The operator welcomes participants to the ConocoPhillips earnings conference call and introduces the members of the leadership team. The team will be available for questions after opening remarks from the CEO and CFO. Important reminders and guidelines for the call are also mentioned.

In the second quarter, ConocoPhillips had a strong performance, achieving record production and a preliminary reserve replacement ratio of 123%. They also made progress on strategic initiatives such as expanding their global LNG strategy and acquiring the remaining 50% of Surmont. They were able to deliver returns to shareholders and had a 17% return on capital employed. They also announced plans to distribute $9 billion to shareholders in 2024 and reinvest the remainder of their cash flow into the business to continue growing earnings and cash flows.

In conclusion, the organization is proud of their accomplishments and their portfolio is set to generate competitive returns and cash flow for years to come. In the fourth quarter, the company generated $2.40 per share in adjusted earnings and had a 4% underlying growth rate. They also returned $11 billion to shareholders in 2023 and forecast a 2-4% underlying growth rate for 2024, with a balance between their Lower 48 and International operations. The call then transitioned to Bill to cover more details on their fourth quarter performance and 2024 guidance.

The company's full year forecast includes an expected increase in turnaround impacts compared to the previous year, with a concentration in the third quarter due to a one-month turnaround occurring once every five years. Production guidance for the first quarter shows a 1% to 3% underlying growth, with a 20,000 barrel per day headwind from January weather impacts. The company also expects distributions of $400 million in the first quarter and $1.3 billion for the full year for APLNG. Cost guidance shows essentially flat unit costs on a year-over-year basis, with cash expiration expenses and DD&A expenses also expected to be similar to the previous year. The company's adjusted corporate segment net loss guidance is $1 billion to $1.1 billion, and the effective corporate tax rate is expected to be in the 36% to 37% range of strip prices. Capital spending for the full year is expected to be between $11 billion to $11.5 billion.

The paragraph discusses expectations for various financial benefits and spending in various projects, including a decrease in LNG spending offset by increases in other areas. The first quarter is expected to have higher capital expenditures, and the company had a strong operational quarter. The speaker then turns the call over to the operator for Q&A. The following question asks about the company's predictions for U.S. oil production and how it relates to their development plans.

Ryan Lance, CEO of ConocoPhillips, discusses the company's growth rate in the U.S. and its plans for the Lower 48 region. He predicts a modest growth rate of between 300,000 and 500,000 barrels of oil equivalent, primarily driven by the Permian. The company does not plan to ramp up its program in the Lower 48 and will maintain a similar activity level to what was seen in 2023. When asked about the company's portfolio breakeven and cash returns, Dominic, a representative from the company, will provide more details.

Dominic Macklon and Bill Bullock provide more details on ConocoPhillips' free cash flow breakeven and balance sheet. They mention that the company's free cash flow breakeven is around $35 WTI and their dividend would add an additional $8 to $9. They also state that the company has $6.9 billion in cash and a net debt-to-CFO ratio of 0.5 turns. Ryan Lance adds that the company is confident in their $9 billion in distributions for the year. The next question from Roger Read is about the company's thoughts on M&A, specifically mentioning the Surmont deal from last year.

The company's approach to M&A has not changed and they are still looking for opportunities that fit their financial framework and make their 10-year plan better. They have reduced their cash return target from $11 billion to $9 billion, but the mix between dividends, buybacks, and other channels has not been determined yet. The company believes that the total amount of distribution is the most important factor.

The company is pleased to announce plans to return $9 billion to shareholders. They have shifted their mix to include more buybacks, with 60% of their total plan distributions going towards buybacks. The remaining 40% will be in cash, including a $0.20 per share dividend. The company believes this mix of cash and buybacks is a solid strategy. They also discuss the recent administration decision to pause LNG projects, but feel confident in their permitted projects at Port Arthur.

The speaker is pleased with the progress of Port Arthur Phase 1, which is fully permitted and has environmental permits in place. They are interested in developing a diversified portfolio of offtake, with a focus on low cost, low greenhouse gas intensity resources. The recent news about lawsuits around Willow does not impact their plans for the project, and they are confident in their construction plan for the year and progress towards the 2024 build.

The speaker provides a legal update on the fourth quarter, highlighting positive rulings that allowed construction work to proceed on the North Slope and upheld the legality of the ROD issued by the BLM. These rulings gave the company the certainty to make the FID decision. They are currently mobilizing 1,200 workers and making progress with modular facility fabrications. The estimated capital for 2024 remains unchanged at $7 billion to $7.5 billion. 90% of the project scope is expected to be under contract by the end of 2024, with 70% of contracts being lump sum or unit rate contracts with limited exposure to future inflation.

The speaker discusses the progress of a major project called Willow and emphasizes the importance of getting off to a fast start. The team is currently in full execution mode and focused on building Willow. The question is then raised about production growth and the speaker explains that they are holding activity flat this year, but if they become more efficient, they may consider increasing production. However, their main focus is on efficiency and not chasing growth.

The speaker is discussing the company's modest level of growth and how it aligns with their previous statements. They expect a 2-4% increase in production, with growth coming from both domestic and international portfolios. They also mention the impact of weather and turnaround on growth in the first and third quarters. The company is pleased with the diversity and stability of their growth and is committed to maintaining a steady and efficient program. The CEO emphasizes the importance of a constant pace for maximizing returns. The next question is about the Montney.

The speaker is discussing the company's growth in processing facilities and development plans in the Montney region. They mention that the lower natural gas prices have not affected their long-term plans and that their position in Surmont makes them a user of natural gas. They also mention that production in the fourth quarter of 2023 was 33,000 barrels per day and is expected to continue growing. The modest growth in Canada's CapEx is due to additional equity in Surmont and adding a second rig in the Montney. The speaker then addresses a question about the company's triple-digit organic reserve replacement ratio and mentions the impact of sanctioning Willow.

The company is pleased with its strong organic and total reserve replacement this year. The Lower 48 portfolio is performing well, with an organic replacement ratio over 100% and contributions from Montney and Willow. The initial booking for Willow was 160 million barrels, but it is expected to reach the base case resource estimate of 600 million barrels as the project develops. The company also benefited from the Surmont 50% acquisition, resulting in strong total reserve replacement for the year. There has been some deflation in Lower 48 capital, mainly driven by consumables and commodities, and activity levels have decreased in the second half of 2023.

The speaker is discussing the current state of the Lower 48 deflationary trend and its potential impact on their spending plan. They mention their consistent execution and stable activity levels, as well as their focus on operating and capital efficiency. The speaker also mentions the potential for terming out contracts and taking advantage of deflation in various spend categories. They emphasize their level-loaded steady-state program through 2024.

The speaker is discussing the production decline in some Lower 48 assets and the direction of production in the future. They mention a 9% production drop in Q3-Q4 due to a conscious decision and the completion efficiencies outpacing drilling efficiency. They also mention a similar situation in the Bakken and state that they will have a steady program in both areas. The speaker then addresses a question about the Permian and mentions supply chain costs and efficiency, stating that they presented cost of supply numbers last April and are currently evaluating their standing relative to those assumptions.

Ryan Lance discusses the efficiency improvements in both drilling and completion processes. These improvements have resulted in a 10-15% increase in pumping hours per day. Some of the strategies being utilized include simul frac, super zipper, remote frac, and real-time drilling intelligence. These have all contributed to the overall improvement in efficiency.

Paul Cheng from Scotiabank asks Ryan Lance, CEO of the company, about their willingness to engage in consolidation deals and their balance sheet. Lance responds that the $9 billion distribution for this year is a starting point and will be adjusted based on commodity prices. He also mentions that the company maintains an A credit rating and has a strong balance sheet with a 2.5 net debt turn to cash.

The speaker discusses the company's balance sheet and its ability to handle volatile commodity prices. They mention their willingness to use debt for acquisitions if it fits their financial framework and improves their 10-year plan. They also mention their focus on maintaining a strong balance sheet and avoiding excessive debt. The speaker then addresses a question about international growth, specifically mentioning the Montney in Canada and other potential projects.

The speaker discusses the good momentum of Alaskan international projects, with first production achieved ahead of schedule in Norway and China, and gradual ramping up of production in Surmont and Montney. The speaker also mentions that ANI will provide a significant part of the company's growth this year.

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