COP - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the Q3 2020 ConocoPhillips Earnings Conference Call. My name is Laura, and I'll be the 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, this conference is being recorded. the to turn now will call Ms. over I DeSanctis. Ellen Ms. DeSanctis, you begin. may

Ellen DeSanctis

who morning Hello, of listeners. team call. and Laura. to the on welcome executive members Thanks, the this our today's introduce I'll ConocoPhillips are first

have Dominic EVP Chief Vice Nick Macklon, Vice our President our We Matt Chief Financial our Bill and Lance, Senior and this Operating Olds, our Operations. President CEO; with our Ryan Vice of Technology; Officer; Strategy, and Global open Fox, Exploration Bullock, and President Officer; Executive will questions. remarks, Chairman Ryan prepared we and have will team take morning and some of the Senior then your

short the with material regarding deck reminders. call turn website, Ryan, to the In quarter I onto this a available release, conjunction press access. our for your few a of Before morning's that's supplemental over posted we

for turn to I of corresponding today also now our by this over incorporated morning's release reference also this ConocoPhillips some this as week can And press be business about will between make important well Next, with refer measure today's risks information call A website. you. will of can found press and forward-looking GAAP statements on statements the associated in forward-looking which combination about reconciliations to We'll to as all expectations, some and are release, be we call. based proposed measures other and of description the financial statements nearest transaction Thank on non-GAAP purposes and the the the proposed Ryan. current last Concho. found announced in morning

Ryan Lance

good morning And our to you, listeners. Thank Ellen.

for market Conoco that clarification. annotations take highest added combination of compelling the our of minutes past days, say great third a few merits Today's week's address our I'm We way, to opportunity of deck the a our and this call on week, the the several Before the to we sets lot to the for transaction with spent By feedback announcement positive. reiterate the to we at to level. reflect is talking start a time of transaction earlier into some been pleased and results, conversations over last quarter I'll our I'll shareholders. both Resources. get has

model, three Our recognized our widely all providing uniquely the our Yet pure-play enterprise is on returns positioned mandates and announced model focused best-in-class our on We $XX affordable to be price combines while business transaction ConocoPhillips Concho the stronger on recognized Concho industry the maturity, leaders characterized and and been two more leader within returns in by leader with a for sector. stand-alone investable existing both And Permian we companies cycles, in scaling recognized frequent been the a returns a capital has by of business. has we're sector, are up class. basis the in create ESG these we embracing third, a value the successfully sector. transaction second, nearly We'll intensity we ESG billion mandates accelerates returns. that these by and That's world, capital will delivering competitive to mandates. how to first, essential what and of for simultaneously committed to believe future excellence, win. ability energy are, the the And are deliver sustained believe focus. three

energy of scenarios, me part hydrocarbons transaction. we our by even long the let need energy we as all adoption for a as the context one In Now increasing low-carbon these of will take time, the see in of world one sources. mandates mix know energy future

company supply gets to gets transition the the a transition of That's having affordably in two-degree will attributes. our barrel. always developed been reason of the best in also benefits - the in rock with However, supply resource cost transition world. can the less any recognize including scenario, resources than we've less adding energy scenario. industry. of cost global, resource The way, the be And of with we base means the resources in $XX the Conoco a that winners committed companies that will those quality benefit of a a portfolio the be XX capital we lowest everywhere. have the ConocoPhillips intensity some billion base diverse a barrel studied and lower by than

we're excellence. on move climate framework. Paris aligned to mandate, so. conjunction ESG first transaction, the we to let's gas Now last oil US-based In commitment the risk second do We're announced a week's adopting with and company to a

installed commitment our goals, ambition to includes a by permanently intensity and net the in in to framework operational US. specific This advocating well-designed carbon is to flaring, no a monitoring target reach price XXXX. emissions routine Our zero methane service emissions reduction framework a for

risk announced agreed. explicit assets. The our in is this framework transaction we've the if meetings effects engagement Concho Now answer the We included portfolio climate of our framework were was preparing before issue the to new no.

lowest of and assets addition being the accretive consistent in see unconventionals the the we to emissions with assets intensity are world. Concho's the production The GHG goals. among these However, US as of

So a the benefit and addition of these projections, plans targets. to resources our will be

mandate, the attracting to the competitive imperative is sector. third retaining Now delivering for returns and an investors

that and has all company Our change. been about will returns,

attributes our proposition deliver uniquely several know sector proven a lot In the we demonstrated of be positioned combined on from fact, the focused returns advantaged and because priorities. company will to investors

competitive transaction for no cycles. but described, part resource a how cost will event combined the discussed cost supply been example, we've For supply as of we'll by of price way, have cost I the supply financial our doubt as we After asked this in be low I Washington. add that one, curve. best it of returns creates mandate base. through in risk I leadership massive, about By change low is of also a publish definition, resilient, the delivering best-in-class. just in deal view closes, the assurance, of

intensity the company and earnings and optimize outcomes flow then targeted free all announced of will our cash value. intensity, combination investment will is as matters. in and And we and program our low a the global approach total including our base potential on plan material cash disciplined to for capital our into flow we federal are future portfolio capital in We’ll our and that financial the of cost outcome, will integrated our rate. intensity overall benefit assets be basis supply accounted on some criteria, might preserve risk metrics, apply on competitively means Adding first we positioned leases capital we create expansion the flow transaction generation. make those difference in capital such based optimization, secondary Factoring and $XXX generation. And assures mentioned, earnings, evaluation greater portfolio free affordability headwinds to and capital the company's unconventional to resulting visibility That within US savings, state Concho's and be is low our transaction. that programs, yield. of industry, advantage and asset and Diversification a decline a as overall just not flexibility, diversification I allocated view Permian for for that key The consensus of Our cash both on consistent creates private, million the cash and of cost accretive while expanded shareholders. it this the and for diversification our from free retain transaction characteristics. mix free

we've sheet, Finally, generation investors cash this to our even our CFO XX% what returns The flow ability target of stated strong balance than isn't returning positioned doing been target past they better this our from And plus of to It's to we're free the more what of four enhances our ambition. capital. for means want meet annually. owners our give years. business, an transaction

to over competitor a remain XX% a bottom transaction a that period, we our part of scale of this is returned thrive shareholders In key our new will for future and future companies. to owners compelling creates line, best-in-class offering. CFO fact, energy that over of in both for The it

expect on Now what to next. comments few a

of we committed already the weeks, and [ph] XXXX. integration. filed the close effort Concho. Our S-X couple Dominic to in should Both excited be is very for quarter planning Will Integration sides effort the for a next lead transaction underway. the will and Drow successful of filings the to ConocoPhillips are in Macklon and first lead expect

evaluate announce cautious a recovery. pro to the of we'll to best shortly planning, next directionally, forma programs. pace expect timing stand-alone part As remain of to optimize and on after begin how CapEx year spaces, But our integration we the on would for future We investment closing. ConocoPhillips

growth currently as to similar roughly year's a no a we're XXXX capital, little to stand-alone level that place on at meaning CapEx to a thinking we start, So is this basis. production enter

year the the to retain flexibility as we course, Of progresses. adjust

second respond underlying on to well. third actions the We numbers. downturn, we quarters, sheet third in to me And have major capital quarter the capital meeting bit quarter that we changes while as to program out running the priority. the noise quarter, as all third a But the year production the of respond our flexibility, also the the of complete, cash results. hand the macro behind took in and curtailment some turnarounds been was to including couple very balance was our seasonal The a a significant the to us, the necessary of the and know. few revolver business, certainly comments for company [ph] over and It's And curtailments. return were end on by carried seasonal brings quarter past the saw the turnarounds, business

you that take third as finally, I the and line As now integration you baseline safe turn We've plans operator We for the saw business. and Those capital look reinstated XXXX hope well. for guidance for Q&A. our updated new I'll the you it our future production. think we over should mentioned, fourth this and subject to morning's and results And market that's forward monitoring to just in ongoing - And with of to were keeping quarter on progress should everyone quarter the release, and expectations. conditions. is you

Operator

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

Your line is open.

Phil Gresh

Yes, hello.

like wanted factors the around first It So just moving flows, cash about here. looks distributions some to some question, there. affiliate other are pieces ask there and quarter

wondering was the define if think I how CFO little the So help a quarter? there us give would and bit about you more clean you in could color

Ryan Lance

you. Bullock can Thanks, Yes. I'll let Phil. for that answer Thanks. Bill

Bill Bullock

Phil. Hi,

$X.XXX settlement cash couple quarter, XX,XXX totaling ex from a settlement about was had of and barrels in the in the the a of we day. that. quarter quarter, for a yes, an of also one-time about working And benefits operations, $XXX capital we million billion. So audit But had curtailments legal

flow cash. about the So have been would $XXX for foregone million of cash that

clean about quarter. to be for place of good quarter, a So is rate if you the run thinking a billion for the think number $X.XXX

fourth in APLNG $XXX from somewhere you we're quarter. distributions APLNG. a Now distribution quarter remainder year. the distributions. equity full have asked of a And give would million of distribution We under did million second million about the for $XXX in the We around to about from the year, received the $XXX quarter. a the little expecting through million year That of for $XXX

Phil Gresh

I my you we provided. which Okay. Great. of this Very here helpful. questions to CFO some around guess kind second continue question, that in pro is forma get this dovetails guidance

if Perhaps these $XX look that the around us to you the ex-hedges, $XX you billion night, are think bridge which XXX. provided? so the about results, the guidance $X.XX WTI And I X reported WTI which Concho help I you billion, and about just at think other I could what results, talked was

Ryan Lance

light. a there's know company, combined I the point you Yes, moving a in. bought there, barrel described few for Phil. people X the that Thanks, had of at a a they $XX looked out as number we've parts bit Yes. little billion

quarter, high $XX. equity at closer seen Bill you Concho's third mid So in to on the if affiliates, adjust hedging I you and described to get that we've our benefits think the what for just something Xs

maybe let details. of little Matt color add to I'll bit a those So

Matt Fox

Yes.

it barrel. If you Bill look both would and a the X.X somewhere for $XX quarter at imply X.X third companies, clean at explained between

of the year, And numbers this is on got range. the also the in $XXX these affiliates that million range Does be pro the we've get, was full and the $XXX which cash, directly. million year CFO expected capital, doesn't that distribution. end at equity that If that that we cost of up top that that's what There's Phil? similar basically distributions that Now also affect shows include the of forma savings these we'll help, of assumption numbers. in the to we uncertainty announced, is

Phil Gresh

I hope so.

Operator

Thank you.

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

Your line is open.

Doug Terreson

Good everybody. morning,

Ryan Lance

Good morning, Doug.

Doug Terreson

well like been the to the XXXX situations been strategic what operating capital that management that the has you've organization? most to be question you're this are And to the had agility get to further near corporate and My way think upside, cost hallmarks, as portfolio. is clear the about from three important stand point, the group One past not going are Ryan, that brings medium-term periods. And a and over whether you're some to things confident the as benefits of guys to transactions? you going have really to second, higher the of is that other Phillips So deliver in on two you're And areas the about quality of the pretty optimistic with Conoco areas investment about that before questions. may that while you're think you may that ability that enhancements that to or about obvious I'd similar value as even merger split then two new and transactions the in after and in create get, it. the there

Ryan Lance

and Yes. few I'll maybe a add Thanks, Dominic Doug. comments. start let

You're think various out want bit, you're Dominic, put When second described. a of this we right. We pretty is additional fair to on. waving. what forms going little looking fully the about the alluding uplift little the be a that I get value you integration we I Yes, maybe million out you of to seems to let to add we numbers specific lot to that which a either what put it to the other $XXX amount people of going Dominic and we're through look like see a could incremental add there, synergy at. price is page, describe number, team arm at transaction. expect or if opportunity But that we but bit can other be synergy

Dominic Macklon

the that there focused And Yes. Thanks, million see delivering question. the beyond that. a we very on we put opportunity thanks have for Doug, commitment. certainly, we're Actually, $XXX out as Ryan. But

of kind we our think deck. I outlined in those

I those think more about specifically. to just talk

I the optimistic we're think ones that about. most

the further side, the to Concho to product down wellhead. marketing On We realization. our improve chain typically sells the value sell

commercial we ConocoPhillips. strong So very have group, a

drilling been So about us the doing they're the Permian that. well on we're Concho completion been in the has curve The and on there. extremely excited further certainly excellent costs. learning have down performance

on Ford best course, Lower XX and So and expect our we do too. expect And the Eagle across of between to improved acreage accelerate see the technologies performance that performance and the and the we Permian sharing so practices to from Bakken on.

chain So power, we're definitely, have purchasing operational efficiencies. And then on obviously, the side, flexibility. supply going scale, increased to

these So in the we're some and in months be coming working we'll additional upside on that anticipating all areas areas here. to

and to So forward see are about it, these we're these, how and talking through excited already about Will we'll look next year. pretty develop I

Ryan Lance

Doug. question, last your maybe And

is and have their what the presence and built both ConocoPhillips, added secret for beat last of take consistent I've view association both done something business beyond. couple in getting it's goals and to Tim deal. with Concho. conversations CEOs what very Basin. successful really that And when to you, to or XX the networks is I've incredible deeper Dominic it's going And committed is is networks. they have Tim So forward. this some a or the well competition. the decade what to two given come and take Permian to vision sauce there company That out mentioned secret appreciate, over for say, our finally, then last next to going really successful is the with committed I'll the then that -- better what long of with make to shares I'd really years broader have Tim passion the Permian, probably, over and we're we the lot over had a of sauce time a in over going he's They And my succeed course a They even that's what we're we experience. what be really And to view the Permian and years. three appreciate the And our what of tell of in expertise bring than has and and combined

Operator

you. Thank

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

open. is line Your

Neil Mehta

guys. Thanks Thanks appreciate taking I Great. for questions. my it.

is follow-up APLNG, affiliates So from first including just broadly. distributions, on a equity the but

that, we those the into Just distributions how oil that do should shouldn't be And you you modeling think made expect Can business? ratable. different about about you be about that to thinking we price levels? coming talk how

Bill Bullock

This is Neil. Yes. Sure, Bill.

as affiliates, think thinking they you're about I we've how the ratable. in equity talked aren't past

from first in second more affiliates as at thinking you be the and thinking range look that's pricing, that you're on, APLNG, that going the think will $XXX the next the lighter the into how APLNG, of next million and our more you to you should quarter third. you to in markets. pretty if You performing And obviously fourth year, of close. significant year of terms depends $XXX prices terms But equity they're going for being how about of distributions in about of ballpark. an at like and to million, strip optimizing and we're in It gives get the but over from -- those capital kind

Neil Mehta

Great as follow-up… and a Ryan

Bill Bullock

in do deck, a Neil, a And for that for we have sensitivity reminder, pricing. our just as price the

Neil Mehta

Yes. That's right. That's right.

Ellen DeSanctis

materials supplemental included we the In today.

Neil Mehta

guys. Okay,

Ryan Lance

go Yes, ahead, Neil.

had second a follow-up? You

Neil Mehta

investment of a sort on Yes. from know very away there? think It I general, we're cadence election, you about around in And probably temperature your just message topic, your and this sensitive Alaska. Share of days just the but was that And of just Act. And a really Fair about couple is spend Alaska. the the

Ryan Lance

- have but following you answer. too, closely. got that's an bet. I Yes, been I'll that Matt's let

Matt Fox

They're mean, moving now, that if the in there administration, the of just change to land initiative there's And impact, happens Yes, increase production any, you there's of tax. really the are Willow permitting. status parts. as know, federal ballot the There's I three topical project. the Neil. a if on

So should Alaska so one up with about of I clear we probably talk hopefully that this three question. can them,

ballot investment impose competitiveness So a And to It's That's to reduce Alaska. would in measure problems two and as know, going adverse increase, effects. it's uncertainty have you going of the tax the to increase to production. instability. in going

elsewhere of So this in get what mean a I we've rational, good. a shift tax And to left increase. development taxes Alaska, years Alaska is be going if of tax. that's you but going not will got production to from capital opportunities be more, your is less of. And

maybe be if those that. if this. So, doubt resume so not voting And avoid we've the the that the that should fields, for And the expected, to in clear, targets drilling that three been XXXX advocating should proposal passes, increase, and to pretty the tax we beyond of big were that. for understand Alaska, in going in any it's

the other the labor, the the going impacted So all understand they've Alaska opposing businesses tax up elections the adversely contract to to the regime. the by services are part to consequences. there and it's contractors, this change up unions, most be jobs, in this, the now decide all elector associated of proposed And and change. But

with a be we and So wire down have we're voters. we really clear getting feel with here, the Alaska to

itself, after two a it's of BLM big project of the we decision a Willow from years passed more record this than milestone earlier week. We process. the got favorable On

that, on permit that us received track keeps XXXX it's integrated worth was our that under project activity And with plans. the understanding So timeline.

were National the Petroleum administration. rules the the under the that -- So Reserve set

that changing up scrutiny well should happens. they So under stand if administration to

acreage are -- it need end timing by towards working a this just and to administration, federal we're Alaska. to only impact the generally, mean not of I targeted increased. effects the more capital. have tax and a last If ballot then is because although in the that there's be year, The fields oil permitting land because in of to assumes we'll selection our will expect fails production. we measure passes, the it by moving us. of available and is directly, to lack feed increases, on reconsider so XX% knock-on of federal going So on a land represents the the the relatively if limited X% one taxes concept the the in of change there's about our would And

GMT it's but X, is Now some land, federal in production, coming still particular, on underway.

end year. First of will next production the be at

land we -- land, on drill all. federal that conventional and GMT anything is but techniques. will than to simulation or Willow neither at expect So of affected X X, be GMT don't it or federal Willows other sites course the

is be that. fish they if by about So influenced fracking shouldn't there,

Alaska the implications So of been Ballot with we've I Measure guess, X. about clear

any us. implications expect D.C. change limited administration of a relatively We the on impact in in have to

Operator

you. Thank

Please Our next Wai question is go line Barclays. from from Jeanine your comes ahead, open.

Jeanine Wai

good call. for morning, afternoon good our Hi, everyone. Thanks taking

Ryan Lance

Jeanine. morning, Good

Jeanine Wai

Ballot mean, if Maybe And just it's that position the the the following one on overturn we And Measure be would that And how quick, resolution citizen Neil's question. it need contingent on you on morning. bit is a But think know Day, Measure that the that upon case your Good then Ballot sorry year, in up assets of first. you on talked could Alaska? portfolio? measure. maybe in that a legislature little ballot It's different. decision? for we X, about still But could, on last potentially more know Willow you the any selling you would I down, that, real just likely down sell XX% do now be I XX% Concho Alaska, have X Analyst

Matt Fox

that anticipating until Jeanine, We of resolved. a these uncertainties slowed Matt get was we're down again. still some we that to Willow really to sell we in Alaska. the is will Yes, tie decision the timing down, this that sell say didn't it just of We down explicitly but

on the what may with I on continue meantime so an adjustment But the so we'll proceed still is to In to still we isn't sell project. in Alaska. guess, contingent make the I'm project current saying. the -- it's So equity of timing down, the the

the – Not and one similar the ballot lock wouldn't for going with was barrel. bit overrule a would that alternative unlikely that the of so take an it up would that? time that. the Not or then to can and really. could to measure – little stock the be sound They have overturn legislature we come – On substantially

Jeanine Wai

think on really Thank cash Okay. growth. helpful. you It's much. And follow-up XXXX about that But your production for Great. allocation threshold, a should you is the bunch growth, lot. just mid-XXs generally into of to way in the process? prepared indicated My the Or met? the that need we have in is would little priorities. that moving factor right to very decision-making That's to is that today. strip to other that kind that, XXXX threshold hard question to criteria of moves The with there similar about are a around it's fast just you a CapEx remarks considerations be no production against needs it be us all and

Ryan Lance

Yes.

criteria we I next to. be but need kind mentioned of make. of trying to certainly, cost projecting use dividend I today it also spending flow we'd some sheet, CapEx But, I supply. And that, or we the the basically we're benefit kind the with not of we should have to strong satisfies as that use balance so plans a ConocoPhillips. cash XXXX. are of it's the think, cost we're It's thinking a the about on – curve we our I how for more, That's about that given again, making to we're and for basis think describe, of -- very And in we thinking tried we're seeing. XX% the supply, we cash as of kinds think of of stand-alone going just that also return forward and what year. prices we about those can balance our into And

watching that some is, headwinds in and that sure response OPEC certainly, really depending of cost we're on U.S. XXXX, closely that what the we put what we now, price on the demand outlook in and lowest to started only. that hasn't or and place cash make NOPEC to sure So, the in balance we resurgence things commodity all into program does that the certainly supply recover. And have side we're the with COVID supply whatever investing some make we with flows can expect to the portfolio for right

Operator

you. Thank

Our comes ahead. Wolfe go Silverstein Josh from question next from Please Research.

Your line is open.

Josh Silverstein

question just there. Thanks guys. Yes. last that Maybe gearing off

that for very the stand-alone volumes scenario? stand-alone Concho fourth like under year-over-year on it volumes to similar What a mentioned quarter Concho basis. CapEx, that be would look XXXX You've relative would the

Matt Fox

at sort that we fourth Josh, Yes. would sort year to half similar second be we'd to – of or level. of quarter expect, the be under scenario, rates, that of

So that year, sustaining would our be capital. is above we're roughly X.X bit is which a what spending this

above So, clear I sustaining want flat yet to our and take up. capital. that Because to opportunity that production

So explain let me try and maybe why that's different.

our sustainable is have ConocoPhillips competitive portfolio, sustaining we for tactical strategic recovery sustained and be are response but – modest low-cost X.X below that shutdown is bit start a flat, the in to one the million like back tactical were about much the of roughly sustaining we keep XXXX and be. we'd tactical or the growth. exploration between we a but if we is supply some still shape like completely And But program that for was with with the program Ryan would that that production continue us but we then or company, sustaining ultimately that point, move have would So But strategy we for supply this And production. going need to they tactical investment - distinction wouldn't stand-alone. The how activity. out. away see execute and sustaining too of X.X sustaining those long-term what that indicating a Willow barrels execute the really simply sustain we program, to sort and long-term we from production program, year with projects strategy expect opportunities still demand anticipation things will that. The simply could don't will at

shouldn't for we closes. in things us through sometime XXXX are capital the certainly just expect But guidance we're plan. the to working that now those company combined said, Ryan after the transaction the So, to communicate as

Ryan Lance

Yes, around a at which Josh, modest level we necessarily lot balance capital flat the in something going have go I it similar watch with next equal macro a the flat sheet, would add, that's us. at may of is year. so as we we'll to why be this of in it to But growth, level year, if flexibility to continue evolves production the doesn't capital

Josh Silverstein

guess, you the of that portfolio Lower and Excellent. highest what sort is? I Concho the kind add well, the about international you towards those assets, portfolio? curious the accelerate I'm any Do or, M&A XX And does your emission candidates maybe assets, part path? the as that. that assets the regard in to lowest that XXXX mentioned think to getting then only And of unconventional asset the of

Matt Fox

Yes.

We're in oil add there. really steam ways deploying the be it's And in a in at So the sands the gas more brings also ratio irons pads. the of just to oil flow steam we're sense. That's down in looking the lot That We're steam injection, the portfolio, which to control down got of is a by course, brings down non-condensable assets drives devices. sustaining portfolio, that highest fire heat emissions of ratio intensity. reservoir. it's keeping going moving ratio some emissions going operated extend to focused on why oil to oil we've and we're now so the emissions our bring

As the there steam other ratio get put pads steam technologies oil some their as low ratio. very there's you can new they on, looking And at pads that we're of well. When increases. oil older,

bring And we we at curve. in studies. - the gas across cost our And ourselves, asset and what are that across do we're of what together them can we -- our projects, they're exercises effectively every just that's have. call asking looking greenhouse cost So, now that bring basically what some that XXX board down. to marginal we're process of desktop we're and about our we we what feasibility doing all abatement intensity have And as

down. base about on bring this to year we projects. operating cost capital the So, we look $XX spent million whole those asset and across that ways between But

Ryan Lance

the doesn't XX% to major establish do reduction to we that Josh, targets, our require XX% portfolio And changes that. go that

that about to Matt on talking the time. we portfolio to relatively having not inside over identified being constant things that this with sell portfolio we're the That's have described. assets certain So, work

Matt Fox

driven as Yes. Alaska, in very it's strategic that good the U.S. the investing -- sort in investing. a It's We're in by a low unconventionals intensity Ryan. a lower where It's greenhouse which Canada, like actually is fact of we're we're point, shift -- like that's well. mostly in the low-intensity and places gas

It's reducing that's increases intensity with our we've the And in how assets the over sands, the … So next our the of the emissions that you when combine years. low-intensity existing intensity delivered oil the percentage not very XX with like of production, time. emissions reduction that's

Ryan Lance

not hundreds the described, is to this. sort Matt of, capital We're This get into of this And cost plans. and of plan. small capital talking that small amounts go are about dollars of projects currently is spending our millions deliver to baked

Operator

you. Thank

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

line open. Your is

Roger Read

Thank you. morning. And good

Ryan Lance

Good morning. Roger.

Roger Read

kick really on Just to what with talking there. kind follow-up, about we're Josh a like of I'd

think to down. for you looking I some up Maybe year the presumably you be us roughly nimble price comes. ought XXXX it’s and what in be you you it's for next assume kind or mean, the be oil not CapEx, at? you As flat, I said What look of might ‘XX? some things – about would optimistic I factors. mean, more getting help of macro understand simply signals would

Matt Fox

be Yes. it mean I would macro.

response a looks like to what possibly were the see with U.S. hoping have people coming. how the and Europe We especially response than to in for, demand slower

we cautious to just about that. So have be

look OPEC down can coming November back of the up when to and end see to get and the mean move have sort We a I Russia we they how drawing inventory. of respond. have at to

So the for flat incredible beauty -- the of got dividend. That's got our position production the together. is to and that we've the two low sustained cover companies from cover of breakeven price We've flexibility.

is that what So the the flexibility very ability we're give going helpful. us market actually having to respond and to is to

going headlong this. So we're into to production rush to not grow trying into

play very as out to So months, a sheet, the and our we we good and several us. be assess through. make here that next see in our it any will between we'll how balance shape low doesn't sense then We'll to go make over things breakeven adjustments

Roger Read

Okay. Thanks.

Ryan Lance

going strip Roger, would looks that the a what of two with to as on of we the it's add, much believe depending out and the to optimize that companies. between down, and And make like like, going reassessing Alaska I price. happens so where activity sorry, like the imminent combine back U.S. to I reasonable sense is the to year. for what to longer-term start or what of election what well, then add, not title kind it the mid-cycle Roger would look just of there, what's out level what we shake looks It's it's mid-cycle demand next amount even Concho figure supply and sort with trajectory right is a we'll and And fundamentals be

right, couple back the this that we a the or only -- overshoots mix three but it factors be So number the into you're like not as a recovers as at as there's of undershoots. whether business to will XXXX next look we -- putting mid-cycle look and plans, years

Roger Read

industry. oil It's

it So or first quick both. one the of the to other merger. definitely and but the question, will unrelated do to One kind follow-up related maybe

to you that likely be becomes doesn't for you were Some is just resource maybe spending way? of on in monetized Or exploration more have be that into the disposed something different the go money be curious appraisal in do was that the savings assets won't cited E&A that happen. future, going of I to the near they that back a base? to spending

Dominic Macklon

it's Roger, Dominic Thank here. Yes, you.

focusing units, on was will our existing said as So effort such our business we Alaska, continue that Norway, exploration Malaysia. what we

XXX capital to allow will that of from So half exploration to us XXX. about

such America, be of in So we exits so areas. Colombia, as Argentina managed those areas, working South sort down and will on, from those

Of value the about areas value value. exit good future. those how lot to there. But working course, think There's we lot acreage in of be we lot have a see there. as a to preserve a we'll of of We

question of those a resources more in So dispositions in the portfolio. a managed than rather way, staying

We have portfolio. strong a such

we we appropriate Concho with will it's that the just exploration We that focus effort. think

Ryan Lance

But those said, assets. monetize everything can. we'll Dominic capital -- we going -- And not can employed to them we're those do we as best there's associated with we as manage excessive to there

Dominic Macklon

those don't curve. assets in any There's the associated And have we our them. associated any moment no in supply resource with resource of with

Operator

Thank you.

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

open. line Your is

Scott Hanold

you on bit? opportunity to that And for ability that Or natural has give your a Thanks. associated pretty -- of is Conoco where been is price little is opportunity? gas? the there us gas Could for is there outside flex really color some U.S. strong? Or

Ryan Lance

Yes.

Anadarko right I think Scott, the associated main little not lot now. probably but a bit in that's us, We the opportunity capital our gas. is for Basin, have capturing of a

still So big pretty it mostly, marketers. we're us, for a

were Bcf of we X So moving a day. gas over

a see we of lot So that.

side getting West with So we gas into some we're some South the transport from takes the to have of Arizona on Permian and the down uplift and Coast our business of capacity the commercial that Mexico. even to

gas looking see associated that's it's absolute And taking on the today. but the we unconventional to mostly we're up production. production with it we're ramp from gas, the kind an coming of of kind advantage how and just as So market of dry side, not

Scott Hanold

all quantify you some benefits Yes. marketing of see? the Could you

Ryan Lance

to bit head So I’ll Organization provide a of maybe color Bill, our Commercial let there. he's of

Bill Bullock

Yes, sure.

to have very ability asset market an and ranging moving across we to from in agreements, little variety and We're that gain gas U.S. also marketer a Ryan X pipelines. the into of management commercial Bcf and fifth organization. we customers largest margin that active the sources insight mentioned we're Scott, a day. a one, cross to, provide moving provides to over agreements various have offtake So a the

profit. and we're to shipping to and move, So, look a we continue at continue that gas for

XXX of volume. of Bcf rest is the ours, its cubic it feet day, So, a million third-party of X a that day

in we're daily on so on a And both out the basis. market of and sides

Operator

you. Thank

comes next open. Our from Bank Doug is ahead, question go Please America. from line of Leggate your

Doug Leggate

minimum elaborate everybody. bit on Good to And wonder, specifically start and ask strikes for outcomes. maybe the Ryan's potential the a have Thanks. a tax I a morning guys this. potential that the with about election spotlight. off you looked I'm you at me sure maybe thinking But little I'm could that P&L under bit you is Bill, comments puts of little tax. XX% disturbing around bit a thing NOLs I a is

outcomes I'm you've have just any if about you run expect? thought wondering that guys might that scenarios So, that you

Ryan Lance

to of is, change obviously, various tax be the the There's from one would at impact that Yes. tax look would time. aspects out depreciate that, in XX%. over Sure. removal us. IDCs, the second on the an would the be needing the We've through there, Biden proposals program main tax our certainly taken a elements as one to corporate in two proposal. capital impact would primary including are us. And significant two XX% first rate Doug, look fairly have those particularly it that that we and really Those

Doug Leggate

too of How together this longer is Biden when Ryan, about title a obvious, laid at it cycle we Yes. bottom lot put signs seen now I'll And to maybe it of with follow-up right and about you -- scenarios and your sales wave a beyond demand of is the a if supply little consolidation, as think a seeing was what I out think thoughts COVID does a scenario bottom, being guess we've administration. yourself Day, but we the you as clear. enough. like, your there. have know all when what been the Thanks. on Strategy that. term you're maybe that coming then, now influence planning? part I leave other the should bit that something Matt talking a I ask it's I potential don't scenarios you

Ryan Lance

of Matt we demand it recovery, add was a is on But a yes, bit little as masked happening overlooked the of And get think by can I maybe of important maybe and hitting Yes. on, couple fully declines a we but then back what's the by day, supply in think time in a well. whether in spent XXX million a declines And bit lot the what back as of today and few coming trying to maybe gets probably are see and time little like. well. the to barrels side, the recovery We supply equally and there. trajectory be uncertain I'll bit a curtailments when but jump Thanks going factors. Doug. inventory, taking about looks certainly drop DUC a there's masked comments, probably competing it to to U.S.

work. So, can our debate describe and chime program we're and that the I bit scenarios put as how capital the Matt much back we to in net to can to probably about about -- thinking effect a little

Matt Fox

the we I somewhere past. for the expectations and The this X the million at have the mean, the think X.X is you as and -- day, and for Doug, I Yes, exit I look rate approach between U.S. for year oil, trade discussed be year. our -- in -- million if a the you we'll that end Europe and this barrels of

bit think the day. going XXXX be get flow. the see that -- going low too, a XXs. first and into still over barrels industry a model of know year, cash so the dropped But quarter X be prices to less you into day maintain significant So The DUCs. production it's wells here. of within in flatters oil X.X. decline because the And December's on at XXXX. quarter. second in lift that X million million there's will we a When going flat were And to people is from barrels bringing I in do to compares that underlying December rates last extent, the through strip on 'XX. that real in challenge to at struggle this, people a live and deceive trade to We to the some going are a to and and There's a to to likely than 'XX 'XX

And on, flexibility. decline more quickly oil. here you day a the happening that's because were just less respond If trajectory capital than the the barrels trend. And to we elsewhere. at X least U.S. issues compare trade the we pre-COVID are in But of the that rates similar million that's

the than be the few it's So, certainly effect, and over a and demand how of years. be uncertainty likely although will less demand effect to is much next the definitely there effect supply

now the a setting the and in way feels So for us. the -- a here? the we OPEC setting for terms, supply-demand premise I of certainly are that up your year a certainly exactly tighter upon that. will question the when up but to short of cycle balance we're COVID before so, not it dependent bottom And how it or doing demand at be term, initially if

Ryan Lance

Yes.

scenarios term, enter So we demand, about have supply short, longer-term medium, trajectory medium look slope Matt a what all around starts And as described. X to couple, X, that like. we picture, the how think and

Operator

you. Thank

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

Your line is open.

Paul Cheng

Hey guys, good morning.

Ryan Lance

Good morning, Paul.

Paul Cheng

historically, the as [indiscernible] and your a center. asset. to have that mainly for looking And and quite or U.S. as look operation, to seems at be commercial physical If trade a at well optimization we doing aggressive at good they and trading approach the around that a a profit more take European, facilitation, core logic it looking the center the on other

return? that you So on at in look it and you don't that that higher and whether and should that from you question. allow swing better, have So take Conoco risk? and to a could to higher will is the Or see earnings standpoint, higher that want think facilitation performance that's the operation first

growth rate to has argument different lower. as plan changed that future question, second the you be such longer-term to XX-year for your The with less due going decide if condition and your market is

With and your of backseat asset, take lesser investment. asset more the the the seeing capital portfolio addition in will what other of Concho

you. If two on Thank say, possible? that, if the one, you that's can, number number

Ryan Lance

Yes.

take the investment. second can and chime one in the capital maybe the me first Matt on let on So one,

at the the of expanding we're space. sales middleman assets that a what it gas to mostly looking oil bring, of add fact, commercial first we is equation, think forward both as inside to take we I about we're think capacity Paul, opportunity got at as more we And as enhancing quite building there well. earlier, point sales the one, to Concho, described that export have and the at to the cost we Dominic but the so the yes, kind value the some side. of future a wellhead, they you -- So the Concho we -- as go We're addition company, with out margin saw some center as found where the described, in looking and the done a customers and company and as

that's forward. the we described with about can mean, commercial we we a and to big So we represents differently, part I that going the already that too. with get share organization it market as have the bigger it how growing Bill only Concho, have think US production absolutely and of combination the with go expand

asset. Matt, whole So, commercial the what more our criteria, as want of you capital more contribution to Matt take primary from if detail go allocation bit of might Concho we're for but it's I back cost to side Again, looking the Maybe, out. across result a integrating can provide the -- the a about portfolio. supply a fall

Matt Fox

year. we pace, we the optimum using a to parts Yes, set Paul, we're a of of decision we try as you that some November most of in that optimize of important an of our to described know, $XX of above not the what supply barrel, last do is portfolio cost get of which and individual invest length incremental the but back is each to criteria, going

the each trying pace to the we given at project can increase the we're adjustments, and the maybe portfolio together, by then flexibility which at assets. look of adjust it the can the a in any the rate we and we so, make honor pace number the each, ramp across of but And the few is of put optimum so we in we euro, adjust of rigs. There and optimization we

of call and portfolio that Lower But we Canada criteria, mostly of something do If the that assets the diversification winning I well. across places that that optimize diverse to is, decide still criteria. like and issue the to each flexibility want we out what maximizing -- across But to the exists, we're wouldn't I that if any XX, asset, there that's asset. you, when portfolio, the That's specific our obvious the X% we're do where the on that value a portfolio. you're to Alaska. or out The grow we're optimizing instead wouldn't as the specific to you're brings at not X% we're so and So out call really the optimal. flexibility bust in is make are do sure trying trying maybe across these trying to we but wouldn't

Operator

Thank you.

comes go Our from from ahead. next question Tudor Please Jeoffrey Pickering. Lambujon

open. is line Your

Jeoffrey Lambujon

monitoring, of morning. questions. climate for My Good anything earlier share specific commentary on my can first a just retrofitting But your equipment I'm again, for think there this terms on portfolio? around focus, for emissions you're you the Paris get investment taking undertaking decisions. point or ESG in trying that control what's Thanks what of one a of strategy. focusing on answered for to and is is oil comments on broader and and lot these other the scope operational looking that's you? risk some sand with at changes the And you technology Just for of sense in the whether incremental new what projects your aligned mentioned, have I

Dominic Macklon

some there. very Dominic I'll It's Lower really I and much take some XX, there's in we're involved the important Recently, here. Thanks. that. was Yes. making just progress

And I initiative that's routine think we was our Paris World announced of with Bank commitment a along aligned flaring. strategy. new the to One there. a zero couple here, things

to was the So introduction And methane of other that. we're committed monitoring. one the continuous

able have able basically, at for now very real sites, to implemented. We're do So on reasonable cost. to this us. we'll now, we're this is a this breakthrough a key And our

allows will every early production XX of it to from can that low Lower quickly. very sites, to year. respond think looking covered very any And I at seconds. technology, from cost, by our we have around about sample the XX can emissions And aberrations that, this quickly next XX% ethane we us very address

mover gas the a intensity really initiatives this, for we to aligned. those XX% GHG overall We have to by XX% Paris And on have that as to that contribute intensity the and target, to U.S. GHG couple by and So U.S. set to reduce first company us we first to XXXX. important Jeff. really based commitment oil gas were a based are oil our being company commit know, first and we're you'll of

Operator

you. Thank

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

open. line is Your

Pavel Molchanov

gas that Or to about I question. your in for $X Thanks Europe, two quick we've Is related of prices situation? gas XX% that something below that an the it's a is No had volumes. Two accustomed North guess ones, structural market? demand seeing Sea the regarding more COVID is but last both one there MCf, quarters.

Bill Bullock

I think that this -- is Bill.

think the macro would see have Gulf Europe incremental you about of COVID to the right barrel. arbitrage that, of we U.S. I see about the into world, starting issues both as markets Coast more we more that's think and long-term, volumes related we of what around to think Asia related to now the move as off into that with LNG markets, demand supply as tend

is change. what that structural and a you're long-term So I think short-term a not response seeing to supply-demand

Pavel Molchanov

the of a change Law for the the the about thinking that follow-up you're of make covered a will be will terms six how weeks, as the that Climate which whole? your approved EU zero portfolio European leaders, And mandate. about in by in that the Okay. part a by given North on anything asset, EU is net one Does decarbonization targets Sea, that,

Bill Bullock

No, really. not

Norway Europe of is have to continue are emissions options to and other cost it's and the Norwegian is supply the it's at look to our in electrification looking some offshore portfolio I competitive What we with very at think adjustments. addition the still there. our to it, assets we're we're But carbon it's and lowest of that make manageable assets. the and reduce additions minimal we And through continuing left portfolio. in as quite intensity

Ellen DeSanctis

take question, and last don't you. mind. if our We'll Ellen. ahead is This you go Thank

Operator

Absolutely. Thank you.

comes Please from Capital Our question ahead. go from next One. Phillips Johnston

open. is line Your now

Phillips Johnston

Thanks. guys. Hi,

of So an question price it last at to around and future worth to capital to share. years, a shareholders. little you guys me billion $XX have just a of the one stock average repurchased In over return of five your relates $XX

And substantial. in plan to more today's share ask appetite But the So I I to paper loss that in is the stock pretty free cash repurchases. repurchase shareholders here there's dividend guys a at wanted to at if fourth quarter. certain plus variable realize fixed price, instead, level any directly would you Board out program percentage flow the share paying of scrap of strategy that a idea the pursue your to each target quarter.

Ryan Lance

Yes.

of that. your important last most thing the think piece I is

what think certainly cash this to value certainly do thing the last on to the think three a to of committed our out targeting XX% back came years, I over we've of We large over in and shareholder. a buying covering an to important relative to dividend because of business. reestablish certainly kind shares proposition should think we delivered new are undervalued. be. today excess for kind to shares That's price is four too, And the share are level our back It's Also that where at of is that. this we well since mid-cycle

repurchases on share completely. we'll give don't I think So up

And production shares mean wanted quarter. through with to significant in a going made on point. the this the we downturn cycle. a You pretty buy our I real the curtailed and second like was

wanted suspend the So the a up shares, cost not your to restart We price, at end low brings that's to really benefit down shares of what your is while. just buy because through we continue the average the When we because buying of for to did them. buy you're them mid-cycle cycle obviously.

future mid-cycle to big all the had we've and XX price all it's continue different in that. another But our seconds, to to begins, return call on happens and be ways with if and to market, cycle, our at dividend to be to And look and open shareholder returns a that piece the what to exceed pie. start still at continue think we when than the to So of excess there's we the conversations this going return around ways more the do we do different shareholders. satisfies that question our

Operator

you. Thank

you. over back this We call I'll turn Thank Ellen. the have at questions time. to no

Ellen DeSanctis

by Great. you your support interest we any have means, us all to Thanks, questions in reach appreciate and Thanks ConocoPhillips. follow-up to Thank really our you. if and Laura. listeners, back

Operator

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

You may now disconnect.

ConocoPhillips (COP) 29 Oct 202020 Q3 Earnings call transcript