics like five could is up the is of north piece position Yes. has play good Permian but be very I'll Vaca And and in layers the shale very looks geography. Matt. Eagle Muerta. Ford, within oil be XX,XXX-acre there a take Dave. this within the that it so The about we've acreage. some this this of are Yes, It’s in across in the picked lag There multiple the and stack to it

certainly a up. picked success Our north the here be expectations with pieces we've on would barrels success of potential on of billion acreage X.X

the the basin North. really us. this low for into probably And So supply international entry best best good unconventional as America. the of the see outside represented cost a play Vaca we play, Muerta

any them exploration aren't There they're over manage significant years. able work the we'll within commitments be but not that to our budget and next commitments, are significant several work

Devin McDermott

Got question And That's is helpful. second on Alaska. it. my

some and remarks road maybe bit of could develop. then the wondering if in whether down I mentioned just on impact the this issues what or remediate there's a the that you the prepared quantify an the offset one talk to more, or XXXX opportunity that GMT at a wells year You there beyond? or you're seeing about in later either

Michael Hatfield

is the had and at X. up in rate. Devin, It's last was Yes, development online year The this to a there's ramped underperformance Michael. plateau development producers We've brought smaller four GMT this are development. that only

case been producer one that underperforms any significantly up impacting And the So development. ends the here. overall that's

this We at taken GMT with different don't the but despite we this should were this deliver applied underperformance, we reductions that GMT that I the our the supply. had we project, terms expected X of for reservoir remediating in plans we executing X those where continuing and X. had see we what GMT capital with at actually we've while point, learnings the mention from of this project are costs to

Operator

Thank you.

Hanold Scott comes Our go ahead. RBC. next from from question Please

open. Your line is

Scott Hanold

going quantify or income how you'll alternative Canada, kind you netbacks on it Can Matt, revenue means incremental you that from of diluent in Thanks the was going obviously about terms to what Yes. the that? improve of much and forward? talked see using

Michael Hatfield

again. Michael, is This

about improvement, $X be the a blend actually it – say – of the a so. we look ratio With a upward would to be about in from dollars improvement we'll depend total improving would But perspective diluent of that's season. from general as and When a a about it'll year-on-year we project the or blend couple reducing total on so barrel a we perspective, barrel. think $X XX% at

Matthew Fox

the saying could Could condensate with takes was And the batch than that to two some of Scott, the synthetic, more bit a be the price versus double a fair it flexibility as sometimes price some synbit. $X? of big of because can there, $X blend have versus is advantages quite moves, the and run the One bit the because well. condensate, here all be the we all we or the value it the market value of of flexibility as Michael

truly a – the So a with the and and going we this that will the time. veterinarian perhaps plant with unlock optionality only over that's to be active of value choose the what lot to blend

Scott Hanold

Okay. great then Thanks. one color. That's one. quick really And

that any of terms out you sense in region. have take I some of of advantage excess like give of think Were a the weak and able last the talked And Permian much about pricing you and quarter? gas firm be this you've how can monetize some all us having quarter, you there got capacity to kind to you there? able

Donald Wallette

so what would Yes, requires. lot some commercially, you our out a Don. asking you're Permian Yes, whole I maybe is production multiples are offtake things fairly of the just give This probably say on is of Scott. of equity can't our the that that.

we commercially And to take Waha prices. of continued yes, be advantage the able to low

quarter in averaged second $X.XX. I think they minus the

do points we and west to it take And Permian. We in on that. the margin a capture purchase a so

for new year. active probably Gulf come Second quite pipelines the this to Express wasn't the others going us and later Coast until some continue is was quarter of is like But first quarter. on that's

Operator

Thank you.

Pavel next go Our Please from comes from ahead. Molchanov question James. Raymond

open. is line Your

Pavel Molchanov

gas One capacity of you're the previous what's up the Thanks the following that one to constraints? in it as flaring, situation, for on the seeing the more taking relates particularly the some regarding question. Permian latest given

Dominic Macklon

this here. Well, is for Dominic yes, question. Thanks so – the

problem offtake I our have talked have don't think just particular terms situation, of in we we about. as good own Don very a because

quite year significant we coming on think of question thereafter. Don see new we is I a as see there's lot a that export to there's some going said, of and pipelines end really coming gas on and this the this when capacity come

is resolved So I short pretty this think going to order. something get is that in

Pavel Molchanov

there think special low? Okay. I any so the tax parts explain And if was I'm QX, eight why in earlier, in XX%, lowest, sorry this Were that you but moving addressed income it quarters. about

Donald Wallette

Yes. is Don. Pavel, this Yes.

the Our during reported rate XX% effective was quarter. tax

So we special did number have a of items.

be. about is our provide expect reported or to would so and well our ATRs so supplemental in as are adjusted we our our which think saw I information, XX%, typically adjusted we where – ATRs And you as was

either where are tax two special on those low between paying difference the to going be the no pay or So we're very items items those we tax.

what – the ATR. get those so drives And reported that's down

and the a course for of pretty example, associated benefit tax being had with sale large UK tax it it. So we benefit, our quarter tax no in a has on

rate. a that's tax So zero

And level. our something sunrise We affiliates equity at then we look taxes from affiliate you disposition. the on the are paid on that the at the equity now similar equity get earnings had affiliates,

get our reported won't it that level. So corporate in

those So standpoint. from effective rate tax zero earnings effectively are

large low had tax number either we in special no that a of treatment. or the quarter So type tax items with

Ellen DeSanctis

this sounds of questions. is It out Ellen. we're Sanera, like

Operator

Correct.

further no this have time. questions We at

Ellen DeSanctis

call, out in much Well, by everybody. joining thank means, very follow-up any you have all us. if questions feel you to for ConocoPhillips. Thank ongoing the your interest and for today free after us Okay to reach you

Operator

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

disconnect. now may You

ConocoPhillips (COP) 30 Jul 192019 Q2 Earnings call transcript