COP - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to the Q4 2021 ConocoPhillips Earnings Conference Call. My name is Zanera, 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]. the to turn now will call Mr. over I Keener, VP, Relations. Investor Mark begin. may you Mark,

Mark Keener

to Thank you, all our Zanera. Welcome of listeners today.

First, members on let of our team the me who today's call. introduce are

prepared Olds, and Lance, President Ryan today's Chairman and Ryan of Financial and Nick Macklon, Sustainability of take Dominic Vice Executive Officer; Executive Leach, after some and and call have will We Technology; Chief and XX; CEO; Tim Vice for Bill our to President President Operations. Strategy, Vice Executive team Lower Global Bullock, the off Executive Bill lead with available will comments, which President be questions. your Vice

Before year preliminary reserve reminders. that and supplemental and I a summaries, materials Ryan, with XXXX cash guidance call fourth flow price information, we few updated to sensitivities. quarter and posted XXXX highlights, In and include turn earnings full quick this analysis realization the over replacement conjunction morning's release,

During could based our today's and call, we filings expectations. in described And we'll our due with press the differ Actual in release finally, periodic statements factors current on SEC. to the may make forward-looking results this our GAAP the non-GAAP make the release corresponding also today. found to Ryan. measure over morning's call website. on in Reconciliations can some measures and With nearest that, be turn to reference financial to I'll

Ryan Lance

Thank you, Mark.

a ConocoPhillips. was for XXXX year So remarkable truly

outstanding. generated heart and returns Basin. strong the We was Permian on capital globe acquisitions the X on closed shareholders around significant for the of performance our operating highly Our of in and accretive

brought pad X Malaysia. the global workforce. Montney in barrels X.X results Alaska, at and the are of projects Phase Our per first and our and talent well GMTX online million last X third in attributable to Phase produced production the year Malikai SNP exceptional day and directly We dedication

employed the on And year billion CFO, cost, and we or with $XX.X flow. completed capital environmental from of achieved our generated XX% in a return Tor basis achieved a full of returned safety cash Norway billion over and schedule, billion in Financially, we II XX% excellent with to all cash on cash our representing operations. also $XX project XX% free $X and adjusted We in shareholders, this performance.

reduced continued in portfolio assets transformative the in truly we also $X.X Concho completing XX, APLNG an our the base Shell and an last $X.X the further noncore Lower agreement region, Indonesia generated asset work, acquisitions we announced optimization acquire of Collectively, the than billion. to And [XX and sale exercised assets right our resource we We transactions of additional preemption rigorous the $XXX last down world. property for our high-grading the our both Asia we're an year. from additional supply well budget consistent core set, million. for GHG plan growth areas billion-barrel] the billion towards of base year. achieving road the intensity allocation priorities, our these expected capital a average modest announced and and cost of deliver X outside to billion we capital our in XXXX sell of additional proceeds in the In this with more XXXX. Permian an and our by week, around In December, Pacific and sale to XX% early XX-year returns-driven dispositions for billion that's In to X signed

on current and total cash shareholders. shareholders a in over billion we've $X.XX full of VROC, or target Based represents distribution our of We second and to paid a curve, a for XX% target of to form also share a of capital this forward coming introduced the of that prices provided variable higher quarter framework increased with tiered The cash. increased incremental $X returned share announced year billion quarter. we $X new on our per billion, increase the return to variable in the the return VROC inaugural returns repurchases variable the our $X to

Now XX% and billion return greater in to equates the put the returned shareholders. $X than from to of in increase year a last billion than $X XX% increase perspective, projected to it an cash more

pathway Our you X-tier meet our sector generate we based returns and and the and deliver distribution others durable by to capital net our achieve is cash our by triple not everything gas CFO XXXX. cycle And Paris-aligned commitment on a must meet of We on oil do framework free responsibly for commitment demand. provides and transition mandate. in and through of guided in our means flexible competitive is zero percentage reliably need know, returns are We this shareholders price to energy to we truly ambition flow. a and as as and to differential production returns our

the excellent it Just as gross I'm XX% in XXXX, we reduction operated third We expanded our of emissions of production. in about include and delivered equally and progress medium-term increased I'm performance very we XX% both and of have made proud the XXXX operational to pillar intensity target our to to returns-focused equity mandate. the by support pleased net

and it the early-stage that well to regardless mandate not very opportunities transition, fully realizing several believe level triple to release, and ConocoPhillips committed reminder, emissions of X survive that on reducing this focus investments our and XXXX. just this company's we've capital address to intensity end-use our allocated methane emissions through also program a by X energy ambition emissions. to positioned the and pathways takes. as Scope has in thrive And zero-routine flaring in reduce for performance highlighted of further strongly our year's $X.X As of achieving projects we're toward the our December billion low-carbon but We

reliable, and ongoing commodity the levels, and of alternative towards importance which of continued to go and isn't orderly the needs inventory for seeing demonstrate in world to the use While for happen past and have couple energy driving touch people spare the our but impacted concerns gas reflect the returning by a to signal. the the to a with need we're what today in and the as decreased along me world need and global well of managed balances with capacity point. on switch. in supply production our our back of sources globe price transition, shareholders providing reality around demand like accessible The not for mandate energy amount and that them is to and moment, still the cautionary What levels, is sector and situation topic investment transition, the be, that's the a is I'd that macroenvironment. products. today are prices years, simple to pre-pandemic Europe these at importance Supply pillars, to to our and energy may Commodity across the as most over on oil demand likely increasingly affordable available fragile long becoming the of global the of be volatility current X a who of and being about scalable, It's foreseeable economy flip the going future. system. way of people All businesses the energy the all performing factors brings the becoming world clear triple this transition the

outlook. me to call let fourth and the turn will that, he our over Bill, quarter cover the with XXXX Now and

William Bullock

Ryan. Thanks,

the midpoint including earnings. well performance This from offset fourth inventory per by guidance slightly Bakken. share in higher price reflects XXX,XXX we per day the and adjusted generated averaged the Ford realizations for partially XX some commercial timing Looking from costs quarter of earnings, of the above and at benefits, as oil production quarter, production $X.XX from Lower strong Eagle XXX,XXX equivalent DD&A. in the XXX,XXX XXX,XXX barrels and Permian, as

production the our of communicated, quarter the increased from X rigs At per XX,XXX XX, acquired operated for in oil including due day in acquired previously crews the had the accounting from to recently developing XX drilling overall were roughly X assets. acreage of equivalent frac Lower and barrels As Concho we Lower Shell. Permian to year, conversion both we stream and the the working X XX those end the

first operations earlier, extremely the rest as the also planned. GMTX year ran across quarter producing of last in fourth with As touched Alaska portfolio oil Ryan our project in on well the

capital, we $X.X $X.X to in in Turning the from generated quarter. excluding cash free of billion resulting flow billion cash working CFO, in operations,

year we billion $X generated returned full $XX.X shareholders. and to CFO, flow cash the free billion For XXXX, of in $XX.X billion

balance repurchases In addition XX Cenovus sold in to we also shares. of covered, with million Basin sheet the all-cash shares a in by our billion fund We the even at asset of billion completing in dispositions over intend the assets. in after ended $X.X differential we shares we maintaining Ryan little own This monetize Shell's us with our to XXX the we used to Delaware the end held of acquisition quarter. this which generating cash, proceeds Cenovus that of year year, year, over left million $X end the the strength, fully

So very it strong but only and also for not to recap, bodes quarter well was that years. one future a XXXX

running had company We incredibly overall around the we portfolio, and for head this an are as platform our continue powerful into an XXX%, of we businesses ratio very and well the to the replacement optimize have globe, reserve nearly year beyond. establishing

our continue including prices newly-acquired cash our to substantially results the to we results as this as and in the fourth Delaware performance improved demonstrated years couple past quarter of consolidated begin by will Our leverage it have and assets flow over expect quarter. improve

to $XX that our our estimate reflects cash Now accurate fully a demonstrating to diverse at year position to the operations U.S. of projected roughly price appreciating generating the of those movements. of how unhedged of And and to supplemental reentering be be with We and point price barrel And approximately WTI earnings it's updated cash across $XX Hub this capture global at year estimate in of are our have for base, provided a helpful price the tax-paying so a we price stronger $X.XX, would be expect today's to this we our Brent in we which the CFO differential with year levels. billion, price CFO sense billion. materials continue would help $XX an Henry change and market XXXX a production year $X free much the upside a market flow for environment. sensitivities to capacity, current course, this full us from

readiness as we've returns with player that all for E&P up, energy to a shared as we competitive It's built and generate it transition. what thoughtfully move triple sum responsible, for have our our our you deliver. underscores shareholders reliably today in ConocoPhillips to ready is we the to are So valuable mandate. That very forward

Q&A that, to the go Now operator with start let's the to

Operator

And Barclays. Wai first [Operator from Instructions]. our from question Jeanine comes

Jeanine Wai

by return you, in It's cash pretty $X for the have to $X Ryan. you through maybe question, the still billion the but first increase early Our billion. year, the confidence expected

You is an can really industry increasing on general update in strong your the call. we level? on macro of as is you provided And the view from trending update recent some driver prices how cash provide inflation for earlier an heard as primary And service this Conoco, oil the well commentary for given continued the companies? return

Ryan Lance

It just to a few reason our the of Jeanine. to increasing from Thanks, we're now. we $X primary billion weeks shareholders ago returns billion is here Yes. our $X that the capital announced

step where we again, pretty of at, is forward at, about look, balance thinking but as increase our sheet like reflection a quarter, we our is kind and the it's the curve at. represents it take the each back where view. So is year-on-year, at, a a market's where capital where significant And will of

commodity So our more inflation Lower And strengthening I seeing I'd of we rates. capital bit well, inflation budget as since frame in of market. but we're Permian a of Prior, kind price And probably price we're a were time And the strengthening in it's primarily kind inflation kind the Basin a mid-level the we for the spreading a XX. a in of single-digit we strengthening when the would across say say result whole mid-single-digit that of the the that's December that as be bit a announced it's to see. reflection company. of recognition now the commodity year.

in the seeing commodities the these Lower trucking, that. see the of the labor, global would But X of chemicals, Permian though, seeing impact parts than are we higher uncertain little much So a we said seeing at prices of months world, those higher benefit whole spend today. and maybe active primarily the like ago. bit we OTCG, that's inflation, kinds more the diversified pressure a X.X have portfolio. lower months the like we're XX Around of and of tubulars, It's things even what or commodity

Jeanine Wai

Great. Okay.

is example, But second a color Our were to interest, guess of a integration the gains? you cost on provide been you to it related to very closed. on opportunities for for any lower-hanging thinking, Concho and or at question efficiency chain using big very the Shell since can just know up hasn't the number. impact related any that capturing really long I acquisition. We related we're the deal, added playbook, percentage But And as marketing that the a Shell optimizations you non-operator savings have similar to successful dampen of supply optimization. and could higher structural it

the So are opportunities there Shell assets? with other unique

Timothy Leach

Jeanine, address me those Tim. let this Yes, is questions.

personnel we We've XX the we As X, had the December a of smooth transition operatorship closed safe and days time. the just after a Shell and reminder, on transaction. the acquisition over made announcement of

up to that remainder Shell running since X We the our style cluster through proppant, but year, the cost. this we've activity design, of transitioned same continue taken which economics provides personnel, that's And quickly using plan running We've lower casing our we've rigs our of of which better property, and also style fracking operatorship, rate a So that huge on switched spacing. we've moved drilling specs our design, generated the been our to on. rigs to fluids success. well has was design,

transitioning with there of term And our that's and would us tackling the all we those opportunity kind blocking you partnered X-mile in up operations partners core deals the companies with, style properties. X-mile and laterals. field. near are on the But those All out with putting done we're wells. the the that past, that those longer in our to So biggest of tell drill I is to have in from wells of

So I think low-hanging fruit. that's the

reference, XX% the those X-mile of XX just made of same, difference of a with rate else and a between We improvement economics, are return properties the some held in for of generates transactions properties We've basis cost already. a X-mile improvement in lateral being And everything which lateral, on them. a on of is conversations on those supply. well point drilling all frame about on a

and pretty on I'm excited The we're management. Shell itself of allowed for that other us working has the thing that freedom overall in property about, more deal

the kind it we Central Basin in management, for Mexico sold You example, weeks some from shelf may have one our to in on read the noncore assets of that affected on get we and of of last couple Permian. X% efficiency the allowed that our those The production of us property New XX% transaction kind sell only operated the wellbores, of and Platform.

of things and of will better. I kind example just flow entire organization that making the how So one through it's think we're efficiency

Operator

next Our from comes Goldman from question Sachs. Neil Mehta

Neil Mehta

Permian? peers. love it's about XXX,XXX this I perspective and you're your you've for asset of seeing about profile, to for the U.S. recently us talking was you get Ryan, same-store the how might I the I'd in for think thinking the as we done you 'XX But are day, U.S. quoted thought point as just profile think rate sales acquisitions how Permian Conoco -- production that's rate think 'XX here. And grow to were in growth entry store exit about tough you your yourself accrued. guess you because, some the production just barrels the that you base, about year, I a own your course, growth in versus same on

Ryan Lance

think that say I would of XXX,XXX is the asset. place I But -- moving the announcements barrels recent a exit light would importantly, a and number. that that a let I strength in include hearing. because some that a yes, think I and bit I've we And several number actually even by can I discussion peers crude were at entry surprised quoted about we was be with year. the that this we to numbers couple the heard, put specifically Neil, the condensate and macro, think we up talk -- the Tim were doesn't NGLs. now about and Lower day It of But of of I'd I the Yes, XX in last

to and from the X, privates, mode day coming kind year in growth by say publics. all capital year reenergizing, XXX,XXX I'd of XXXX the of like this in probably bit having out the This clearly, number year, out Bakken, and kind probably X So the and with XXX,XXX some both of are. coming a big just and swap well. the were next U.S. in we year. next barrels similar some a dominated publics and influence Eagle the by as Permian to probably maintenance But a We of the -- the regenerating add plan activity Ford a that

Tim a seize normalized I let basis. about how maybe that talk our So how that, portfolio we bit can a in manifests on

Timothy Leach

Yes. add is I rate whole lot don't that really the other than have on to you substantial. just decline underlying pretty to Permian remind a

high that a and our XX-year efficiency move kind you cost a increase growth supply. that such the show lower seen a down of result of But other your activity allows like that you disciplined growth and disciplined large production, talked in and and as the get ours learning numbers. so more plan single of we've We the the companies Permian is of and our your rate where that that more in for really digits seen a to up you've of sustainable generate curve think think privates because growth the that's rate I And growth. of in kind from will companies in

consolidation. think do be I more So there'll

XX% our and deal since seen you've other we Permian did operated production in us, like more company Shell the things. a than for the So grew

on around the be there'll some think I production consolidation. So based moving

Neil Mehta

you've which was think further core it the either Foster play, you and competence a that transaction follow-up and How is particularly developed of can consolidation then, ConocoPhillips the the here, M&A actually, do my between in the of XX? course, market Shell assets. around of terms here, Concho role seeing in and Lower the Creek And

Ryan Lance

I Neil, think that before, said further I've sense. Well, makes consolidation

I responsible in business. a more like and our and like the about that spent that how about think responsible to triple sense. have proposition we we mandate going hands lot get you hands of value ConocoPhillips. make in talking getting to think have think time I more the the just And assets assets We is

with Shell, is a Concho inside the on lot high and clearly, and we our the company. of Now, plate, the got addition bar quite

make these And not So better that might market. we're a we that watch of if us top we We're us everything XX-year lot on. we to a think our what better a in we It company, better any completing going way see wells the apply better at, and a looking assets We we've plan assets be immune to make what's plan. the as value to add a company, on. drilling we and to can that takes got of look that's is on make at. going

high we're ruthless always and of we've the we're yes, -- graders looking So been portfolio.

that So well that do and as as Creek us the well. really even on pathway did, down XXXX to path. the to to billion started the high transaction by of Lake And billion we're that you $X we mentioned, this And end grade sell back to the committed Foster dating that. $X we've just Christina

the to intensity. GHG trying and we lower always can if through that the through portfolio, And do they cost we're can potentially inorganic of organic in the investments, do lower we compete. So that supply

Operator

Wells from from Our next Read comes question Fargo. Roger

Roger Read

your increasing whether laterals. or impact you it, do terms was acreage any you've X from maybe further guess you of just aspect even to your heard made of percentage where X-mile sort supply? whether laterals, idea come a not tried of not that about or cost of on I the to of talk it commentary And I switching yet, think on X-mile might the of sense that an that what as decreasing about and in wondering back the mile

Timothy Leach

drilling a record lateral time, Yes, X-mile that the the Basin, Roger, we that very just completed in that. results the one X.X-mile and pleased Midland been we included just drilled and -- project several production Southern with in and from have

blocky another your it's the that's think big opportunity lease acreage to for I for So It's configuration, good big have future. challenge that's blocks. why a

Roger Read

Mexico, early was where next No doubt. And which can swap you active? my the like anything question, mean true But thing in Shell alignment mentioned as side? said your acreage you've real a I of Permian terms become in You the seen New I that but leads into more very acquisition. improvement curious one Jeanine on earlier, in

Timothy Leach

Yes.

this to they longer big partners own on sizable time one have parties. be several partner is The interest swapping other win-win long operations. bigger to for trading. that we've for both and business news that in laterals good with We Everybody pretty done a have where and able a their wants is drill

in this. a I if you So moving direction. but we've or blocking things rapidly already can't I accomplished small of be a and pretty tell tackling some to going good of few lot big think it's a are trades,

Operator

comes next Leggate Doug of from Bank Our America. question from

Douglas Leggate

want your given And of to the U.S. of you I back to Permian. to back just Ryan, the recent want philosophically, you I the about level going to about history growth, ask that we know that post-COVID concerned comments into that are a strategy? outlook. And global in recovery, to all your growth pedestrian long-term relatively sake? the growth play still that how how does Saudi responded which come growth's for And has despite market,

Ryan Lance

Doug, am. thanks. No, Yes, I

so am of of the at but our not absolutely much the -- front very sits concerned about. that think right mind, I I our at back mind,

is. and the at U.S. the a back -- and we that sitting globally in think inventories we is I 'XX, XXXX that the you the And can last down fact was spare a maybe It OPEC+ the in number one debate are to and what can the that were group. quite point change time, bit number here what these late different certainly at all time quite the kind just is of capacity levels relative in

associated bit certainly, of thinking have little the getting it, and that. of the be should growth to if you about But time in U.S. that we're about. a back there's if think not level we you're that with worried I So be

Douglas Leggate

your listening. Well, our question with this peers is, for kind you're to favorite able maybe My changes going don't the are know yet, of portfolio I hope follow-up on, Bill. I you the sustaining of Are the with taxes? update output goes do, to now basis, that breakeven an you're post-tax capital that you guys give analysis is full along us paying if that. But Okay. a to give one a on cash all given able back

Dominic Macklon

Dominic that Yes, showed our help had I'll I here. there. bit. back course, of I you Doug, numbers it's the can take included modeling, with just XX-year a all prices mean, the in that That little we to tax we of plan.

we So mid-cycle breakeven. We that in WTI price. were $XX were about a

the taxes. higher little the competitiveness of think But a higher we'd that bit the So have obviously, prices, I portfolio. demonstrates

Bill, got So if anything don't to know you've I to that? add

William Bullock

No. That's well said, Dominic.

Operator

Our question Scott Markets. comes from Hanold from Capital RBC next

Scott Hanold

you stand a you little season on about the that proxy Scope X And all could proposition shareholder where guys your talk bit on coming emissions? up, With now? right

Dominic Macklon

Yes. again. Thanks, Dominic It's Scott.

So we engaged you with the on shareholders would as resolution, very expect. our extensively have

So and investor base. of with of XX% our represents met stockholder half around we've base, institutional that actually our about

we progress to well for allocation X includes and will some that on our scope capital being detail this X of announced million X emission a So level, oil I a and at And the But our and the towards $XXX X that. lot summary that effort zero ambition and first set statement. low go making Paris-aligned net we for carbon support in to for year, company say Scope have we're opportunities. as coming U.S.-based heard gas business more we'll our a lot as reduction proxy the a emissions which would

exceptions, very Our a upstream-only many that all across industrial target. general amount to company recognition E&P production X end-use retail an consumers, shift effectively, few will commercial did not X less And addressed the express for to responsible set a also And of that's really the an also only really the consumers, the if consumers prescribed Scope there accountable Paris-aligned chain, emissions. as emissions this of address because sources. value they was Scope ConocoPhillips stockholders, would that with expectation X be the and consumers, other to

So not but emphasize also, were X. are Scope we ignoring to -- that we able

to price continuing actively economy-wide in an are carbon. for We advocate

course, making Of in that's the on plans, but that address lot those. That's that, side, a We're engaging so some their important reduction important, we're emissions and side. chain capture course, and And both pursuing and supply opportunities and supply early-stage carbon we're so business their emissions. investments low also end-use with talked demand to about address the storage of our hydrogen. we've carbon

play Paris-aligned So we cost believe a and a production a to E&P reliable, valuable supply has energy low with transition. intensity crucial and of role company, the focus on low in really the GHG a

to dialogue has progressed. So of how shareholders, course, we update as are continuing in dialogue with our but that's an really that

Scott Hanold

thorough. very I appreciate was very, That that.

a full gas in ask guys quarter. gas over for project online, other dials, Norway? it capacity? like on got seemed can given were to volumes that very the and up you've the ramping prices Is Or just it you this Obviously, follow-up, I there? As strength Tor are pulling some robust

Nicholas Olds

a our XXXX, production the of did to as last trying of the we work what is year. Scott, all Tor asset we the -- Yes, That in that's May bring bottom through we and come expected. make on this gas online seeing end we did Nick. just II, Yes, through and And is line. lot wells with producing maximize non-operated then sure folks of you're

gas Tor and are expected XXXX. assets II through additional So some as well, performing yes, flowing

Operator

comes from next Gresh Our question JPMorgan. Phil from

Philip Gresh

of playing in things hope and you particularly My by information elaborate a some and cadence the gave first question, frac more rig just as you big XXXX. a release, see basin little how bit bit of some a for follow-up any progresses? levels X. and on could the planned on the moving I press pieces, you crews, the but out In year additional color the on the count activity

Timothy Leach

give Phil, spreads, the rigs cadence And cadence gains. XX efficiency us rigs weighted think back-end the But the drilling kind approximately Lower as X Tim the about we would of we balance The and will frac right now, drilling is more again. before this add X it's XX year. that at in activity talked year. of is throughout in we're and we of

One in the are think Ford of Bakken those in the standing up Eagle Permian. and rest the I and the

it's being and pace give lots and last in and we this will very pace have it's we think the Permian. So measured as said of efficiency. And quarter, kind capacity. constrained is the are But we a of -- in a greatest flexibility we us disciplined the

Ryan Lance

Phil, scope a add, talk early that about is to setting in teams And scope. lot the not wanting I our and year we whipsaw what with would our

to go execute can. efficiently as wanting just as it they So possibly

operated to of our items the do them know to to -- year what on that we beginning So we expect that and that right hope be go them that, at execute to the want scope, we have want flexibility.

Philip Gresh

of of any One quick Bill. call. Libya did the That there. of operates royalty cash that be presume just And I course, your your quarter their would much for something appreciate one peers any XXXX. there the clarification first follow-up in working there. for and for mentioned have pending ex just One for capital, follow-up anything tax flow income Very but kind I payments? on guidance color makes sense. you question have Do

William Bullock

Phil. sure, Yes,

Libya Libya, month of on to through in year. continue with current January. the the payments expect that income So our I we're would through now tax current and

Philip Gresh

in January? a Was there particular payment

William Bullock

There was.

working on That financials year current on capital million up year. last was It's paid that at became our in $XXX in was as you look for catching the January. the about from for taxes was we January So year. shown

surprise a that. on So not

Philip Gresh

billion $XX Got it. And the be right? of would excluding that, guidance

William Bullock

based Correct, on CFO.

Operator

Sandler. comes Piper Todd from from Ryan question next Our

Ryan Todd

just a -- if couple Maybe of I follow-ups. could detailed Yes.

regarding is billion pushing factors XXXX, versus of rough streams guidance expense the mentioned for by change versus is higher you operating X, from that Maybe roughly how number breakdowns driven On a any of on -- much much the inflation? $X.X coming that of year-on-year. X portfolio switch how

Dominic Macklon

Yes. Thanks Ryan, question. it's here. the Dominic again for

the of acquisition set we billion to of here, announced now year, we just our $X last to of pro remember a and structure of sort target rate So adjusted a $X I run bit billion. Concho little provide QX that versus cost -- op you was forma last we that improvement a costs achieved XXXX $X our when billion context think

continuing that. done the advantage last transaction the the of and we've years. So a That's benefit major couple to been from over from work we're through

I so year, X with do $X.X increased, Shell properties, this really got Permian some would those of and stream. half other about obviously, costs we production that. look the for breakdown, impact would we've We've terms obviously. anticipated equally the some like anticipated from something Shell inflation the rest that that's stream We've increase the come accounting X represent to and say -- Concho would historical production is general the Permian of the of X inflation. said of billion and I X -- from that split and say we've got in Concho that's we As incorporating converting have to it our assets,

So pleased we're progress with very so. our costs, -- but on the made we've

Ryan Lance

were kind million day level of we too, production. in of little forma bit barrels a And X.X pro Concho, Ryan, put I at context, a $X-ish that were would a reminder about we had and just the billion we -- that

So we're production now barrels kind for at a of that X.X of XXXX. at million level day

around put where just sort we're I and to of want context at. where we've some So come

Ryan Todd

is that something expect at going out those to trend much helping the expect you've should follow-up slide of continue be That's relative thoughts I some mix, appreciate And the we back Any an that widen organization continue? included and doing drive very that helpful. one point may your should realizations. as to mean forward, in forward? we what on Or you highs Maybe we deck. on that? that's realizations looking to towards to across

William Bullock

this Sure, Bill. Yes. is Ryan,

X% a increase they in realizations total in And Europe of XX% driven Henry a really to data, realizations Brent. as our supplementary increase in to the percentage our in increase that's prices versus that quarter. notice quarter you'll Brent, a and Hub the in about increased versus by at XX% in Looking XX% versus third just fourth XXX% gas

So realizations, outperformance They're to our that relative driving by those on it's that overall that of realizations. within I'd crude remain all percent historical strong. those say continue are ranges.

you as conversion what XX% third driven through And deliveries with the on we realizations go XXX%, XX there. call. gas here the of by from optimize signaled really year, saw expect change were to in move realizations back to The as go that's continue the surprise It's particularly we big expecting. there, we kind Lower gas folks. you quarter versus on. I X through line Concho we to change that that volumes is was, be our one our primarily then to level a would continue of the shouldn't X on the really those as the As This to stream

that for fourth So as what pretty a I of we are indication expect seeing good to quarter be. you're expect where realizations would here

Operator

from Wolfe Our comes next Josh Research. from question Silverstein

Joshua Silverstein

billion billion the Just question there. divestitures, on had asset $X $X the to a

As whether proceeds big because the over I the years. Or right or are of coming you short-term of -- it few going this lot the be start $X.X maturities dividend? could I a via return capital potentially think buyback don't to debt billion profile, they reduction? the that accelerate asked next have in, about but there's of debt,

Ryan Lance

No, ratable maturities. it's pretty

and back annual I Over give proceeds think look we that that's our is shareholders the an we're specifics past on Josh, few and our But our you we've in history, significant coming Bill look at years, as in on cash sharing you the have can the I And getting pretty flow if at been of with our cash, proceeds I cash at both we basis. percentage well. think -- no, next the look cash can that.

So it's And all balance well. as cash. we the fungible sheet watch

sheet. we're and on maybe balance reduction bit track, that gross of to debt a on respect Bill a and have the billion can little provide We target, with color $X

William Bullock

sometime do then looking Sure, to debt. as about that cost we're we Ryan. would billion we've depend and XXXX. refinancing, to our maturing expecting at we're debt repay by right as $XX that have debt track of potential you We're it million when and decide year, including act out, new retire previously, target advantage noted, things stay cash Yes, market portfolio. gross achieving matures. And take this said to if on some And And to how manage overall looking that debt putting we us on they've We're balance of to sheet. all to debt supportive mind been relatively could at. those and where to pointed don't issue at you soon the cost we and see $XXX as expect on multiple factors, factors Ryan that

Joshua Silverstein

you. Got

on mix. question asset a the and the base Just portfolio

that with position a You're area how have about Asia the gas is do already global happening But increasing an in you want asset get And an APLNG. the COP's you think stake and may Europe your market? within portfolio to given It's of position in. what's you prices? this bigger, where

Ryan Lance

and be LNG I the we're what energy -- longer that. given Europe and on transition going and both that is trend the bullish pretty the term, gas prices, we're on role is Well, play mean the through going planet Asia, to in going to

and of what foundation years, It's well. So model. of the looking to cost gas developing gas or and over by will our that oil. Asia, and assets. North the -- in here beauty investment. yes, allocate It's role on again, the in the of to additional for that's next as the LNG interested of geology. will product it how we're we our capital, That's But few supply supply in we type why whether model that that or U.S. terms the cost the of basis indifferent up Qatar. of by services some some if to it's preempt Field and a advantage informs both at decision and Europe And attract show sale of kind the APLNG we structural basis our of then It's play geographically expansion see in in the

Operator

is from question next Paul Scotiabank. Cheng from Our

Paul Cheng

But fourth add first quarter, bit say, is higher. the the there to from seems production [XXX it a production, going XXX]. Mind -- that also Shell, you're is going which be the detail. to maybe it call that Alaska in to little to

somewhat the guidance. assume Permian higher I noted So like legacy offset, without I that, be production mean, that first will seems the quarter we be higher. also should production other your than

to not for such the Total with quarter mean, the take second mid-year. X.XX question offset I in that deal, Shell -- over just is going interest and think you big I it's the down order to to mean, production So The in come to but a the X.XX? guidance is first I

why that that But given the the high be really have the also just to the behind kind M&A ownership interested and you? there of political want tax already understand You there. volatility, will regime over to rationale

Ryan Lance

I well. first, have go me as Dominic Yes, to can a production add of little color let bit it and

turnaround -- the quarter-by-quarter Tim about a a on depending it's high in going going production I quarter. in it We're planned first It's the to worried be that's quarter, think a at at basis our level, a of the get what spreads as fine. from wells all. wasn't complete What's and Paul, described online. Qatar probably fourth on in you come in people not to when the out a there's lumpy I'm just -- bit -- to ramp earlier, always missing frac Lower they back-end be XX, when

respect and few that. outs to So a with ins there's

in partnership just you of necessarily bought Libya of Total partnership differences. forward. in then in interested Libyans the and partner interest is, take On up with ConocoPhillips some approached outside some Hess not the We you're participate clearly, and of going quarter parties and ConocoPhillips the Total So interest. and the fourth Libya. but deal. supply edges to in the conversations coming with we Take of that for a venture if some -- bit wanted the its as quarter, may have there, to I of might see opportunity is And in who remained question, Hess a low Marathon's an we Total, in to would the around quite like a Libya, why And said, a just with to points. like the that, pick on Paul, Total looking basis your sequential out want think XP after It frankly, -- to good deal was margin. to were it's the It's that's -- It's margin there approached. all It's be first Libra recognize relatively take different little us. contract Hess cost that. the We the kinds a at maybe and your from pretty were it's contract. control not we'd production gross attractive

Operator

next Research. from Our Bob question from Bernstein Brackett is

Robert Brackett

How And gets about of exhausted. lion's about the growth that you whole share day to out? guys X.X to growth day to in the million do rate gas million think do how U.S. targets? can takeaway think your takeaway start the you a see where shaking X.X gas being you Permian, that meet the I and Permian your barrels see If of basin

Ryan Lance

Coast and we're else shape based can have. of as start that Hub And and position South, yes, we're on we we We infrastructure With chime can come and good Yes, I Bob. the West. can some think the Bill. in Katy well. commercial all is over we we evacuate the this, team And I for our can really in, anybody guess, Gulf the have into I that, go the into we gas potential can

an -- and go it industry-wide, don't So to got closely pretty flaring we're kinds make things. those of industry because all back sure to as we we watching but

maybe So we've color commercial infrastructure offtake Basin. offtakes gas to And to the in add from macro be got support team. bit there and these side I of Bill oil the little can has Permian coming of build the a capacity have to out our broader

William Bullock

Ryan. sure, Yes,

Basin takeaway more but You're starts start that years ramping to to something on. is an gas eye of as that a hitting capacity Permian production of watching the Bob, capacity, coming do, up, particularly as keep before out right, important on couple important the and you exactly it's away associated is probably we're that's particularly

look we note. as things of at a couple think to I

the And multiples pipelines there's we assurance you've skilled to of for so ConocoPhillips very across Houston out the area of Permian several and move commercial what moving that the a Basin. down organization additional put a in of then volume, Christi proposed area. takeaway recent both production. kind how is couple have would market, coming seen got flow capacity production of current currently are we terms in We've Corpus First, our the been that we

is keep goes. on physical the production. flow are to look important think for our be as keep at where on market going to those something eye an we But I we an assurance definitely eye

Robert Brackett

sort capital in of quick follow-up. around your appetite the philosophy What's results? mid-year A program Great. revisiting or

Ryan Lance

month, it day, Well, watch every we every Bob.

on And system. be level. We're prices the for the we're the evaluating looking of these so activity at pressures in see OBO what by certainly, at and looking pressure what our other the that operated might that kinds are spend us inflationary partners And is they there.

through program at should every choose scope. we nature steady can again, So like on we operated look that to that impact we the scope, our operated Obviously, But go we year. do our that.

talked it, go choose that be we guess that macro, we the But and side activity we the have on that about, will opportunities I should So absolutely, quarterly is inflationary to watch kind sort level, calls forces an out do lots come message be and offsets Tim the might we portfolio Shell of we've couple things still as outcome, watch because of manage the watch into as that. well. next got we're the levers seeing what there that integrate the those efficiency to the will conversations the that assets and as of of to we on toolbox the watch in

update all over be So moving of there's remaining a we'll necessary but as quarters. lot market parts, -- there's the the a through and number absolutely, it

Operator

Freeman James. question comes John next Our Raymond from from

John Freeman

in just a had I on topic, on of understand what's built question follow-up the guidance. the inflation was to make just First kind sure I

you're a is through Or go of in all have are market as of is still I idea items can some budget us service there the that like give spot cost that items?" you you've locked inflation, million what certain from "the guess, you got inflation dollars year, So standpoint, that the much to for you hundred couple certain would almost in? the exposed -- for pretty

Ryan Lance

side. on in the not we're in service side fully locked No, that

they back went lot the chain of supply from X,XXX, in the that at categories are chemicals X,XXX, again, down watch as so of closely. the exposed get to the has that up of in a chain we constraints what's because predominantly X,XXX or originate ton, Europe And what ones that. -- steel. or come like now right most condition everybody pretty to TCG to So describe our industry. Those you happening are it's old updates And are them X we out a spot in is service with of frequently started spend. X supply we Interestingly, are organization, for side now

to with would bit things, closely. what So as labor, and and of we probably them because update I inflating X some also watch impacts we said sand our weeks watching year. capital efficiencies trucking But -- and and we'll that and as your thought progresses. just point, for included when inflation, out that the generating some put then ago, we're those they're a a more, as the guidance company, earlier, local We've we're have we of pretty than year kind

John Freeman

could And I are put well, still there's items out locked sort so say, use that any will I for of you there Ryan, number there peers in of given of service at ballpark is slides in mean year. in is a that terms least know few exposed? what's what's x of a locked our of round kind -- your percent versus

Ryan Lance

on get have you We'd John. don't. I with that, No, to back

question, on out first the sorry. of yes, cut your You But, follow-up. part

John Freeman

your shareholders, of of longer-term have question of for kind something, shifting equal? that when has just relatively of kind kind where and kind or last at think framework do like When kind of is the XX-year a I Do buybacks see sort you had plan turning of of think relatively of been get of about, sort you've the of tiers just gone look those the you your flow, just look ordinary you you of don't kind know, to sales those the over and maybe time? have base Cenovus equal then are Or where me, you X you of then that Tier we X And about share anything you to exclude you sort the sure. and that's all VROC. sort X returns kind if at Yes, Tier perspective. cash dividend like thinking the been incremental and

Ryan Lance

Well, actually it we it's the affordable, end it's to of XXX. that. it's the look and think transparent, equal make it's ordinary through can growable affordable don't cycle. necessarily bottom at about as the We S&P think want we We sure competitive -- that what's an it's of with dividend reliable,

shares end we cycle. mid-cycle at the which torque ordinary at dividend So bottom we at that, that is price, what our kind mid-cycle of the for to able recognize we you described. But proportions the we cash combination believe least more about these of that X the then and have the the the that price our to top look the we our have But repurchasing with those that does it do on things of in of this and -- higher upside prices, what commodity going Cenovus combination in of doing we'd and some of we're dividend, price will shareholders the allowed shares, And to our mid-cycle first Cenovus think also us in this And quarter and be of at view the to of we the ConocoPhillips strength share into it swap we're make the XX% the represents has be to shareholder. like importantly, swapping is a -- our sure shares. more and of into year. complete back price

left VROC, third return we the target a in. XX% above kind called to is what's hit So introduced is coming tier weighs And variable the that that our of to back and which all that year through last shareholders. cash

think business. that's recognizes the in is reliable the how using We it's So the reality this that we're of volatility we're X-tiered seeing and durable, system it. it

deal. least together. so we And put an that X-tiered we've a through ratably We still of cash we upside reliable. a like why shareholders And experiencing up at ordinary like system over these dividend cycles, like today. cycles and XX% And a that's shares the we we and think to the of want torque we we're -- got and predictable that's buying they're good amount to our in deserve more or like a lot significant that recognize

Mark Keener

for have probably we Zanera, time one more. just

Operator

Absolutely.

last comes Truist from Our Securities. question Dingmann Neal from

Neal Dingmann

one guess, could. last if I ones, I two Just -- quick

the have along returns why cash again, some of are and know this, with off, at off, is why collars And you something my been notable nature? question in kicking maybe all the it's amount not and Just I this the kicking you're or opposed guys not you obviously. least with to cash given lock -- that but of

Ryan Lance

Yes, in buy shareholders price company. upside the that shares we unhedged, upside we the our the set up and We think in represents of because torque have commodity we're it to Neil. the the that the way

So no, would we and we're prefer -- remain unhedged, to help. do hedging frankly, little

downside a balance exposure have we very on So experiencing to we're sheet, to upside the that strong ought to full the shareholders and expect date. helps which us

Neal Dingmann

point. great No,

lastly just two does might requirement of now, sort make is? sort noncore that balance My then done of the sheet -- how that do does balance of around strong difficult given to it sell, And and more the likely of that even non considered in sheet it is sort couple small why sort divestiture near-term put that strong the you how secondly, your there Is you've a -- in I core, less -- is Tim be given know of sort and that. it divestitures. questions Okay. category? mentioned, there And then ones. anything on to -- of

Ryan Lance

No, of course not we've of and bar last and that the on the cost take X our we're transformational really. We made supply. of seeing just strong it's transactions want markets year, we in recognize today, raised company over the advantage pretty to whole the

there's invest invest that will in we So in. not recognize going that things probably to we're others

in So this company. XX the our we part that's for been mantra our of last and years -- drumbeat

think constantly in trying the do be the current Lower to the And going about more opportunities XX, to as portfolio. to we're see portfolio. primarily what's -- that some we So across high-grade Permian competitive again, see we we

Operator

back the any would over not I'm Mark. time. I at call showing you. turn to this Thank to like further questions

Mark Keener

Thank you, Thank Zanera, Zanera. call. you. in And thanks you back to to all pass for wrap-up. And today's I'll dialed for who your it

Operator

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

may You disconnect. now

ConocoPhillips (COP) 3 Feb 222021 Q4 Earnings call transcript