Josh Silverstein

Josh Silverstein asked about the future trend of APA's FT capacity and trading benefits beyond 2026, considering new Permian pipeline capacity coming online in 2027, and whether increased equity gas volumes could offset any reduction in trading income. He also inquired about the flexibility of the 60%+ free cash flow return to shareholders policy in relation to the $3 billion net debt target.

Answer

CFO Ben Rodgers stated that the $650 million trading income for 2026 is based on current strip pricing, and it is expected to decrease in 2027 due to new Permian pipeline capacity. He noted that while increased WAHA prices would benefit equity gas, it wouldn't fully offset the trading income drop due to APA's capacity exceeding production. He confirmed trading remains positive through 2028. Regarding the balance sheet, Ben Rodgers reiterated the 60%+ free cash flow return policy as competitive and prudent, balancing exploration investment, ARO, and debt reduction. He expects to reach the $3 billion net debt target (originally set at $70 WTI) in the next couple of years at current prices, highlighting 2025's free cash flow increase despite lower prices.

Josh Silverstein asked about the future trend of the FT capacity and trading benefit, specifically how the projected $650 million for 2026 might change in 2027 with new Permian pipeline capacity coming online, and if increased own volumes could offset any reduction. He also inquired about the balance sheet improvement efforts, asking if the 60%+ free cash flow allocation to shareholders would continue until the $3 billion net debt target is met, or if there's flexibility.

Answer

Ben Rodgers, EVP and CFO, explained that the trading benefit is expected to decrease in 2027 based on strip prices due to new Permian takeaway capacity, but it remains positive through 2028. He noted that if WAHA prices strengthen, it would mitigate the drop in marketing income by improving equity gas prices. Regarding the balance sheet, Ben Rodgers stated that the 60%+ free cash flow return is considered competitive and prudent, balancing exploration investment and debt reduction. He reiterated the $3 billion net debt target, noting it was based on $70 WTI and could be achieved by 2027-2028 with higher prices or later in the decade with lower prices, emphasizing the program's flexibility.

Josh Silverstein asked if the additional firm transportation (FT) capacity coming online next year would alter Permian Resources' development strategy, specifically by encouraging drilling in areas with a greater gas mix. He also inquired about the royalty opportunity within PR, including its percentage of total production, and whether the company would consider putting it into another vehicle.

Answer

Co-CEO Will Hickey stated that the additional FT capacity would not change the development strategy; oil still drives capital allocation, though they will benefit from better gas prices. Co-CEO James Walter explained that they have an 'awesome royalty business,' which is over 90% Permian Resources operated and contributes to capital efficiency. While they have considered creating incremental value through a standalone or subsidiary royalty business, they haven't yet found the conviction for such a move, as it currently fits well within their upstream operations.

Josh Silverstein asked if the additional firm transportation capacity in 2027 would alter Permian Resources' development strategy, such as drilling in areas with a greater gas mix. He also inquired about the royalty opportunity, its percentage of total production, and thoughts on creating a separate vehicle for it.

Answer

Will Hickey, Co-CEO and Director, confirmed that additional gas capacity will not change the development strategy, as oil still drives capital allocation. James Walter, Co-CEO and Director, stated that the royalty business, being over 90% Permian Resources operated, fits well within the upstream business and contributes to capital efficiency, though they continuously evaluate standalone options without current conviction.

Josh Silverstein (UBS Group) asked about Ovintiv's future debt target, given they are now below the $4 billion long-term target, and whether it will be an absolute level or tied to free cash flow allocation. He also inquired about infrastructure optimization opportunities on the newly acquired NuVista assets and potential long-term infrastructure investments.

Answer

President and CEO Brendan McCracken stated that the $4 billion target was a trigger for increased shareholder returns, which is now active. He indicated that the focus will shift to maintaining debt around the current level and allocating more to cash returns. EVP and COO Greg Givens added that short-term focus is on well-level cost savings, while longer-term, there's significant opportunity to optimize infrastructure by integrating the three Montney positions to reduce T&P costs and route gas more efficiently.

Josh Silverstein (UBS Group) noted Ovintiv is now below its $4 billion long-term net debt target and asked how the company views the appropriate future debt level, whether as an absolute or net debt level, and its relation to free cash flow allocation. He also asked about optimizing infrastructure on the NuVista asset, similar to the Paramount transaction, to improve productivity, and inquired about any long-term infrastructure investment plans or third-party build considerations.

Answer

Brendan McCracken (President and CEO, Ovintiv) confirmed that Ovintiv has surpassed its $4 billion net debt target with the Anadarko proceeds, which served as a trigger for increased shareholder returns. He stated no new debt target is being set, but the focus will now shift to maintaining debt around current levels while allocating a greater portion of free cash flow to shareholder returns, having achieved a resilient financial and inventory position. Regarding infrastructure, Brendan McCracken expressed excitement about applying a unified value-creating mindset across the integrated legacy, Paramount, and NuVista systems. Greg Givens (EVP and COO, Ovintiv) detailed that short-term efforts focus on well cost savings and design. Longer-term, significant opportunities exist for infrastructure optimization, including gas plants and midstream lines, to reduce T&P costs and enhance efficiency, though this will be a more time-consuming process.

Josh Silverstein asked for details on the Permian turn-in-line cadence for the year and inquired about opportunities for OpEx reduction in the Montney beyond the well-publicized D&C cost savings.

Answer

EVP & COO Greg Givens confirmed the full-year turn-in-line count is unchanged, with a more front-loaded first half due to faster-than-expected completions. President and CEO Brendan McCracken and Givens highlighted that OpEx is being reduced through higher run times, faster production restoration via automation, and optimized gas lift, contributing to the overall free cash flow increase.

Josh Silverstein from UBS asked about the primary challenges Expand Energy faces in expanding its volumes to demand growth areas, specifically whether these challenges relate to securing customer agreements, pricing, or concerns over inventory duration. He also inquired about the cost associated with achieving the targeted $0.20 incremental realizations or margins, asking if it would require significant upfront investment for future benefits.

Answer

Mike Wichterich, Chairman of the Board and Interim President and CEO, identified two main challenges: the need for Expand Energy's team to be more aggressive in pursuing transactions and building out its marketing presence (e.g., moving to Houston), and the physical challenge of transportation to get gas to clients. He emphasized leveraging their competitive advantage of assured production. Regarding costs for the $0.20 uplift, Wichterich stated that while some commitments (like FT) might not be debt, any capital deployment or balance sheet risk for larger initiatives (like building facilities) would be subject to a high rate of return framework, acknowledging that some money would "undoubtedly" be spent over the next 3-5 years, but with discipline.

Josh Silverstein asked about the biggest challenges Expand Energy faces in getting expanded volumes to demand growth areas and the associated costs to achieve the targeted $0.20 uplift in realizations or margins.

Answer

Mike Wichterich, Chairman of the Board and Interim President and CEO of Expand Energy, identified challenges as the team needing to be more aggressive in pursuing transactions and the physical logistics of transportation and client servicing, which necessitates midstream partnerships. He emphasized a culture of discipline and a rate of return framework for the $0.20 uplift, noting that while trading to premium markets involves commitments, other initiatives requiring capital or balance sheet risk will demand higher rates of return, expecting some spending over the next 3-5 years within a decent ROE framework.

Josh Silverstein of UBS Group asked for an update on basis differential expectations for the Haynesville and Appalachia for the rest of the year and into 2026. He also sought the company's view on the recent step-up in total Lower 48 natural gas production.

Answer

EVP of Marketing & Commercial Dan Turco projected a gradual improvement of basis in Appalachia and long-term basis improvement in the Haynesville driven by strong LNG demand. He acknowledged the surprising recent production increase but stated that growing LNG demand is expected to outpace that supply.

Josh Silverstein asked for an update on basis differential expectations for the second half of the year and into 2026, and also sought the company's view on the recent step-up in Lower 48 production.

Answer

EVP of Marketing & Commercial Dan Turco projected a gradual improvement in Appalachia basis long-term. For the Haynesville, he noted new pipeline capacity would be a 'wash' in the short term due to transport costs, but the long-term LNG demand pull should improve realizations. He acknowledged the surprising production increase but stated that expected demand growth from new LNG facilities should outpace supply.

Josh Silverstein asked for an update on basis differential expectations for the Haynesville and Appalachia for the second half of 2025 and into 2026, as well as the company's view on total Lower 48 production trends.

Answer

EVP of Marketing & Commercial Dan Turco projected a 'grinding up' of basis in Appalachia over the medium-term. For the Haynesville, he expects a significant long-term demand pull from LNG to increase realizations, though the near-term impact of NG3 will be a wash due to capacity payments. He also noted that while recent production prints have been surprisingly high, growing LNG demand is expected to outpace supply.

Josh Silverstein asked about the level of investment required to support NESR's higher activity levels, potential future CapEx ramps, the role of new technologies, and how acquisitions fit into the company's strategy. He also inquired about the optimal leverage level and the company's preference for shareholder returns (buybacks versus dividends).

Answer

Sherif Foda (Chairman and CEO) stated CapEx would remain within the $150-$180 million range for the next couple of years, potentially reaching $200 million. He highlighted leveraging lower equipment prices and local presence. Foda also discussed their VC-style partnerships for technology, including the Roya platform for directional drilling and the NEDA portfolio for decarbonization. Stefan Angeli (CFO) confirmed a target net debt to adjusted EBITDA ratio of 1x or less and stated that all shareholder return options (dividends, buybacks) are on the table, with a formal announcement expected next quarter.

Josh Silverstein asked about the level of investment required to support higher activity levels, specifically if CapEx would continue to ramp up, the role of new technology development, and how acquisitions fit into the strategy. He also inquired about the company's target leverage level and preference for shareholder returns (buybacks versus dividends).

Answer

Sherif Foda (Chairman and CEO, NESR) stated that CapEx is planned to be within the $150 million-$180 million range for the next couple of years, potentially reaching $200 million if they win significantly more contracts. He highlighted their strategy of partnering with established companies and using a VC-style approach for R&D, investing in startups to commercialize new technologies like directional drilling (Roya platform) and decarbonization (NEDA portfolio). Stefan Angeli (CFO, NESR) clarified that their stated goal for net debt to adjusted EBITDA is 1x or less, and they are currently well below that. He added that a formal capital allocation and shareholder return framework, including dividends and stock buybacks, would be announced in the next earnings call.

Josh Silverstein asked about the expected changes in Antero's cost structure throughout the year, specifically regarding a $0.25 safety margin improvement and the trajectory of GP&T costs. He also inquired about the progress of potential power supply deals, particularly with new HG volumes and interconnects, and how Antero plans to structure these opportunities given improving local basis.

Answer

Michael Kennedy, CFO and SVP of Finance, confirmed a 10% reduction in cost structure, or about $0.25, noting variable components tied to gas prices. Brendan Krueger, VP of Finance and Treasurer, stated that Antero is actively selling gas to utilities for gas-fired power demand and is receiving frequent RFPs for additional gas supply. He emphasized that Antero, as an investment-grade producer, is well-positioned to lock in pricing for these projects.

Josh Silverstein asked how Antero's cost structure, particularly the $0.25 safety margin improvement, is expected to evolve throughout the year, including GP&T costs and benefits extending into 2027. He also inquired about the progress of potential power supply deals, leveraging new HG volumes and interconnects, especially in West Virginia, and how local basis tightening influences deal structuring.

Answer

Michael Kennedy, CEO and President, confirmed a 10% ($0.25) reduction in cost structure, noting variable components tied to gas prices and that realizations remain at a $0.10-$0.20 premium to NYMEX. Brendan Krueger, CFO, stated that Antero is actively selling gas to utilities for power demand, receiving frequent RFPs for additional gas supply, and engaging in conversations to lock in pricing with investment-grade producers in the region.

Josh Silverstein from UBS inquired about Weatherford's significant cost cuts in 2025, totaling $150 million, the drivers behind the resulting margin improvement, and the company's longer-term margin potential.

Answer

Anuj Dhruv, Executive Vice President and CFO, stated that workforce reductions of over 2,000 people in 2025 resulted in $150 million in run-rate savings, enabling margin protection despite headwinds. He noted Weatherford's early diagnosis of the 2025 market environment allowed for swift action. Dhruv emphasized continuous improvement through organizational restructuring, outsourcing to lower-cost jurisdictions, and the multi-year ERP implementation to drive efficiencies in supply chain, procurement, and working capital, positioning the company for stronger margins with future tailwinds.

Josh Silverstein of UBS asked about the success of Weatherford's $150 million cost cuts in 2025, the drivers behind the projected slight margin improvement despite revenue headwinds in 2026, and the longer-term margin potential.

Answer

Executive Vice President and CFO Anuj Dhruv attributed the 2025 cost cuts to a workforce reduction of over 2,000 people, generating a $150 million run rate, and proactive market diagnosis that allowed for swift action to protect margins, resulting in over 21% EBITDA for the full year. He noted ongoing evaluations of the global footprint and organizational structure (in-house vs. outsourcing, lower-cost jurisdictions). Mr. Dhruv highlighted the multi-year ERP journey as a structural change to enhance efficiency in supply chain, procurement, working capital, and inventory, positioning the company to leverage future market tailwinds.

Josh Silverstein with UBS inquired about customer interest in 10-15 year agreements for distributed power, or if they seek shorter 5-10 year outs due to potential grid improvements.

Answer

CEO Ron Gusek indicated that the pendulum is swinging towards more openness for distributed, co-located, behind-the-meter power as the long-term solution due to reliability, economics, commercial optionality, and public concerns, increasing willingness for 15-year ESAs. CFO Michael Stock added that Liberty's solution offers power at grid parity now with a lower inflationary component, making it significantly cheaper than grid prices long-term.

Josh Silverstein inquired about potential cost changes for the additional 2 GW deployment by 2029 compared to the first GW, given market tightness, and whether data center operators are still interested in 10-15 year agreements or seeking shorter 5-10 year windows.

Answer

CEO Ron Gusek stated that no meaningful change in economics or costs is expected, maintaining the $1 million/MW for generation and $1.5-$1.6 million/MW all-in estimates, due to strong supply chain partnerships. He also noted that the pendulum is swinging towards more openness for distributed, co-located power as a long-term solution, with increasing willingness for 15-year ESAs. CFO Michael Stock added that LPI offers grid parity now and expects to be significantly lower than grid prices in the future due to stable gas prices versus rising grid costs.

Josh Silverstein asked about the cash flow breakeven for LNG, comparing tolling and offtake agreements, and how EQT's consolidation strategy in the basin aligns with tightening Appalachian pricing.

Answer

Jeremy Knop, CFO, clarified that tolling and offtake agreements have virtually the same economic breakeven spread, with the difference being EQT's physical delivery responsibility in tolling. He noted significant tightening of M2 basis futures in 2029-2030. Toby Rice, President and CEO, stated that EQT's current asset base offers significant organic runway, making it easy to stay disciplined on acquisitions, but acknowledged the benefits of scale.

Josh Silverstein sought clarification on EQT's LNG cash flow breakeven and whether the spread is achievable with tolling versus offtake agreements. He also asked about EQT's consolidation strategy in the Appalachian basin given anticipated tighter pricing and integration success.

Answer

Jeremy Knop (CFO, EQT) clarified that economically, tolling and offtake agreements have virtually the same breakeven spread, with EQT's preference influenced by regional gas supply risks. He noted that M2 basis futures for 2029-2030 have tightened significantly, reflecting demand projects. Toby Rice (President and CEO, EQT) stated that EQT has substantial organic runway, making it disciplined on acquisitions, but acknowledged the benefits of scale.

Josh Silverstein from UBS Group asked how EQT plans to deliver mid-single-digit growth, questioning the infrastructure needs and whether a DUC backlog would be built. He also requested an updated view on the company's LNG contracting strategy in light of the new power deals.

Answer

President and CEO Toby Rice stated that new midstream infrastructure will be built to connect demand projects to existing networks, leveraging EQT's commercial footprint for optimization. CFO Jeremy Knop addressed LNG, stating the long-term goal is to contract 5-10% of volume directly with end-users, similar to the power deals. He noted that discussions with LNG facilities have recently improved and sees it as a significant opportunity for 2030 and beyond.

Josh Silverstein from UBS Group asked about the company's free cash flow allocation strategy after retiring its 2026 notes, particularly regarding share buybacks, and questioned the reason for the CTV one project's first injection date moving to early 2026.

Answer

EVP & CFO Clio Crespy stated that CRC will remain opportunistic with its over $200M share repurchase program, balancing buybacks with debt redemption. President & CEO Francisco Leon clarified the CTV one timeline, explaining that construction remains on track for year-end 2025 completion, but the injection start is slated for early 2026 to account for the uncertain timing of final EPA approval for the first-of-its-kind project.

Josh Silverstein from UBS Group asked about the strong operational performance at TCO, which is producing 18% above nameplate. He questioned if this level is sustainable and if there are further debottlenecking opportunities.

Answer

Vice Chairman Mark Nelson confirmed the strong performance, attributing it to the integrated operation control center that optimizes the entire system. He noted the 18% above nameplate figure applies to the first and second-generation projects and that they are 'just scratching the surface' of the potential for the whole integrated system. A planned maintenance 'pit stop' in Q4 may allow for further improvements.

Josh Silverstein from UBS Group asked if the digital business is still on track for its previously guided mid-to-high teens growth and requested details on growth contributions from the Delphi cloud and AI platforms. He also followed up on whether more granular disclosures for AI and SaaS products could be expected in the future.

Answer

CEO Olivier Le Peuch confirmed the ambition for the digital business to significantly outpace the market, noting double-digit growth in Q2 from platforms, applications, and digital operations. He highlighted strong momentum, citing a 50% year-over-year increase in cloud CPU hours consumed. He also mentioned strong early adoption of the new Lumi data and AI platform. Le Peuch confirmed that more detailed financial disclosures for the digital business as a separate segment will begin in Q3.

Josh Silverstein of UBS asked if ExxonMobil might shift its strategy of de-emphasizing dry gas production, given an improving demand outlook, or if associated gas growth is sufficient.

Answer

Chairman and CEO Darren Woods confirmed there is no change in strategy. He explained that the company's investment decisions are anchored to long-term fundamentals, not short-term market dynamics. While ExxonMobil has competitive dry gas assets, they are not a current priority compared to higher-value opportunities, including liquids-rich associated gas.

Josh Silverstein asked if Civitas would revert to its 50%+ free cash flow return policy after hitting its 2025 debt target or if it would accelerate deleveraging. He also questioned the status of the Wolfcamp D inventory and its inclusion in the 1,200 Permian location count.

Answer

CFO Marianella Foschi clarified that the company would prioritize accelerating its deleveraging goals rather than immediately reverting to a formulaic shareholder return model. CEO Chris Doyle confirmed that Wolfcamp D locations are included in the 1,200-location count and that the 2025 program will increase its focus on this formation to about 20% of Permian activity, up from 10% in 2024, due to strong well productivity.