Jeoffrey Lambujon

Jeoffrey Lambujon asked about the confidence level in the updated Willow project cost range, seeking clarity on what aspects are now locked in and the flexibility for future changes, or if the current range captures the most likely scenarios.

Answer

Kirk Johnson, Executive Vice President of Global Operations and Technical Functions, explained that the updated estimate reflects actual inflation of 4.5-5% observed post-FID, higher than the initial 2% expectation. He stated that 90% of facility contracts are now secured, tied to market indices, and the company has conservatively budgeted for continued 4-5% inflation for the next three years. He expressed high confidence in the updated capital guide due to strong project execution and no schedule slips or scope discovery issues.

Jeoffrey Lambujon asked for clarification on the confidence level in the updated Willow project capital range, specifically what is locked in and if the wider range captures the most likely scenarios or allows for flexibility.

Answer

Kirk Johnson (EVP of Global Operations and Technical Functions) explained that the updated range reflects a reconciliation of actual inflation (4.5%-5% average) seen over the past couple of years, which was higher than the 2% originally assumed at FID. He noted current inflation rates are abating (3%-3.5%) but they've conservatively budgeted for 4%-5% compounding inflation for the next three years, given contracts tied to market indices. Johnson expressed high confidence in the guide due to strong project execution, no schedule slips, and the cost pressure being primarily market-wide inflation rather than scope discovery.