The operator, Liz, introduces the First Quarter 2024 ConocoPhillips Earnings Conference Call and hands over to Phil Gresh, Vice President of Investor Relations. The call will include members of the ConocoPhillips leadership team, including Chairman and CEO Ryan Lance and Chief Financial Officer Bill Bullock. The team will provide opening remarks and be available for questions. Important reminders and disclaimers are mentioned, and Ryan Lance begins by discussing the company's solid execution of their strategic plan in the first quarter of 2024.

In the first quarter, the company saw production growth at several key projects, including Surmont Pad 267 in Canada, Bohai Bay 4B in China, and subsea tiebacks in Norway. They also saw record production levels at Montney in Canada and are making progress on their LNG projects in Qatar and Port Arthur. In the Lower 48, the focus remains on efficient growth and they expect to deliver low single-digit production growth by 2024. The company is also on track to distribute at least $9 billion to shareholders this year and announced a VROC of $0.20 per share for the second quarter. Overall, the company is on track with their full year guidance and is investing in their diverse asset base for long-term cash flow and shareholder distributions. In the first quarter, the company generated $2.03 per share in adjusted earnings and saw 2% underlying production growth year-over-year.

In the first quarter, production in the Lower 48 averaged 1,046,000 barrels of oil equivalent per day, with the Permian, Eagle Ford, and Bakken contributing the most. However, weather had a negative impact on production, leading to only 1% year-over-year growth. The rest of the company, including Alaska and international operations, saw a 4% growth. Cash flows for the quarter were $5.1 billion, with $2.2 billion returned to shareholders. The company maintained its full year production outlook and expects similar growth in the second quarter. Turnarounds are expected in the second and third quarters.

The company has completed the first winter construction season for the Willow project in Alaska. They have made significant progress and are on track with their plan. The next key milestones for the project include completing the remaining winter activities and continuing with project execution.

The company has successfully completed its first major winter construction season on the North Slope, building 7 miles of gravel road, 30 miles of gravel pads, and 30 acres of pads for future facilities. They have also completed all planned pipelines and are on track to transport the first modules to the North Slope midyear. The project is still estimated to cost $7-7.5 billion, but progress has been made on contractual scope and they expect to have 90% of their total scope contracted by year-end. They will continue off-site module fabrication and prepare for the next winter construction season. The company is pleased with the progress being made on the project.

Neil Mehta of Goldman Sachs asks a question about the company's return of capital plans. CEO Ryan Lance responds by saying that they are in good shape and expect to return a reasonable percentage of their cash flow to shareholders, given the current high prices. They are monitoring market volatility and will make decisions based on durability of prices. The next question comes from Lloyd Byrne of Jefferies, who asks about the company's strategic plans for Permian gas. Lance responds by saying they are proactive in integrating the gas and have target levels in mind, but are also considering differentials.

Lloyd and Bill discuss the company's LNG strategy and their exposure to various gas markets. They have transport capacity to the Gulf and West Coast, and are supportive of off-take capacity from the Permian Basin. They do not disclose the percentage of volume that moves to each location, but their realizations are based on a percentage of capture of first of month Henry Hub pricing. In the first quarter, their realization was about 70%, which was higher than the previous quarter. They expect volatility in the second quarter due to transitory issues, but are confident that their flow assurance and access to competitive market pricing will help them navigate any challenges.

The speaker explains that the company is focused on efficient operations in the Permian region and expects 3% year-over-year growth, excluding weather-related downtime. They also mention a decrease in activity in the Eagle Ford due to a planned operational gap. The company plans to focus on the Delaware region in the first half of the year and then pivot to the Midland Basin for the second half. They are also seeing efficiency improvements through techniques like simul-frac and remote fracs.

The company has a real-time drilling intelligence group that monitors rigs 24/7 and is seeing promising results in terms of efficiency. Production is expected to increase in the second half of the year, with low-single digit growth overall. The company is focused on longer laterals in the Permian Basin, with 80% of their inventory being 1.5 miles or greater and 60% being 2 miles or greater. The company is also seeing efficiency gains from e-fracs and larger pad projects coming online in the second half of the year.

In 2024, 80% of wells will be 1.5 miles or longer, with 20% being 3-mile laterals. This translates to a 30-40% improvement in cost of supply. In the Midland Basin, there has been recent success with record wells and improved drilling and pumping efficiency. The company is focused on increasing feet per day, stages per day, and pumping hours per day, leading to a 10-15% improvement in pumping hours from 2022 to 2033. The company is also expanding its footprint in the global LNG market and has a strategic intent to continue growing in this area.

The company is actively involved in all aspects of LNG production in North America, Qatar, and Australia, including liquefaction and regasification. They are focused on growing their integrated business, even with lower prices, and have secured a significant amount of offtake and regasification capacity in various locations. The company plans to continue expanding in the regasification market in the near future.

The speaker discusses the company's plans for offtake capacity and potential portfolio optimization, including their involvement in the Citgo refining assets process. They clarify that their interest in Citgo is to protect their credit against the Venezuelan government, not to become an integrated refining company.

The speaker is addressing the topic of artificial intelligence (AI) and how it is being used in the oil industry. They mention that while AI is a popular term in other sectors, it hasn't been discussed much by producers. However, a large oil services company believes that their revenue will increase due to the use of AI in improving well productivity and estimated ultimate recovery (EUR).

Ryan Lance, CEO of ConocoPhillips, believes that AI will revolutionize the oil and gas industry and improve efficiency. He acknowledges that it may take some time for AI to have a significant impact, but he sees it as an opportunity to accelerate the company's learning curve and optimize operations. However, the challenge lies in implementing deep machine learning in a large enterprise like ConocoPhillips.

Ryan Lance, CEO of the company, expressed interest in growing their LNG portfolio, with a goal of reaching 10-15 million tons. They are looking for the best opportunities, particularly in North America, and are open to expanding their relationship with Qatar if the terms are competitive. They will wait for Qatar's decision on future expansions from the North Field.

The speaker discusses the strength of the company's relationships and participation in the Port Arthur project. They express confidence in the project's execution and do not have concerns about inflation. They also mention their focus on competitive projects that align with the company's long-term vision. The next question from a caller is about the company's Lower 48 marketing and potential improvements in Permian differentials. The speaker mentions their current off-take capacity and their constant efforts to optimize their portfolio and improve margins. They are also seeking additional takeaway capacity in the Permian region.

The paragraph discusses the recent maintenance and outages at El Paso and other pipelines that have put pressure on Waha pricing. The speaker expects this to clear up in the third quarter when additional pipeline capacity becomes available. They also mention the success of a new pad at Surmont 267, which has seen strong operational performance since its first oil in December.

The company has seen strong production growth on Pad 267 and plans to add a new pad every 12-18 months. They are finding new efficiencies and mitigating base field decline. Gas prices are impacting cash flow, but there are no changes to the capital program and they are waiting for more takeaway capacity in the Permian to improve prices.

The company's first quarter capital expenditure was lower than expected due to some capital being shifted to April. However, excluding this timing issue, the expenditure was in line with expectations. In the second quarter, capital is expected to be slightly higher due to PALNG and Willow timing, but will decrease in the second half of the year due to the completion of a project financing.

During a conference call, Leo Mariani from ROTH MKM asked the operator about the expected trajectory of the company's Eagle Ford volumes. The operator responded that the company had a frac holiday in the second half of 2023, which affected volumes in the last two quarters. This will continue to impact the first quarter of this year, but volumes are expected to increase in the second quarter and beyond. This is in line with the company's full year guidance of 2-4% growth. There were no further questions and the call ended.

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