ConocoPhillips (COP)

“So when we put out the $7 billion free cash flow inflection, you can count on the team delivering that.”

“The planned turnaround that we had premised in the second quarter was successfully executed, and we were able to take advantage of the downtime at Ras Laffan to get work done so that as the train is expected to ramp up over the next quarter, we can be in a strong position with high uptime and execution coming out of that downtime.”

“This improvement from the second quarter is driven by a production ramp in Qatar and continued Lower 48 growth.”

“Third-quarter production guidance range is 2.290 to 2.320 million barrels of oil equivalent per day.”

“With the free cash flow inflection and CapEx coming down, our CFO growing up, our free cash flow breakeven is structurally reducing, which is constructive for the dividend.”

“We remain committed to 45% and we do not choose to manage quarter to quarter given the volatility in commodity prices; that volatility reminds us why we do not do that. I will reaffirm that 45% of our CFO is our target for this year.”

“We see no impact on our $7 billion free cash flow inflection in 2029 from these transactions; in fact, these are upside to that in the future.”

“CFO is going to go up clearly as these projects come online, and capital is coming down.”

“Let me start with a correction: peak CapEx of Willow is behind us. We have passed Willow's peak. We absolutely expect our CapEx to move lower from here, particularly as Willow comes online early in 2029.”

“We are not expecting delays from those projects to meaningfully impact our free cash flow, and we have strong confidence in what we are expecting coming out of Qatar.”

“We are meeting these priorities while reinvesting to deliver a peer-leading $7 billion free cash flow inflection by 2029.”

“We remain firmly on track to deliver our $7 billion free cash flow inflection by 2029, effectively doubling last year's total free cash flow.”

“Our LNG projects will begin contributing in 2027, and Willow continues to hit all key milestones in advance of first oil in early 2029.”

“Looking into the third quarter, our guidance does assume a ramp across the quarter, and naturally there is uncertainty around the pace of the ramp as well as overall throughput through the quarter.”

“Over the long run, we expect significant cash flow from these assets, though volatility will exist. Price risk is asymmetric to the upside.”

“We have been constructive on LNG demand and pricing for some time—we view LNG as the part of the energy complex that will grow the most and expect demand to roughly double between now and 2050.”

“When we deliver $7 billion of free cash flow over the next few years, we believe our share price should improve with a doubling of that free cash flow, so we are not being pro-cyclical in a detrimental way.”

“We are not contemplating feathering back distributions; we expect to remain peer leading.”

“We expect the joint venture to fund its own activity from its own cash flows, so no to little capital expenditures for ConocoPhillips is our base case.”

“We currently expect the Iraq transaction with Kirkuk to close around year-end and acquisition capital to be in the $300 to $500 million at close, including our share of historical costs spent to date and expectations of costs from now to year-end.”

“Expect capital to come down post-first oil into a ratable level consistent with historical averages; our reinvestment rates in Alaska have consistently been in the thirties, and you should expect that from us post-first oil.”

“There will be years of plateau in Willow post first oil, and then as capacity and infrastructure enable it, we will be in a strong position to bring more oil from satellite pads into the 2030s.”

“I do want to say we do not expect to go to zero growth capital maintenance levels once everything is set up. We will continue to invest in our Lower 48 and ANI portfolios for modest growth. But structurally, expect a lower reinvestment rate than where we are today.”

“Our free cash flow breakevens move from the mid-forties WTI today to the low-30s by 2029.”

“But from the schedule and productivity we are seeing, we expect any delays to first gas or first cargo to be in the nature of months, not a full year.”

“As free cash flow grows, our breakeven price comes down. Our reinvestment rate comes down, and our financial strength and competitive positioning further improve.”

“We will continue to grow our dividend at a rate competitive with the top quartile of the S&P 500.”

“These fields are already producing today and we expect the production to largely fund the redevelopment, delivering longer-term free cash flow upside with little to no impact on our capital spending.”

“We averaged about 40% for the first half, meaning we expect to increase the distribution percentage over the second half of the year.”

“For distributions, we continue to target returning 45% of our CFO to shareholders this year.”

“You will see us probably buying more in the second quarter.”

“The midpoint of our second-quarter production guidance is 2.2 million barrels of oil equivalent per day, which reflects the full exclusion of Qatar production from guidance for the quarter, the Surmont royalty rate adjustment, and planned second-quarter maintenance.”

“On Port Arthur Phase 1, we are in a perfect situation—we certainly do not need to sell anything... we will have that asset online in 2027.”

“You saw it in the first quarter; you will see it year on year, and that will continue into 2027.”

“All of this in aggregate puts us in a very strong position for our early oil expectation in 2029, and all that is on track.”

“We made strong progress in the first quarter and we remain confident in realizing the full $1 billion run rate by year end.”

“We are on track to deliver our previously announced $7 billion free cash flow inflection by 2029, driven by our cost reduction efforts, LNG projects, and Willow.”

“We will continue returning significant CFO to shareholders right off the top.”

“We will maintain and protect our investment-grade balance sheet.”

“We will continue delivering base dividend growth competitive with the top quartile of the S&P 500.”

“We have been running roughly one rig and expect to continue at a similar pace because, as we have experienced in the Lower 48, pairing strong drilling and completions crews yields strong performance across both.”

“These adds are weighted to the last half of the year, so they do not have a large impact on 2026, but they set us up for the continued growth that we are seeing in the Lower 48 in our portfolio year on year.”

“On the non-operated OBO side, we have started to see more well ballots from our partners, which will likely translate to a higher level of OBO spend over the second half of the year.”

“This increase is due to slightly more Permian activity over the second half of the year; we are adding a rig to keep pace with the completion efficiencies, and we expect higher levels of non-operated spend.”

“For capital spending, we are updating our guidance to a range of $12 billion to $12.5 billion versus our prior guidance of about $12 billion, representing a 2% increase at the midpoint.”

“Moving to operating costs, full-year guidance of $10.2 billion is unchanged, reflecting a $400 million reduction from 2025 due to the benefits of our cost reduction and margin enhancement program.”

“For production, the midpoint of our annual guidance is updated to 2.31 million barrels of oil equivalent per day.”

“We have also added a modest amount of Permian activity over the second half of the year to maintain our operational efficiency into 2027.”

“Shareholders will directly share in this upside with our 45% of CFO return of capital objective.”

“In terms of how these priorities are translating to our 2026 plan, our expected CFO generation is up materially given our unhedged oil and LNG torque.”

“Additionally, the Port Arthur LNG project continues to progress very well with first LNG expected next year.”

“QE has disclosed that they expect delays; it is a bit premature to provide firm guidance on how that will manifest, but we expect the delay to be on the order of months.”

“While Willow is nearing 50% complete, and on track for first oil in early 2029.”

“But on the strategic trades, we continue to do that on an ongoing basis. And if you look at long lateral inventory in that area you mentioned, if I step back to 2023, about 60% of our Permian future well inventory was two miles or greater. But, today, that's at 80% due to the strategic, trays and core ups. And in fact, you look at the 2026 program, 90% of those wells are two miles or greater.”

“So, we're seeing that basically drive next $2 billion after the one we have now, then the next two comes from those LNG projects.”

“And this is a key driver in our ability to deliver low single-digit growth in the Lower 48 alongside a reduction of more than 5% in capital compared to 2025.”

“If you look ahead to 2026, we expect consistent strong performance across all of our basins like we've demonstrated over the past several years.”

“including at Sermont, where we delivered our most recent pad ahead of schedule and on budget, with another pad expected online early next year.”

“In 2025, we improved our drilling and completion efficiencies by more than 15% expect our capital efficiency improvements to continue in 2026 again driven by strong well productivity, ongoing D and C excellence, and further increases in our longer lateral developments.”

“As a reminder, the four major projects we have underway combined with our cost reduction and margin enhancement initiative, are expected to drive a $7 billion free cash flow inflection by 2029 that will double our 2025 free cash flow generation.”

“Top quartile dividend growth is sustainable, as we expect our free cash flow breakeven to decline into the low $30 per barrel WTI range by the end of this decade.”

“On shareholder returns, we once again expect to return about 45% of our CFO to shareholders while continuing to grow our base dividend at a top quarterly S&P 500 rate.”

“Turning to 2026, our primary focus is on delivering a $1 billion combined reduction across our capital spending and operating costs while growing our production on an underlying basis.”

“But that said, we'll land somewhere modestly below 2Q production as we go forward here in the near term.”

“We'll have close to 90% or 95% of these contracts pretty well secured by year-end, and so a lot of work in that space.”

“In the second half of the year, we expect free cash flow tailwinds in the form of higher APLNG distributions, cash tax benefits and lower capital spending.”

“And we now expect a total full year deferred tax benefit of about $0.5 billion, primarily reflecting the positive impacts from the One Big Beautiful Bill.”

“We now expect our full year effective corporate tax rate to be in the mid- to high 30% range, excluding onetime items, lower than we previously guided due to geographical mix.”

“As that free cash flow inflects and our CFO grows, distributions are going to grow with that.”

“So it just continues to give us a lot of confidence in execution and strong expectations again around 2029 and first oil.”

“But what we do know is that it's going to be a tailwind for us for next year.”

“There's going to be consistent start-ups starting next year with Qatar -- one of the trains in Qatar, '27 with Port Arthur '28 with another train in Qatar, and then, '29 with Willow.”

“If you look at what we're doing this year, from our guidance, basically, it implies about 2% growth on an underlying basis this year. And in the macro environment, we see right now, I think this would be a pretty good place to start for modeling purposes for next year.”

“We expect our capital next year to be lower than this year as we -- at the beginning of the cash flow for inflection.”

“In addition to furthering our cost reduction initiatives, we are more than doubling our asset sales target to $5 billion, which we also expect to achieve by the end of next year.”

“All in, including the Marathon synergies, we expect to drive over $2 billion of run rate improvements by the end of next year.”

“We've identified more than $1 billion of opportunities that we expect to realize on a run rate basis by the end of 2026.”

“That would almost double the consensus free cash flow expectation for the entire company this year.”

“Assuming a $70 per barrel WTI price environment, we expect the major projects we're currently progressing in combination with the additional cost and margin enhancements we just announced to drive a $7 billion free cash flow inflection by 2029.”

“We remain very confident that we're going to exit the year achieving the cost and S&J synergies for that run rate of $500 million.”

“Well, I think we've kind of factored that into the plans that we've talked about, Betty. The absolute worst thing to do right now is to try to whipsaw these long cycle investments. So we're not trying to slow Willow down or we're not trying to create inefficiencies in that and we're not equally important not trying to do that on the LNG side.”

“you shouldn't expect a lot of things to change out of our company at these kinds of price, because we're built for it, we can handle the volatility, got a great balance sheet.”

“But as Bill described in his opening remarks, we stand in a pretty good shape. We think buying our shares makes sense right now. We're not going to drop off that at all.”

“And so here by year end, we'll have 90% to 95% of that work sourced and that brings even more certainty just to understanding how this will continue to play out for us in a positive way.”

“So again, peak capital, we guided you a bit to about a third of total spend here. This year will be in the first three to four months of this year. We're seeing that actualize for us and so we expect capital to continue to taper down through the remainder of the year.”

“So we do expect to source and receive a bulk of the engineered equipment that's required to procure again for those process modules and as well as all this forward-looking work that we have on the slope.”

“Now, what does this mean for the second quarter? We still think we ought to be buying our shares and we're doing that. But as we kind of go into second quarter reflective of where the macro is at, it probably represents a couple hundred million reduction in the second quarter relative to the first quarter.”

“In terms of working capital, we expect a modest use of cash on a full year basis.”

“Full year APLNG distributions are now expected to be $800 million primarily due to lower pricing.”

“We expect an effective cash tax rate to be roughly in line with book tax, which is a function of discrete items in the first quarter.”

“Now second quarter capital should be similar to the first quarter and then decline materially over the back half of the year.”

“Then third quarter turnarounds should be around 25,000 barrels per day, primarily in Alaska.”

“We still expect to deliver low single digit production growth at this lower level of capital spending.”

“we will continue returning a significant portion of our cash flow to our shareholders, consistent with our long term track record of distributing 45% of our annual CFO.”

“And the CFO going up as those projects come online and the free cash flow going up at an even faster pace because not only is the CFO coming up, we see a drop off in the capital that's being invested.”

“over time as our cash flow goes and free cash flow as these projects come on, the reinvestment rate falls, the breakeven falls, the reinvestment rate falls that's really the reason why we're doing these projects to begin with.”

“This underlying improvement in our free cash flow will structurally lower our breakeven and increase our capacity to return capital to shareholders.”

“I'd also add that it has a negligible impact on production next year.”

“When we just tried to signal what the cash flow and free cash flow inflection is coming as these projects come online, we don't have another Willow and another big batch of LNG things sitting on the cupboard waiting to fall into the execution plan. So no, at this point, you ought to see the capital start ramping down commensurate with the completion of those projects.”

“As you look sort of through this year and going forward, we talk about our free cash flow inflection, this is exactly where you'll start to see it with breakeven coming down into the low 30s as we start to basically reduce the capital and we see the projects coming on.”

“And presumably what you're talking about is a price outlook that is well below 60. So into the 50s or the low 50s. And I think you'll see even some of the larger companies, I think if we found ourselves thinking that the remainder of the year was going to be in the low 50s, we would be looking probably at additional scope kinds of opportunities within our company too.”

“But we feel very confident about the $2 billion target we put out there and we feel good about achieving that.”

“And we remain confident that we will deliver more than $1 billion of run-rate synergies by the end of 2025, over half of which is included in our capital guidance.”

“And should lead to you know, more sustained plateau or growth in our production coming out of the lower forty-eight in terms of liquids and certainly the growing amount of gas volumes that are coming as well.”

“We are in fact expecting know, that production to enable us to more than offset decline. As we look at Alaska's production profile for the next year.”

“Once that's finalized, we'd actually expect to make an additional HUD booking later this year.”

“And then so naturally then we expect the capital this year to stair step down into the second, third, and fourth quarter.”

“So that's another big driver. So you can think about you got the efficiencies, you got material synergy capture, you got activity optimization, and then we expect modest deflation in 2025 as well. Around $200 million.”

“A reminder, if you look at the whole company, a good rule of thumb is about $400 million for every dollar of TI movement.”

“Excluding any one-time items, with an effective cash tax rate, the 35-36% range.”

“Full-year adjusted corporate segment net loss guidance is approximately $1.1 billion, and we expect our effective corporate tax rate to be in the 36-37% range at strip pricing.”

“Dollars and full-year DD and A expense is expected to be in the range of $11.3 billion.”

“Full-year cash exploration expenses are expected to be $300 million.”

“Finally, in Alaska International, we expect to see a $200 million increase in spending driven by our growth opportunities in Canada and Alaska.”

“In the lower 48, we expect to reduce spending by approximately $1.4 billion.”

“We expect a minimal first-quarter impact from turnarounds, and that's similar to the fourth quarter.”

“Transaction-related costs will gradually flow through working capital during 2025, as we achieve our premise synergies.”

“This morning, we announced a target to return $10 billion back to shareholders this year, assuming current commodity prices.”

“We expect 2025 to be the peak year of our long-cycle spending at around $3 billion, followed by a steady stream of project startups from 2026 to 2029.”

“We also expect to grow production in Alaska and Canada.”

“We plan to reduce capital spending by over 15% year over year while still delivering low single-digit production growth.”

“Now related to production and continuing on with that, we've looked at we've kinda demonstrated over the last two and a half years that flat activity we can grow the lower forty-eight business. We the teams that continue to drive operating efficiencies, and we do see that for years to come. At flat activity.”

“If you look past 2025, we are gonna see the major projects spend step down each year.”

“And that leads to roughly $6 billion of incremental annual sustaining free cash flow relative to 2025.”

“Once these projects are all online, we expect $3.5 billion of incremental CFO from NFV Port Arthur, NFS, and Willow.”

“We're confident in our ability to achieve an optimal plateau level at lower levels of activities versus a standalone companies or simply put, we need fewer rigs and fewer frack crews to achieve the same outcome.”

“On return of capital, we remain on track to distribute at least $9 billion into shareholders this year.”

“So in terms of turnarounds, it's -- fourth quarter is a very small turnaround quarter for us. It's about 5,000 barrels a day, predominantly in Norway.”

“In fact, we expect it to be, on the margin, several thousand barrels a day associated with those transactions.”

“And then if you look at kind of 4Q, it's going to be more ratable like 1% quarter-over-quarter, and then total year, it will be 5% overall growth for Lower 48.”

“And then with compression, that should increase capacity to 2.5 Bcf later in 2025.”

“And then specifically to your comment or your question on Matterhorn, we expect Matterhorn to be about 2 Bcf a day in November.”

“So we're going to run at steady state level loaded.”

“So we've got a lot of moving pieces in it but the shareholders should expect to get a significant portion of our cash flow coming back off the top and probably something that exceeds our floor of 30% that we talk about. It's going to be something probably significantly higher than that.”

“But we'll be there on a run rate within the 12 months of closing.”

“So versus 2024 capital spend, we plan to reduce the combined ConocoPhillips and Marathon program by at least $500 million in 2025.”

“On cash flows, we're increasing full year guidance for APLNG distributions by $100 million to $1.5 billion, and we expect over $200 million of distributions in the fourth quarter.”

“For the full year, we now expect production to be 1.94 million to 1.95 million barrels per day, up 10,000 barrels per day from prior guidance.”

“For the fourth quarter, we expect production to be in a range of 1.99 million to 2.03 million barrels per day.”

“Shifting to our planned acquisition of Marathon Oil, we're still on track to close this quarter.”

“On buybacks, our planned fourth quarter share repurchases will approach $2 billion”

“As you say, we've announced a target around $2 billion of non-core asset dispositions over the next several years, and we're very confident of achieving that.”

“If you take a look at what we currently are drilling at rig activity levels, we've got two decades, two decades of inventory in the Permian. So we can grow at modestly as we talked about at AIM kind of that 4% to 5% for the 10 years. We don't plateau until into the second decade, so a significant amount of opportunities there.”

“This next pad is 104, 104 West A as we refer to it. It's smaller than 267 and we plan to start drilling here next year on that pad, and we're expecting first oil in 2026.”

“We haven't sort of -- we're in the process right now, Paul, of putting all that together to try to come up with an inflation/deflation estimate as we go into 2025. But it feels somewhat similar year to 2024.”

“Now it's difficult to forecast exactly how the fourth quarter is going to play out. But the forward curve is suggesting that we should see some improvement.”

“So I would, I'm guessing or expecting that we'll have additional OpEx opportunities, we'll have additional capital opportunities, additional commercial opportunities is we're able to dive in post-close and look a little bit closer at the contracts and some of those things that we have going on.”

“we now have line of sight of achieving a scope of work at Willow around $1.5 billion to $1.7 billion this year.”

“We’re going to be ready to go day one as soon as the transaction closes.”

“we are confident that we can grow this dividend at a top quartile rate relative to the S&P 500.”

“On return of capital, we remain committed to distributing at least $9 billion to shareholders this year on a stand-alone basis.”

“we do, in fact, continue to expect to modestly grow our production throughout 2024, albeit, as you know, and you’ve witnessed from us in the Lower 48, unconventional profiles, they can be a bit lumpy quarter-to-quarter.”

“we’re a long way away from looking at curtailing oil production, but we are looking forward to additional capacity coming out of the Permian Basin.”

“I would expect as we go out of the shorter months and into the fall that, that will resolve itself, too.”

“Relief is really coming later in the third quarter with Matterhorn Pipeline coming on, adding some significant takeaway. We think that’s going to be really helpful for Permian Basin pricing as we look towards the end of the third quarter and into the fourth quarter and should improve overall Lower 48 capture rates as we go forward.”

“We would expect that trend to continue into the third quarter.”

“we are expecting production to be fairly flat in the third quarter, and that’s due to the turnaround I just mentioned at the 20,000 barrels a day that we have at Eagle Ford. Then we’ll be up in the fourth quarter versus the third quarter.”

“We’re expecting organic production to grow 2% to 4% in 2024, and that should be pretty consistent across the Lower 48 and Alaska and International.”

“That’s where we see the fact that our 2024 budget is modestly lower than 2023, primarily driven by that market deflation capture.”

“For the first half, we have seen continued deflation around pumping services, the proppant, there’s an oversupply of proppant out in the Permian. So we’re seeing some price reduction in there. We think that will continue into the second half.”

“Overall, our full year expectation is still in the low single-digit annual average deflation company-wide as we previously guided.”

“We do actually have expectations of even more work next year in 2025 on the North Slope.”

“both the partner-operated activity and the efficiencies, they’re going to brought us some production benefit in 2025.”

“we certainly expect that Marathon will be using a portion of those losses in 2024 prior to closing”

“That would put total annualized distributions at a run rate above 11%, inclusive of the dividend increase weighted for the fourth quarter.”

“once the Marathon shareholder votes complete, you should expect us to be leaning into buybacks.”

“Additionally, we’re going to have a $100 million pension contribution in the third quarter.”

“we are increasing full year guidance for APLNG distributions by $100 million to $1.4 billion, and we expect $400 million of these distributions in the third quarter.”

“For CapEx, we expect to spend approximately $11.5 billion.”

“we now anticipate to be in a range of $9.2 billion to $9.3 billion, primarily due to increased transportation and processing costs and inflationary pressures in the Lower 48.”

“we have lowered our annual after-tax adjusted corporate segment net loss to a range of $800 million to $900 million.”

“we have lowered our DD&A guidance to a range of $9.3 billion to $9.4 billion”

“Our full year turnaround forecast continues to be about 30,000 barrels per day.”

“In the Lower 48, we still expect to deliver low single-digit production growth in 2024 at a lower level of capital spending relative to 2023.”

“we’re still on track for a 2029 first oil”

“at today’s pricing, we would expect to be able to use any remaining NOLs within the first 3 years or so.”

“Finally, as we previously announced with the Marathon acquisition, we will be increasing our annualized buyback run rate by $2 billion upon closing with a plan to retire the equivalent amount of newly issued equity in 2 to 3 years.”

“we continue to work new offtake and placement opportunities as we look to expand our commercial LNG portfolio up to 10 million tons to 15 million tons per annum in the coming years.”

“We’ll probably see a little bit of curtail or decrease in deflation in the second half going into 2025 because we’ve seen fairly large gains over the first half of 2024.”

“We still expect to be in the range of $1.5 billion here for 2024 and the progress that we're making here this year gives us confidence to keep our estimate on total capital to first production as being remaining unchanged. So we're still in that $7 billion to $7.5 billion range.”

“For CapEx, our full year guidance remains $11 billion to $11.5 billion with a greater weight to the first half of the year.”

“We've maintained our full year production outlook of 1.91 million to 1.95 million barrels of oil equivalent per day, which translates to 2% to 4% underlying growth.”

“Shifting to return of capital, we remain on track to distribute at least $9 billion to shareholders this year.”

“And then as you look forward to the second half of the year, capital is expected to be lower than in the second half than the first half, primarily due to the $400 million of Port Arthur LNG equity capital spend that rolls off as we go into project financing.”

“Now as you look ahead to the second quarter, capital is expected to be slightly higher than the first quarter driven by PA LNG and the Willow timing.”

“We see up to that 30% to 40% improvement on cost of supply when you move from a 1-mile lateral to a 3-mile lateral.”

“You can look at 1Q kind of being the low point for the year around production, we'll see progressively higher production kind of Q2, Q3, Q4.”

“So our investors should expect well above 30% of our cash flow going back to them.”

“We have an expectation that we could be upwards of 90% of our total scope contractor here by year-end.”

“Our full year turnaround forecast is 30,000 barrels per day. This includes 25,000 barrels per day of turnarounds in the second quarter, primarily in Alaska, Norway and Qatar and 90,000 barrels per day for the third quarter.”

“And we expect to start up the fourth subsea tieback in Norway in the next month.”

“That will likely clear through the system here as we go through this quarter.”

“We are -- we will maintain an A credit rating.”

“And I think, as we said in one of the earlier questions, that ANI is going to be providing a significant part of the total company growth this year.”

“We averaged 33,000 barrels a day in the fourth quarter and that -- that’s -- we’re expecting that to grow now throughout the year.”

“I think, in terms of the progress we’re making on Montney, we are going to be ramping this year.”

“In terms of the shape for the year, fairly rateable year-over-year growth by quarter, except for Q1, we have the weather impacts.”

“But our estimate for the capital to first production remains unchanged at $7 billion to $7.5 billion.”

“Now, when it comes to mix, we look at a number of different factors and commodity prices, our own stock price and other considerations. And so, for 2024, you’ve seen that, we’ve shifted our mix to be a bit more weighted towards buybacks, about 60% of our total plan distributions, that would put our buybacks essentially flat with what we spent in 2023 at about $5.3, $5.4 billion and we continue to like the value of our shares.”

“And for Port Arthur, we expect that our $400 million of equity contributions in 2024 will also be weighted towards the first half of the year.”

“These decreases are offset by a $900 million to $1 billion increase at Willow, and $100 million to $200 million increase in Canada to account for the acquisition of the remaining 50% of Surmont and the addition of a second rig in the Montney.”

“These include our expectation of $200 million to $300 million in deflation benefits, primarily in the Lower 48; $200 million to $300 million of lower spending in Norway following the startup of our four subsea tieback projects; and $500 million to $600 million in lower LNG spending, mostly at Port Arthur.”

“And for taxes, we expect our effective corporate tax rate to be in the 36% to 37% range of strip prices, and that’s excluding any one-time items and that’s with an effective cash tax rate in the 33% to 34% range.”

“Full year cash expiration expenses are expected to be $300 million to $400 million, and DD&A expenses are expected to be in a range of $9.4 billion to $9.6 billion.”

“Our full year forecast includes turnaround impacts of 25,000 barrels per day to 30,000 barrels per day, which is about 10,000 barrels per day higher than in 2023.”

“In the Montney, we averaged about 20,000 barrels of production in Q3, and we're going to substantially grow that next year.”

“Beginning in 2024, we will be aligning both the announcement timing and subsequent payment of our VROC with our ordinary dividend.”

“We remain on track for our $11 billion full year target.”

“But I think, as I said earlier, in terms of our overall capital expectations next year, very much in line with what we laid out at AIM, of course, plus our additional interest in Surmont.”

“But we still expect our overall company capital inflation to average out in the mid-single digits this year over last year, and that's all reflected in our guidance.”

“So as we continue the contract negotiations, our estimate of capital to first production remains unchanged at $7 billion to $7.5 billion that we previously provided.”

“As I mentioned on the last call, we expect to see a ruling on this in November.”

“And then we've said, when the prices are in excess of our mid-cycle price call, which is where the prices are today and where they've been over the last few years, you should expect us to be delivering more of our cash back.”

“Based on our mid-cycle price call, you can expect us to deliver at least 30% of our cash flow back to our shareholders.”

“And those increases will be mostly offset by, we're going to see lower spending on our LNG projects and roll off of the project capital at Norway.”

“And then, of course, you have the incremental $100 million or so for the other 50% of the term of the Surmont that we're adding.”

“We got -- assuming Willow is sanctioned, which we expect spending on that project will be higher.”

“Now with 267 online, we'd expect to see Surmont grow -- something 5,000 and 10,000 barrels a day next year.”

“So we expect those 4 projects in aggregate to add about 20,000 barrels a day of production next year, which should more than offset normal decline in '24.”

“And we expect the fourth one to come online as planned in Q2 '24.”

“And full year adjusted corporate net loss guidance remains unchanged at roughly $800 million, and the second half run rate is a good starting point for 2024.”

“We've also raised our DD&A guidance by $100 million to $8.3 billion, which is also primarily due to Surmont.”

“For APLNG, we expect distributions of $300 million in the fourth quarter and $1.9 billion for the full year.”

“We expect underlying growth for both the fourth quarter and the full year to be roughly 4% year-over-year, which includes Lower 48 production growth of roughly 7%.”

“Full year production guidance is now roughly 1.82 million barrels of oil equivalent today.”

“We can leverage existing infrastructure to add additional pads with very limited capital requirements in the years ahead.”

“Production is expected to start up in the first quarter of 2024.”

“That gets us down to our original target of $15 billion in gross debt, and we can continue to do that.”

“And then with that, we'll then have the opportunity to drill new wells in Bohai for the next 4 to 5 years.”

“So we started to a place that says, let's just think about flat scope, and then we'll think about these other drivers like commodity price or service capability to your point and make a decision as we go into next year about what the scope and the resulting capital will look like.”

“So it's probably not a bad starting point for next year.”

“So I'd say when we look at this and pull it out all together, we remain encouraged by our recent capture rates, and we're confident in our full year estimates and activities, and we're pretty constructive on the second half of the year, Neil.”

“We're confident in our outlook, leading to our increase in full year production guidance. We continue to progress our strategic initiatives across the portfolio, and we expect to return $11 billion to shareholders this year.”

“So probably the main update since we last spoke is we're pleased that a schedule has been agreed now, and we expect to see a ruling on that in November.”

“And you can think of Bakken at plateau. So 100,000 barrels a day for several years is a good number.”

“And the deferred tax tailwind of about $200 million for the second quarter, that's also a good run rate for the remainder of the year.”

“But the bottom line is for the second half of the year, 35% annualized effective tax rate is a reasonable run rate for book tax at our current commodity prices.”

“But I think that you should kind of have in your mind that we're not expecting to spend additional capital there at this point in time.”

“But overall, certainly seeing some deflation going into the second half, and that's a big part of the reason we see a lower capital run rate for the second half for the first half.”

“I would say, however, we still expect our overall company capital inflation to average out in the mid-single digits this year versus last year on an annual basis.”

“We expect our longer-cycle capital to average around $2 billion, pretty flat for the next few years here.”

“Given that WTI is back to around $80 and the forward curve is about there as we have been anticipating, frankly, we'd expect to be at the higher end of that range that we talked about back in April. So a similar capital level for next year to this year.”

“Now to your point, even at a constant price, we're going to be generating more free cash flow as we come out of the APLNG and Surmont activity.”

“So for the Surmont to transaction specifically, and it's a bit tactical, but it's likely that we will use debt for a majority of the funding for Surmont.”

“Now when we look forward at the current strip, we expect that our organic sources and uses for the remainder of the year are going to be pretty balanced, Steve, and that our ending cash absent Surmont would be flattish with what we're seeing right now.”

“So let me just say that we expect our product mix to be consistent over the year also.”

“And so our full year underlying growth is expected to be 3% to 4% this year, and that would be 7% to 8% in the Lower 48.”

“Now looking at third quarter, Permian differentials have narrowed back to more normal ranges. That's with some pipeline takeaway improvements and additional debottleling ahead, and SoCal's looking a bit better as well.”

“We have also lowered our corporate cost guidance by $100 million to $800 million due to higher interest income.”

“For APLNG, we expect distributions of $400 million in the third quarter and $1.9 billion for the full year.”

“And as a result, we have narrowed our full year capital guidance range to $10.8 billion to $11.2 billion, with no change to the midpoint.”

“We also expect to see a step down in Lower 48 capital in the second half of the year.”

“Now through the first half, we have now funded $700 million for Port Arthur LNG of the planned $1.1 billion for the year, which we expect to lead to a step down in overall capital in the second half.”

“Now based on strip pricing for the second half, we expect price capture to normalize and be consistent with our previous full year guidance of $22 billion in CFO at $80 WTI and our published full year sensitivities.”

“In the current $80 per barrel WTI price environment, we expect incremental free cash flow from the additional 50% interest to approach $1 billion in 2024.”

“We've talked about how Port Arthur on an integrated basis that we'd expect low to mid-teens returns overall but with really steady cash flow and low-risk returns on that equity component.”

“So as we said in AIM, I think in terms of the capital range, that still holds. We expect the capital range to be in the $7 billion to $7.5 billion.”

“I would refer you to the AIM presentation, where we talked about Eagle Ford and Bakken essentially sustaining production for $330,000 through the decade.”

“But I'll leave you with this Paul, our plan will deliver at least mid-single digits for Lower 48.”

“We still expect a full year average impact from our turnarounds of about 15,000 barrels a day equivalent.”

“And then looking for the rest of the year, assuming we don't see FX rates move materially for the remainder of the year, we'd expect -- we wouldn't really expect any material working capital movements across Q3 or Q4.”

“For Q2, we'd expect that to be just over $1 billion.”

“We do expect low to mid-single digits growth for the year, and that's pretty consistent with the long-term 4% to 5% CAGR we presented at our Investor Meeting.”

“I think overall, our capital inflation for the company, we still expect to be in the mid-single digits year-over-year.”

“We really think we've got sufficient capital allocation to Port Arthur, and we're looking for ways to optimize our current investment. So our plate's pretty full, and we don't need -- see need to allocate significant additional capital in the near term.”

“On return of capital, we are on track to deliver on our planned $11 billion for 2023, which represents greater than 50% of our projected CFO and is highly competitive with peers.”

“Yes, the way it's going to work out we think is pretty ratable through the year. We have got consistent activity in the Lower 48 level loaded.”

“The price would have to go down considerably. I mean you said into the 60s, full year average, I think before we would talk about changing that.”

“Going forward, we will continue to see bookings in the Lower 48. We will see bookings in Alaska, obviously with pending FIDs. And then we will continue to see some LNG bookings as well, particularly on the resource projects as we call them, NFE and NFS.”

“Yes. So, this is Bill. You saw us in the fourth quarter and make our initial catch-up payment on NFE. And then you should expect that those projects are funding through the next couple of years.”

“Now with respect to the profile shape, it will be kind of mid to back-end weighted in 2023.”

“The ability to drill extended laterals greater than 1 mile can reduce our cost of supply by 30% to 40%.”

“But I’d expect the deferred tax source full year to be lower in 2022. Now we are in a U.S. cash tax paying position for the full year, but we also utilized all significant U.S. net operating losses, NOLs and EOR credit carryforwards in 2022. And that utilization generated a larger source of cash last year compared to what we’re going to be seeing in 2023.”

“We have also signaled to – or we have also told to shareholders that when prices are above our mid-cycle price, you should expect higher distributions for the company and that’s consistent with what we have done over the last number of years.”

“So we are in the process of finalizing our cost estimates, but we would anticipate the AFE to first production to be in the $7 billion to $7.5 billion range.”

“For Willow, we are guiding to $100 million to $400 million of incremental spending with the higher end of this range, assuming that the project is sanctioned this year.”

“However, more than half of this capital investment will be in 2023.”

“Starting with base capital spending, we forecast an increase from $8.1 billion in 2022 to a range of $9.1 billion to $9.3 billion in 2023.”

“Included in our cash flow forecast is $1.9 billion in APLNG distributions with $600 million expected in the first quarter.”

“For 2023 cash flow, we forecast $22 billion in CFO at $80 barrel WTI, $85 Brent and $325 Henry Hub at current strip prices for regional differentials.”

“Our full year planned maintenance is expected to be similar to 2022.”

“The other half of our cash flow will be dedicated to reinvesting in the business.”

“So, you ought to expect that's going to come down as you look into the 2 years, 3 years, 4 years.”

“For Port Arthur specifically, after factoring in expected project financing, we forecast that ConocoPhillips net investment will be just under $2 billion over the 5-year investment period.”

“So, yes, we're in – we're seeing some categories of spend that are key to the company actually start to plateau and maybe even roll over a little bit, one that – one we're watching pretty closely is OCTG, the tubulars, some of the raw materials that are going into making those are starting to come down and be slight a little bit.”

“As we said it for the first quarter, that's kind of the ratable amount that we had through the course of last year, which should signal that we're pretty bullish on how we think about 2023.”

“We're really very confident with our in-basin flow assurance and that we've got sufficient takeaway to manage through the short- and medium-term capacity constraints.”

“And I would say our internal plans this year and going into next are very consistent with our long-term outlook on production out of the Permian and the Lower 48.”

“Yes, Ryan, we're very happy with our execution out there and feel that it's prudent right now to keep a steady amount of activity going into next year.”

“We just set our subsea templates on both Tommeliten Alpha and Eldfisk North and we'll start drilling later this year. All 4 of those will come online throughout 2024.”

“Now pending that successful record of decision, we expect to have 2023 capital spend for this upcoming winter season, and that's mainly focused on civil construction, so that'd be opening up mine site and laying some gravel roads.”

“Jeanine, as I mentioned previously, we would only take FID following a final SEIS and support a record decision by the BLM and we are targeting FID early next year.”

“Now with respect to schedule, we're still targeting the final SEIS in a supportive record of decision by the BLM end of this year.”

“And when we look at it based on forward markets, we'd expect to be in the upper 70s to low 80s as a percentage of Henry Hub for the fourth quarter.”

“In the Lower 48, we do expect to see continued growth, as Ryan mentioned, in the fourth quarter and in the Permian should modestly exceed that kind of low single digits that we expect out of the Lower 48.”

“We're not looking at trying to add scope into our Lower 48 operation, given the kind of environment on inflation that we see.”

“Partially offsetting these increases, we have reduced full year DD&A guidance from $7.6 billion to $7.5 billion.”

“On costs, we've increased full year adjusted operating cost guidance to $7.7 billion from $7.5 billion, and this is driven by inflationary impacts.”

“Turning to guidance, we still expect full year production of 1.74 million barrels of oil equivalent per day, with a fourth quarter guidance range of 1.74 million to 1.8 million barrels of oil equivalent per day.”

“For the fourth quarter, we do not expect any material turnaround impacts.”

“And third, we continue to progress our Port Arthur LNG project with Sempra, which we expect to reach FID by early next year.”

“Additionally, we'll return $15 billion of capital for 2022, which represents over 50% of our projected CFO, well in excess of our greater than 30% annual commitment.”

“Startup again for NFE is 2026 and then NFS will probably follow a year later.”

“I think the split that we've historically have, you mentioned 35%-65%. I think those are reasonable up to like a 50-50 split between cash and share buybacks is how we nominally think about the VROC.”

“So assuming that prices and our capital program stays around current levels, I think you could see deferred tax to remain a modest source of cash, though cash taxes should be more close to our book taxes over time.”

“Yes, Neil, I would -- I guess I would start by saying I'd probably take the last half of this year, that kind of pace, annualize that for our base business as we think about that going into 2023.”

“We don't expect that to have any material impact on the company because we exceed a 15% minimum tax across our jurisdictions.”

“We don't want to be investing anything that has a cost of supply over $40.”

“Yes, Raphaël, I think we're still in that 900,000 barrel a day.”

“In general, the Eagle Ford is growing towards its plateaued production, but it's not there yet. So it will be a continued source of Lower 48 production growth.”

“I'd say somewhere in that two-third, one-third, so 60%, 40% is probably something that you should expect for the year, this year.”

“I mean, I think looking at this year, our actual breakeven this year is still calculating out around $30 a barrel capital breakeven. So sustaining capital around $6 billion.”

“Looking at the limitations on NOLs, we'd expect to be our tax payments through 2023 to be reduced only slightly, but not eliminated.”

“As for expectations for activity, good news is we're -- we plan to run steady in the back half of the year, and we are currently running the number of rigs that we plan to run for the rest of the year.”

“But on an entry-exit basis, we expect Lower 48 to grow in the mid- to high single digits with the Permian at the higher end of that range.”

“In general, the production in both the Lower 48 and in the Permian is back-half weighted, and we expect low single-digit growth year-over-year on a pro forma basis.”

“Yes. So Jeanine, that's incremental. If it did -- if a catch-up payment that did occur this year, that would be incremental to the $7.8 billion that we guided to.”

“We continue to project full year distributions of $2.3 billion, with roughly $300 million expected in the third quarter.”

“Operating capital guidance for the year remains unchanged at $7.8 billion.”

“We reduced guidance for the corporate segment loss from $1 billion to $900 million, primarily due to lower interest expense resulting from our recent debt reduction and higher interest earned on cash balances, along with some restructuring efforts.”

“So if you look at the ramp in activity throughout the year, that's true across our asset base, especially true in the Permian, 500 completed wells brought on throughout the entire year, but 90 in the first quarter. So it's going to build and be back-end loaded.”

“So Q2, we've got a fairly large turnaround activity, both in Norway nonoperated and operated as well as Surmont. So that will average about 35,000 barrels a day for Q2. And then we have less activity in Q3, and that's focused on Alaska, Train 2, APLNG, and then Montney and Canada and that will be 15,000 for Q3.”

“So that drop that you're seeing over the last 4 quarters is really just a lack of work that we're doing up in Montney. So we're started back to drilling both, like I said, Pad 5, Pad 6, we'll see some of that production come on stream in Q3 and Q4.”

“Assuming that current pricing continues, we would expect to be moving into a U.S. tax paying position this year with payments beginning quarterly starting this quarter, in the second quarter.”