Leo Mariani

Leo Mariani from Roth MKM questioned if the 2025 CapEx and OpEx cuts would have a modest production impact in the next 1-2 years. He also asked for clarity on the full-year chemicals guidance, given the first-half outlook and economic uncertainty.

Answer

CEO Vicki Hollub and Richard Jackson, President, U.S. Onshore, asserted that the capital reductions were efficiency-driven and would not sacrifice production in 2026-2027. Kenneth Dillon, President, International Operations, added that supply chain deflation is creating further cost benefits. CFO Sunil Mathew addressed the chemicals outlook, acknowledging market challenges but expecting second-half improvement from rationalized supply and lower input costs, thus maintaining the current full-year guidance range.

Leo Mariani asked whether a potential change in the U.S. administration would alter Occidental's strategy for its low-carbon ventures (LCV) business over the next four years.

Answer

Vicki Hollub, President and CEO, stated that the LCV strategy remains unchanged. She acknowledged political uncertainty but stressed the critical need for CO2 in enhanced oil recovery for U.S. energy security. She expressed confidence that the business case for direct air capture and supporting policies like 45Q is compelling and that OXY can accelerate cost reductions, regardless of the political environment.

Leo Mariani sought clarification on the 2026 mid-single-digit growth guidance, specifically whether it was unadjusted for the pending asset sale and how stripping out non-Permian volumes would affect the growth rate. He also asked if investors should expect an acceleration in the variable dividend component as debt is paid off, given the company's lean into buybacks.

Answer

President Austen Gilfillian clarified that the Q4 guidance includes non-Permian assets; stripping out the 5,000 bbl/day contribution from non-Permian assets from the 66,000 bbl/day Q4 midpoint provides the go-forward starting point for 2026, from which a couple thousand barrels of growth leads to mid-single digits. He stated that variable dividend acceleration is 'all price-related,' reiterating that buybacks are the third priority and signal the stock is cheap, but Viper's balance sheet flexibility allows for both buybacks and significant cash distributions.

Leo Mariani of Roth Capital Partners asked about the expected timeline for reaching the net debt target and whether there was room for dividend increases in addition to buybacks. He also inquired about the current M&A environment and the availability of deals.

Answer

CEO & Director Kaes Van’t Hof indicated it is reasonable to expect the board to consider a base dividend increase in the coming quarters. He reaffirmed the plan to return 100% of cash flow once the debt target is hit. On M&A, he reiterated a patient stance, emphasizing the need for investors to realize the benefits from the two recent transformative deals before pursuing new ones.

Leo Mariani of Roth Capital Partners asked about the expected timeline for reaching the net debt target, whether it would occur in 2026, and if there was room for a base dividend increase. He also inquired about the current M&A environment and the availability of deals.

Answer

CEO Kaes Van’t Hof indicated it was reasonable to expect the board to review a base dividend increase in the coming quarters and reaffirmed the plan to return 100% of cash flow once the debt target is met. On M&A, he reiterated a patient stance, emphasizing that the focus is on digesting the two recent transformative deals and ensuring investors benefit from the expected accretion before pursuing further large-scale transactions.

Leo Mariani of ROTH MKM asked if dividends could increase in the coming quarters due to acquisition accretion despite weaker oil prices, and also requested clarification on lower cash tax guidance and G&A expense trends.

Answer

CEO Kaes Van't Hof affirmed that at a flat commodity price, distributions are expected to grow due to the drop-down's accretion. He explained that the lower tax guidance is a direct result of lower oil prices and projected that G&A per BOE should decline following the drop-down, as Q1 is typically the peak for such expenses.

Leo Mariani asked about the degree of fragmentation in the minerals landscape and the potential for dividend accretion following the close of the Endeavor-related Drop Down deal.

Answer

CEO Kaes Van’t Hof illustrated the fragmentation by noting that Viper, the largest public minerals company, holds only 3.3% of the Permian's royalty barrels, whereas top E&Ps control 60-70% of gross production. He agreed the deal is accretive and stated a near-term goal is to achieve $1 per share of distributable cash flow each quarter.

Leo Mariani sought more clarity on leverage parameters for the Endeavor drop-down, asking about a potential maximum leverage target for Viper. He also questioned the M&A outlook post-drop, asking if Viper would be positioned to pursue other deals in late 2025 and what the current landscape for mineral consolidation looks like.

Answer

CEO Travis Stice suggested a pro forma leverage target of around 1.5x turns would be reasonable, emphasizing that Viper's strong free cash flow model allows for rapid deleveraging. Regarding future M&A, Stice confirmed that Viper's increased scale and unique structure, which allows for tax-deferred transactions via OpCo units, have attracted significant interest. He stated that while the company will remain selective, a large opportunity set for high-quality mineral consolidation exists.

Leo Mariani asked for commentary on what Diamondback would view as a 'red light' scenario for 2026 in terms of costs and oil prices. He also inquired about other uses of capital in a 'yellow light' scenario, specifically the continuation of healthy buybacks and the potential for bolt-on acquisitions.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) defined a 'red light' scenario as consistently printing months in the $50s or near $50 oil, which would prompt a re-evaluation of capital deferral. He highlighted Diamondback's strong position at $63 oil with a 36-37% reinvestment ratio, secure dividend, strong balance sheet, and low costs. In a 'yellow light' scenario, Kaes Van't Hof stated that the primary use of free cash remains the base dividend, followed by buying back at least 1% of public float per quarter. After that, the focus would be on debt reduction, with ongoing small bolt-on deals and cashless value-accretive trades, while being more selective on big M&A.

Leo Mariani asked for a definition of a 'red light' scenario for 2026 in terms of costs and oil prices. He also inquired about how other uses of capital, beyond the base dividend, might come into play in a 'yellow light' scenario, specifically regarding buybacks and potential bolt-on acquisitions.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) defined a 'red light' as consecutive months printing in the $50s, or near $50 oil, which would prompt a re-evaluation of capital deferral. He highlighted Diamondback's strong position at $63 oil with a 36-37% reinvestment ratio, secure dividend, strong balance sheet, and COVID-low costs. He confirmed the base dividend as primary, followed by buying back at least 1% of public float per quarter. Remaining free cash would go to debt reduction, with continued small bolt-on deals and cashless value-accretive trades. He stated Diamondback would be more selective on big M&A.

Leo Mariani of Roth Capital Partners, LLC inquired about the triggers for a 'red light' scenario to slow activity and asked for a shareholder return framework for FANG similar to the one provided for Viper.

Answer

CEO Kaes Van't Hof stated that the primary trigger for a 'red light' would be oil prices printing in the low $50s for a month, but emphasized that Diamondback has already done its part in cutting capex. For the parent company, he reiterated the commitment to return at least 50% of free cash flow to shareholders, with the potential to go higher in periods of share price weakness, but avoided setting a specific debt target due to the need for flexibility at the E&P level.

Leo Mariani asked for the drivers behind updated guidance for LOE and transportation costs, and whether the pace of share buybacks would be inversely correlated with oil prices and activity levels.

Answer

President Kaes Van’t Hof explained that higher gas transportation costs were due to taking more molecules in-kind, which should improve price realizations. COO Daniel Wesson attributed lower LOE to resolving a one-time issue. Van't Hof confirmed the buyback strategy is inverse to activity, with more capital allocated to repurchases in the current environment.

Leo Mariani sought to quantify the potential D&C and LOE cost synergies from the Double Eagle acquisition, asking for their run-rate well costs. He also asked whether capitalized interest is included in the 2025 capital budget.

Answer

President Kaes Van't Hof described Double Eagle as good operators with well costs in the $625-$650 per foot range, noting the biggest synergy is applying Diamondback's lower cost structure. He emphasized the deal was timed to acquire upside inventory rather than high-decline production. He clarified that capitalized interest, which is an accounting rule for debt-funded acquisitions, is not in the CapEx budget but is included in their internal math for shareholder return commitments.

Leo Mariani suggested the 2025 production outlook might be conservative given the Q4 run-rate and asked if the company would allow oil production to decline in a weak macro environment. He also inquired about any potential cash tax benefits from the Endeavor deal.

Answer

President and CFO Kaes Van't Hof confirmed the base case for 2025 remains hitting 480,000 barrels of oil per day, but acknowledged the total BOE guidance is conservative and likely to be closer to 840-850 MBOE/d. The final plan will be dictated by the macro environment in January. He stated that any cash tax benefit from the Endeavor acquisition would not be material and the rate should remain in the mid-to-high teens.

Leo Mariani asked about Matador's flexibility in adjusting plans, the variables considered, and specifically how the oil macro (e.g., oversupplied market, lower oil prices) influences capital spending decisions, including if there's a price level that would lead to reduced growth.

Answer

Chris Calvert, EVP and COO, and Joseph Foran, Founder, Chairman and CEO, reiterated that capital decisions are multi-variable, not solely dependent on oil price. They emphasized the optionality to reduce activity if commodity prices slide and costs don't decrease proportionally. They highlighted the importance of efficiency gains (e.g., saving $100,000 per day by reducing days on well) and the company's strong balance sheet and midstream business as factors enabling flexibility and long-term value creation.

Leo Mariani of Roth Capital Partners inquired about the allocation of free cash flow, particularly the balance between the 'brick-by-brick' M&A strategy and the newly active share repurchase program, and whether buybacks would be price-sensitive.

Answer

EVP & CFO William Lambert outlined the priorities for free cash flow after the dividend as: 1) brick-by-brick land acquisitions, 2) share repurchases, and 3) debt reduction. He emphasized a flexible, non-formulaic approach to capitalize on opportunities as they arise, using buybacks during periods of market volatility. Co-President Bryan Erman added that the brick-by-brick approach is a core strength and competitive advantage for Matador.

Leo Mariani from Roth Capital Partners asked about the allocation of free cash flow, particularly how the company balances its 'brick-by-brick' acquisition strategy with its new share repurchase program.

Answer

EVP and CFO William Lambert outlined a flexible capital allocation framework for free cash flow after the dividend. The priorities are: 1) 'brick-by-brick' land acquisitions, 2) opportunistic share repurchases under the $400 million authorization, and 3) balance sheet management. He stressed there is no set formula, allowing the company to capitalize on land deals and market volatility. Co-President Bryan Erman reiterated that the 'brick-by-brick' program is a core competitive advantage.

Leo Mariani of Roth Capital Partners, LLC asked about the allocation of free cash flow, particularly how the company balances its 'brick-by-brick' M&A program with its new share repurchase initiative.

Answer

EVP and CFO William Lambert outlined a three-pronged approach for free cash flow after the dividend: 1) 'brick-by-brick' land acquisitions, 2) share repurchases, and 3) balance sheet management. He stated there is no set formula, and the company will remain opportunistic across all three buckets. Co-President Bryan Erman added that the brick-by-brick strategy is a continuous, core competitive advantage for Matador.

Leo Mariani from Roth Capital Partners, LLC inquired about the allocation of free cash flow, particularly how the company balances its 'brick-by-brick' acquisition strategy with its new share repurchase program.

Answer

EVP and CFO William Lambert outlined a three-pronged approach for free cash flow after the dividend: reinvesting in inventory through 'brick-by-brick' acquisitions, executing share repurchases opportunistically, and managing the balance sheet by paying down debt. He stated there is no set formula. Co-President Bryan Erman added that the brick-by-brick approach is a core competitive advantage for Matador.

Leo Mariani of ROTH MKM asked for the rationale behind shifting drilling activity towards West Texas and away from other assets, and questioned if Q2 production would represent the peak for the year.

Answer

Tom Elsener, EVP of Reservoir Engineering, clarified that the activity shift was a normal part of optimizing the completion schedule while moving from a 9-rig to an 8-rig program. Glenn Stetson, EVP of Production, confirmed strong results from the Ameredev assets and projected that Q3 production would be lower than Q2, with Q4 potentially slightly higher than Q3, subject to timing.

Leo Mariani from ROTH MKM inquired about potential plans to unlock the value of Matador's midstream business, valued at over $1.5 billion, and asked for the outlook on infrastructure CapEx for 2025.

Answer

Joseph Wm. Foran, Founder, Chairman, and CEO, stated the company is always open to opportunities for its midstream assets and highlighted the strategic value of flow assurance. Brian Willey, EVP and CFO, projected that 2025 midstream CapEx would be less than 2024's $225 million but still above the long-term maintenance level of $50-$75 million, which he expects to reach in 2026 once the system is fully built out.

Questioned the significant production ramp needed to meet H2 guidance, sought clarification on the initial production from Bayswater, asked about the oil cut in guidance, CapEx cadence, and the reason for the low realized NGL price.

Answer

The production ramp in H2 is driven by turning 35 new wells online, with most concentrated in Q3 and Q4. The previously announced Bayswater production number was based on a 12/1 effective date. The oil cut is ~50%. The low NGL price is a result of the company's specific weighted average accounting methodology.

Leo Mariani of Roth Capital Partners, LLC sought clarification on several items, including the previously announced Bayswater production rate, the significant production ramp implied by H2 guidance, the expected oil cut, CapEx cadence, and the quarter's low NGL pricing.

Answer

Co-Founder, Chairman & CEO, Edward Kovalik, clarified that the previously announced production number was based on a 12/1 effective date. He explained the H2 production ramp is driven by turning 35 wells online, with activity concentrated in Q3 and Q4. He guided to a ~50% oil cut and ~75% total liquids. Regarding NGL pricing, Kovalik noted the reported $8.7/bbl was a result of the company's weighted-average accounting methodology.

Leo Mariani of Roth Capital Partners asked about EOG's strategic approach, including potential for bolt-on M&A, during a potentially weaker near-term oil market. He also sought clarification on the company's near-term outlook for the natural gas macro environment.

Answer

CEO Ezra Yacob stated that while the company can be counter-cyclical, the primary focus after the Encino deal is on organic execution and smaller bolt-ons rather than large M&A. He clarified that EOG's gas business is strategically ramping up to meet contracted LNG demand, which provides significant revenue uplift and allows for paced, value-driven investment through price cycles.

Leo Mariani requested a comparison of investment returns between the Dorado gas play at $4 gas and core oil plays at $55 oil. He also asked about the timing of the $200 million CapEx reduction, its potential production impact in 2026, and the company's tariff exposure in 2026.

Answer

CEO Ezra Yacob noted that while Dorado returns are compelling, the broader portfolio delivers over 100% ATROR at $55 oil and $3 gas, and investment decisions consider multiple metrics beyond returns. COO Jeff Leitzel explained the CapEx cut is mostly in H2 2025 in flexible basins like the Delaware and Eagle Ford, and the plan was designed to maintain flexibility for 2026 without impacting capital efficiency.

Leo Mariani of ROTH MKM questioned the rationale for reducing activity in the Eagle Ford shale and asked about the status and focus of EOG's domestic oil exploration program for 2025.

Answer

SVP, Exploration and Production, Keith Trasko clarified that the lower Eagle Ford activity in 2025 is a normalization after elevated levels in 2023-24 and that the play remains a high-return core asset. CEO Ezra Yacob confirmed that the domestic exploration program remains active with wells planned for 2025, but the focus is on high-return opportunities, regardless of commodity type.

Leo Mariani sought clarification on the Utica play, asking about the potential to lower the stated $6-$8 per BOE finding cost and how it relates to a previously disclosed $5 target. He also requested an update on the Powder River Basin's (PRB) performance and future activity levels.

Answer

SVP of Exploration and Production Keith Trasko clarified that the $6-$8/BOE finding cost is a near-term expectation for the volatile oil window, whereas the $5/BOE target reflects the entire acreage at full-field development. COO Jeff Leitzell added that the PRB program is now split between the Mowry and Niobrara formations, with encouraging early results from the Niobrara showing a productivity increase of over 10% versus 2023. Activity levels there are expected to remain consistent in 2025.

Leo Mariani of Roth Capital Partners, LLC asked for the production mix of the Anadarko asset sale and the rationale for increasing the overall divestiture target at this time.

Answer

Chairman and CEO Ryan Lance stated the Anadarko asset was mostly gas and confirmed the decision to raise the divestiture target to $5 billion by the end of 2026 was a result of their standard internal portfolio review. He stressed they are not 'fire selling' assets and will only sell when they receive good value, expressing confidence in their ability to market the identified assets successfully.

Leo Mariani requested more specific details on the $500 million capital budget cut, including the types of activities, locations, and any potential medium-term production impact.

Answer

SVP Andy O'Brien and CEO Ryan Lance characterized the savings as 'nits and gnats' spread across the entire global portfolio. O'Brien explained it was a combination of deflation, optimization, and deferrals of non-critical items with no material impact on production this year or next. Lance confirmed the cuts were distributed across both the Lower 48 and Global Operations divisions.

Leo Mariani of ROTH MKM asked for more detail on the $600 million divestiture, specifically the associated production volume and commodity mix of the non-core Permian assets being sold.

Answer

Andy O'Brien, SVP of Strategy, specified that the assets being sold produced approximately 15,000 barrels of oil equivalent per day last year. He characterized the assets as non-core Southern Delaware, which implies a typical commodity mix for that region.

Leo Mariani asked for specific quantification of expected turnarounds, CapEx, and OpEx for the fourth quarter.

Answer

Andy O'Brien, SVP of Strategy, provided details for Q4, stating turnarounds would be minimal at about 5,000 barrels per day. He reiterated that full-year OpEx guidance is unchanged and that Q4 CapEx is tracking as expected, influenced by lower non-operated activity, reduced Port Arthur LNG spend, and some service cost deflation. He highlighted that the annual production guidance was raised without increasing the operating cost guidance.

Leo Mariani from Roth Capital Partners, LLC sought clarification on the outlook for well costs in the second half of the year and asked if the company's cautious macro view implies a strategy of holding oil production flat for the foreseeable future.

Answer

Co-CEO Will Hickey confirmed he expects net well costs per foot to decline in the second half, driven by efficiency gains and some service cost deflation, which should offset tariff impacts on casing. Co-CEO James Walter affirmed that a flattish to low-single-digit growth profile is the right expectation in the near term, given the current market uncertainty.

Leo Mariani requested an update on the company's gas marketing strategy, including potential involvement in data center deals. He also asked for more detail on the claim that returns at $60 oil are comparable to last year's returns at $75 oil.

Answer

Hays Mabry, an executive, indicated that while maximizing molecule value is a key focus, specific updates on the marketing strategy would be shared on a future call. He explained that the company's return resiliency is primarily driven by significant reductions in D&C cost per foot over the last 18 months, which has largely offset the impact of lower crude prices.

Leo Mariani from ROTH Capital Partners questioned why the company isn't pursuing more share buybacks given its low valuation and strong cash flow, rather than waiting for a market downturn. He also asked for the specific drivers of the expected reduction in controllable cash costs for 2025.

Answer

Executive Hays Mabry reiterated that the company's buyback strategy is a 'rifle shot' approach, reserved for true market dislocations to maximize value, and that current conditions don't meet that threshold. Co-CEO William Hickey explained that 2025 cost reductions are driven by realizing synergies from recent acquisitions, like the Brea Draw asset, and favorable midstream contract terms aligned with the development plan.

Leo Mariani asked about the expected activity and CapEx cadence for Q4 and whether the company might reduce its rig count to translate efficiency gains into capital savings.

Answer

Co-CEO William Hickey projected that Q4 CapEx would be slightly down from Q3, primarily due to working interest mix rather than a change in activity. He confirmed that while they could achieve their original well count with fewer rigs (e.g., 11 instead of 12), the final 2025 plan for capital and rig count has not yet been decided but will incorporate the new efficiencies.

Leo Mariani requested an update on offshore Canada production, specifically the uptime issues at the Terra Nova facility, and asked about the sustainability of the company's new, lower Lease Operating Expense (LOE) guidance of $10-$12 per barrel.

Answer

President, CEO & Director Eric Hambly and SVP - Operations Chris Lorino acknowledged disappointing runtime at Terra Nova, which impacted Q2 and the Q3 outlook. Regarding costs, Hambly expressed confidence in the $10-$12/bbl LOE range, noting that Q2's underlying rate was even lower without workovers. Lorino added that significant, durable cost reductions in the Eagle Ford also support the lower LOE profile.

Leo Mariani asked about the capital plan in a 'middle ground' oil price scenario of around $60 and requested more detail on the Q1 offshore Canada production issue and the lease operating expense (LOE) outlook.

Answer

President and CEO Eric Hambly stated that in a $58-$60 oil price environment, the company would be comfortable maintaining its $1.1B-$1.3B capital plan and would invest through the cycle. He explained the Canada downtime was a short-lived, third-party logistical issue with a shuttle tanker, not an asset problem. He projected LOE would remain elevated in Q2 (around $14/boe) due to workover activity before dropping to the $10-$11/boe range in the second half of the year.

Leo Mariani from ROTH Capital Partners asked about the expected increase in offshore Canadian production, questioning if operational improvements at the Terra Nova field were driving better run times. He also sought clarification on the Eagle Ford, asking if the 1,900 BOE/d impact from the failed completion design was due to exceptionally poor well performance and if the 2025 production growth was an anomaly or a new sustainable level.

Answer

President and CEO Eric Hambly confirmed that Suncor, the operator of Terra Nova, made significant operational reliability improvements late last year, boosting confidence in 2025 production. Regarding the Eagle Ford, he stated the new completion design significantly underperformed, producing at 50-60% of the expected rate, but the issue was isolated to one pad. He clarified that the higher Eagle Ford production expected in 2025 represents a return to the upper end of the guided 30,000-35,000 barrel-a-day range, consistent with prior years, due to a steadier program.

Leo Mariani questioned the onshore drilling strategy, asking if the accelerated activity in the Eagle Ford would translate to similar early-year growth in the Montney and Duvernay. He also asked for the outlook on workover expenses, which have been elevated in 2024.

Answer

President and COO Eric Hambly clarified that the Eagle Ford strategy aims for a more consistent drilling profile to achieve higher average annual production. He expects Eagle Ford output to grow by 3,000-4,000 bbl/d in 2025. For the Tupper Montney, the plan is to maintain production near plant capacity, consistent with prior years. Hambly acknowledged that 2024 workover expenses were an outlier and unusually high, and he does not anticipate similar significant workovers beyond the two planned for Q4.

Leo Mariani from Roth Capital Partners, LLC requested more detail on recent Wolfcamp B well results in the Midland Basin. He also asked for an assessment of the company's inventory quality and depth across its DJ, Delaware, and Midland basin assets.

Answer

President & COO Clay Carrell reported encouraging results from the Wolfcamp B, noting earlier oil cuts and ongoing work to customize completion designs. Regarding inventory, he stated that while the Permian currently offers slightly better returns, the company is focused on enhancing resources across all basins through cost reductions, efficiency gains, and technical work to identify secondary objectives and elevate overall inventory quality.

Leo Mariani sought more color on the DJ Basin, questioning the reasons for the significant Q1 volume decline and the flat Q2 guidance, and asked about the production trend for the second half of the year. He also inquired if Civitas is seeing any cost relief from oilfield service providers at the local basin level.

Answer

CEO M. Doyle and CFO Marianella Foschi explained the DJ Basin decline was expected due to a 4-5 month period with no new wells online, allowing base decline to take full effect. A delay in Q1 turn-in-lines pushed some production growth into Q3, resulting in flat Q2 volumes. On service costs, Mr. Doyle confirmed they are seeing market weakness and are actively negotiating with suppliers for cost reductions, expressing confidence that these savings will outweigh potential tariff pressures.

Leo Mariani questioned the company's appetite for further Permian M&A given the competitive market and asked about the drivers behind the increase in Lease Operating Expense (LOE) during the fourth quarter.

Answer

CEO Chris Doyle reiterated that the primary goal for 2025 is hitting the $4.5 billion net debt target, and any M&A would likely be funded by asset sales. Doyle attributed the Q4 LOE increase to winterization projects and higher workover activity in the Permian. CFO Marianella Foschi added that the increase was almost entirely from the Permian, with DJ LOE remaining flat, and that full-year costs remain peer-leading.

Leo Mariani sought more specific detail on the maintenance rig count, asking if a 2-rig DJ and 4-rig Permian program was accurate. He also asked why Civitas finds the Wolfcamp D competitive when other operators have deemed it less economic.

Answer

CEO M. Doyle confirmed the 2 DJ/4 Permian rig split was 'not far off' for a maintenance program. He explained that the Wolfcamp D became competitive due to better-than-expected capital execution and surprisingly high well productivity, which now allows it to compete for capital with the A and B zones and will likely comprise 20-30% of the future program.

Leo Mariani of Roth Capital Partners, LLC requested more quantitative detail on the Franklin Mountain and Avant acquisitions, asking how recent well results and costs have trended compared to the prior operator and initial expectations.

Answer

EVP of Business Units Michael Deshazer confirmed the assets are fully integrated from an operational and cultural standpoint. He stated that all wells in progress at the time of the acquisition are meeting or exceeding expectations. Going forward, he emphasized that new wells will reflect Coterra's own designs for spacing and completions, and should deliver 'Coterra results.'

Leo Mariani asked for quantification of the development runway in the Marcellus's Dimmit box and how returns compare between the Permian and Lower Marcellus at current commodity prices.

Answer

SVP of Business Units Michael Deshazer confirmed continued activity in the Dimmit box in the coming years, including overfill wells and new long-lateral developments. Chairman, CEO and President Thomas Jorden stated that at approximately $70 oil and $4 gas, the returns between the Permian and Lower Marcellus programs are 'very comparable'.

Leo Mariani asked if Coterra's three-year capital expenditure outlook is now biased lower due to recent efficiency gains and requested a more detailed explanation of the company's M&A strategy.

Answer

Blake Sirgo, SVP of Operations, confirmed that current efficiencies are repeatable and would improve the three-year outlook, but the final plan depends on 2025 decisions. Tom Jorden, CEO, elaborated on M&A, stating they would only 'stretch' for a high-quality asset that could establish a new core focus area, not just for incremental bolt-ons, reflecting their disciplined approach in a competitive market.

Leo Mariani inquired about the specifics of the $75 million increase in the capital budget, the nature of the added wells, and the drivers behind the Uinta Basin's strong well performance and cost trends.

Answer

EVP & COO Beth McDonald clarified the CapEx increase is primarily for high-return, non-operated projects in the Midland Basin, with Q4 CapEx expected to decrease. She attributed the Uinta's stellar well performance and lower costs to the successful integration of SM's technical expertise with XCL's operational execution and optimized completion designs. President & CEO Herbert Vogel noted the new wells will add production in 2026.

Questioned the 2025 plan to complete significantly more wells than are drilled, asking if this was to draw down DUC inventory and if drilling would need to increase in 2026. He also asked for an explanation for the variance in Uinta's Q4 production and LOE compared to the figures discussed at the time of the acquisition.

Answer

The company explained that the high DUC count was an outcome of the acquired asset's activity and that the 2025 plan will reduce it, but they don't manage to a specific DUC target. Future drilling needs will depend on pad sizes. The Q4 Uinta variance was attributed to it being a 'noisy' integration quarter with limited operational control. They emphasized that the asset's cash margin per barrel is in line with the Midland Basin, meeting their expectations.

Leo Mariani of Roth MKM questioned the 2025 plan to complete significantly more wells than drilled, the resulting DUC inventory drawdown, and the variance in Uinta's Q4 production and LOE compared to initial acquisition estimates.

Answer

COO Beth McDonald clarified that the DUC count, which will be reduced by about 45%, is an output of activity timing, influenced by the pace of drilling at the acquired Utah asset. CEO Herbert Vogel noted that Q4 was a noisy transitional quarter for Uinta, with limited operational control. CFO Wade Pursell added that despite the noise, the Uinta cash production margin was strong and comparable to the Midland Basin, as anticipated.

Leo Mariani questioned the 2025 plan to complete significantly more wells than drilled, implying a DUC drawdown, and asked about variances in Uinta Basin's Q4 performance, such as lower production and higher LOE, compared to initial acquisition projections.

Answer

President and CEO Herbert Vogel and COO Beth McDonald explained that the DUC count is an output, not a managed target, and the high year-end number was a result of the acquired asset's drilling pace. On Uinta performance, Mr. Vogel noted Q4 was a 'noisy' transitional quarter with limited operational control. CFO Wade Pursell emphasized that the cash production margin in Uinta was nearly identical to the Midland Basin's, meeting a key objective of the deal.

Leo Mariani asked about Antero's involvement in new in-basin power demand projects, the potential timing of announcements, and the future of shareholder returns, including a possible dividend.

Answer

CFO Michael Kennedy emphasized that while Antero is uniquely positioned for in-basin demand, any deal must be accretive and NYMEX-based, not tied to volatile local pricing. He declined to provide a timeline for announcements. Regarding returns, he stated the focus remains on opportunistic buybacks and debt management, and a dividend has not been a focus.

Leo Mariani followed up on the capital return split, noting the Q1 skew towards debt paydown and asking if the 50/50 target is for the full year, implying more room for buybacks. He also asked for more color on Antero's involvement in discussions to supply new in-basin demand projects.

Answer

CFO Michael Kennedy reiterated their opportunistic approach, explaining they accelerated buybacks in March when a disconnect appeared between share value and fundamentals. He confirmed that with little debt remaining, share buybacks will naturally become a larger percentage of free cash flow use. On in-basin demand, Kennedy confirmed Antero is in discussions due to its scale but is not interested in selling gas on a local basis for its maintenance program, as its current FT commitments secure premium Henry Hub pricing.

Leo Mariani requested color on the quarterly cadence of CapEx and production in 2025. He also asked for clarification on the drilling JV financial structure, noting a discrepancy between the partner's contribution and the guided D&C budget.

Answer

CFO Michael Kennedy indicated that production and capital spending would be relatively even throughout 2025, with a slight potential increase in Q2 due to the timing of a completion crew. Regarding the JV, he explained that the gross program size is larger than the net maintenance capital budget, which necessitates the JV partner to keep the program efficient and Antero's net spending and production flat.

Leo Mariani questioned the outlook for 2025 maintenance capital, asking if the 2024 level of $650 million is a reasonable estimate for flat production. He also asked about the near-term production trajectory given the deferral of some well completions.

Answer

CFO Michael Kennedy clarified that a maintenance capital level of approximately $700 million is needed to sustain production in the 3.3 to 3.4 Bcfe/d range. He noted that the Q4 2024 production is guided to approximately 3.35 Bcfe/d, which is also the expected level for 2025.

Leo Mariani asked for more detail on the cadence of drilling, completion, and CapEx in the second half of 2025. He also questioned the performance of the Utica wells, asking about potential for further cost reductions and how production results compare to the Marcellus.

Answer

CFO & President Alan Shepard confirmed a lull in completion activity and lower CapEx in Q3, with a pickup in Q4. COO Navneet Behl stated that the team is aggressively working to further reduce Utica well costs, which are already below target, and noted that recent Utica wells are performing slightly above expectations. Shepard added that Utica wells are now competitive with core Marcellus assets.

Leo Mariani asked for clarification on the cash taxes paid in Q1, which seemed unexpected, and whether the robust $125 million share buyback indicates management sees the stock as a compelling value. He also inquired about any new information regarding potential changes to the 45Q tax credit under a possible Trump administration.

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Chief Financial Officer Alan Shepard clarified that CNX remains a de minimis cash taxpayer, with any perceived noise resulting from the hedge book, and that the company does not expect to be a material cash taxpayer until 2027 or 2028. He affirmed that management sees value in share repurchases when they are executed. Regarding 45Q, he stated they have no information beyond what is publicly available.

Leo Mariani questioned the drivers behind the New Technologies free cash flow guidance for 2025 after a strong Q4, the potential impact of the new political administration on CMM initiatives, and sought to confirm the 2025 production strategy involving base volume maintenance alongside modest declines from Apex assets.

Answer

Ravi Srivastava, President of New Technologies, clarified that Q4'24 free cash flow was boosted by timing of volume monetization and the annual run-rate is expected to be around $75 million. He also noted it's too early to gauge the new administration's stance. CFO Alan Shepard confirmed the production strategy, emphasizing the built-in optionality to accelerate activity if market conditions warrant.

Leo Mariani asked for clarification on guidance, specifically why five turn-in-lines were removed from the 2024 schedule. He also sought more detail on the potential value of the 45Q and 45V tax credits and the expected timeline for a decision.

Answer

CFO Alan Shepard clarified the turn-in-line change was a minor timing shift across the year-end, not a reduction in activity. Ravi Srivastava, President of New Technologies Group, noted potential credit values ($60/tonne for 45Q, up to $3/kg for 45V) but stressed the impact is unclear until final rules are out, with 45V guidance expected in Q4.

Leo Mariani of ROTH MKM asked about the outlook for APA's share buyback program in light of softer oil prices and the increased focus on debt paydown. He also sought clarification on the expected decline trajectory for gross oil volumes in Egypt.

Answer

CEO John Christmann emphasized that the recent asset sale was opportunistic, providing financial flexibility. CFO Ben Rodgers affirmed the company's commitment to its 60% shareholder return framework and stated they will remain opportunistic on both share buybacks and debt reduction. Regarding Egypt, President and CFO Steve Riney confirmed there was some unexpected Q1 downtime but that investors should expect a continued 'very slight decline' in gross oil volumes through the year.

Leo Mariani asked for an update on the accounts receivable situation in Egypt and requested a breakdown of the guided $600 million in 2025 purchased oil and gas sales between the Cheniere contract and domestic gas trading.

Answer

CEO John Christmann stated that the past-due balance in Egypt has been stable and he is optimistic about making progress on collections this year. CFO Stephen Riney detailed the $600 million trading gain outlook for 2025, attributing approximately $400 million to domestic pipeline trading and $200 million to the Cheniere LNG contract.

Leo Mariani questioned the rationale for pulling back on U.S. activity with oil prices around $70 and asked for clarity on Egypt's production outlook, specifically how net oil production could remain flat if gross volumes are declining.

Answer

CEO John Christmann cited a 'softer price environment' and the company's ability to efficiently sustain volumes with 8 rigs as the reason for the U.S. activity level. He reiterated that with the Permian and Egypt stable, Suriname will provide corporate growth starting in 2028. For Egypt, he noted the 11-rig program leads to a slight gross oil decline, which waterflood projects aim to mitigate, while the new gas program will add volumes over time.

Leo P. Mariani of ROTH MKM asked for an explanation for the Q2 production guidance, which implies a decline steeper than the company's typical rate. He also requested a specific update on the status and timeline of the Kern County Environmental Impact Report (EIR) for oil and gas permitting.

Answer

President and CEO Francisco Leon clarified the Q2 BOE decline is a strategic decision to optimize cash flow, not an indicator of asset performance. By altering power plant operations, CRC reduces low-value gas sales to lower overall OpEx. On permitting, he noted the Kern County EIR process is ongoing, but CRC is pursuing multiple successful avenues for permits and has a constructive dialogue with regulators.

Leo Mariani from ROTH MKM questioned the significant improvement in capital efficiency, pointing out that the guided second-half 2025 CapEx with two rigs appeared similar to the fourth-quarter 2024 spend with only one rig, and asked for the drivers behind this change.

Answer

CEO Francisco Leon attributed the enhanced capital efficiency primarily to the mix of projects being executed. He referenced a slide in the earnings presentation showing a 9% year-over-year improvement, describing it as a result of fundamental "blocking and tackling" and applying CRC's operational expertise to the newly acquired Aera asset base.

Leo Mariani asked for an update on the drilling permit situation with CalGEM and whether any new permits were being issued. He also inquired about the legislative progress on CO2 pipeline regulations in California.

Answer

Francisco Leon (Executive) reported progress on drilling permits via alternative paths like field-level conditional use permits (CUPs), noting other operators have recently received permits this way. He expects a resolution for CRC in the second half of next year. On pipelines, he anticipates the legislature will address the issue in the next session, driven by market demand and the state's opportunity to attract significant capital.

Leo Mariani asked about the 2025 CapEx budget being lower than previously indicated, whether this signals a philosophical shift, and its potential impact on 2026 production. He also inquired about accelerating the share buyback program and the acquisition cost for the increased working interest in the Monument project.

Answer

Interim Co-President and CFO Sergio Maiworm attributed the lower 2025 CapEx to significant drilling efficiencies from the West Vela rig, not a strategic shift. He stated that capital return plans will be refined with the new CEO, and confirmed the incremental Monument working interest cost approximately $12 million plus adjustments.

Leo Mariani asked for quantification of third-quarter storm-related downtime, an estimate for fourth-quarter downtime, and whether 2025 capital expenditures are expected to increase due to rig activity.

Answer

EVP & CFO Sergio Maiworm explained that while specific Q3 downtime figures were not disclosed, the asset base outperformed expectations, and the company is confident in its full-year guidance. Interim President & CEO Joseph Mills confirmed that 2025 CapEx will likely be higher due to a delayed start to the 2024 drilling program shifting capital into the next year, along with commitments for the West Vela and Conquer rigs.

Leo Mariani of ROTH MKM questioned the accounting of the $5 million fee from Project Drake, the effectiveness of cost-saving measures given rising operating expenses, and the specifics of the new infrastructure partnership model.

Answer

CFO Geoff Trukenbrod clarified the $5 million from Project Drake is an exclusivity fee expected to be recognized as incremental revenue in Q4, separate from the base business. CEO Jennifer Holmgren and CFO Trukenbrod explained that rising costs are due to upfront project development expenses for projects like Drake, which are expensed now but will be recouped upon transfer to partners. Holmgren also confirmed a completed JV with Olayan Group and discussions with other infrastructure partners beyond Brookfield.

Leo Mariani inquired about the revenue recognition for the $5 million fee from Project Drake, the reasons for rising operating costs despite stated cost-saving initiatives, and specifics of the new infrastructure partnership model.

Answer

CFO Geoff Trukenbrod clarified the $5 million Project Drake fee is an initial payment expected to be recognized as incremental revenue in Q4 upon finalizing agreements. CEO Jennifer Holmgren explained that current operating expenses are elevated because they include upfront development costs for major projects, which will be recouped upon transfer to partners. She also confirmed the company is forming partnerships beyond Brookfield, such as a completed JV with the Olayan Group, to accelerate project development and capture more upside.

Leo Mariani questioned the significant revenue ramp required in the second half of 2024 to meet guidance and asked for details on the Q1 increase in operating costs compared to Q4 2023.

Answer

CFO Geoffrey Trukenbrod confirmed the back-half weighted revenue is driven by multiple projects expected to move into the construction phase. He explained that Q1 operating costs were higher due to one-time severance charges and normalized bonus accruals, following lower bonus-related costs in Q4 2023, and that these costs are expected to decrease.

Leo Mariani of Daniel Energy Partners asked about the D&C cost difference between horseshoe wells and traditional laterals, questioning if the cost gap could narrow as the company gains more experience with the new technique.

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COO Daniel Harrison explained the cost premium for horseshoe wells is almost entirely on the drilling side, stemming from the extra day or two needed to execute the 180-degree turn. He noted completion costs are similar and that the initial cost estimate was conservative, with the first well already beating projections. He expects the 5-7% savings from pad drilling will further reduce the cost on future wells.

Leo Mariani asked about the outlook for share buybacks as free cash flow is expected to increase. He also inquired about quantifying recent D&C cost efficiencies and the current outlook for leading-edge oilfield service costs.

Answer

CFO Mark Scucchi confirmed that with the balance sheet in its target range, Range has greater latitude for capital returns and views share buybacks as a very compelling option given the stock's valuation. CEO Dennis Degner addressed costs, stating that while it's early in the RFP process, they have seen some relief in consumables but resilience in rig rates. He emphasized that regardless of service costs, operational efficiencies like achieving 9-10 frac stages per day allow the company to maintain production with a single frac crew.