ConocoPhillips (COP) 30 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Ellen DeSanctis	Senior Vice President of Corporate Relations
Ryan Lance	Chairman & Chief Executive Officer
Don Wallette	Executive Vice President & Chief Financial Officer
Matt Fox	Executive Vice President & Chief Operating Officer
Phil Gresh	JPMorgan
Neil Mehta	Goldman Sachs
Doug Terreson	Evercore ISI
Roger Read	Wells Fargo
Doug Leggate	Bank of America
Scott Hanold	RBC
Jeanine Wai	Barclays
Paul Cheng	Scotiabank
Ryan Todd	Simmons Energy

Call transcript

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Operator

Good morning and welcome to the Q2 '20 earnings call. My name is Zanera and I'll be the operator for today's call. [Operator Instructions] Please note this conference is being recorded. I will now turn the call over to Ms. Ellen DeSanctis. begin. may you Ellen

Ellen DeSanctis

and to earnings and be; call. and Chief our our Hello Fox and second EVP our Ryan to quarter Chairman and EVP Wallette Don XXXX Today's Officer. CEO; Financial our Zanera. Officer; welcome Matt listeners Operating our Lance. Chief Thanks speakers will

deck a statement. noticed quarter. of deck supplementary on the you As with morning's presentation many have of cautionary press short this X contains of that Page conjunction in release our we posted material

morning's We forward-looking to Actual with the our factors periodic as and some also measures to will press corresponding that could reconciliations described results in We'll and as this financial slide, call. make refer nearest website. today's the during statements also non-GAAP to Ryan. I'll that on differ to measure our call over can the turn And GAAP today due filings. well release be in some found SEC on

Ryan Lance

to Thank you Ellen listeners. morning and our good

the at everyone on has our and the hope I now historic been world. industry call and are is for a of midpoint well. the safe year We shy for nothing what Since of downturn and focused three including ConocoPhillips workforce. our safely March, the the on the business to began taking COVID-XX operating has the help actions protect and pandemic things: appropriate mitigate industry of in spread

very face plans. Our our stepped successfully the field are and in proud challenging this of of how I'm time. personnel the business delivering has up office organization

scenarios our to and our and strengths. continuously those relative against monitoring market Next we're we're executing prudent and current value preserve And focused on testing leveraging by plans and developing create future scenarios. thoughtful third, actions the

because capital curtailments. the we reduced clear in and allows operational approach this flexibility well to $XXX program. million our We to versus significant it April because voluntary retain is $X.X quick the the carry compelling sheet economic full to actions pricing that a prices our first We and that made would them a company. to operating XXXX realized out half recap roughly recovery a year. of for by through out the suspended second We by earnings the positioned the volumes lowered prices. balance tough of believe and rationale deteriorated and Low underlying exposure were significantly, hedging announced a curtailments share billion, Now repurchase reduced headline laid of us about costs as begin strength preferable believe curtailments. of for mask We strength. we our for us quarter due spending our we In production here's

you how We nearly at under totaling our through the crash available about into position. rest should in the of year, the the despite to $XX revolver. we investments billion Here's read including liquidity similar are short-term cash a we year $X $X prices of the billion. quarter's billion billion and prices results. $XX roughly with exit If current year midyear total sitting with available in for the the At came expect hold

such the take like deals supply curtailments navigating withstand announced can for downturn. to Our price the we optionality position cash We Canadian in volatility of bolt-on as on significant transact elect actions low-cost value creates Montney. better high and production

handle performing business. is we but business underlying production a curtailments top have Our base mask numbers, on very line the Again and good dispositions well. the very

the compared impacted capital and whom lower have cost announced productive modestly a relative weaker have our much competition, portfolio decline near-term we balance advantage reductions and to our believe intensity higher of many diversification represent previously rates and While capital capacity, sheets.

very just in well importantly, inevitable benefit prices. uncertainty and we're of time as But this recovery during from well up set to we're positioned So volatility. the

prices unhedged. a eventually we're We low significantly when more capital direction. capacity, positive This benefit productive move strong financial and in intensity and us have should

Importantly, maximizes that value we how shareholders. for have the on way manage a to in recovery choices

developing timing the We're you'd prices. ahead. already recovery our views looking path on and the of So short we're for in and expect as actively both medium-term the outlook

strongly cash beyond, communicate cash and shouldn't of change. still to year definitive a for next plan we us there we're of our you to answer our That's invest sheet strong recovery? a of and expected believe right next We How returning extent future? it's what flows but kick-start next, returns, While it's the appreciate might our as business: flows to years. the approach expansion, weeks believe the sheet? to to our to we significant shareholders what ongoing early the in we'll To to we the Given for about model simple above nearly fundamental should our generate if for choose What the we've the here business asking while distribute maintaining too balance stress questions following should are the to been to we We do shareholders for we to recovers. launched isn't and in the and program cash flow a capacity? uniquely right over last this months. what's capital testing uncertainty relation to of can you in the it cash ourselves When do on be be, execute one to We and do financial dividend downturn. expect value and proposition and strong cash carry portion want it much out flows a positioned four XXXX, by model the What's the mechanism tenets also balance see cash downturn way balance well environment think the and that? still business, some positioned coming a sheet.

me let Now in over the the turn this cover to Don to drivers call quarter's results. key

Don Wallette

some comments. they're second website. begin a on to slides curtailment some morning's key then provided drivers providing earnings this off Thank by you We our our of supplemental summary I'll and for with before available recap release along Ryan. the handing activities and press Matt quarter outlook

If to can quarter X slide prices our production sequentially. to be earnings the XX% by the down explained recap Libya in primarily quarter Realized second materials, The I'll performance. XX% the fell you first two and excluding drivers. variance from refer was quarter

the from our products; as caused the you lower to was was from barrel lower now due in curtailments willing remainder $XX the our curtailments deficiency decisions the value the transportation over at second of we barrel to the were volumes a the for foregoing product cash future. realizations at Big primary We've quarter the breakout time. and XX,XXX of rationale was and to the a approximately curtailments oil fields. you some the XX% net quarter the estimated Recall side business. We Of in the to prices are the the had day across that benchmark barrel by was X. about quarter. factors just quarter in roughly slide, create right per you was $XX can slide of to and offer see prices for Lower we to minor this differentials in sell in XXX,XXX day, and decline X by our see of the at XX,XXX, our first equivalent of not estimate on CFO reduction all for unconventional cover that a for payments almost in in Canada driver LNG; decrease, And On downturn We curtailments, BOE Norway. $XX barrels equivalent that aware short-term the a which sourced I'll roughly XX% related with significant better could unused XXX,XXX in and U.S., flows Canada production the total Malaysia Surmont can realize on Alaska per in XX, associated at second

our was in be based average clear an cash price second realized what on believe quarter $XX view As we meaning voluntary more about the attractive for economic we framework. barrel. CFO. as electing investment, voluntarily a We production oil to future we areas previously oil flows will was the forego curtailments activity for discussed, a we're where deferred The current curtailment

we can flow the of future. decision not return the And estimate results. higher investment while while, cash deferred would on we reasonably prices these on impact expect on to know our barrels a So quarter's capture will this we for the in this economic

As of cash million sold for sound barrels we and curtailed these as differentials average decision second We quarter, a this realized we from about at operations. was yield prices of represented a well. Market assuming economic the lows shows, the prices and increased prices that $XXX slide current decision from tightened had produced XX%. would estimate at the believe strip the quarter have than greater have curtailment return

quarter few through actively second plans areas actions curtailed the we're summarize recent we beginning to our quarter. key restore will describe a takeaways. Matt with deliberate in third we our We're a As but production where returns-driven moment, sound update, the taking actions during had I'll announced in downturn. in the operations

on is the focus our strong and company capacity maintaining Our preserving balance of sheet. a productive

to far, creation. a that, value despite And focus hand year with a financial Lastly, a in we're challenging competitively clear on very strong Matt. so position with I'll advantaged off

Matt Fox

Thanks Don.

of quarter some I'm slide briefly in cleared X on more going already Don's As and detail to curtailments, the a more high-level actions. to add those second color view production shown as

turnaround. curtailments to most duration and Malaysia back over limit second the Canada, the at expect Norway. staff. Alaska to September. precautionary sheltered And and the anticipated and few the We're Lower there based the the in fully turnaround third a at average field We're slower decision our described in and curtailments. at of We're quarter per bottom maintenance for criteria COVID fully was from mitigation, to we lend also the we by where Surmont, curtailed going be or curtailed Production next more is point restored. we ramp net quarter. quarter the day production fields minor third production. to in Canada. pressure expect the roughly up Also this our now Lower to and of production be increasing XX in of a maximize wells, some could massive but a expected quarter. chart the production relevant planned we as well third to in in in month-by-month downhole XXX,XXX It down time, we We in of operation effort estimate ramped we about U.S. conducted barrels But than this X,XXX in we So still XXX this our sustained on XXX equivalent are Canada measurements the the opportunistically in making between half the in curtailments line be a continue sometime extremely volume in of restored oil and our shown that's May. months, by in due X,XXX injection been decisions facilities Alaska The shut safely non-operating to through end collected roughly also except flush the volumes staffing ramping that's going and XX, as to has online

questions announced operational we negative curtailments. the a Now about got curtailment when we lot impacts plans, risks from of or

expect anticipated we've shut-ins been answer didn't online. that as impacts Our any XX observed flush the brought Alaska was due as the and and wells Lower we that's And we in back to case. negative production

I'll few So rest outline year. the for take minutes a of items now to some the operational other

touched In year. ago; back Montney, addition Collectively, wells as used that biggest Lower is in few our volumes production Alpine; pads planned flow permanent third wells quarter our are from half roughly day a completion barrels And pad production started they'll about now the In designs reduce the minutes XX,XXX We now flowback as quarter or Pad activity our a Malaysia. tied to Alaska of week XX and Norway; line fields, day. February that above a developed in three as X ago. of jobs activity in performing and at with is liquids. All pumped the expectations. the on impacts development the which X-well barrels being a Kuparuk I primarily XX by curtailment in new been have Montney the XX,XXX in our and pad know the third far in started this facilities ramping about turnaround one of we with Surmont, first big today. up. a Montney

encouraged the of it's data recently the part to and see very spot liquids-rich the and interest. window announced that's we're results. Montney encouraged Kelt. And low-cost with in The we this well our through the the acreage could position, from transaction to to pleased sweet of the operations almost our at like proprietary roughly of position bolt-on adjacent end-of-well play East our doubling And XXX,XXX current resource So acquisition expand with position how of liquids-rich running XXX% held significant us adds our acres working that Montney. what supply are from early by

higher producing the XX,XXX liquids. than In locations is slightly combined adds one supply of new deal day X,XXX in cost basis. acreage. billion a forma liquids On content pro all-in close over is over the barrel acquisition XX% the fact, about barrels cost to and a the and the mid-XXs with development per Montney And well including resource basis, a of on the barrels WTI

So very bolt-on we acquisition. are this with happy

Moving now we're the Ford Bakken two XX, rigs in seven to the the four Permian. running Eagle Lower currently in and in one the

between year. and We the given curtailments had add rig May, no contract, expect now or and spreads remainder crews frac of of some flat dispositions, the And the of end Ford underlying activity to the to and we changes uncertain one adjustments maintain with volatile, level Since calibration production. is plans the capital we've understand to expect still the you expect calibrate this to for not of give we the the when our guidance, to two be point for we activity, to Eagle curtailments under in operating Libya Because XXXX it's but we're underlying year. providing and about our a production. detailed but for adjusted XXXX you to difficult other environment our yet production

Now, for Ryan I'll call closing turn back the comments. some to

Ryan Lance

and billion we've close I the at available our to impact including Thanks low modest taken key cash strength, Matt is have date you and very want retained to midyear. big business capacity. underlying by our investments productive from Despite well workforce. roughly credit only near-term to our The $X the performing I'll in actions short-term The this Don. year's we've financial summarizing prices, quarter. a take will a on messages

represent better to withstand the and a successfully capital us price strength competition. advantage This volatility, the ability maintaining while can here. compared the Our to intensity to environment from lower navigate financial higher prices. portfolio diversification exposure gives relative We

value So plans, set future remain the as that believe committed our that shareholder is should to right one maximizes proposition sector. successful the for our we us expect you returns and we to

turn whose of and to his retirement Many the for Now, he's couple years I Don, company Q&A, announced the to call before I done certainly know wanted quite ago. I well recognize we over of of XX over months everything Don I you a appreciate service. do.

best you. We we So, wish you your Don you in we'll the retirement. miss and all thank

So with we'll over operator turn it that, Q&A. to

Operator

And question JPMorgan. Instructions] go [Operator first our from comes Please ahead. from Phil Gresh

Your line is open.

Phil Gresh

too. my Yes. Hello to Don and congratulations

You the we will and all definitely be missed together. time worked appreciate

Don Wallette

Thank you, Phil.

Phil Gresh

giving first appreciate guidance I guess, recognizing provided clarify that the my you're the on not the pieces guess all moving I quarter you commentary and wanted Matt question -- specific I just that third here. to here. I

the have So obviously we the positive impact curtailment with XXX,XXX.

headwind be XX a I think KBB second have quarter maintenance but a maintenance We sure the would that -- wasn't what the it's was. I

Or in absolute? And of is like or else we then base terms that should about there as anything pieces gave be number a you perhaps that rates such anything Thanks. decline the that? thinking is is quarter-over-quarter? moving So delta

Matt Fox

yes -- the Yes. for Thanks the second X,XXX was The Phil. barrels In and XX,XXX a it yes absolute day. number. the that's about quarter, quarter

Norway. APME So there's and X,XXX it's X,XXX in in a X,XXX from delta second about Malaysia in in barrels day The Canada, XX,XXX about -- bit and a quarter. a Alaska little about the it's and

split. quarter So it more. a The day. about in was that's the barrels the a -- It third XX,XXX bit was XXXX was of -- it

the No the -- a third third curtailed done that your it's bit return of of the question moving other mostly Phil? answer so the quarter. which be the does obviously XXXX. other than in will that significant than production Is parts quarter And less

Phil Gresh

does. does. It It

Okay.

exit thinking bit Second bunch question things business? further looking we just XXXX you here. for a suggest off you're you rattled guess of to I should little to view that how revised XQ XX? out a the sustaining think $XX of would think out How like environment do the But have And And the you're be we're about as about. Ryan were the an what you roughly kind on in company do of we requirements today would for about and/or if CapEx with WTI for any Lower think CapEx? you rate

Ryan Lance

Yes.

and some about in me supply spending Matt quickly let elaborate thinking and Yes we real of what would recovering the a that chime we then of we're Let like view demand and time recovery the a have Phil. lot trajectory see restraints. that look

where we But some XXXX said what middle saw we before you next prices saw process prices today And be differently that causing think in suggest the if our the see in and XXs if in at into we're act case ramp-up that's go recovery or as oil where we're in constructive into we I've of plans. a right some of kind remain some do year. kind mean demand the low now. than as would improvement we they're to building -- more of I bit So we the I the prices

let trying process rate then ramping and So if to the and in question we we prices which we're flat of And the some on today. have relative answer that understand numbers something base CapEx versus that's different exit chime case can a sustaining that Matt think in you I saw is had. to today a

Matt Fox

Yes.

the last rate in this as exit be to bit So -- that first year basis. roughly second a and was of Phil, so apples-to-apples on the -- on than an we in than said same the first the year. expect the quarter XXXX I production XXXX Production higher

and a quarter of with up to that X% So expect -- be lower second XXXX fourth we'd rates quarter balance. to bit X% to Right half the fourth in in to to XXXX. in quarter a the lower it's than somewhere from be now end fourth basis, and going the between get

So a sort shape as of the the rough of how profile. to see that's guide we

changed. we're In -- current be a sustaining about XXXX to to for tracking program billion year. the in wanted We've capital program $X.X about in, design 'XX, terms having The of to capital It's billion stalking it's of case flat capital to a sustain hasn't $X.X the shouldn't sustaining indication capital, still not from production if be taken XXXX an been that trying production but our shutting with it production because sustain to price and it's we year. still activities production, a environment. this

Operator

Thank you.

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

is Your line open.

Neil Mehta

guys. morning Good

I just there what point it was forward? realizations just the more there nature? Or softer be would think that onetime a than of of anything first in had that curve which a quarter. at question price in around The function had the would were role They you carrying Was in little the and anticipated. was we differentials in

Don Wallette

this nature. seen to the holds. quarter. were future we we turn Don. is it through be Neil, went out as mean would be depend in to that's I April pretty we what be But -- the May tough. improvements Well some on seen Yes that certainly hopeful onetime -- second would and going obviously have

about seeing we a what as maybe as was quite I differentials were from far talked on in field what the in this screens. everyone think seeing bit late different the physically April. That we was

the we that netbacks And even -- trade situation month we're that real differentials has but the we're finished June month materially the in improve into -- held at up So we seeing in in or August. July as the in got the certainly -- lease. far of trade as did and as

quarter point Brent in the But weak. the second the in able rates the Brent. there. And first with XX% it's only price of situation quarter, realizations give or quarter. demand everybody X talk we XX%. Brent next we realization. of on reasonably to pretty just market the capture let's familiar reference to capture the the a Coast third a because talk mean low Alaska quarter utilization And West were as Brent pad basis, with a like able refinery very for just -- looking the we were I up it's to in second quarter or well you WTI most first So holding were of is

And quarter lower the there. will difference we're hope and a stay we But that of marker did a quite we the more see So quarter-on-quarter. in realizations seeing significantly to now it in relative what third is to Alaska. return normal

the the We Permian. in also XX the them and saw Lower in particularly Bakken

Neil Mehta

from here. you I to to And When retirement. do we the federal also lands then gratitude two, around consolidation as of about question two to strategic think you pushback get ballot and continue on just in you. well want risk risk Alaska from areas well your be one, both focus and The is of but kind my standpoint the initiative. to Conoco, extend a be: wish Thank two-parter follow-up the M&A; perspective on a continue and around we Don a

could on you if head it. those appreciate Ryan, two would take we So

Ryan Lance

what And perspective the describe no. a and business, an M&A, needs the our be billion nauseating has Thanks, how be be has XXs. is the looking both we're business. inside for barrel of supply we've cost I development framework Neil. in Its detail in accretive probably Yes, and XX about fit from the resource I how got about to it we what supply to cost in we needs competitive the to think of Yes, ongoing thinking think average base. think the all-in to of acquisition from kind tried include the financial November, capital to to Again portfolio. to cost

large the work the don't encouraging couple of and of going market just We're think persistent. deals. changing of premium Noble watching the looking at that, day. We're that So deal years at in you this Chevron corporate the both paid encouraged Chevron And is past I we're business see we're think the patient, premiums today we're across the market I because for or looking looking when kind every deals. We're board. forward. We're asset

to necessary to by take the -- out the G&A we're by actions what of today of encouraged that's that's So we going market certainly business. I some help see drive the the what think in there of because some

deals described watching. looking November. but in at other we're assets it's yes and of kinds there both the fit framework we So to out got that We're

November. On the up is We're federal acreage hard. on pretty about coming working that in Alaska, for the ballot initiative

I long represent citizens the them. of more what on term going lower in just to recognize of is to slowing over Alaska slope, think it's raising well. doing what problem this result people a whole industry. taxes And to time create for not be the of a the just not are but It's across investment and and going the down we're doing maybe activity other North as

think So way and it's policy the and the safe. is operating probably we're the the acreage hear The doing Willow acreage the NPRA is out leased where Alaska state it's little leased are the out we're on state. bad policy it out our We've federal the from up acreage the bad federal fiscal up. of the there and in legislate through despite big to what pretty bad process. for view there. what up that state bit acreage prospective all initiative we're out in Most west. it's Alpine in on And is fields politicians, The discovery the is a we a already different. in We've rhetoric we

process? want you through dragged a still does the XX So do for been the development to it of into question -- our out it to they get different doing sustainably we do while successful we business that who said permit down and shut process. are the a and and follow responsibly, you a have it managed we've to that the done years get explorer and those accelerate projects Republicans, because this through and to all we then comes if go those we And forms Democrats it want administration, mode,

it delay if one-year that's manageable something concerned global within too to a portfolio. not our well we're So adds

Operator

you. Thank

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

open. is line Your

Doug Terreson

you Good Don help you. morning, over congratulations years. too the and appreciate we to the and all And everybody

Don Wallette

thank morning, Good Doug, you.

Doug Terreson

a astute to high-level And low went sales volumes looks your a of second talked pretty And point, bit maybe this prices few and when is record or negligible quarter little levels economic and choice so decision. choice like degradation. And specifically, to you about my reduce you your all's production first, a question Ryan regard differentials comments. on

of, And of it you should give just case evidence future to having kind some So second the ConocoPhillips? then exposure us financial higher be strongly levels peers your likely why to this E&P like be that's you after feel your can salvo that recent for flexibility so with as peers a seems simply. weaker stronger the versus production shale OPEC normalized most in and also many

on wanted get to just made? So that comments that color any you additional had you those

Ryan Lance

And Yes. don't let But as comments, a add in talked want any I and to see we've we -- production. then me may Thanks, start. so think Matt comments Matt what some Doug. can well. -- prepared few said shut-in -- expect with that's yes to seen. I the we we have have his issues returning to

what in barrels Matt third XXX,XXX curtailed the We second process. has. described the the quarter. quarter started we've So

seen of longer of the the Alaska color. seen any Alaska don't the not curtailed We've some of Lower actually So XX. and Matt bringing as some process production. in I is that described return to Matt some we're on we've seen even in production of in bringing and in provide I we think production. in fact And don't production. might that issues expected can that we've think, terms flush have

have this a the very of that we're shale Even return to the going higher rate. profitable coming kind in believe We curtailment a We're that to have the we not come production position CapEx finally and from reliant see curve have described sheet described. just curtailments a general. confident at rate XX% out pretty back the that's the the we in the financial flush course the economic we're of then of a of the reduced strength delivering And competitive advantaged. experience decline not and something yes, The feel some flexibility for through we do the in gained forward economic looking very our the on exposure made the we the given that excess us people believe to the So going lower discussion yes Don that But we we've feel got balance only that industry shale decline and of that we've completely strength respond. and but only think confident we're decision we're we we had. shale. financial have of that on that competitively we've will analysis not

Doug Terreson

Thanks a Okay. guys. lot

Operator

Thank you.

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

Your line open. is

Roger Read

you. several thank great I calls hope Don but from Yes. a years. you it's least morning. at Good this, Thank And for the like last over congratulations. retirement everything

Ryan Lance

ear Roger to smiling He's ear. Yes. from

Don Wallette

Appreciate it Roger. Thank you.

Roger Read

back flip the kind thing. to of M&A to Just

you You take you $XXX I type couple weeks bigger to than to acquisition this to as part did But mention and time opportunity suite you Kelt assume looking at? bolt-on elsewhere? you in the as there opposed the XX this of want out of look on the or to that it. at offshore not something things at kind had mean transaction. at I compare point some you're that's Lower how Noble that's of how maybe little million acquisition a other mentioned the a of that probably that you the was just Kelt announced transaction. compared I nice curious though the ago

Ryan Lance

Yes.

and portfolio to probably balance Roger seeing even their bit financial those sheet. either diversified are trying bolster assets at a in we're more is that a out singular that there looking what condition distressed or think have of there's I to their potentially or transact companies

at kind some financial and deals it we I pure kind of some deals corporate But November to looking a at So that had motivated or we them. It until that of and all-in actually on we a or of think we're simple even identified framework other price pay ago. we that and it's an supply. interesting the to willing asset they acreage smaller interesting. were two were we transacted see in we outlined cost year sell with And wasn't on are see this

to So again in and -- our to. last you five fit we're just got has to and And cost financial the sticking we're for detail incredible six what pretty framework to patient that's or it persistent. supply years it we've outlined that guys framework our

it our that meets capital attract in as criteria. So it's regard. be got as portfolio to competitive it Then that long will within

Roger Read

fair been? So are it sellers motivated little that they say is more than have to a

Ryan Lance

certainly yes. are, Some

Roger Read

directions second And to seen about oil Okay. for a programs. E&P of price bit some a minimum with little talk their before some companies would just change drilling the they We've to question. then restart start

think As the earlier an the were price decline of this you deferred oil billion about should makes CapEx probably down XXXX attention probably wells and think XXXX it to Or to to? that you year completing plans? and $X.X is confident there Or we everybody that is as see drilling likely as that pay managing to shut the rates drill? need of more sustaining feel about more lever you kind what marker you the

Matt Fox

economic to curtailment there's production, specific clear the of, We Yes. was Roger, weren't wells, This as in sort very is easy Matt. in well. made would discussion I any then deferring criteria trigger. completing similar, curtailing economic a mean a production that was sense. that of It's later. mean that. the be I been we're of certainly -- take bringing is that's adding The on we've say I the prices it new wouldn't any below -- I more on course. bringing may not and economic of XXs calculation there sense new where make that the for that and course, it reasons, -- so to the one production the and see

cost efforts as as $XX bringing curtailments. of criteria did that of new low similar supply, production for we of sort as for for new we're on bringing as as enough, long would use production, on low we portfolio is criteria cost long is the our supply supply then the the and a below developing enough and cost to So our is

bring the you for strip would at okay it's portfolio today, that if our that look new that if to suggest into necessary. on So production strip,

Ryan Lance

And competing year, all for we I how the next stands things all balance cash do try the to we based price, think, Where add, balance those the I'd flow when we price. the think cash that's is flows? we're on starting the to Roger, the that as generate today balance sheet about

and not flow that to we're a need we'll good on sheet. cash the that we're that given afraid. balance Matt's think, good against for deliver We cost competitive investing just of I a We're in. expectations the supply our capital now the So, a ROCE right, convinced investments return and balance and

Operator

you. Thank

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

is line Your open.

Doug Leggate

luck as you a been I'm good know, morning. Thank always and not Don, putting everyone, I it years. afternoon, the but add good up Good you. going spin for congratulations differently. everything. for us to maybe Thank well, with of easy, my it's little with bunch all but last of

Don Wallette

Thank pleasure. a you. Been

Doug Leggate

with selling in argue, don't things point not, some about is, a it? if you've strategic if forgive you off ConocoPhillips? that's "gaps" type here, a how term. controversial followed confident seems controversial I'm the expressed what got to portfolio? out, of recovery. it's be not, one why But goals too Ryan, fill smaller of at -- the Noble to are look and you M&A for to for When Did but kick that me ConocoPhillips commodity bottom. would a what at being you of know kind the specifically, going My you've less that -- little that, bit the the process. in believes Noble the strong landscape, your mentioned, confidence With And would think If the changed, are I peers not?

Ryan Lance

Doug. Well, we did -- I a it's question. think, think, look, I fair And,

and us position. when with I the And the second about problems portfolio, the look then in gem an little doing Eastern maybe politically. And big issue things certainly creates at Middle the it, we're a of think bit that mean, of go gas and -- a the I Colorado pretty a we even got wanting thought fit price offers and valued in portfolio. not would Colorado different obviously, of a Noble to portfolio for I they're painfully great our But, we in Colorado. recovery little piece a commodity is Weld fairly exiting maybe and them Then, back. say, just not the other think in Middle done East we with County being match the on the our concerned about just some we bit is perspective

Doug Leggate

would a example, looking are that -- landscape, the may, assets the answer. Conoco. Where it. I inventory great a be decline depth or asked for let you so if So, you with potential when more fish portfolio. fit M&A But in unconventional Thank -- strategic for if you life, seem bit. as are long like, do Is gaps? folks at your the What gaps, appreciate -- just just to for about little concerned, you have look -- sometimes you growth low me you see the

Ryan Lance

gap worried add portfolio. I don't much there. even just we're unconventional position inventory in Kelt Well, think the our recent long-dated think too I And -- about some acquisition more

of its quality again, So, over supply. it's quantity. -- cost just And we're and

long-life that your So in your decline we're And like just space, focused on are unconventional -- cutter, train that in low another describe would firmly we low elsewhere. cost the wouldn't assets it?

Doug Leggate

I leave not I wonder, just Don, flow quarter. again, guess, was manage think, Don. don't what a of look, could at kind still the this sure people. of help you if seems there. non-cash for moves And Don opened it advantage to some past. about and your But, us just and being the what here. some range we're to that just in that estimates, it morning, surprised if I'm walk lot the I'm the It behind and exactly is, would. moving Yes. up I of other earnings deltas Yes, of you up a question were parts? clean very corporate this related mind cash thinking the difference that. wide the my specifically Well, you of which, how to And stock take on, XX% follow-on so market all I'll rates of thanks, between almost items the DD&A through maybe

Don Wallette

of expect, was estimates was difference we addition, there between wide quite Yes. because earnings did volatile Thank you. Thank range as would quarter. you a you, And, any it Doug. course, not provide in on a -- Yes, guidance. the

think about first So, there. what we for would were the to things -- or I But we point folks outside don't the probably that estimate. we the the difficult was can important be company and significant talked know with I of lower I realizations. to before would a very completely -- I number the it that guess surprised can most that

a mentioned item. Now think somewhere temporary that that was a that, around market hopefully versus impact a not But And historic mentioned capture of per a we share as impact. before, prior -- I figures we quarters. far that our was quarters think I percentage some cash XX% as non-cash and those and item, as probably

not You that was factor that mentioned probably DD&A and expected. was another

But DD&A an did during couple the our course lower made DD&A a due production. you dollars, that rate with would a anticipation adjustment price as fill up the BOE. to of we Of that was reduced expect per quarter lower declining of considerably go our to the we've result in that reserves of rate seen. And

through year. their rate, reserves. end and the the until it their wait We companies some look Now year periodically DD&A to of revise the at adjust to

interim updates. So will we do

direction us it seen went the improved the as we then, XXXX, do And other did in reserves came and down. it as We on going back before. reserves You've in XXXX prices were and books. XXXX,

be the rate that But up. rate DD&A adjustment did the interim go situation caused that perhaps the make wasn't to the only thing in so to here. will we go up. that That second caused DD&A quarter And an the

also guess, our Alaska the were impacts -- XX quarter we had -- with unusual curtailment during volumes. from would decisions. some low, I product I second say, an We Lower We had mix low

compensation quarter, market the had see is million not was pre-tax track, $XX something normally wouldn't been that rate so I mark-to-market end an from you as pretty and the as most we issues. well. movements rebounded an you'll benefits And mark-to-market, stock to it product the cost of the And the of the I area second it's around impact would saw first anticipated, the think, of on the that adverse have well. that that -- third quarter ConocoPhillips as on and important end mix stock think significantly just impact Then may

saw benefit to $XX as a million went went was end the had down. about from And recognized the the end I stock in fourth it of -- of a ConocoPhillips the we impact stock the down. think pre-tax quarter, market saw cost as price on first we the quarter a the go when And and saw you book SG&A negative. mark-to-market opposite. Now quarter, first We

be that think point are to, to I three So I company. the those the items difficult outside would that would main estimate

Operator

Thank you.

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

Your line open. is

Scott Hanold

as congrats Don And well. Thanks.

of about think strategy like a we what and prepared Day. not Just at considering it picture, made a of heard last coming tenets guess strategy of had up of question recently, recasting level your what you several we a several Analyst several we the last what months? have you -- remarks, like guess the years. the most guys happened high sounds little And in the like has what bit over some your approach growth changed forward. over because November becoming next in But comment what on, Big your And for sort Conoco operations next should look I I we conservative taking at moving over of are more years, year from discussed a guidance the your Ryan, and about you terms how you saw? core

Ryan Lance

quantity think recovery low-cost come we of timing in the once we've see points we looks get what like we'll large as we all second forward in portfolio. the be you base then, XXXX investment opportunities. we'll guidance, of We'll associated differently came huge, talking testing And are, little we against got quarter. go what lot scenarios, supply, bit be about and think a I or we Yes, are we'll and as curtailments, with our through forward. I noise a it tell -- the as we'll and plans plans think forward of We've that. working we our a -- resource what But uncertainty, beyond as Scott, kind our of into both look recovery, got then just market. We yes, terms the and I of had to

We maybe to and get it's what we've flat the front got market, view. kind people us of should any a the what questions the a I in us do November. do in And we've that to seeing that think You have And go to on assets. similar of to portfolio to going are, recovery. in We recovery described growth back that, to are do, mid-cycle follow We trajectory, we the demand don't recovery. a some the do expect of be back with see the kind that way of of other got if to lot modest then forever. invest some think is we they for the are what is the And is going value going to have right return E&P around going put prices, rational industry they they to a not forward? the sector shareholders back proposition industry. a a view of to And balance a questions one which to are repair or sheets? that decent Are going going we believe

and of plans returns but being decision to returns feel So to I our pretty there of the grow from we in the a a perspective both capital the able shareholder capital. and returns our if confident that's right lot parts, are think on company moving

Scott Hanold

that some Okay. I I forward detail. of appreciate look to the color.

bit seem but more that of portion follow-up is quantify the pure-play there and a operating not type I'm far could Obviously so little all costs the with you same there. some that to shift? dramatically that? As has. if saw question, And little of of may we've not Conoco give a It a a Does curtailed of that Conoco sustainable, If and companies mix Don have what but production that doesn't bit the in color that view good quarter. it this sure versus the XQ are some us of others? of type seen can a from second Matt like have be do dropped drop. a Is you

Don Wallette

didn't caught in didn't I fall our competitors' on speculate the that, But if where I'm Don. look did. because have in decisions areas quarter to pretty second as And competitors much we I looked plan Scott the for exactly or I did of around lot at know you at And And curtail this fall try numbers. has curtailment. to that. a do cost it that is as the don't you on the Eagle heavily example I'll just -- and think unit with that going rates that might I production haven't because our like I would the our being quarter surmise Ford. question the

dollars Our costs in the lifting a barrel. Eagle like couple Ford is a of

fields. BOE operating you high look are type unconventionals flowing these very if cost So low typically cash at our per

ConocoPhillips looks second the reducing benchmark that will we're we going of top so been year, early one little efficiency. operating to up competitively as that. like XX%. compete looking benchmarked track that this We back has range a by the XX bit we far quarter X% announced around to And in from or reductions production companies from as beyond maybe And it of of a with on higher by company offline, I always year recent history, benefits see in of very low not say we And the it's XX% keep against say with. operating company. the very one cost the that do were

would that on I expect think I our efficiency. we've operating competitiveness So retained

Operator

you. Thank

from Barclays. Wai ahead. Our Jeanine from Please next comes go question

line is open. Your

Jeanine Wai

Hi, afternoon, everyone. good

Don Wallette

Jeanine. afternoon, Good

Jeanine Wai

caught already But earlier that leased the Hi, I the acreage in. you on good me you're In question that on. election Neil's risk. interested and And Alaska state change some, not on was gas status of up believe the receive if those be on you land? oil sure you for federal I'll And already in follow-up I you afternoon. environment what just mentioned permits. project federal said the Alaska, all Thanks I'm Willow? having kind on there the you and specifically federal insulated once would of, do and how permits think do permits, have potential for you regulatory

Ryan Lance

process Well, to all expect Willow get in right specific year. we're for your federal permits question to now I and we -- this the so the later

on We're is process record everything in the of comments. the decision. on track the So all

on last XX So that for the don't the other we any and permitting don't expect of associated expect things we process these seconds -- at some issues the sure would with permitting? we're for part. doing to Willow Could Jeanine different me? not citizens the caught I'm you what rephrase that You Slope. your something sure, say said not North about I I'm

Jeanine Wai

if No, I it and second might think answered question. part the you had that the was think terms you be permits of you in insulated how many of

Ryan Lance

Okay.

Jeanine Wai

potential your there if federal be development you the would likely And still elsewhere, that what's plans very run those follow-up maybe backfill about list? growth most projects? your your project you. you acreage acquisition? would high in Alaska through would you're I or of couple interested the alternatives in. issue be risk cutter that if some whether And think is the guess can to I Thank factored either just can Kelt mentioned for this Willow a the affect in you you into kind might U.S. know talk on more be

Matt Fox

take is Matt. Yes, Jeanine this that. maybe I'll

that project mean, in issue, a were was So Willow we've resolved. I we'd in if anticipate if don't particular one, permitting delay to But there we there that -- time one. COVID because head just the had do until accelerating. we if the advantage at capital that towards there's no in reallocate necessarily the wouldn't that we back pace We had we Alaska. in past the crisis the before capital was

will the run opportunity the interested several this through looked the the Mexico. -- in were in than unable rest expanse Alaska other U.S. lands -- XX time -- And we at and drill -- federal an the completely substitute time, in just So still XX-year North as federal we a on in with could its topical the ago as in the years. land federal of most question is Ryan earlier answer at -- of talked for terms course And bit months Mexico, that we'd wait. if that we've lands think New -- we at the of to again. land have it's but next topical a but we that year. U.S. the New our provided we call, The I the just in plan the nonfederal We're a Slope in little this that's was becoming Field the we're process in probably still North expansion

just different location would that's not affected drilling the we move that. a by to So

that of U.S. version short our the lands the be ability constraints significant develop in the federal to that, So will issue company. any for on a on is not

Operator

you. Thank

Our question from from Cheng Scotiabank. comes next Paul

Paul Cheng

say happy in get morning. my will the I'm Coast. I Really Good for let appreciate the also me that beach or while Don in fun. years. you. the add don't too you help but Gulf We Thank congratulations. had over comfortable But the

that. for too You're young

Don Wallette

Thanks Paul.

Paul Cheng

Anyway a of couple questions.

CapEx and So in be actually you're that is your can the in important designing look maybe to at Or Or First, free more inventory? the addition that for deficit your a of dividend neutral in demand-supply little you also we're you the most cash going And and process? after Ryan or decision? year plan position willing understand in do to thought that how have important a in process bit flow is CapEx year? is will free price through trying signal to cash be balance the that next the help understand cash to actual for run this to will the you positive? secondary terms flow flow driver me next that a that going you

Ryan Lance

your as said to answer or believe want that's of we over Paul be the the of direction goes the we recovery terms be as I to long think in watch to it haul. don't my to to -- of Well not question magnitude will only what determined. think I back recovery mid-cycle comments, the the opening I in trying we've price

a to to trying depending then, pre-COVID trying slower level. to drive movement and company kind on to will price is recovery also to on. of sheet of slower going fundamentals CapEx demand to worse be what where the that around of potential what excess going our fundamentals, the re-ramped needs function we're But supply cash and fundamentals a think considering those that cash things. the were program and look obviously be all side consider, price to productive the that scenarios our capacity that's free be sheet balance equation We're the the like to what we balance or the which what and be up So we're flow and you're get and needs balance either the supply-demand about of

into those the ourselves the those that's about have to understanding So trajectory it industry answer pot of questions we're what but next I through the as into a satisfying we follows know, is all to the beyond. And we not and think and I trying establish and wanted I around kind demand and the as itself. it which putting why that's to year is all we're to rooted are look what say get is XXXX, understand. of of but price -- to asking trying going very supply closer go that mixing asking it's more we're we'll to that year in like But fundamentals and as

Operator

you. Thank

Simmons from Please Our go next ahead. question comes from Energy. Ryan Todd

line is Your open.

Ryan Todd

now about that price? on that XX Thanks. you there Is I'll is my just as one further that the nominations? anything we does -- talked in Is cause -- And the the of volumes, any then years. been And Lower It's some add it resumption congratulations September. of pleasure restoration the a between the is oil based timing Or Maybe, on the that about production Don. to time into line over current further think based follow-up price? the could assume is on recovery curtailed and there to right? push that it

Ryan Lance

you happy that? Don want Yes. to I Go -- do to ahead. I'm mean take

Don Wallette

economics plans production. think a September and we No comfortable in that to in restore to August a increasing pricing while our deliver that curtailment for got enough of the type Ryan, netback we little point starting where to we where just it to weren't going are like as was going returns ago pricing more well. was where little XX%-plus were netback got the to bit I look to to high expecting. happen Saw were the We just

a out decided were to come we and from could ramp-up to XX% pullback decided in still the kind along But spread up the August that we're few frankly market. we July expecting expecting there to plan. over And just and with months than of watch go that we of be somewhere capacity a So a in rather XXX% way.

posted if plan change change we as morning and materials we the our what's that on so If what is, based And well. is, may then things then this outlook. significantly current there showed you in we our current

market be they and will plan accordingly. like to the May and to netbacks returns adjust we responsive So the back then if we'll market very poor were our April in

Ryan Todd

current months? Thanks. And suggest you other mechanisms comments And prepared then your buyback? Has what on debate proper view at to all of on the in your dividend. recent the changed mechanism at to are beyond follow-up. share at the seem in this cash maybe your shareholders start Ryan returning remarks one some above looking

Ryan Lance

over had course we most people last we've probably money conversation I or optimum to way years at look the the with the I return think as back think two phone on the this kind shareholders. three of of Well, we've the to

ordinary environment So, of of we're flow. providing in cash in that our is dealing that obviously, in XX% dividend well the today the excess current we're

-- respect satisfies markers it our down value set that our with of the we proposition. to So, some

to to price And about what and return flows as I conversation and variable looking cash structure. is share the sort years are that the those buyback we're think obviously, the with the back about now. number shareholder. is well we as as one best of So, for think or money optimum It's the way incremental coming thinking recovery of at a we've a had of sell-side some of dividend buy options type we

be trying We price continue like, what continue informed is to part analyze the think ultimately, mid-cycle and large the about recovery that about the what way. and going of best we figure trajectory But it the to to in the marketplace. is, think looks to a what is out

we that to of but So, lot of a together kinds alternatives. are about put have thinking those all

Operator

you. Thank

at this Ellen We have I Ms. time. to back turn to the no further over questions DeSanctis. would like call

Ellen DeSanctis

all Zanera. of Thank stay means morning. appreciate and have the Thank everybody's at any you, follow-up That safe. out this and time top We're hour. wraps if everybody up. the And questions. by I interest things you you reach

Operator

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

You disconnect. may now

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