The Third Quarter 2023 ConocoPhillips Earnings Conference Call is about to begin. The operator, Liz, introduces Phil Gresh, Vice President of Investor Relations, who will be leading the call. Other members of the ConocoPhillips leadership team are also present. The team will provide opening remarks and then be available for questions. Important materials and disclosures can be found on the Investor Relations website. Forward-looking statements and non-GAAP financial measures will be discussed. Each caller will be limited to one question. Chairman and CEO Ryan Lance thanks everyone for joining the call.

ConocoPhillips had a successful quarter and achieved several project milestones in their international portfolio. They addressed the recent M&A headlines and stated their focus on returns and cost of supply. They also closed an acquisition of the remaining 50% of Surmont, which is a long-life, low capital intensity asset. They have also made progress in their global LNG strategy, securing regas capacity at the Gate LNG terminal and effectively securing destinations for nearly half of their Port Arthur LNG offtake commitment. Additionally, they started up their second central processing facility in the Montney.

The company has announced the early start of three project developments in Norway and China, demonstrating the strength of their diversified international portfolio. They have also achieved record production and increased their dividend, while remaining on track with their capital growth plans. The team continues to execute well and the company is well positioned for long-term success. In the third quarter, they generated $2.16 per share in adjusted earnings and saw a 3% underlying growth in production year-over-year.

In the third quarter, planned turnarounds were completed in Norway and Alaska, and production averaged 1,083,000 barrels of oil equivalent per day. Cash flow from operations was $5.5 billion, and capital expenditures were $2.5 billion. The company delivered $2.6 billion to shareholders through share buybacks and dividends, and announced a 14% increase in the organic dividend. The company also updated their VROC payment schedule and provided guidance for the fourth quarter and full year production, which now includes an additional 50% of Surmont starting in October.

The company expects 4% growth for the fourth quarter and full year, driven by Lower 48 production growth of 7%. APLNG distributions are expected to be $300 million in the fourth quarter and $1.9 billion for the full year. Adjusted operating costs have been raised by $300 million due to increased activity in Surmont and the Lower 48, while DD&A guidance has been raised by $100 million. The company remains competitive in shareholder distributions and has a solid operational quarter. The Lower 48 results have been steady, with 7% growth, and the company is confident in their plan for 2024.

Nicholas Olds and Ryan Lance discuss the strong performance of their company's assets in various basins, particularly in the Delaware well where they are seeing top quartile results. They attribute this success to their focus on returns and capital efficiency. They also mention recent international project start-ups and their positive progress, with plans for further growth in the future.

In 2024, the company expects to add 20,000 barrels a day of production through four projects, offsetting normal decline. They also achieved first production ahead of schedule in China and have major milestones in Canada. They plan to leverage existing infrastructure for low cost opportunities. In 2024, the company plans to invest in new wells in Bohai for the next 4-5 years, increase production in the Montney, and achieve first half in early '24 for Surmont Pad 267. They expect to see Surmont grow by 5,000-10,000 barrels a day, inclusive of a month-long turnaround every 5 years. The company is proud of their execution and momentum going into next year. In terms of 2024 CapEx, the company did not provide specific details but mentioned their focus on low cost opportunities and leveraging existing infrastructure.

In the past, the company has discussed a flat CapEx of $11 billion with some potential changes due to M&A activity. The company expects spending to increase for the Willow project and the additional 50% of Surmont, but this will be offset by lower spending on LNG projects and the roll-off of Norway project capital. The company's stock is up 5% due to the announcement of an ordinary dividend move. One analyst asked about the company's performance in the Permian, and another asked about any differences between operated and non-operated production.

Ryan Lance and Nick Olds are discussing the company's performance in the Lower 48 and Permian regions. They mention that their plan is to target top quartile dividend growth and they are sticking to it. Nick then answers a question about the company's performance in the Permian, specifically mentioning increases in operated by other assets. He also talks about the company's investment strategy in the Permian and how they are reviewing every ballot to ensure capital efficiency. In response to a question about international gas integration, Ryan mentions that it is still early but there is a lot of potential for the company.

Ryan Lance and Bill Bullock discuss the thought process behind adding regas capacity in the Netherlands at the Gate LNG and their plans to build out and move Port Arthur volumes into the market. They are confident in the strong demand for LNG and are focused on developing a diversified portfolio with sales in both Europe and Asia. Within 6 months of FID on Port Arthur, they have already placed roughly half of the capacity.

The speaker discusses the company's capacity in Germany and the TTF and how it affects returns. They also mention their progress in Asia and agree that it is a valuable addition to their portfolio. The speaker then addresses a question about the recent dividend raise and explains that their framework for shareholder return has not changed. They plan to deliver at least 30% of their cash flow back to shareholders and when prices are higher, they will give back more.

The company has been delivering a high percentage of cash back to shareholders over the past 5 to 6 years through dividends and share buybacks. This strategy will continue, with a focus on providing an affordable, growing dividend and buying back shares during mid-cycle periods. The company also introduced a third leg, VROC, to provide additional returns to shareholders when prices are above mid-cycle levels. The company expects to give back half of its $22 billion cash flow to shareholders this year. When it comes to improving recovery rates in the Permian Basin, the company is deploying technologies and techniques to maximize recovery from its wells, acreage, and layers within its portfolio.

The company is focused on maximizing recovery of assets and optimizing reservoirs in order to improve capital efficiency. They have a lot of inventory in the Permian and are increasing lateral length to improve recovery per well. They are also executing 3-mile laterals and improving well completion.

The speaker discusses various techniques being used to optimize recovery and capital efficiency in different basins, including multi-varied analysis, co-development, refracking, and enhanced oil recovery. These techniques have shown success in improving well performance and increasing overall recovery, but enhanced oil recovery projects do not currently compete with the company's drill 1 inventory. The company will continue to study and analyze these techniques for potential future use.

Roger asks about the current status of the Willow project in Alaska, mentioning potential legal and regulatory challenges. Andy responds by stating that there are ongoing lawsuits challenging the federal government's approval of the project, with a ruling expected in November. He also mentions separate proposed regulations for the management and protection of the NPRA, which could potentially impact future developments beyond Willow. The company is providing feedback to try and make the proposed rules more consistent with existing laws.

The speaker, Ryan, has been actively managing the company's portfolio over the past few years, making strategic moves across different regions and asset types. These moves have been a mix of opportunistic and planned, with some projects like Surmont and APLNG being acquired at advantageous times.

The speaker is satisfied with the current state of the company's portfolio and believes it will lead to a successful 10-year plan. They are constantly evaluating and high-grading the portfolio, but do not currently see any major changes needed. They also remain opportunistic for potential acquisitions that align with their financial framework.

During an earnings call, a question was asked about the company's plans for improving their assets in the Permian region. CEO Ryan Lance responded by stating that their goal is to make their 10-year plan even better, which is a high hurdle within the company. He then passed the question to Nick Olds, who discussed the various factors they are considering in order to improve their operations in the Permian, including lateral length, completion efficiency, and spacing and stacking. They have deep experience in all 3 basins (Bakken, Eagle Ford, and Permian) and are using their knowledge to maximize recovery, minimize costs, and increase efficiency. Olds also mentioned that they have a significant inventory of long lateral wells in the Permian.

The company is seeing good results from their 3-mile laterals and are increasing their portfolio of long laterals across all 4 assets. They are considering going even further with longer lateral lengths, but are aware of the trade-offs and operational risks. The company has a deep inventory of long laterals and is considering their return to capital for next year, taking into account the added debt from the Surmont transaction. They may focus on building cash or paying down debt instead of increasing shareholder returns.

Ryan Lance, CEO of a company, is discussing their plans for the upcoming year and how commodity prices will impact their total return. They also have a plan to pay off debt and potentially add more cash to their balance sheet if there is a large increase in commodity prices. The company is also involved in a process with Venezuela to try and reclaim money owed to them through claims. They are closely monitoring the progress and pursuing the owed money aggressively.

In paragraph 21, the speaker discusses the government's lifting of some sanctions on Venezuela and their commitment to getting their owed money back. They also mention a potential opening for free and fair elections, but acknowledge that this is a long process. In terms of M&A, the company is focused on a global, diverse, and balanced portfolio with a high bar for any potential assets. They do not comment on recent deals, but note that they were likely done at a higher mid-cycle price. The speaker also mentions their preference for assets with a low cost of supply and the ability to compete for capital against the company's current inventory. In the next question, the speaker is asked about their view on recent public deals and their preference for shorter or longer-term cycle assets.

Scott Hanold asks about the impact of consolidation in the Permian Basin on competition and development. Ryan Lance responds that they do not see it as a major issue and that being a large operator in the basin allows them to get the attention of service companies. They do not see any exposure to current consolidation trends and believe more consolidation may need to happen. The next question asks about adding activity in the Lower 48, to which Lance responds that it will be part of their current process.

The company is currently focused on maximizing efficiency and growth from their assets. They plan to maintain a flat scope and make decisions based on factors such as commodity prices and service capabilities. The operator asks about service cost trends in the Lower 48, and the company mentions seeing some areas of deflation but still expects overall capital inflation. They are monitoring the market and considering potential trends for next year's capital expectations.

The speaker mentions that they are closely monitoring a certain topic, but does not provide further details. The operator then announces that there are no more questions and the conference call is ending.

This summary was generated with AI and may contain some inaccuracies.