Neil Mehta

Neil Mehta asked for Permian Resources' perspective on the evolution of Waha gas prices over the next couple of years and how the company is managing through commodity softness. He also questioned the risks of underinvestment when using a long-term free cash flow per share framework.

Answer

Guy Oliphint, EVP and CFO, anticipated potential Waha challenges in 2026 but confidence for 2027 and beyond due to pipeline capacity, noting Permian Resources is well-insulated by gas marketing efforts. James Walter, Co-CEO and Director, clarified that the long-term free cash flow per share focus (5-20 years) necessitates avoiding underinvestment, emphasizing a numerator-focused approach through organic growth and acquisitions.

Neil Mehta asked for Permian Resources' perspective on the evolution of Waha gas prices over the next couple of years and how the company is managing through the current period of commodity softness. He also sought clarification on the potential pitfalls of using a free cash flow per share framework, particularly the risk of underinvestment, and how the business manages this over the long term.

Answer

CFO Guy Oliphint acknowledged potential challenges for Waha in 2026 but expressed confidence that pipeline takeaway capacity could mitigate volatility by 2027. He stated that Permian Resources is well-insulated from Waha volatility due to significant efforts in gas marketing, with 90% of 2026 gas priced at attractive Waha rates or non-Waha destinations. Co-CEO James Walter emphasized that the free cash flow per share framework is a long-term focus, not single years, and that underinvestment would prevent sustained growth. He noted their strategy is more numerator-focused (organic/inorganic growth) given current opportunities.

Neil Mehta from Goldman Sachs requested a deeper explanation of the company's "downturn playbook" and sought perspective on whether Permian Resources views itself primarily as a consolidator or a potential seller in the current M&A landscape.

Answer

Co-CEO James Walter described the downturn playbook as leveraging a strong balance sheet and high-quality assets to opportunistically buy back shares and acquire assets at attractive prices. Regarding M&A, Walter positioned Permian Resources as a "logical consolidator" in the Delaware Basin but emphasized that their ultimate goal is maximizing long-term shareholder value, with management's significant ownership ensuring alignment with all investors.

Neil Mehta inquired about the strategic fit of the New Mexico bolt-on acquisition, asking how it compares to past deals and what aspects might be underappreciated. He also asked about the company's capacity for further share repurchases.

Answer

Hays Mabry, an executive, explained that the acquisition adds high-quality, low breakeven inventory that immediately competes for capital. Mabry highlighted the underappreciated, low-cost structure of the Parkway asset. Regarding buybacks, he stated that Permian Resources has ample capacity for both M&A and share repurchases, intends to remain patient, and will act aggressively during market dislocations.

Neil Mehta from Goldman Sachs asked for management's perspective on why Permian Resources' stock trades at a valuation discount to peers despite its strong performance. He also inquired about the drivers behind the planned increase in average lateral length for 2025 and the company's approach to further extensions.

Answer

Executive Hays Mabry speculated that the valuation gap may be due to PR being a relatively new story and that consistent execution over time should close it. Co-CEO William Hickey explained that the increase in lateral length to 10,000 feet is a function of the 2025 acreage setup, with fewer short laterals being drilled. He noted that while the team can drill longer laterals, the economic verdict is still out for pushing significantly beyond two miles in the Delaware Basin.

Neil Mehta questioned the substance of headline risks regarding potential setbacks in New Mexico and asked for the company's current perspective on transformative versus bolt-on M&A.

Answer

Co-CEO James Walter dismissed the New Mexico setback concerns as having no substance, stating that such measures would be detrimental to the state and are highly unlikely to pass. On M&A, he explained that the current focus is on bolt-on deals, as the bar for transformative acquisitions is now very high and recent opportunities have not met their stringent return hurdles.

Neil Mehta asked about the composition of EOG's well activity, specifically the slowdown in the Delaware Basin and the increase in the Utica, and the optimal activity level in the Permian. He also inquired about concerns regarding inventory quality degradation in the Delaware Basin.

Answer

Chairman and CEO Ezra Yacob explained that the plan optimizes investment across high-return foundational plays, with Delaware Basin activity supporting capital efficiency and consistent performance. COO Jeff Leitzell detailed how cost savings and infrastructure investment unlocked additional targets, improving capital efficiency by 4% and maximizing NPV per acre, ensuring high returns despite varied productivity.

Neil Mehta inquired about the composition of EOG's 2026 well activity, noting a slowdown in the Delaware Basin and an increase in the Utica, and asked for insights into the optimal activity levels, particularly in the Permian. He also asked EOG to address investor concerns regarding perceived degradation in Delaware Basin inventory quality and well results.

Answer

Ezra Yacob, Chairman and CEO, explained that the 2026 plan optimizes investment across EOG's high-return foundational plays, with Delaware Basin activity supporting capital efficiency and consistent performance. Jeff Leitzel, Chief Operating Officer, detailed how extended laterals and cost reductions (20% over three years) improved capital efficiency by 4%, enabling the economic development of additional targets with lower productivity but strong returns. Both executives emphasized that the new development approach ensures consistent well results and sustained returns for over a decade in the Delaware Basin.

Neil Mehta of Goldman Sachs requested quantification of the free cash flow benefits from recent tax legislation. He also asked for EOG's perspective on the oil macro environment and supply/demand balances through 2026.

Answer

CFO Ann Janssen quantified the tax benefit at approximately $200 million for 2025, expecting it to be a recurring annual benefit. CEO Ezra Yacob described a strong demand backdrop, with spare supply capacity likely to first rebuild low inventories, leading to a more fundamentally balanced oil market in 2026.

Neil Mehta asked for details on the strategic value of the 30,000-acre Eagle Ford bolt-on acquisition. He also inquired about the key lessons learned from the 2020 downturn that EOG would apply in a future scenario of sharply falling oil prices.

Answer

SVP Keith Trasko described the acquisition as a unique, undeveloped core block that immediately competes for capital, enables longer laterals, and benefits from existing infrastructure. CEO Ezra Yacob explained that lessons from 2020 are embedded in EOG's current structure: a low-cost base, flexible contracts, and a strong balance sheet, all of which enable capital discipline and countercyclical opportunities.

Neil Mehta of Goldman Sachs questioned the 2025 free cash flow guidance, which appeared softer than consensus, asking about the impact of investment timing in emerging plays and the drivers behind increased international spending.

Answer

CEO Ezra Yacob explained that the lower 2025 free cash flow projection is primarily driven by higher cash taxes from expiring credits and increased operating expenses, rather than just the timing of capital investments. COO Jeff Leitzell and SVP Keith Trasko detailed the ~$100 million increase in international capex for projects in Trinidad and Bahrain, clarifying that production benefits from these investments are expected in 2026, not 2025.

Neil Mehta asked about Range Resources' performance during Winter Storm Fern, specifically if the company was able to maintain operations and sell into bid week, requesting any quantification of the cash flow uplift from the storm and lessons learned regarding market volatility and the marketing team's performance.

Answer

CEO Dennis Degner confirmed that Range was able to lean into the $7 pricing during bid week, resulting in significant cash flow. He praised the operating team for maintaining operations in subzero temperatures with minimal downtime, attributing it to years of planning and teamwork. Mr. Degner expects continued market volatility and highlighted the multidisciplinary team's role in optimizing sales between bid week and daily markets. CFO Mark Scucchi added that February 2026 is anticipated to be one of the best free cash flow and realizations months in company history.

Neil Mehta asked about Range Resources' operational performance during Winter Storm Fern, seeking quantification of any cash flow uplift, lessons learned, and an assessment of the marketing team's performance during that period of high volatility.

Answer

CEO Dennis Degner highlighted the significant cash flow generated by leaning into $7/MMBtu bid week pricing during Winter Storm Fern, attributing successful operations to years of planning and robust facility designs that minimized downtime in subzero conditions. He expects continued volatility. CFO Mark Scucchi added that February 2026 is anticipated to be one of the best free cash flow and realizations months in company history.

Neil Mehta sought Range's perspective on the recent strength in U.S. natural gas production figures and the potential for price elasticity. He also asked for the company's updated hedging strategy for 2026, given the state of the forward curve.

Answer

CEO Dennis Degner stated that the production levels were not surprising and that growing LNG and export demand should balance the market, making days-of-supply a more relevant metric than absolute storage. CFO Mark Scucchi reiterated that Range's hedging philosophy is to cover fixed costs while retaining upside, as they believe the forward curve is undervalued. He indicated the 2026/2027 hedge book is largely set.

Neil Mehta inquired about Range's hedging strategy for 2026 amidst price volatility and asked for their perspective on opportunistically repurchasing shares given the strong balance sheet.

Answer

CFO Mark Scucchi stated the hedging strategy is to protect the balance sheet while preserving upside, noting the 2026 program is lightly hedged at an attractive floor. He confirmed they can and will be opportunistic with share buybacks, highlighting that Q1 repurchases exceeded all of 2024. He views buying back shares at current prices as an 'incredibly valuable investment' and will continue to lean in during market dislocations.

Neil Mehta asked about the drivers of the strong 2024 NGL premium and the outlook for 2025, and questioned the risk of an industry-wide supply overreaction to strong demand signals.

Answer

Executive Alan Engberg attributed the 2024 NGL premium to international contracts and tight export capacity, noting that new capacity will tighten domestic markets, likely boosting base prices while potentially narrowing international premiums. CFO Mark Scucchi argued that Range is uniquely positioned to grow due to its low-cost inventory and secured transport, and he expressed confidence in continued industry-wide capital discipline.

Neil Mehta asked for a more detailed breakdown of the record NGL price realizations, questioning what the marketing team is doing to achieve these premiums and how sustainable this performance is. He also asked if the 2024 capital plan serves as a good proxy for 2025.

Answer

CEO Dennis Degner explained that the NGL premium is a result of a long-term strategy focused on purity product processing and export access via Marcus Hook, which avoids Gulf Coast congestion. He cited high global demand, new PDH infrastructure in Asia, and limited new U.S. export capacity until late 2025 as structural factors supporting continued strong realizations. Regarding 2025 capital, Degner confirmed that the 2024 plan, centered on two rigs and one continuous frac crew, is a reasonable baseline for modeling the upcoming year.

Neil Mehta asked about the current M&A environment for royalty assets, specifically if there are large opportunities like Sitio Royalties still available. He also questioned Viper Energy's geographic focus, particularly the role of the Delaware Basin in its portfolio, and confirmed its commitment to being a Permian pure play.

Answer

CEO Kaes Van't Hof noted a lack of large deals in the past six months, attributing it to lower commodity prices and investor desire for Viper to integrate recent acquisitions. He stated that Viper is ready for larger deals but they are challenging at current prices, emphasizing the company's strong balance sheet. President Austen Gilfillian confirmed Viper's commitment to being a Permian pure play, highlighting the basin's unique attributes for mineral owners. He added that while the Midland Basin has asset overlap with Diamondback, the Delaware Basin still offers high-quality undeveloped locations under well-capitalized operators, particularly in the Northern Delaware.

Neil Mehta inquired about the geographic concentration of Viper's portfolio, its focus on the Midland side, how the Delaware Basin fits into the portfolio, and confirmation of Viper's Permian pure-play strategy.

Answer

Austen Gilfillian, President, confirmed Viper's Permian pure-play strategy, emphasizing the unique attributes of the Permian. He highlighted value in the Delaware Basin, particularly the Northern Delaware, focusing on high-quality undeveloped locations under well-capitalized operators, despite less reliance on Diamondback's drill bit there.

Neil Mehta asked for clarification on any offsets, such as taxes, to the cash inflows from the non-Permian divestitures. He also questioned the state of the A&D market, particularly how softer commodity prices might affect the ease or difficulty of completing bolt-on deals over the next 6-12 months.

Answer

CEO Kaes Van't Hof clarified that net proceeds from the asset sale would be approximately $610 million after a tax hit, primarily used to pay down the revolver and term loan. He and President Austen Gilfillian noted that lower commodity prices traditionally make mineral deals harder, suggesting a pause for larger strategic acquisitions, but acknowledged some success with smaller 'ground game' acquisitions. They also highlighted buybacks as an effective way to acquire high-quality assets.

Neil Mehta of Goldman Sachs asked for Viper's perspective on the non-Permian assets in the Sitio portfolio and how the company is evaluating potential monetization versus retention. He also questioned how Viper balances new M&A opportunities against the integration of the large Sitio acquisition.

Answer

CEO & Director Kaes Van’t Hof stated that while Viper's long-term focus remains on the Permian, the company will be patient with monetizing non-Permian assets to maximize value. Regarding M&A, he stressed that the immediate priority is to successfully integrate Sitio, deliver on synergies, and allow the market to reward the recent accretive deals before considering another large transaction.

Neil Mehta of Goldman Sachs questioned the long-term strategy for the non-Permian assets being acquired through the Sitio merger and how much would be monetized. He also asked how the company balances the M&A opportunity set against the immediate need to integrate the large Sitio acquisition.

Answer

CEO Kaes Van’t Hof reiterated Viper's long-term focus on the Permian Basin but stated the company will be patient in monetizing non-Permian assets to maximize value. Regarding M&A, he stressed that after two major deals, the priority is a successful integration of Sitio and demonstrating value to shareholders through execution and buybacks before considering another large strategic move.

Neil Mehta asked for perspective on the 75% to 100% shareholder payout guidance, the factors influencing the payout level, and whether the Double Eagle transaction could create future drop-down opportunities for Viper.

Answer

CEO Kaes Van’t Hof explained that a 75% payout allows for retaining cash for accretive deals without tapping capital markets, with flexibility to exceed 75% via buybacks during market volatility. An executive added that the Double Eagle drop-down opportunity is small, but the accelerated development in Reagan County is more significant.

Neil Mehta (Goldman Sachs) congratulated Ovintiv on its portfolio transformation and asked if the company has reached its optimal portfolio level, implying a pause on M&A to focus on buybacks, or if further strategic exploration is planned. He also inquired about the expected quarterly cadence for production and capital expenditures, noting Q1's heavier spend.

Answer

President and CEO Brendan McCracken confirmed the portfolio transition is complete, with a clear focus on Montney and Permian, emphasizing stability and unlocking value. He explained that the higher Q1 capital is due to the Anadarko effect, and the company aims for a fully load-leveled program for predictable and stable operations throughout 2026.

Neil Mehta (Goldman Sachs) congratulated Brendan McCracken on Ovintiv's five-year portfolio transformation, asking if the company has reached its optimal two-basin sweet spot, implying a pause on M&A, and if incremental capital will now primarily go towards buybacks. He followed up by asking about the quarterly cadence of production and capital expenditure for the year, noting a heavier Q1 and more maintenance in Q2, likely due to the pro forma portfolio.

Answer

Brendan McCracken (President and CEO, Ovintiv) confirmed that Ovintiv's portfolio transition is complete, with the company now focused on the Montney and Permian basins where it holds competitive advantages and access to premium resources. He emphasized that the company has built a long-duration inventory, and this stability will unlock significant value for investors, signaling a pause on further M&A. He also confirmed that the higher Q1 capital expenditure is primarily due to the Anadarko operations, which will normalize after the sale closes. He highlighted the company's multi-year transformation to a 'fully load-leveled program' for 2026, ensuring predictable and stable quarterly production and capital cadence.

Neil Mehta inquired about Ovintiv's return of capital strategy, particularly the rationale for share buybacks given the stock's high free cash flow yield, and asked about the company's gas marketing strategy in the Montney.

Answer

President and CEO Brendan McCracken affirmed the buyback strategy, noting it drives cash flow per share growth and that the shares are priced below intrinsic value. General Counsel & EVP Meghan Eilers detailed new marketing agreements, including a physical JKM deal and a new Chicago deal, which significantly reduce AECO price exposure through 2026.

Neil Mehta of Goldman Sachs asked for the company's outlook on AECO and Waha pricing and inquired about the sensitivity of royalties to commodity price fluctuations, particularly in Canada.

Answer

Executive Brendan McCracken emphasized that the company's strategy is to 'produce gas in those places and not sell gas in those places,' aiming for NYMEX-plus realizations. He confirmed that Canadian royalties are price-sensitive, which provides a natural hedge and cushion to cash flow during price downturns.

An analyst from Goldman Sachs asked if Ovintiv's current hedge book was sufficient and if there was upside to the 75% utilization estimate for trimul-frac completions in the Permian.

Answer

Executive Brendan McCracken stated the hedging strategy of covering ~25% of production is designed to protect the balance sheet during deleveraging and will shrink as debt targets are met. Executive Gregory Givens noted that trimul-frac utilization will continue to 'inch up' over time, with current limitations being physical constraints on well pads rather than technological ones.

Neil Mehta of Goldman Sachs asked how Ovintiv is shaping its business to maximize the value of its natural gas production, given pricing challenges. He also inquired about the potential monetization of the Uinta asset and any related process.

Answer

Executive Brendan McCracken explained their strategy focuses on basin diversification and securing egress to move gas away from challenged hubs like AECO and Waha, noting new Permian capacity coming online next year. Regarding the Uinta, he stated that while they always evaluate the portfolio, the asset's margins are now competitive and it is delivering strong returns.

Neil Mehta asked about Diamondback Energy's Barnett opportunity, including capital deployment in 2026, potential returns, and the oil and gas product mix, with a follow-up on maximizing liquids cut.

Answer

CEO Kaes Van't Hof discussed building the Barnett position organically and the strong productivity, noting the need to reduce costs for full field development in H2 2026. CFO Jere Thompson highlighted competitive returns at lower costs and 900 gross locations. COO Danny Wesson clarified the Barnett's 67% oil mix, which remains flat for the first 12 months, contrasting it with the core's profile. Kaes Van't Hof added that future gas takeaway capacity will benefit Barnett returns.

Neil Mehta asked about the opportunity set in the Barnett, including capital deployment in 2026, potential returns, and the mix between oil and gas. He followed up on the product mix and strategies to maximize the liquids cut from Barnett barrels.

Answer

CEO Kaes Van't Hof highlighted the exciting reveal of their Barnett position, built organically without external capital, and the strong productivity. CFO Jere Thompson referenced slide 12, noting the competitive performance and potential for 900 gross locations once costs are reduced. COO Danny Wesson detailed the product mix, noting a flatter GOR profile in the Barnett compared to core zones, with 67% oil for the first 12 months. Kaes Van't Hof added that gas takeaway capacity in 2027-2030 would benefit Barnett returns.

Neil Mehta asked Kaes Van't Hof for his perspective on the current macro environment, specifically the 'yellow light' status and the outlook for 2026. He also inquired about M&A, focusing on opportunities for non-core asset sales within Diamondback's portfolio and clarifying the company's stance as a potential seller.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) described the macro outlook as murky, with a supply-side debate. He emphasized Diamondback's focus on producing more oil with less cost, generating 15% more free cash per share despite a 14% oil price drop, positioning the company as a long-term winner. He credited Jere Thompson and the team for selling $1.5 billion in non-EMP assets at higher multiples, improving the balance sheet, and stated that most non-core sales are exhausted. He reiterated Diamondback's privileged position with a coveted asset base, earned acre by acre.

Neil Mehta asked for Kaes Van't Hof's perspective on the current macro environment, specifically the 'yellow light' scenario, and then inquired about M&A, focusing on opportunities for non-core asset sales and Diamondback's overall position in the industry.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) described the macro outlook as murky, with the debate shifting to the supply side. He emphasized the company's focus on operational efficiency, generating 15% more free cash per share despite a 14% drop in oil prices, and positioning Diamondback as a long-term winner. Regarding M&A, Kaes Van't Hof credited Jere Thompson and the team for selling $1.5 billion in non-core assets at higher multiples, improving the balance sheet. He stated that Diamondback has largely exhausted non-core sales and holds a 'coveted asset base in North America,' taking pride in execution for long-term shareholder value.

Neil Mehta of Goldman Sachs requested an update on the company's 'stoplight' macro analogy and asked if the M&A framework still involves pausing at Diamondback while pursuing roll-ups via Viper Energy.

Answer

CEO Kaes Van't Hof confirmed the company is still in a 'yellow light' situation due to macro uncertainty, justifying a focus on debt and share count reduction in 2025. He reaffirmed that this is the base case, stating that Diamondback must be more selective with M&A given its high-quality inventory, while Viper Energy will continue to be the primary vehicle for consolidation.

Neil Mehta asked about the rationale behind reducing capital and activity in response to the challenging oil macro, and questioned why the 2025 production impact appeared minimal.

Answer

Travis Stice, Chairman and CEO, explained the decision was a strategic response to macro headwinds, including OPEC's actions, to maximize capital efficiency and flexibility. Kaes Van’t Hof, President, clarified that while the full-year production impact is muted, a significant peak-to-trough decline of approximately 20,000 net barrels of oil per day is expected in Q2, with volumes declining into Q3 before stabilizing.

Neil Mehta inquired about the company's M&A outlook following the Double Eagle acquisition, suggesting a potential pause, and asked how Diamondback plans to approach its share repurchase program, particularly in light of the large, concentrated shareholder from the Endeavor transaction.

Answer

Chairman and CEO Travis Stice confirmed that the Double Eagle deal was likely the last major opportunity in the core Midland Basin. President Kaes Van't Hof added that while not ruling out future deals, the focus is shifting to share repurchases, which are attractive at current valuations. He characterized the Stephens family as a long-term, patient shareholder supportive of the buyback and suggested the company has the balance sheet and cash flow to creatively manage potential sell-downs.

Neil Mehta asked for Diamondback's perspective on its cautious 2025 macro outlook and why its strategy differs from more growth-oriented peers. He also inquired about the shift in capital allocation strategy, particularly the renewed emphasis on share repurchases.

Answer

Chairman and CEO Travis Stice explained that the strategy is to remain flexible and prioritize shareholder returns over growth, especially with significant surplus capacity in the global market. President and CFO Kaes Van't Hof added that the focus is on per-share metrics. Regarding capital allocation, he noted the combined company's higher intrinsic value increases their tolerance for buybacks, while Travis Stice emphasized that a countercyclical repurchase strategy has proven to be the right approach in a commodity business.

Neil Mehta congratulated the team on new roles and asked Senior Vice President and COO Richard Jackson for his initial observations since stepping into the COO seat late last year. He specifically inquired about what Occidental is doing exceptionally well from an operations standpoint and where he sees room for improvement with fresh eyes. His follow-up question was directed to President and CEO Vicki Hollub, seeking her perspective on the 2026 oil macro, particularly the interplay between geopolitical volatility and underlying fundamentals, and whether the industry would respond to potentially higher near-term prices or remain focused on the less volatile back end of the curve.

Answer

Senior Vice President and COO Richard Jackson highlighted Occidental's outstanding resource base, improved over 10-15 years through organic efforts and focused strategy, citing Gulf of America waterfloods and EOR as exciting opportunities to reduce costs and lower decline. He praised the operational efficiency of the teams and expressed excitement about the momentum in technology, including digital and AI, exemplified by remote operation centers resolving 300 issues daily in the Rockies during a winter storm, improving safety and efficiency. President and CEO Vicki Hollub expressed caution about 2026, believing current prices driven by geopolitical events are not sustainable and that fundamentals don't yet support them. She anticipates a shift in fundamentals towards the end of 2026 and into 2027, driven by a worldwide industry reserve replacement ratio of less than 25%. Hollub emphasized that new discoveries like Guyana are insufficient for global supply, and that Occidental's unique CO2 enhanced oil recovery expertise is crucial for maximizing output from existing reservoirs and extending U.S. energy independence.

Neil Mehta asked for an update on the Stratos project, specifically regarding gating items and early thoughts on startup activities. He also questioned Occidental's return of capital strategy post-OxyChem sale, addressing legacy liabilities and the potential for opportunistic share repurchases before August 2029.

Answer

Ken Dillon, SVP and President, International Oil and Gas Operations, reported good progress on Stratos Phase 1 startup, including CPU commissioning and process compression, with CO2 injection expected in Q1. Vicki Hollub, President and CEO, and Sunil Mathew, SVP and CFO, confirmed debt repayment as a priority, followed by opportunistic share repurchases, while noting that OxyChem's legacy liabilities are minimal ($20 million annually) and not material to operations.

Neil Mehta inquired about the progress and gating items for Occidental's Stratos project ramp-up, seeking insights into early startup activities. He also asked about the company's return of capital strategy post-OxyChem sale, specifically how legacy liabilities would be addressed and if opportunistic share repurchases would occur before the August 2029 preferred redemption.

Answer

Ken Dillon (SVP and President, International Oil and Gas Operations) confirmed Stratos phase one startup is progressing well, with the central processing unit and process compression facilities commissioned, expecting KOH circulation this quarter and CO2 injection in Q1. Vicki Hollub (President and CEO) outlined the return of capital plan: first, $6.5 billion debt repayment, followed by opportunistic share repurchases based on value and market conditions, while maintaining $3 billion-$4 billion cash. She clarified that OxyChem's legacy liabilities are minimal, costing around $20 million annually and are not material. Sunil Mathew (SVP and CFO) reinforced the opportunistic approach to share repurchases, with an eye towards building cash for the August 2029 preferred redemption.

Neil Mehta inquired about the progress of digital applications like AI in the oilfield and its potential to drive volume. He also asked for Occidental's perspective on the U.S. oil production profile over the next five years.

Answer

President & CEO Vicki Hollub expressed excitement about internal AI initiatives, particularly for the complex Gulf of Mexico subsurface and operational efficiencies, believing they will yield significant results. She projected that U.S. oil production could peak between 2027-2030 and stressed the critical role of CO2 EOR in extending the nation's energy independence.

Neil Mehta of Goldman Sachs inquired about the Low-Carbon Ventures business, focusing on the derisking of the STRATOS project and the impact of policy changes on returns. He also asked for Vicki Hollub's latest perspective on the oil macro and U.S. supply trends.

Answer

CEO Vicki Hollub and Richard Jackson, President, U.S. Onshore, highlighted the strong voluntary market for carbon credits, R&D progress driving cost reductions for DAC technology, and the importance of partnerships in derisking projects. On the macro, Hollub stated that U.S. shale basins outside the Permian are plateauing or declining, and with current headwinds, the Permian's growth could slow, potentially causing the U.S. production peak to arrive sooner than the previously expected 2027-2030 timeframe.

Neil Mehta asked for the key drivers of the Midstream business guidance for 2025, noting the weaker Q1 outlook. He also inquired about the company's framework for a potential monetization of its Western Midstream Partners (WES) stake and the associated tax considerations.

Answer

Sunil Mathew, SVP and CFO, outlined the 2025 Midstream guidance, highlighting a $200 million benefit from lower crude transport costs, which is offset by narrower gas marketing differentials, the impact of selling WES units, and the STRATOS ramp-up. Regarding WES, Vicki Hollub, President and CEO, stated that any potential divestiture is continuously evaluated based on its value proposition, which would necessarily include the significant tax impact.

Neil Mehta of Goldman Sachs questioned if persistent industry-wide shale productivity has altered Occidental's long-term macro view. He also asked about the critical path for the STRATOS DAC project and the impact of the recent election on its economics.

Answer

President and CEO Vicki Hollub responded that while Permian productivity will continue, she expects a U.S. production plateau in 3-5 years as declines in other basins offset Permian growth. Ken Dillon, SVP and President of International Operations, detailed that STRATOS construction is progressing well, with Phase 1 nearly 90% complete. Vicki Hollub added that she views the election outcome as positive for the industry and expects bipartisan support for initiatives like 45Q to continue, securing the project's funding and commercial viability.

Neil Mehta addressed Cenovus's growth towards a million barrels per day, raising concerns about egress from Canada, potential WCS volatility, and the impact of less WRB as a hedge. He also questioned whether a firmer commodity price environment would lead to accelerated growth or increased deleveraging/shareholder returns.

Answer

CEO Jon McKenzie emphasized egress and a strong balance sheet as core priorities. EVP Jeff Murray noted a significant shift, with only 40% of crude now sold in Alberta, down from 80% in 2018, and highlighted Trans Mountain's stability and 150,000 barrels per day of export under contract. McKenzie added that numerous smaller, more easily permitted egress projects are being actively evaluated. Regarding capital allocation, McKenzie stated a long-term, value-oriented approach, not reacting to daily commodity prices. CFO Kam Sandhar confirmed that growth spend is lower year-over-year, with the growth plan fully funded at a low $50 WTI price, and the company remains committed to a balanced approach of 50% deleveraging and 50% share repurchases until net debt reaches CAD 6 billion.

Neil Mehta asked about Cenovus's capital allocation strategy between return of capital and growth in a firmer commodity price environment.

Answer

CEO Jon McKenzie and CFO Kam Sandhar emphasized a value-oriented, long-term capital allocation approach, not reacting to daily commodity prices. They reiterated the framework: 50% of free cash flow for deleveraging and 50% for shareholder returns (buybacks) until net debt reaches CAD 6 billion. They noted that growth spend is down year-over-year, and the growth plan can be fully funded at low $50 WTI prices, indicating no knee-jerk reactions to higher oil prices to accelerate growth.

Neil Mehta asked for Cenovus's perspective on its M&A strategy and inquired about the key gating items and free cash flow impact of the West White Rose project as it enters the hookup and commissioning phase.

Answer

President & CEO Jon McKenzie reiterated that the company's M&A philosophy is unchanged and they see no holes in the portfolio. For West White Rose, he identified welding the topsides as the critical path item and highlighted the project's significant financial swing from an ~$800M annual capital investment to an ~$800M annual free cash flow generator at full production.

Neil Mehta asked for Cenovus's perspective on its M&A strategy and inquired about the key gating items for the West White Rose project's hookup and commissioning phase, as well as its expected free cash flow impact.

Answer

Jon McKenzie, Director, President & CEO, stated that the company's M&A view is unchanged, as they are satisfied with the current portfolio and see no strategic holes. For West White Rose, he highlighted that the project will shift from an ~$800 million annual investment to an ~$800 million annual free cash flow generator. The critical path is now welding the topsides to the CGS, with first oil expected in early Q2 2026.

Neil Mehta asked for an update on the progress, key upcoming milestones, and risk mitigation efforts for the West White Rose project as it approaches a critical phase.

Answer

CEO Jon McKenzie described the project as being at an 'inflection point,' providing a detailed timeline for the next several months. Key milestones include the imminent tow-out of the gravity structure, topsides load-out in late May/early June, and offshore installation in the summer. He expressed high confidence in the derisking process, targeting first oil in Q2 2026.

Neil Mehta questioned if Cenovus's medium-term view of the Mid-Continent refining market has changed and sought commitment on transitioning from the current heavy capital spending cycle to a 'free cash flow harvest' phase.

Answer

CEO Jon McKenzie affirmed that the long-term view of the Mid-Con as a preferred refining jurisdiction has not changed. He also stated that the current growth capital cycle was a unique opportunity and that spending will decline in late 2025, leading to higher free cash flow generation for shareholders as the portfolio of high-return projects is more muted going forward.

Neil Mehta from Goldman Sachs inquired about the key gating items for the West White Rose project and the factors behind the weaker performance in Canadian refining during the quarter.

Answer

Executive Jonathan McKenzie and Executive Keith Chiasson detailed the West White Rose project's progress, noting it's 80% complete with marine work as the next phase, targeting first oil in 2026. McKenzie explained the Canadian refining results were impacted by a major, one-time turnaround at the Lloydminster Upgrader, which occurs every four years, and associated expensed costs of about $220 million.

Neil Mehta asked about Devon Energy's progress on its $1 billion pre-tax business optimization target, key milestones for the first half of 2026, and which areas management is prioritizing.

Answer

President and CEO Clay Gaspar expressed excitement, confirming 85% of the $1 billion target achieved with clear line of sight to completion, emphasizing technology's role. SVP and CTO Trey Lowe added that over 100 work streams are active, with AI investments in production scaling up to lower long-term capital and improve LOE.

Neil Mehta asked about the progress of Devon's business optimization program relative to its $1 billion pre-tax target, inquiring about key milestones for the first half of 2026 and which specific areas management is most focused on.

Answer

Clay Gaspar, President and CEO, expressed excitement about achieving 85% of the target within a year, highlighting the organization's ability to unlock potential. Trey Lowe, SVP and CTO, added that over 100 work streams are being tracked, with significant progress in production optimization through AI-enabled artificial lift and advanced analytics, which are now scaling across the organization to lower capital and improve LOE.

Neil Mehta inquired about the current status of Devon Energy's business optimization program, specifically regarding the $1 billion target, and where the company stands in achieving this goal, including potential upside surprises. He also asked about the 2026 CapEx budget, the service environment, and the distinction between structural cost improvements and cyclical factors like inflation or deflation in product lines.

Answer

CEO Clay Gaspar expressed pride in the program's progress, noting 60% completion in a third of the time, driven by over 80 parallel workstreams, and emphasized the goal of embedding these gains into the company's culture. SVP and CTO Trey Lowe highlighted the impact of technology and AI in production, expecting over $10 million from one workstream in 2026. Regarding the 2026 CapEx budget, Clay Gaspar stated that the preliminary guide assumes flat inflation/deflation, preparing the company for a potentially oversupplied market.

Neil Mehta inquired about the current status and remaining opportunities within Devon Energy's $1 billion business optimization program, seeking insights into potential upside beyond initial targets. He also asked about the 2026 CapEx budget, specifically distinguishing between structural cost improvements and cyclical service environment factors like deflation or inflation across product lines.

Answer

CEO Clay Gaspar and SVP and CTO Trey Lowe highlighted that 60% of the $1 billion target has been achieved in a third of the time, driven by over 80 parallel workstreams, including new production ideas and scaled automation/AI for downtime. Clay Gaspar further clarified that the preliminary 2026 CapEx guide assumes flat service costs, with no inflation or deflation baked in, preparing the company for potential market challenges.

Neil Mehta of Goldman Sachs inquired about Devon's strategy to improve non-oil realizations, particularly for NGLs and natural gas, and asked for an update on the progress of the $1 billion business optimization plan.

Answer

EVP & CFO Jeff Ritenour explained the strategy to move gas away from Waha pricing to the Gulf Coast, noting less than 15% of their gas has direct Waha exposure. SVP & CTO Trey Lowe detailed progress on the optimization plan, highlighting that 40% of the target has been captured, driven by technology and AI in areas like production fault analysis. President & CEO Clay Gaspar emphasized the plan's credibility, clarifying that major items like the Matterhorn sale proceeds and recent tax benefits are incremental to the $1 billion target.

Neil Mehta of Goldman Sachs inquired about Devon's strategy to improve non-oil realizations, particularly for NGLs and natural gas, and asked for an update on the progress of the $1 billion business optimization plan.

Answer

EVP & CFO Jeff Ritenour explained the strategy to move gas away from Waha pricing, noting less than 15% of their gas has direct Waha exposure, and highlighted new long-term LNG and power generation agreements. SVP & CTO Trey Lowe and President & CEO Clay Gaspar discussed the business optimization plan, stating that 40% of the target has been achieved through technology and AI adoption. Gaspar emphasized that major items like the Matterhorn sale proceeds and tax benefits are incremental to this $1 billion goal.

Neil Mehta of Goldman Sachs inquired about Devon's strategy to improve non-oil realizations for NGLs and natural gas, and asked for an update on the $1 billion business optimization plan's progress versus expectations.

Answer

President & CEO Clay Gaspar and EVP & CFO Jeff Ritenour explained their strategy to move gas away from Waha pricing, highlighting new LNG and power generation agreements. SVP & CTO Trey Lowe and Clay Gaspar added that the optimization plan is 40% complete, driven by AI and analytics, and stressed that gains from the Matterhorn sale, Cottondraw acquisition, deflation, and tax benefits are all incremental to the $1 billion target to ensure program credibility.

Neil Mehta asked for a detailed breakdown of Devon's $1 billion business optimization plan, seeking more color on the various cost-saving buckets and management's confidence in achieving these targets, particularly the commercial opportunities.

Answer

President and CEO Clay Gaspar initiated the response, deferring to CFO Jeffrey Ritenour, who detailed the $300 million in commercial opportunities. Ritenour expressed high confidence, noting that renegotiated midstream contracts in the Delaware Basin are already executed and will significantly lower NGL fees starting in 2026. SVP, Asset Management John Raines then elaborated on the $250 million in production optimization, citing initiatives like condition-based maintenance and AI-driven smart gas lift calibration to reduce downtime and flatten declines.

Neil Mehta from Goldman Sachs Group, Inc. questioned if new CEO Clay Gaspar's strategy prioritizes organic growth and share buybacks over M&A. He also sought further detail on the value uplift from the Eagle Ford partnership dissolution with BPX.

Answer

COO Clay Gaspar confirmed a primary focus on internal value creation through operational improvements and technology, stating the goal is to 'make Devon a heck of a lot better Devon' while remaining open to the right M&A. For the Eagle Ford, he reiterated that the main value driver is over $2 million in D&C savings per well, supplemented by gaining control over development pace.

Neil Mehta asked about Devon's M&A strategy, questioning whether the company favors large transformational deals or a series of bolt-on acquisitions like Grayson Mill. He also inquired about the company's strategy for maximizing Permian natural gas realizations, the impact of the Matterhorn pipeline on Waha pricing, and the risk of gas oversupply shifting to the Gulf Coast.

Answer

President and CEO Richard Muncrief described the M&A approach as a consistent "combo path" that includes both organic inventory growth and inorganic deals of various sizes. Chief Financial Officer Jeff Ritenour addressed the gas question, noting that with Matterhorn online, about 90% of Devon's Permian gas flows to the Gulf Coast. He added that the company has proactively secured capacity to the Louisiana LNG hub to mitigate potential pricing pressure at the Katy hub.

Neil Mehta asked for quantification of the uplift from Winter Storm Fern and lessons learned to ensure EQT's marketing team continues to capitalize on volatility. He also inquired about the U.S. gas macro outlook, specifically production surprises and the M2 basis profile.

Answer

EQT President and CEO Toby Rice highlighted that EQT's operational uptime during Winter Storm Fern was 97.2%, outperforming Appalachian peers by two times, and emphasized leveraging volatility. CFO Jeremy Knop detailed tactical trades during the storm, including selling MVP capacity at $130/MMBtu, and noted a strategic shift to less hedging for local sales due to an improving M2 basis outlook.

Neil Mehta asked for quantification of the uplift from Winter Storm Fern, lessons learned for EQT's marketing team, and how the company plans to leverage volatility going forward. He also inquired about the impact of recent production surprises on the U.S. gas outlook and the M2 basis profile.

Answer

President and CEO Toby Rice highlighted EQT's operational uptime of 97.2% during Winter Storm Fern, outperforming Appalachian peers by two times, and emphasized leveraging volatility through their world-class commercial team. CFO Jeremy Knop detailed how the commodities team focuses on minimizing imbalances and arbitrage capture, citing examples like selling gas at $130/MMBtu during peak demand. Regarding the macro, Toby Rice reiterated EQT's view of U.S. supply exiting 2026 closer to 114-115 Bcf/day and noted the strengthening narrative around energy affordability. Jeremy Knop mentioned intentionally hedging less local sales (35% vs. historical 90%) due to a thematic view of basis improvement.

Neil Mehta asked about EQT's Q4 outlook, specifically the mechanism for strategic curtailments, timing for bringing supply back online, and Q3 CapEx. He also inquired about EQT's hedging strategy for 2027, given views on potential LNG oversupply and the rallied 2027 curve.

Answer

Jeremy Knop (CFO, EQT) explained that curtailments are tactical, responding to market pricing to optimize realizations, and Q4 CapEx includes some lumpiness with allocated dollars for project completion. He stated that EQT's hedging approach is opportunistic and tactical, with no specific 2027 plan yet, and remains bullish in the near term, relying on physical molecule optimization.

Neil Mehta inquired about EQT's Q4 outlook, specifically the triggers for strategic curtailments and CapEx, and whether the company plans to be more aggressive in hedging 2027 given the rallied curve.

Answer

Jeremy Knop, CFO, explained that curtailments are tactical responses to market pricing, driving improved realizations, and noted Q4 CapEx lumpiness with conservative budgeting. On hedging 2027, he stated all options are open, but EQT remains opportunistic and tactical, focusing on optimizing physical molecule sales and leveraging volatility rather than a specific hedging plan.

Neil Mehta from Goldman Sachs questioned the pricing strategy for the new data center deals, particularly the decision to link them to local Appalachian pricing (M2+) instead of Henry Hub. He also asked for EQT's perspective on the near-term macro environment, given the surprising strength in U.S. gas production.

Answer

CFO Jeremy Knop explained that local pricing provides a liquid anchor for customers to hedge while positioning EQT to benefit from an expected tightening of the Appalachian basis. On the macro outlook, Mr. Knop acknowledged being surprised by high production levels, attributing the increase primarily to Haynesville producers unsustainably "chasing price signals." He contrasted this with EQT's disciplined, contract-backed growth strategy, which ensures resilience even at lower gas prices.

Neil Mehta asked for EQT's perspective on the marginal cost curve for natural gas, specifically the breakeven price required to incentivize Haynesville production. He also inquired about the production trajectory for Appalachia, questioning if the strong start to the year was a pull-forward and what the outlook is for the remainder of the year.

Answer

CFO Jeremy Knop estimated the Haynesville breakeven is in the mid-$4s, suggesting current strip pricing is insufficient to spur the necessary activity for 2026 demand. He characterized the recent Appalachian production surge as a pull-forward in response to winter pricing, not a sustained increase. Knop anticipates regional production will be relatively flat for the next two quarters, reinforcing a constructive outlook for gas prices, especially if Permian growth also slows.

Neil Mehta of Goldman Sachs inquired about EQT's strategy to reduce net debt to its $5 billion target and how this plan connects with its decision to leave 2026 largely unhedged. He also asked for perspective on the long-term gas price outlook.

Answer

CFO Jeremy Knop stated that future debt reduction will be funded by organic free cash flow. He explained that the company will remain patient with its hedging strategy, anticipating a potential '5 handle' on 2026 gas prices. Regarding the long-term outlook, Knop acknowledged medium-term headwinds post-2026 from new Permian and Qatar supply but sees the next two years as bullish, viewing fears around geopolitical impacts on gas prices as overblown.

Neil Mehta requested a real-time assessment of the AI and data center demand theme for natural gas, including its specific impact in the Marcellus. He also asked how competition from renewables and potential nuclear restarts factors into the total addressable market for gas-fired power generation.

Answer

CEO Toby Rice stated that the theme is real, evidenced by 50-90% year-over-year order increases for natural gas turbines at major manufacturers like Mitsubishi and GE. He characterized the potential 3 gigawatts from nuclear restarts as a 'drop in the bucket' compared to the 70-80 gigawatts of new baseload power needed, positioning natural gas as the primary, reliable solution to fill the gap.

Neil Mehta from Goldman Sachs inquired about the characteristics Expand Energy is seeking in its next CEO, including a broader view of energy and customer proximity, and the expected timeline for the CEO search. He also asked for quantification of the potential cash flow or realization uplift from optimizing the commercial side of the business, specifically referencing the Winter Storm Fern event as a case study for improved marketing efforts.

Answer

Mike Wichterich, Chairman of the Board and Interim President and CEO, stated the company seeks a leader with a "bigger view of energy" who thinks about the entire value chain and customer proximity in the U.S. and Europe, estimating the search could take six to nine months. He committed to staying until the right person is found. Wichterich quantified the potential uplift at $0.20 per Mcf, translating to approximately $500 million in EBITDA, achievable through premium markets, volatility management (storage), and facilitating new demand (LCM deals) over 3-5 years. Josh Viets, EVP and COO, added that operations held up well in Appalachia during Winter Storm Fern, but the Haynesville faced challenges due to ice, emphasizing the need for the entire value chain, including operations and marketing, to work in tandem.

Neil Mehta asked about the characteristics Expand Energy is seeking in its next CEO, the expected timeline for the search, and the quantification of potential cash flow uplift from optimizing the commercial side of the business, including insights from Winter Storm Fern.

Answer

Mike Wichterich, Chairman of the Board and Interim President and CEO of Expand Energy, outlined the search for an 'energy person' with a 'bigger view of energy' who looks beyond the wellhead and closer to customers globally, estimating the search could take 6-9 months. He also quantified the marketing uplift goal at $0.20 improved realization, equating to approximately $500 million in EBITDA, driven by premium markets, storage, and long-term LCM deals. Josh Viets, EVP and COO, added that operations held up well in Appalachia during Winter Storm Fern but faced challenges in Haynesville due to ice.

Neil Mehta asked if Expand Energy's 2026 capital expenditure is expected to be relatively flat compared to 2025, and what the key moving pieces are for the soft guide. He also inquired about the company's 'Hedge the Wedge' program, specifically how they plan to execute it given the forward curve for 2026 and 2027, and if the rolling eight-quarter framework remains in place.

Answer

CEO Nick Dell'Osso confirmed that the 2026 CapEx profile is expected to be similar to 2025, with market conditions being the primary variable, emphasizing the company's flexibility. VP and Treasurer Brittany Rayford stated that Expand Energy will maintain its disciplined 'Hedge the Wedge' approach, layering on positions over a rolling eight-quarter period for downside protection and upside participation. She cited $165 million in cash inflows from hedges in Q2/Q3 2025 as evidence of the strategy's effectiveness.

Neil Mehta requested a breakdown of the incremental $100 million in merger synergies and asked about the company's hedging strategy, particularly how it adapts to the recent decline in the 2026 price curve.

Answer

Executive VP & COO Josh Viets detailed that half the synergy uplift is from D&C (faster drilling, sand mine efficiencies) and half is from G&A (IT cost rationalization). EVP & CFO Mohit Singh explained the hedging program is disciplined but opportunistic, using volatility to add costless collars. He noted that while the 2026 curve has fallen, prices near $4 are still healthy and well above the company's breakevens.

Neil Mehta from Goldman Sachs requested a breakdown of the additional $100 million in merger synergies. He also asked about the company's hedging strategy, particularly how it adapts to the recent decline in the 2026 natural gas price curve.

Answer

Executive VP & COO Josh Viets explained the synergy increase is split between D&C activities in the Haynesville and G&A savings. EVP & CFO Mohit Singh described the hedging strategy as disciplined but opportunistic, using costless collars to protect downside above breakeven while retaining upside, noting the 2026 curve still represents healthy prices.

Neil Mehta requested a breakdown of the incremental $100 million in merger synergies and asked about the company's hedging strategy given the recent decline in the 2026 natural gas price curve.

Answer

Executive VP & COO Josh Viets detailed that synergies were split between D&C efficiencies in the Haynesville (faster drilling, sand mine ramp) and G&A savings (IT, software). CFO Mohit Singh explained their hedging is programmatic yet opportunistic, noting they added fewer hedges in Q2. He affirmed they remain constructive on 2026, viewing the curve near $4 as healthy and supported by durable LNG demand.

Neil Mehta asked about the management change and audit, seeking more color due to market confusion, and inquired if there was any relationship between these two items. He also asked for color on the path of converting small refinery exemptions (SREs) to cash and the 2026 outlook for SREs.

Answer

Franklin Myers, Interim CEO, stated that the company had no further comment on the management change or audit, viewing the current situation as a buying opportunity, and would provide updates as available. He emphasized comfort with the financial statements released. Atanas Atanasov, CFO, noted the company's intent to continue participating in the SRE program, appreciating the EPA's formulaic approach, but could not comment on future benefits, highlighting significant benefits received in the current quarter and year.

Neil Mehta asked for more color on the management change and the audit committee's review of disclosure processes, inquiring if there was any relationship between these two items. He also asked about the path to converting small refinery exemptions (SREs) to cash and the 2026 outlook for SREs.

Answer

Franklin Myers (Interim CEO, HF Sinclair) stated that the company had no further comment on the management change or audit review at this time, viewing the situation as a buying opportunity and promising updates when available. Atanas Atanasov (CFO, HF Sinclair) confirmed the company's intent to continue participating in the SRE program, appreciating the EPA's formulaic approach, and noted significant EBITDA and cash benefits from SREs in the quarter and year, but declined to comment on future benefits.

Neil Mehta inquired about the reasons for the lower Q4 crude charge guidance (550-590k bbl/day) and any conservatism. He also asked for early thoughts on 2026 turnarounds and HF Sinclair's go-forward strategy for return of capital, specifically regarding the 50%+ net income target.

Answer

Steve Ledbetter, EVP of Commercial, attributed the Q4 guidance to the planned Puget Sound turnaround and pushing small maintenance into a lower margin environment. Valerie Pompa, EVP of Operations, anticipated lower costs and fewer turnarounds for 2026 as they are past the peak. Atanas Atanasov, CFO, stated the 50% payout ratio is a minimum, with shareholder return remaining a priority for any excess cash flow. Tim Go, CEO, added that inorganic and organic growth opportunities are evaluated against returning cash, highlighting a strong historical track record of cash returns.

Neil Mehta of Goldman Sachs asked for an updated perspective on the M&A landscape for refining assets and the company's appetite for deals. He also followed up on the capital return program, asking if the recent pace of buybacks is sustainable given the stock price and balance sheet strength.

Answer

CEO Timothy Go stated that while the company doesn't comment on market rumors, the bid-ask spread for refining M&A remains very wide, making deals difficult. He indicated that better bolt-on opportunities exist in the Marketing and Lubricants businesses. CFO Atanas Atanasov reiterated that the company is not looking to 'hoard cash' and will continue to prioritize shareholder returns. Go added that the company has repurchased 98% of the shares issued for the Sinclair acquisition, underscoring this commitment.

Neil Mehta asked for management's perspective on capital returns, particularly the timeline for resuming significant share buybacks given the challenging margin environment. He also inquired about the state of the Mid-Continent refining market and whether its weakness was seasonal or more structural.

Answer

CFO Atanas Atanasov and CEO Timothy Go reiterated their commitment to a 50% payout ratio, highlighting that strong cash flow from their non-refining businesses is sufficient to cover the dividend, which provides a foundation for buybacks as refining margins improve. EVP, Commercial Steven Ledbetter characterized the Mid-Con market weakness as largely seasonal and expressed a constructive outlook for margins heading into the driving season.

Neil Mehta sought clarity on the capital spending outlook for 2025, asking if the 2024 level of approximately $875 million is a reasonable run rate. He also asked about the strategic priorities for the midstream business and whether it is viewed primarily as a cash flow engine or a vehicle for growth.

Answer

CFO Atanas Atanasov and CEO Timothy Go indicated that the 2024 capital spending level is a 'reasonable assumption' for the next couple of years, with official guidance to be provided in December. Regarding midstream, EVP of Commercial Steven Ledbetter and CEO Timothy Go described it as a growth engine with untapped organic potential. They highlighted record pipeline volumes and a higher EBITDA run rate, driven by higher tariffs, increased volumes, and optimization efforts, with a focus on organic growth before considering bolt-on acquisitions.

Neil Mehta asked about Phillips 66's management of turnarounds, particularly in light of beating the 2025 guide and strong Q1 2026 utilization, and then inquired about the capacity for stock buybacks within the company's 8-2-2-2 cash flow framework, aiming for a 30% net debt target.

Answer

Rich Harbison, EVP of Refining, clarified that the 2026 turnaround guidance includes 100% WRB assets, indicating a relatively light turnaround cycle focused on the Central Corridor and Gulf Coast, with no material change to the $0.75/barrel annual impact guidance. Kevin Mitchell, CFO, explained the cash flow framework, noting that with an $8 billion operating cash flow, nearly $4 billion is available for debt reduction and buybacks, split approximately equally, with an expectation to reduce debt by about $1.5 billion per year for the next two years.

Neil Mehta inquired about Phillips 66's turnaround management in refining, specifically how the company is achieving better-than-peer Q1 2026 utilization rates and its strategy for best-in-class turnaround execution, building on the 2025 performance.

Answer

Rich Harbison, EVP of Refining, clarified that the 2026 turnaround guidance includes 100% WRB assets, explaining the slight uptick in total costs. He noted a relatively light turnaround cycle for 2026, primarily in the Central Corridor and Gulf Coast, with no material change to the $0.75/barrel annual impact guidance. Kevin Mitchell, CFO, elaborated on the '8-2-2-2' cash flow framework, indicating approximately $4 billion available for debt reduction and buybacks from an $8 billion operating cash flow, split roughly equally, with an expectation to reduce debt by about $1.5 billion per year for the next two years, excluding asset dispositions.

Neil Mehta asked for a bridge to the $4.5 billion Midstream EBITDA target by year-end 2027, given the annualized Q3 run rate near $4 billion, and the sensitivity of this target to oil prices. He also followed up on the visibility and drivers behind the large volume of crude in transit on water, questioning if sanctions on Iran, Venezuela, and Russia contribute to this phenomenon.

Answer

Chairman and CEO Mark Lashier highlighted the track record of growing the midstream business and noted the next $500 million increment is largely organic, facilitated by non-core asset dispositions. Midstream and Chemicals executive Don Baldridge detailed organic growth drivers, including Permian plant expansions (Dos Picos II, Iron Mesa), Coastal Bend pipeline expansion, and Powder River pipeline restart, emphasizing that these are fee-based margins with limited commodity price sensitivity. Marketing and Commercial executive Brian Mandell acknowledged the large crude build on water, suggesting it could be Russian or other barrels, potentially pressuring Saudi OSPs and benchmark crudes, but noted the uncertainty of its origin and destination.

Neil Mehta asked for a bridge to the $4.5 billion Midstream EBITDA target by year-end 2027, its sensitivity to oil prices, and the company's perspective on the large volume of crude in transit globally.

Answer

Mark Lashier, Chairman and CEO, highlighted the track record of growing the midstream business and the focus on disciplined, accretive organic and inorganic growth. Don Baldridge, EVP of Midstream and Chemicals, detailed specific organic growth projects like the Dos Picos II and Iron Mesa gas plants, emphasizing their fee-based margins and limited commodity price sensitivity. Brian Mandell, EVP of Marketing and Commercial, acknowledged the large crude build on water, noting uncertainty about its origin and potential impact on OSPs and benchmark crudes.

Neil Mehta of Goldman Sachs asked for the company's outlook on global refining balances, considering net capacity additions and China's export discipline. He also questioned the dynamics of the $1.1 billion working capital outflow and its potential reversal.

Answer

EVP of Marketing & Commercial Brian Mandell stated that net refinery additions are expected to be low through the decade, supporting a strong margin environment, as new Asian capacity is largely petchem-focused with low clean product yields. EVP & CFO Kevin Mitchell explained the working capital use was primarily from higher accounts receivable due to increased sales post-turnarounds and expects a reversal in Q4, aided by inventory reductions and proceeds from asset sales, which will help reduce debt.

Neil Mehta sought clarification on the tax implications of a Midstream monetization, asking if significant tax leakage would apply to a spin-off and requesting quantification. He also asked about the outlook for the refining market and WCS crude differentials.

Answer

Kevin Mitchell, CFO, clarified that a spin-off could be structured as tax-free, but a direct sale of the Midstream business would incur a significant tax liability. He quantified this by stating a hypothetical $50 billion valuation could trigger a $10 billion tax payment due to the low tax basis of the assets. Brian Mandell, EVP of Marketing and Commercial, provided a detailed market outlook, noting firming U.S. margins, tightening gasoline inventories, and low distillate stocks. He expects Canadian heavy crude differentials to widen later in the year.

Neil Mehta inquired about the strategic evolution of Phillips 66's Midstream business, questioning whether growth would be pursued organically or through M&A and asking for parameters on its potential growth rate. He also asked about the optimal capital structure as Midstream becomes a larger part of the business, specifically questioning the rationale behind the new leverage target.

Answer

CEO Mark Lashier and Don Baldridge (Midstream and Chemicals) explained that growth will be a mix of organic and inorganic strategies, leveraging the wellhead-to-market platform. Baldridge noted a target of mid-single-digit organic growth annually, emphasizing that the growth plan is not dependent on future M&A. CFO Kevin Mitchell addressed the capital structure, stating that the company views the balance sheet on a sum-of-the-parts basis, with the stable Midstream and Marketing & Specialties (M&S) segments supporting a leverage target of less than 3x their combined EBITDA.

Neil Mehta of Goldman Sachs questioned the future pace of capital returns in a softer market and the outlook for the strong-performing Chemicals and Marketing segments.

Answer

CFO Kevin Mitchell confirmed a plan to return 50% or more of operating cash flow to shareholders after the current target is met. Chairman and CEO Mark Lashier noted Chemicals' strength from advantaged feedstock and expects continued improvement. Brian Mandell of Marketing and Commercial attributed Q3's strength to seasonal factors and falling prices, anticipating a typical pullback in Q4.

Neil Mehta sought Suncor's perspective on the Canadian refining market, specifically the sustainability of the Canadian refining premium relative to the U.S., and factors contributing to strong margin capture. He also asked if Suncor has earned the license to pursue M&A, considering its successful organic business transformation.

Answer

Rich Kruger (CEO) attributed Canada's refining profitability to import parity pricing, locally advantaged crude, and improved operational execution. Dave Oldreive (EVP of Downstream) noted record crude throughput translated into record gasoline, diesel, and jet fuel production, optimizing yields and sales channels. Rich Kruger (CEO) stated Suncor's goal is shareholder value creation and believes the company has earned trust for any future actions, organic or inorganic.

Neil Mehta sought Suncor's perspective on the Canadian refining market, specifically the sustainability of the margin premium relative to the U.S. He also asked if Suncor has earned the 'license to do M&A' given its successful organic business fix and improved multiple, or if the future strategy remains organic growth.

Answer

CEO Rich Kruger attributed Canada's refining profitability to structural advantages like import parity pricing and advantaged crude, amplified by Suncor's improved operations and integrated nature. EVP of Downstream Dave Oldreive added that Suncor's 'value and volume' philosophy led to record throughput and production of high-value products (gasoline, diesel, jet fuel), optimizing sales channels. On M&A, Rich Kruger stated Suncor's goal is per-share value creation, believing they've earned trust through delivering on commitments, and any actions, organic or inorganic, would be in shareholders' best interest.

Neil Mehta of Goldman Sachs questioned the potential for Suncor's full-year upstream production to surpass its guidance range and asked if the revised, lower capital expenditure forecast represents a new structural norm for the company.

Answer

President and CEO Rich Kruger confirmed that all indicators point to the high end of, or potentially above, the production guidance, crediting the organization's ability to reduce seasonal variation and exceed expectations. He also affirmed that the lower CapEx is structural, reflecting a new norm of frugal and thoughtful capital management designed to ensure reliable dividend growth and shareholder returns.

Neil Mehta from Goldman Sachs asked about Suncor's capital flexibility in a volatile macro environment and whether to expect a downward trend in capital spending as the company approaches 2026.

Answer

CEO Richard Kruger emphasized that Suncor is 'rebuilt for this' environment with a low WTI breakeven, allowing it to execute long-term plans without sudden changes. He noted flexibility comes from being judicious with economic spending and the natural tail-off of major projects. Kruger confirmed a downward bias for capital spending into 2026, consistent with the plan outlined at the 2024 Investor Day, which targeted a reduction driven by improved sustaining capital efficiency and the cadence of economic projects.

Neil Mehta of Goldman Sachs questioned the timeline for reaching the $8 billion net debt target, asking if it could be accelerated from mid-next year. He also inquired if asset sales or working capital management were potential levers to pull this timeline forward.

Answer

President & CEO Rich Kruger expressed high confidence in accelerating the debt reduction timeline, citing operational performance that is exceeding the plan laid out at the Investor Day. He confirmed that the company continues to evaluate its portfolio for non-core asset sales. CFO Kris Smith added that working capital is another key lever being actively managed to improve cash flow.

Neil Mehta asked for an update on Syncrude's performance journey, key focus areas, and thoughts on realizations in the current strong distillate market. He also inquired about Imperial Oil's ongoing efforts to drive efficiency and reduce costs, specifically organizational changes like the campus sale and staff relocation, and their contribution to cost goals.

Answer

John Whelan, Chairman, President and CEO of Imperial Oil, expressed satisfaction with Syncrude's performance improvement, attributing it to Imperial's contributions and the operator's efforts. Scott Maloney, Vice President of Downstream, reiterated that global supply-demand imbalances boosted distillate margins, and Imperial's refinery flexibility allows optimizing output. Mr. Whelan detailed the September restructuring, involving a 20% staff reduction and outsourcing to global capability centers, projected to yield CAD 150 million in annual savings by 2028, enhancing efficiency and technology application.

Neil Mehta asked for Imperial Oil's perspective on Syncrude's journey and performance, including focus areas with partners and realizations in the current distillate market, and also inquired about the company's efforts to drive efficiency and reduce costs through organizational changes like the campus sale and staff relocation.

Answer

Chairman, President and CEO John Whelan expressed satisfaction with Syncrude's performance improvement, attributing it to Imperial's contributions and the operator's efforts. Vice President of Downstream Scott Maloney noted that global supply-demand imbalances are pushing distillate margins, and Imperial's ability to tune refineries and leverage the Strathcona Renewable Diesel facility supports its distillate plans. Mr. Whelan further explained the September restructuring, which includes a 20% staff reduction and relocation, aiming for CAD 150 million in annual savings from efficiency capture and outsourcing to global capability centers, enhancing effectiveness through technology application.

Neil Mehta of Goldman Sachs asked about Imperial's progress toward its upstream cash cost targets of $18/bbl at Kearl and $13/bbl at Cold Lake. He also sought clarity on the potential production upside at Kearl beyond the guided 300,000+ barrels per day.

Answer

SVP of the Upstream Cheryl Gomez-Smith explained that cost reduction at Kearl is driven by leveraging scale and reliability, while at Cold Lake it comes from adding lower-cost barrels from projects like Grand Rapids. CEO Bradley Corson added that it's too early to quantify Kearl's ultimate potential beyond 300,000 bpd, as the focus is on capital-efficient growth and improving operational consistency to string together more high-production days.

Neil Mehta asked about the expected timing of share repurchases under the NCIB and a potential SIB, and questioned how the Pathways Alliance project can avoid the cost overruns seen in other major Canadian projects.

Answer

Dan Lyons, SVP of Finance and Administration, confirmed the NCIB renewal is planned for late June and stated that the pace of buybacks, including any potential SIB, is dependent on the commodity price environment and resulting cash flow. Bradley Corson, Chairman, President and CEO, addressed the Pathways project, expressing confidence that the collective experience of the six member companies, combined with a staged, orderly execution plan and proactive regulatory engagement, will mitigate the risk of cost overruns. He stressed the importance of a year-end pipe order to meet the 2030 timeline.

Neil Mehta inquired about the conditions of Chevron's assets in Venezuela, the extent of the resource potential, its potential scale within Chevron's portfolio, and details on the self-funding model for operations.

Answer

Chairman and CEO Mike Wirth confirmed uninterrupted operations in Venezuela, with production growing over 200,000 barrels per day since 2022 to around 250,000 barrels per day gross. He highlighted potential for an incremental 50% production growth over 18-24 months, funded entirely through venture cash, and emphasized the large resource potential while noting the need for stability and competitive fiscal terms for future expansion.

Neil Mehta inquired about Chevron's Venezuela operations, specifically the condition of assets, the resource running room, the potential scale within Chevron's portfolio, and details on the self-funding model.

Answer

Chairman and CEO Mike Wirth confirmed uninterrupted operations in Venezuela, highlighting that gross production has grown by over 200,000 barrels per day since 2022 to around 250,000 barrels per day. He noted potential for an incremental 50% production growth over 18-24 months, funded entirely through venture cash, and emphasized the large resource potential while stressing the need for stability, fiscal regime confidence, and regulatory predictability for future expansion.

Neil Mehta asked for initial observations on the Bakken asset acquired from Hess, including adjustments to the activity plan, its core status within Chevron's portfolio, and its competitiveness for capital within the broader Rockies corridor.

Answer

Chairman and CEO Mike Wirth expressed enthusiasm for the Bakken position, noting Hess's plan to maintain a 200,000 barrels of oil equivalent per day plateau. He identified opportunities for efficiency gains through drilling cycle time improvements and longer laterals, aiming to optimize capital and operating efficiency. He stated that Chevron is in no hurry to determine the asset's long-term role, emphasizing a thorough assessment of its competitiveness for capital, including its midstream components.

Neil Mehta asked for initial observations on the Bakken asset, specifically whether it is considered core to Chevron's portfolio, if it fits into a broader Rockies corridor, and its ability to compete for capital.

Answer

Chairman and CEO Mike Wirth expressed excitement about adding the Bakken position, noting Hess's plan to grow it to 200,000 barrels of oil equivalent per day. He highlighted opportunities for efficiency gains from drilling cycle time improvements and longer laterals, similar to the Permian. Wirth stated there's no hurry to decide its longer-term role, as they want to apply best practices and assess its competitiveness for capital, including the midstream component.

Neil Mehta from Goldman Sachs asked for an assessment of the confidence level in the updated $12.5 billion free cash flow waterfall, seeking details on the derisking of the standalone $10 billion and the key assumptions behind the incremental $2.5 billion from the Hess acquisition.

Answer

Chairman & CEO Michael Wirth expressed high confidence. VP & CFO Eimear Bonner detailed that the $10 billion is largely derisked, with TCO and Permian projects ramped up and cost reductions on track. The incremental $2.5 billion is driven by $1 billion in synergies and production growth from new FPSOs in Guyana.

Neil Mehta inquired about the Tengiz (TCO) project in Kazakhstan, seeking updates on its startup performance, discussions around the concession extension, and the outlook for production levels and potential curtailments.

Answer

CEO Mike Wirth reported a 'world-class' startup for the Future Growth Project, achieving nameplate capacity in under 30 days. He confirmed positive discussions with Kazakhstan's President regarding a concession extension beyond 2033, noting a mutual intent to negotiate. Wirth conveyed a positive outlook, emphasizing the project's value to the country.

Neil Mehta sought to understand Chevron's new power generation venture, questioning how the company plans to de-risk its entry into a historically challenging business while adhering to its core competencies.

Answer

CEO Mike Wirth clarified the strategy leverages existing strengths, as Chevron already operates nearly 5 gigawatts of power. He emphasized it is not a merchant power play but a targeted, 'behind-the-meter' offering for high-demand customers like data centers, which integrates with Chevron's large U.S. natural gas position.

Neil Mehta from Goldman Sachs asked for more detail on the strong Permian performance, its sustainability, and the path to reaching plateau production.

Answer

CEO Mike Wirth attributed the strong quarter to top-quartile new well performance in the Delaware Basin, improved base business reliability, and efficiency gains. He noted that 2024 will likely be the peak for Permian CapEx, with a future focus on maximizing free cash flow as production approaches a plateau near 1 million barrels per day.

Neil Mehta inquired about ExxonMobil's Permian production, specifically the fourth quarter 2025 exit rate versus the annual guide, potential upside, and the impact of lightweight proppant deployment.

Answer

CEO Darren Woods cautioned against extrapolating quarterly results to annual figures, emphasizing expected significant annual improvement in Permian production. He highlighted enthusiasm for lightweight proppant and other technologies, which are being deployed to maximize ultimate recovery beyond 2030. CFO Kathryn Mikells added that an annual increase of approximately 200,000 oil equivalent barrels per day is expected year-over-year in the Permian, with lightweight proppant deployment increasing to 50% of new wells by the end of next year.

Neil Mehta inquired about the Permian production guide for 2026, potential upside to volume cadence, and the impact of lightweight proppant deployment on future production numbers.

Answer

CEO Darren Woods cautioned against extrapolating quarterly results to annual figures but affirmed confidence in the Permian development plan and communicated volumes. He expressed optimism about lightweight proppant and other technologies, expecting them to deliver promising results beyond 2030. CFO Kathryn Mikells added that annual Permian production is expected to be up by 200,000 kboe/d year-over-year, with lightweight proppant deployment reaching 50% of new wells by the end of 2026.

Neil Mehta inquired about ExxonMobil's capital expenditure, specifically why it is expected to be below the guided range for the year. He asked if this was due to deflation capture, deferred investment in low-carbon solutions, or other drivers.

Answer

Darren Woods, Chairman and Chief Executive Officer, explained that the capital spend is being paced in line with the slower development of markets for new ventures, particularly in the low-carbon solutions portfolio. Kathryn Mikells, Senior Vice President and Chief Financial Officer, added that the guidance excludes recent M&A transactions totaling $2.4 billion.

Neil Mehta asked about ExxonMobil's capital spend, specifically the indication of being below the guided range for the year, and inquired about the drivers behind this, such as deflation, deferring low-carbon solutions investments, or other factors.

Answer

Darren Woods, Chairman and CEO, explained that the capital spend is being paced in line with market development for new ventures, particularly low-carbon solutions, as markets are not developing as fast as planned. He also noted the inherent variability in project execution schedules and good capital productivity in the Permian. Kathryn Mikells, Senior Vice President and CFO, clarified that the guidance excludes recent M&A transactions totaling $2.4 billion.

Neil Mehta from Goldman Sachs asked about ExxonMobil's Permian production outlook, questioning if its technology gives it a different view on 'peak Permian' and if the basin is a logical area for further consolidation.

Answer

Chairman and CEO Darren Woods affirmed a differentiated view, citing the company's goal to double recovery rates through technologies like its patented lightweight proppant, which is already improving recoveries by up to 20%. He stated these unique capabilities create significant 'one plus one equals three' M&A opportunities, making the Permian an attractive area for potential value-accretive consolidation.

Neil Mehta of Goldman Sachs asked how M&A fits into ExxonMobil's strategy to capitalize on a low-cost environment and whether the company sees any gaps in its portfolio.

Answer

Chairman and CEO Darren Woods reiterated the company's M&A philosophy that any deal must create significant value ('1+1=3') by leveraging ExxonMobil's unique advantages. He acknowledged that a low-price environment could present more opportunities as weaker companies struggle, but stated that ExxonMobil does not need acquisitions to meet its growth targets. The company remains vigilant for value-accretive opportunities.

Neil Mehta inquired about the key project milestones for ExxonMobil's Guyana assets in 2025 and the long-term production capacity outlook for the region.

Answer

CEO Darren Woods stated that 2025 projects are tracking well, with many likely to start up ahead of schedule. He highlighted the Yellowtail project in Guyana, suggesting it will likely come online earlier than the public 3Q 2025 target. Regarding long-term capacity, Woods noted that while projections are challenging due to variables like reservoir depletion and infill drilling, he is confident the team will ultimately outperform the current conservative forecasts.

Neil Mehta inquired about the key 2025 project milestones for the Guyana asset, its performance relative to expectations, and the long-term production capacity outlook.

Answer

CEO Darren Woods stated that 2025 projects are tracking well, with many likely to start up ahead of schedule. He highlighted that the Yellowtail project in Guyana will probably come in 'a little better' than the public Q3 2025 target. Regarding long-term capacity, Woods noted that while projections are challenging due to variables like reservoir management and depletion, he expects the team to outperform current estimates.

Neil Mehta followed up on the feedstock side, asking about the absorption capacity for Venezuelan crude in Valero's Gulf Coast footprint and its impact on differentials, including Gulf Coast light-heavy and Midcontinent light-heavy, given the related impact to WCS.

Answer

R. Lane Riggs, Chairman, CEO, and President, highlighted Valero's historical position as the largest purchaser of Venezuelan heavy crude, with processing capability substantially north of 240,000 barrels per day after the 2023 Port Arthur coker project. Brian Donovan, Head of Investor Relations, noted several factors making differentials favorable for complex refiners, including OPEC increases, growing U.S. Gulf sour crude production, Kirkuk exports, Canadian production, and higher freight rates. He reported Heavy Canadian in the Gulf Coast trading at $11-$11.50 under Brent and Mars at $5 under Brent.

Neil Mehta followed up on Valero's capital allocation strategy, specifically regarding the aggressiveness of stock buybacks given the stock's strong performance. He also asked about the competition for heavy crude, including Western Canadian and Venezuelan barrels, and its implications for pricing in the Gulf Coast.

Answer

Homer Bhullar (VP Investor Relations and Finance, Valero Energy Corporation) reiterated Valero's commitment to share repurchases as a core tenet of its capital allocation framework, citing a strong balance sheet and disciplined growth investments. R. Lane Riggs (Chairman, CEO and President, Valero Energy Corporation) stated that Valero evaluates Venezuelan crude against all alternatives and expects it to be a significant part of their heavy crude diet, having already purchased barrels from authorized sellers.

Neil Mehta inquired about the performance and sustainability of Valero's non-refining businesses, specifically the ethanol segment's margins and the path to profitability for Diamond Green Diesel (DGD) post-RVO.

Answer

Eric Fisher, Senior Vice President Product Supply, Trading and Wholesale, stated that ethanol's positive outlook is driven by a record corn crop, strong domestic and export demand, and increasing global interest in ethanol blends. For DGD, he noted that rationalization in biodiesel and renewable diesel is softening fat prices, leading to positive EBITDA in Q4 2025, but highlighted challenges for 2026 with PTC changes and RVO policy uncertainty.

Neil Mehta of Goldman Sachs inquired about the sustainability of Valero's capital returns program and the outlook for share buybacks in the second half of the year. He also asked about the Diamond Green Diesel (DGD) business, its path to recovery, and the company's long-term commitment to it.

Answer

VP of Investor Relations Homer Bhullar reaffirmed the commitment to a 40-50% annual payout ratio and using all excess free cash flow for share buybacks. SVP Eric Fisher addressed the DGD business, stating that a return to mid-cycle margins hinges on EPA policy clarity regarding RVOs and SREs, which will ultimately drive credit prices and improve feedstock spreads.

Neil Mehta of Goldman Sachs inquired about the sustainability of Valero's capital return program and the outlook for share buybacks, and also asked about the path to recovery for the Diamond Green Diesel (DGD) business.

Answer

VP of Investor Relations Homer Bhullar reaffirmed the 40-50% payout commitment and stated that all excess free cash flow will be used for buybacks. SVP Eric Fisher explained that the DGD recovery hinges on EPA policy clarity for RINs and credits, but long-term fundamentals for low-carbon fuels remain strong, supported by various mandates.

Neil Mehta of Goldman Sachs inquired about Valero's strategy for share buybacks given its strong balance sheet and asked for a specific outlook on the tight distillate and diesel markets.

Answer

Homer Bhullar, an executive, reaffirmed Valero's commitment to shareholder returns, stating that excess free cash flow will continue to fund share buybacks. Gary Simmons, EVP and COO, highlighted that the diesel market is fundamentally strong, with inventories near historic lows and open export arbitrage opportunities to Europe and Latin America, indicating a global shortage.

Neil Mehta asked about Valero's strategy for utilizing its balance sheet to increase share buybacks and sought more detail on the outlook for the distillate market, which appears tight relative to margins.

Answer

Homer Bhullar, an executive, reaffirmed Valero's commitment to shareholder returns, stating that with a strong balance sheet, excess free cash flow will continue to be directed towards share buybacks. Gary Simmons, EVP and COO, agreed that the diesel market is fundamentally strong, with historically low inventories in the U.S. and open export arbitrage opportunities to Europe and Latin America, indicating a global tightness.

Neil Mehta inquired about the drivers behind the strong Q4 performance in the Renewable Diesel segment and its 2025 outlook. He also asked how Valero managed to process a record volume of heavy sour crude despite tight fuel oil economics.

Answer

Eric Fisher, an executive, attributed the strong Renewable Diesel results to a one-time inventory optimization at year-end and noted the 2025 outlook depends on market adaptation to the new production tax credit. Greg Bram, an executive, explained that the record heavy crude run was achieved by pivoting away from higher-priced fuel oil as a feedstock and utilizing the new Port Arthur coker.

Neil Mehta of Goldman Sachs asked for perspective on managing operating expenses and for an update on the Port Arthur coker project's economic performance relative to initial expectations.

Answer

Executive Greg Bram stated that while inflation has been a headwind for maintenance and chemical costs, low natural gas prices have been a benefit, and they continue to focus on cost control. Regarding the Port Arthur coker, Bram confirmed that its returns are still expected to be consistent with the original FID projections, with its value hinged on heavy sour crude differentials.

Neil Mehta asked for clarification on the softer-than-expected 2026 oil volumes, linking it to timing and the expected ramp-up in the second half of the year. He sought advice on how to reconcile 2027 production numbers, specifically whether to compare them to the 2026 exit rate or the full-year guide. Additionally, he inquired about the de-risking of the Chinook project, its gating items, and the confidence interval around its expected production.

Answer

Eric Hambly, President and CEO, and Atif Riaz, VP, Investor Relations and Treasurer, attributed the 2026 offshore volume decrease to a weather downtime provision, increased planned downtime at non-operated facilities, and the timing of the Chinook well. They anticipate a decent exit rate for the offshore business in 2026 due to Chinook's high-rate production coming online in the second half, leading to modest low single-digit growth (1-5%) in the midterm. For 2027, they advised expecting production similar to the 2026 full-year guide. For Chinook, they described it as targeting an underdeveloped, currently producing reservoir with low subsurface uncertainty. The primary uncertainty is execution timing, with an initial production rate having a ±25% variability, but overall characterized as low uncertainty and nearly zero risk.

Neil Mehta sought clarification on Murphy Oil's 2026 oil volume profile, acknowledging the softer-than-expected start due to timing, and asked for guidance on the 2027 oil exit rate and overall production trajectory. He also inquired about de-risking the Chinook development well, its gating items, and confidence in its production.

Answer

Eric Hambly (President and CEO) confirmed that 2026 offshore oil volumes would be slightly lower than 2025, but the high-rate Chinook well coming online in H2 2026 should lead to a decent exit rate. For 2027, he anticipated similar or slightly higher production with modest low single-digit growth (1-5%). Regarding Chinook, Hambly stated it targets an underdeveloped, currently producing reservoir, making subsurface uncertainty limited and risk nearly zero, with timing being the primary execution issue.

Neil Mehta inquired whether operational challenges in the Gulf of America were resolved and asked about the company's capital return priorities, specifically the balance between debt repayment and stock repurchases as it approaches its net debt target.

Answer

President, CEO & Director Eric Hambly confirmed that the major workover backlog in the Gulf of America is nearly complete, resolving earlier issues. On capital allocation, he stated a clear preference for share repurchases over further debt reduction, although paying down the revolving credit facility remains a consideration.

Neil Mehta inquired about the operational status of the Khaleesi #2 and Marmalard #3 workovers and asked about the company's exposure to OCTG pricing and its impact on well costs for 2025 and 2026.

Answer

SVP, Operations Chris Lorino confirmed the Khaleesi-2 and Marmalard-3 workovers are underway, with completion expected in Q2 and Q3 respectively, and OpEx should normalize in the second half of the year. President and CEO Eric Hambly and CFO Tom Mireles added that overall well costs are expected to be flat, with minor tubular goods pressure offset by lower rig rates. They noted most 2025 equipment is secured, limiting tariff exposure.

Neil Mehta from Goldman Sachs asked for an explanation of the softer Q4 production, seeking details on the downtime, mechanical issues, and delays mentioned. He also inquired about the 2025 plan for the Eagle Ford shale, including success metrics and whether the revised completion design issue from Q4 would affect 2025 performance.

Answer

President and CEO Eric Hambly acknowledged a 'rough' fourth quarter, attributing the production miss to several short-lived issues, including rig delays for a Samurai workover, a safety valve issue at Khaleesi, non-operated Gulf of Mexico downtime due to storms, and underperformance from a new Eagle Ford completion design. He stated these issues are largely resolved by Q2 2025 and that the Eagle Ford issue was isolated. For 2025, he highlighted a more efficient Eagle Ford program with 35 wells planned, a significant Karnes component, and a reworked development plan to improve capital efficiency.

Neil Mehta posed a macro question regarding SLB's unique perspective on the debate surrounding OPEC spare capacity, particularly in the Middle East, and its implications for the back end of the oil curve. He also sought SLB's perspective on the Mexican market, noting a more constructive tone, and how it is expected to evolve from a bottoming phase into a potential cash recovery.

Answer

CEO Olivier Le Peuch indicated that with OPEC+ unwinding 2.2 million barrels and the market rebalancing into 2027, significant spare capacity beyond what has been released is unlikely, leading to a tighter market and a better investment backdrop from 2027 onwards. For Mexico, Le Peuch stated the market has normalized, with land activity expected to be steady short-to-midterm. He sees upside in offshore activity in 2026, driven by deepwater asset development, with land activity potentially strengthening into 2027.

Neil Mehta from The Goldman Sachs Group, Inc. asked for SLB's macro perspective on the debate regarding OPEC+ spare capacity in the Middle East and its implications for the back end of the oil curve. He also sought insights into the evolution of the Mexico market, noting a more constructive tone from SLB.

Answer

CEO Olivier Le Peuch stated that as OPEC+ unwinds 2.2 million barrels and the market rebalances into 2027, he doesn't expect much spare capacity, citing reinvestment into oil capacity sustenance and intervention activity in the Middle East. He believes the market will tighten, setting conditions for a better investment backdrop from 2027 onwards. Regarding Mexico, Mr. Le Peuch noted the market has normalized after a significant drop, anticipating steady land activity short-to-midterm. He sees upside in offshore activity in 2026, particularly deepwater asset development, with land activity potentially strengthening into 2027.

Neil Mehta from Goldman Sachs asked for incremental thoughts on leveraging the ChampionX platform and products internationally. He also requested segment-level perspective on margin trends for the second half of the year.

Answer

CEO Olivier Le Peuch highlighted plans to leverage ChampionX's U.S. innovation across SLB's international platform and create new value by combining it with SLB's subsurface, digital, and integration capabilities. CFO Stephane Biguet provided margin guidance for H2, stating that Digital margins will continue to increase, Production Systems EBITDA margins will be accretive due to ChampionX, and both Reservoir Performance and Well Construction margins are expected to be relatively flat compared to Q2.

Neil Mehta asked for an update on the closing timeline for the ChampionX acquisition, including any remaining hurdles. He also sought Olivier Le Peuch's perspective on the global energy supply macro, particularly which regions might see activity cuts in a lower price environment and whether this reinforces the long-term underinvestment thesis.

Answer

CEO Olivier Le Peuch expressed high confidence in closing the ChampionX transaction by the end of Q2 or early Q3, citing positive progress with regulators in the U.K. and Norway. On the macro front, Le Peuch reaffirmed the long-term underinvestment thesis. In the near term, he anticipates that short-cycle activities, especially in U.S. land, are most vulnerable to spending cuts, while long-cycle projects and regions driven by energy security, such as the Middle East and Asia, will show more resilience.

Neil Mehta asked about the strategy for the accelerated share repurchase program and the potential to increase returns beyond the $4 billion minimum. He also inquired about plans to better isolate and communicate the value of the digital business to the market.

Answer

CFO Stephane Biguet explained the $2.3 billion accelerated repurchase was timed to capitalize on a low stock valuation and confirmed the $4 billion shareholder return target is a minimum that could be increased. CEO Olivier Le Peuch stated that SLB will provide further disclosure on its digital business in the coming months to clarify its performance, growth, and accretive value.

Neil Mehta asked for an update on the company's $10 billion EBITDA target for 2025 in light of the current macro environment and inquired about the drivers of the strong quarterly free cash flow.

Answer

CFO Stephane Biguet acknowledged that due to the macro outlook, the 2021-2025 EBITDA CAGR might end up in the high teens rather than the original 20% target, excluding ChampionX. He attributed the strong Q3 free cash flow of $1.8 billion primarily to significant customer collections, noting it was partly a catch-up from Q2. He reaffirmed the $4 billion shareholder return target for 2025, supported by expectations of higher free cash flow.

Neil Mehta asked for a regional breakdown of Halliburton's international outlook for 2026, identifying areas of expected growth and decline. He also sought insights into the importance and potential scale of the VoltaGrid business, Halliburton's strategic position, and any consolidation plans.

Answer

Jeff Miller, Chairman, President, and CEO, outlined the international outlook: Latin America is expected to lead growth (Brazil, Argentina, Ecuador, Guyana), the Middle East is seen as flatish to slightly down (cautious on Saudi timing, rest solid), and Asia-Pacific is flatish despite gas demand. He expressed excitement for VoltaGrid's international prospects, highlighting a solid pipeline, potential for significant long-term growth, and the commitment to 400 megawatts of modular power systems.

Neil Mehta asked for a detailed breakdown of Halliburton's international outlook for 2026, specifically by region, and inquired about the importance, growth potential, and strategic positioning of the VoltaGrid partnership, including any consolidation plans.

Answer

Jeff Miller, Chairman, President, and CEO, projected Latin America to lead international growth, driven by Brazil, Argentina, Ecuador, and Guyana. He anticipated the Middle East to be flat to slightly down due to conservative timing on Saudi Arabia's activity return, while Asia-Pacific is expected to be flat. Miller expressed excitement about VoltaGrid's international prospects, highlighting strong customer interest and a commitment to 400 MW of modular power systems, viewing it as a potentially very large business over time.

Neil Mehta asked for more details on the Middle East opportunity for power generation, specifically why Halliburton is focusing on this region, potential constraints, and strategies to overcome them. He also sought early thoughts on the 2026 outlook, particularly for North America, based on initial customer conversations.

Answer

Jeffrey Miller, Chairman, President, and CEO, identified the Middle East as a key initial focus due to its developing economy, forward-looking investment, abundant energy resources, and significant capital availability. For 2026, Mr. Miller described the overall outlook as 'flattish with some bright spots,' with North America likely operating below maintenance spending levels. He pointed to OPEC+ barrels entering the market, Mexico's production decline, and growing oil demand as factors that will create an 'inflection point' and a strong market snapback.

Neil Mehta from Goldman Sachs inquired about the drivers behind the softer Q2 Completion and Production (C&P) margins and the weaker Q3 guidance, asking how Halliburton plans to improve them. He also asked about customer conversations regarding schedule gaps, or 'white space,' in North America for the second half of 2025 and any early outlook for 2026.

Answer

EVP & CFO Eric Carre attributed the Q2 C&P margin softness to reduced activity in Saudi Arabia, lower artificial lift sales in North America, and U.S. land pricing headwinds. He noted the Q3 decline is driven by continued North America pricing pressure, lower international completion tool sales, and ongoing Saudi activity reductions. Chairman, President & CEO Jeff Miller added that customers are cautious and conserving budgets, but still prioritize technology. He stated that while it's too early for a precise 2026 forecast, he expects activity to pick up from H2 2025 levels but does not see a major ramp-up without a commodity price catalyst.

Neil Mehta from Goldman Sachs inquired about the weaker-than-expected Completion and Production (C&P) margins in Q2 and the drivers behind the Q3 guidance. He also asked about customer conversations regarding increasing 'white space' in North American frac calendars for the second half of 2025 and the early outlook for 2026.

Answer

EVP & CFO Eric Carre attributed the Q2 C&P margin softness to U.S. land pricing headwinds and reduced activity in Saudi Arabia. He noted the Q3 guide reflects ongoing pricing pressure and activity reductions. Chairman, President & CEO Jeff Miller added that customers are cautious and conserving budgets, and while he expects activity to pick up in early 2026 from H2 2025 lows, a major ramp-up is unlikely without a market catalyst.

Neil Mehta inquired about the outlook for North American activity for the remainder of the year amid commodity price volatility and asked about the situation in Mexico, including its impact on results and the potential path to recovery.

Answer

CEO Jeffrey Miller explained that North American customers are currently digesting recent market volatility, but he noted that the market is not adding new equipment and that significant activity declines would impact production, creating a natural floor. Regarding Mexico, Miller stated that after meeting with the new Pemex CEO, he sees the situation as challenging for a while with no immediate recovery expected, though he believes Mexico will eventually stabilize due to the importance of oil and gas to its economy and its significant production decline rates.

Neil Mehta asked about the lessons learned from the recent cybersecurity incident, its impact on the SAP ERP system rollout, and the company's go-forward strategy for stock buybacks. He questioned if the $250 million quarterly run rate was appropriate for 2025 and if a more aggressive repurchase plan was warranted.

Answer

CEO Jeffrey Miller emphasized preparedness as the key lesson from the cyber event. CFO Eric Carre detailed that the SAP rollout is now delayed by 3-6 months with a $20-30M cost increase. Carre also explained that Q3 buybacks were reduced as a precaution, with plans to catch up in Q4. He described buybacks as a systematic, through-cycle tool for shareholder returns, with the general view to increase them in 2025 over 2024 levels.

Neil Mehta asked about the updated Willow project capital estimate, specifically bridging the increase from $7-$7.5 billion to $8.5-$9 billion, and whether management feels they now have a good handle on the project given the history of cost overruns on major capital projects, while acknowledging the intact timing.

Answer

Ryan Lance (Chairman and CEO) acknowledged the disappointment regarding higher costs but emphasized the project's strong execution and strategic importance. Kirk Johnson (EVP of Global Operations and Technical Functions) detailed the cost increase, attributing 80% to higher general inflation (labor, materials, engineering equipment) and localized North Slope cost escalation due to increased regional activity. He also mentioned minor impacts from tariffs and decisions made to mitigate schedule risk. Johnson confirmed over 90% of facility contracts are secured, providing confidence in the updated estimate and the accelerated first oil to early 2029.

Neil Mehta asked for clarification on the Willow project's cost increase from $7-7.5 billion to $8.5-9 billion, seeking assurance that the company now has a firm handle on the project's costs despite the overruns, noting that the project timing remains intact.

Answer

Ryan Lance, Chairman and CEO, acknowledged the disappointment regarding higher costs but emphasized the project's strategic importance. Kirk Johnson, Executive Vice President of Global Operations and Technical Functions, detailed that 80% of the increase is due to higher general inflation and localized North Slope cost escalation, with 90% of facility contracts now secured, providing confidence in the updated estimate and an accelerated first oil target of early 2029.

Neil Mehta of Goldman Sachs asked for confirmation on the math behind the projected $7 billion free cash flow inflection by 2029 and questioned if investors have to wait until 2029 to see the benefits.

Answer

Chairman and CEO Ryan Lance confirmed the math was correct. He emphasized that the benefits will be realized progressively, not all at once in 2029, as major LNG and Alaskan projects are scheduled to start up sequentially beginning in 2026. He noted this growth profile is unique in the sector and does not include potential upside from accelerating Lower 48 development.

Neil Mehta asked about the feasibility of the $10 billion capital return target amid a softer commodity market and whether ConocoPhillips would consider using debt to fund share buybacks.

Answer

Chairman and CEO Ryan Lance reaffirmed the company's framework of returning approximately 45% of cash from operations (CFO) to shareholders. He indicated a willingness to use cash on the balance sheet to support this goal and noted that while Q2 buybacks might see a slight reduction from Q1, the company still views its shares as attractive. Lance clarified that they do not intend to borrow gross debt to fund these returns.

Neil Mehta from Goldman Sachs asked for perspective on the company's strong reserve replacement ratio, inquiring where the additions came from and how investors should interpret the metric.

Answer

Andy O'Brien, SVP of Strategy, affirmed that reserve replacement is a key metric. He reported a 123% organic reserve replacement ratio for 2024, achieved despite lower prices causing downward revisions. Key drivers included over 100% replacement in the Lower 48, initial bookings for the NFS project, and new bookings at Surmont. Including acquisitions, the total reserve replacement was 244%. O'Brien also noted that additional proved undeveloped (PUD) reserves from the Marathon assets are expected to be booked later in the year.

Neil Mehta inquired about the significant increase in synergy targets for the Marathon Oil acquisition, asking for a breakdown of the sources and the timeline for realization.

Answer

Andy O'Brien, SVP of Strategy, explained that the initial $500 million in synergies from overhead and operating costs is now complemented by at least another $500 million from capital optimization, primarily by reducing rig and frac crew activity in the Eagle Ford and Bakken. He noted CapEx savings would be immediate in 2025, while cost synergies would be realized on a run-rate basis within a year of closing. Chairman and CEO Ryan Lance added that these are pre-close estimates and he anticipates further opportunities after the deal is finalized.

Neil Mehta asked about Marathon Petroleum's third-quarter capture rates, which were 96% compared to typical rates above 100%, inquiring about the specific West Coast dynamics and the impact of the Galveston Bay RESID Hydrocracker downtime. He also followed up on the company's share repurchase strategy, noting a lighter buyback than street expectations.

Answer

CEO Maryann Mannen explained that the West Coast was the primary driver of the capture rate change, with clean product margins falling 40% and the jet premium to diesel narrowing. CCO Rick Hessling added that jet and product margins have normalized in Q4, and butane inventory build in Q3 will be a Q4 tailwind. Regarding buybacks, Maryann Mannen reiterated no change in the primary use of share repurchases for capital return, emphasizing the support from MPLX's growing distributions.

Neil Mehta asked about Marathon Petroleum's third-quarter capture rates, which were 96% compared to their usual >100%, inquiring about specific drivers like West Coast dynamics and the REZID hydrocracker downtime. He also followed up on the company's share repurchase program, noting it was lighter than expected and seeking insight into future buyback strategy.

Answer

CEO Maryann Mannen and CCO Rick Hessling explained that the West Coast was the leading driver for the capture rate change, accounting for over 50% due to falling clean product margins and a narrowed jet premium to diesel. They also cited the REZID downtime and butane inventory build as factors. Regarding share repurchases, Maryann Mannen reiterated no change in their commitment to buybacks as the primary return of capital, supported by MPLX's growing distributions, and stated they would not take on debt for buybacks.

Neil Mehta questioned the pace of share buybacks in the context of the company's capital return strategy and requested an update on the Galveston Bay refinery unit downtime.

Answer

CEO Maryann Mannen reaffirmed the commitment to return all free cash flow via buybacks, noting the growing MPLX distribution provides significant support. On Galveston Bay, EVP - Refining Michael Henschen reported the refinery is halfway through a phased startup after an incident, with the impact already factored into Q3 guidance.

Neil Mehta inquired about real-time demand trends for refined products, seeking evidence of any economic slowdown, and asked for a multi-year outlook on the West Coast market, including Marathon's positioning and ability to capitalize on margins amid the political environment.

Answer

CEO Maryann Mannen and executive Rick Hessling responded, stating they see strong seasonal demand improvement with no signs of a slowdown. They highlighted steady year-over-year gasoline demand and growth in diesel and jet fuel, supported by low inventories. For the West Coast, Mannen emphasized the strategic investment in the Los Angeles refinery to enhance its competitive advantage. Hessling added that competitor refinery closures are a tailwind for both their LAR and Pacific Northwest facilities, and they expect to benefit from more favorable feedstock differentials.

Neil Mehta inquired about the drivers behind the strong 119% refining capture rate in Q4, asking for a breakdown between seasonal factors and structural commercial improvements. He also asked about the underlying assumptions for the mid-teens returns on the new MPLX wellhead-to-water project and whether the associated capital spend would impact MPC's share buyback capacity.

Answer

CEO Maryann Mannen and executive Rick Hessling attributed the high capture rate to both typical Q4 seasonal strength and sustained structural improvements, highlighting record export volumes and margins as well as strong performance in the asphalt business. Mannen confirmed that the MPLX project's capital spend would not affect MPC's ability to return capital, as it will be funded by MPLX's own balance sheet flexibility and its growing distribution, which is expected to cover MPC's dividend and standalone capital needs.

Neil Mehta inquired about Marathon Petroleum's capital return strategy, specifically the anticipated quarterly run rate for share buybacks in 2025, and sought perspective on the West Coast market outlook following recent competitor refinery retirement announcements.

Answer

CEO Maryann Mannen reiterated MPC's commitment to leading peers in capital returns through the cycle, supported by strong cash flow and a $2.5 billion annual distribution from MPLX which covers the dividend and likely 2025 capital. Regarding the West Coast, she expressed confidence in MPC's competitive assets, noting their sophistication, waterborne access, and ability to source Canadian crude, suggesting that competitor shutdowns bode well for MPC's position.

Neil Mehta asked about the tangible upsides and synergies of Coterra Energy operating as a multi-basin portfolio versus a pure-play, and whether the company has sufficient scale in the Marcellus to be a first-quartile operator.

Answer

Tom Jorden, Chairman, CEO, and President, emphasized that multi-basin operations foster technical collaboration and allow the transfer of best practices, citing winterization techniques from the Marcellus team improving Permian operations. Shane Young, Executive Vice President and CFO, affirmed that Coterra has sufficient scale in the Marcellus (2 Bcf/day) and benefits from its broader portfolio in negotiating with service providers, driving down costs and securing better equipment.

Neil Mehta asked about the value of Coterra operating as a multi-basin portfolio versus a pure play, seeking tangible upsides and synergies since the Cabot acquisition. He also questioned if Coterra has sufficient scale in the Marcellus to be a first-quartile operator, given industry consolidation.

Answer

Tom Jorden, Chairman, CEO, and President, highlighted the advantage of spreading best practices and operational efficiencies across different plays, citing winterization efforts in the Permian benefiting from Marcellus team collaboration. Shane Young, Executive Vice President and CFO, affirmed sufficient scale in the Marcellus (2 Bcf/day production) and noted that the broader Coterra portfolio helps drive down costs and secure better equipment and focus from service providers.

Neil Mehta of Goldman Sachs asked for an update on the Harkey well issues, seeking clarity on the conviction level for the fix and the timeline for production to normalize. He also questioned the decision to increase activity in the Marcellus given the weak natural gas price environment.

Answer

CEO Thomas Jorden expressed high confidence that the Harkey issue is localized and has been addressed through a new wellbore design, though he noted dewatering the formation will take time. Regarding the Marcellus, EVP of Operations Blake Sirgo and CFO Shane Young explained the decision is driven by strong project returns, a focus on consistent activity to lower costs, and bringing activity back to a maintenance level after a period of near-zero activity.

Neil Mehta from Goldman Sachs shifted focus to natural gas, asking about Coterra's macro view, its priorities for the Marcellus program for the rest of the year, and its perspective on the depth of its gas inventory, including the potential for M&A.

Answer

Chairman, CEO and President Thomas Jorden highlighted the positive impact of higher natural gas prices on cash flow and noted the Marcellus program has been redesigned for lower costs and flexibility. He stated that while the company has a dozen years of inventory and is not solving a problem, it will always remain opportunistic on M&A for both oil and gas assets.

Neil Mehta inquired about the rationale for restarting two rigs in the Marcellus, what market signals Coterra is watching for potential acceleration, and the company's go-forward M&A strategy after the recent acquisitions.

Answer

Chairman, CEO and President Thomas Jorden stated that improved returns, a positive winter, and a constructive outlook for 2025 and 2026 justify restarting activity. He clarified that they are opportunistic, not serial, acquirers and will only pursue deals that add value at a reasonable entry price, emphasizing their focus on a strong existing inventory.

Neil Mehta of Goldman Sachs requested perspective on the WCS heavy oil differential, asking if recent tightening is structural post-TMX, and also inquired about the outlook for the SCO premium relative to WTI.

Answer

President Scott Seltz stated that the WCS differential is expected to be range-bound between $10-$13, a structural improvement due to the TMX pipeline, though short-term volatility from refinery turnarounds will persist. For SCO, he projected a pricing range of -$1 to +$1 relative to WTI, with no major structural shifts expected.

Neil Mehta inquired about the drivers of the current tight WCS-WTI differential and the outlook for the rest of the year. He also asked for an update on how the recently acquired Chevron assets have performed relative to expectations.

Answer

Scott Stauth, President, commented that the current tight WCS differentials appear realistic and are influenced by factors like downstream turnaround activity. He reiterated that the acquired Duvernay assets are meeting expectations and that the company is successfully driving value through capital cost reductions and efficiency gains.

Neil Mehta of The Goldman Sachs Group, Inc. inquired about the market dynamics for Western Canadian Select (WCS) crude, the outlook for its price differential to WTI, and the performance of the recently acquired Chevron assets relative to initial expectations.

Answer

President Scott Stauth commented that while differentials can fluctuate with downstream turnarounds, the current forward strip appears realistic. He reiterated that the acquired assets are meeting expectations, highlighting a 14% reduction in capital costs compared to the previous year as a key efficiency gain.

Neil Mehta asked for a macro perspective on WCS differentials amid tariff discussions and inquired how a weaker Canadian dollar could provide an offset, along with how much room remains for operating cost reductions.

Answer

President Scott Stauth stated that while the differential market is fluid, CNQ's view is that the U.S. consumer will ultimately absorb the tariff costs, not the producer. Regarding costs, he emphasized that CNQ's key advantage is its already very low and sustainable cost structure, which provides superior netbacks and resilience. He highlighted that half of production is SCO priced off WTI, providing a partial buffer from WCS volatility.

Neil Mehta asked about the role of natural gas in the portfolio given weak pricing, the net impact on the company, and the AECO price outlook. He also requested an update on the Pathways carbon capture project, its gating items, and the influence of political uncertainty.

Answer

CFO Mark Stainthorpe explained that the company is deferring production from about half its remaining planned gas wells for the year until prices improve, likely in late Q4 or early Q1 with the startup of LNG Canada. On the Pathways project, he stated that the federal government, provincial government, and the industry organization are working diligently to finalize a supportive financial regime, and he remains positive about reaching an agreement.

Neil Mehta from Goldman Sachs requested an update on the potential for small refinery exemptions (SREs), including the timeline and how to size the cash flow impact, and also asked for an outlook on Singapore margins considering various global market dynamics.

Answer

President & CEO Will Monteleone stated that Par Pacific expects the EPA to follow the law regarding SREs but noted the timeline is highly uncertain. He clarified that any exemptions would be upside, as the company's RIN position is balanced. SVP & CFO Shawn Flores quantified the forward gross exposure at approximately 140 million RINs for the mainland refineries. Regarding Singapore, Monteleone expressed a view that the Chinese refining fleet remains focused on internal demand and petchem integration, not foreseeing a material change in product exports.

Neil Mehta from Goldman Sachs requested an update on the status and potential financial impact of small refinery exemptions (SREs). He also asked for an assessment of the Singapore market's sustainability, given risks from Chinese demand and export policies.

Answer

President & CEO Will Monteleone stated Par Pacific expects the EPA to follow the law with a refinery-by-refinery assessment for SREs but would not speculate on timing. SVP & CFO Sean Flores quantified the forward exposure at 140 million RINs for mainland refineries, noting retroactive SREs would be direct cash proceeds. Regarding Singapore, Monteleone expressed confidence, citing China's focus on internal demand and continued need for arbitrage barrels to Europe.

Neil Mehta from Goldman Sachs asked about the drivers of the Washington refinery's low capture rate and its potential for recovery, the operational outlook for the Billings refinery into 2025, and how management thinks about unlocking the embedded value of its retail business for investors.

Answer

President and CEO William Monteleone explained that Washington's results were impacted by weak West Coast jet fuel and global VGO markets, but he sees favorable dynamics emerging. For Billings, he expressed confidence in its mid-cycle potential, noting progress on throughput and a path to lower OpEx post-turnaround. Regarding retail, Monteleone acknowledged its premium value but emphasized its strategic importance to the integrated business, suggesting a focus on growth over a simple value unlock.

Neil Mehta of Goldman Sachs inquired about the key areas of strategic focus for CVR Energy as incoming CEO Mark Pytosh takes over. He also asked for retiring CEO Dave Lamp's multi-year outlook for the refining cycle.

Answer

CEO David Lamp stated that a key strategic challenge is the company's concentration in a single market, expressing hope for future diversification through M&A, either by acquiring assets or being acquired. For the long-term refining outlook, Lamp was positive, citing limited new global capacity additions, stable demand, and his belief that petroleum products will remain the most versatile and dominant fuels.

Neil Mehta of Goldman Sachs Group, Inc. asked for details on the extended Coffeyville refinery turnaround and the outlook for returning the dividend. He later followed up with questions on the U.S. shale oil growth outlook and recent insider trading activity.

Answer

CEO David Lamp explained the Coffeyville turnaround was complicated by an unplanned early shutdown, causing significant disruptions, and noted the company is contemplating a potential insurance claim. On the dividend, he reiterated CVR's goal to be a "dividend machine" but stated the current priority is paying down debt before resuming shareholder returns. Regarding shale, Mr. Lamp believes many producers are near breakeven levels and expects rig counts to continue falling. He declined to comment on insider activity.

Neil Mehta inquired about CVR Energy's framework for its dividend, asking about the conditions under which it might be resumed after the current suspension, and also questioned the opportunity set for non-core asset sales.

Answer

CEO David Lamp explained that the dividend suspension is a cautious measure due to challenging forward crack spreads and a major upcoming turnaround. He affirmed that dividends remain the preferred method for returning cash to shareholders and the board will review the policy quarterly. Regarding asset sales, Lamp noted that while nothing is in earnest, midstream assets with approximately $80 million in EBITDA could be considered for monetization, but there was no new update on the UAN partnership.

Neil Mehta asked for details on the restart timeline for the Martinez refinery, including critical path items, and inquired about the potential for data center development on excess land at the Delaware City refinery.

Answer

SVP & Head of Refining Michael A. Bukowski detailed the Martinez progress, noting demolition is complete and the restart is expected by year-end, with the next milestone being the start of major construction. President & CEO Matthew Lucey confirmed PBF is actively exploring opportunities to maximize the value of its Delaware City land, including working with experts on potential development projects.

Neil Mehta of Goldman Sachs inquired about the working capital outlook for Q2 and the full year, and asked management to address credit market concerns by detailing their confidence in the company's liquidity position.

Answer

CFO Karen Davis explained that a Q1 inventory build is expected to be reduced, providing a modest working capital benefit in Q2, subject to prices. She affirmed that the company's liquidity is sufficient, supported by reduced CapEx, RBI initiatives, the $250 million insurance payment, and a dedicated team working to secure future insurance proceeds in a timely manner.

Neil Mehta of Goldman Sachs inquired about the potential impact of tariffs on crude imports from Canada and Mexico. He also asked for the framework PBF uses to decide when to pivot from deleveraging back to share buybacks.

Answer

President and CEO Matthew Lucey and executive Thomas O'Connor discussed the dynamic tariff situation, noting PBF is not uniquely disadvantaged. Regarding capital allocation, Lucey stated there isn't a single metric, but a combination of market conditions and asset performance guides the decision. CFO Karen Davis added that while their goal is to be conservative, they view an investment-grade metric as a net debt-to-cap ratio below 35%.

Neil Mehta inquired about the potential for monetizing underutilized assets, specifically real estate, and asked for an update on the company's environmental payables and where they stand relative to targets.

Answer

President and CEO Matthew Lucey confirmed the company is actively working to create value from underutilized assets, highlighting excess land in Delaware as having potential for a "higher and better use." CFO Karen Davis addressed environmental payables (including RINs, LCFS), stating the balance increased to $474 million, slightly above the typical $200-$400 million range, primarily due to extended payment terms for cap-and-trade obligations.

Neil Mehta of Goldman Sachs inquired about the regulatory environment, the rationale for adjusting EBITDA to include the Production Tax Credit (PTC), and the company's balance sheet strength, liquidity, and deleveraging progress.

Answer

CEO Louis Borgmann explained that reporting adjusted EBITDA with tax attributes provides an apples-to-apples comparison to the prior Blender's Tax Credit (BTC) era and better reflects the business's steady earnings power. EVP Bruce Fleming added that the PTC is now law. EVP & CFO David Lunin and CEO Louis Borgmann affirmed their confidence in the company's liquidity following the DOE loan and Royal Purple sale, noting the ultimate deleveraging goal is tied to the Montana Renewables monetization, which they hope could be a 2026 event.

Neil Mehta from Goldman Sachs & Co. requested details on the Royal Purple asset sale, including its strategic rationale and valuation, and sought clarification on the Small Refinery Exemption (SRE) litigation and its impact on adjusted EBITDA reporting.

Answer

EVP Scott Obermeier stated the sale stemmed from inbound interest and a strategic review that identified the industrial business as non-core to Calumet's integrated strategy. CEO Todd Borgmann confirmed the sale was at a ~10x EBITDA multiple and expressed confidence in recapturing most of the sold EBITDA via synergies. Regarding SREs, Borgmann explained the plan to add back the non-cash RINs incurrence (~$40 million in 2024) to adjusted EBITDA to better reflect cash generation. EVP Bruce Fleming noted that courts have ruled the EPA acted illegally, and they expect a resolution.

Neil Mehta asked for Antero's perspective on the dry gas macro, specifically how lower oil prices might impact associated gas supply and create a tailwind. He also posed long-term questions about the marginal cost of Haynesville supply and whether an oversupplied global gas market could cap U.S. prices.

Answer

CFO Michael Kennedy agreed that reduced associated gas from the Permian, combined with low rig counts elsewhere, sets up an "explosive" environment for natural gas prices given strong LNG and power demand. He estimated the marginal cost for Haynesville supply is over $4 and rising due to inventory fatigue. SVP Justin Fowler added that global demand continues to grow, with healthy arbitrage spreads to Europe and Asia supporting continued U.S. exports.

Neil Mehta asked about the company's return of capital strategy, the timeline for increasing shareholder returns, and the optimal capital structure. He also posed a theoretical question about how potential changes in the European gas market (TTF prices) could impact the U.S. gas balance.

Answer

CFO Michael Kennedy stated the optimal capital structure is zero debt. The immediate priority is paying down ~$500 million in debt. Afterward, the company will move to a 50/50 strategy of further debt reduction and share buybacks. SVP of Natural Gas Marketing Justin Fowler added that the Henry Hub vs. TTF spread remains very healthy and supportive of U.S. LNG exports, with significant cushion to absorb market changes.

Neil Mehta asked about the key milestones for the Suriname development in 2025 and whether APA might accelerate Permian production given its inventory depth, or if the strategy is to maintain a plateau.

Answer

CEO John Christmann noted that 2025 for Suriname involves advancing the development plan and securing long-lead items. He confirmed the Permian strategy is to maintain a flat production profile with an 8-rig program to maximize free cash flow. CFO Stephen Riney added this allows exploration to be the primary long-term growth driver.

Neil Mehta asked about the key strategic areas the new leadership team will focus on to provide stability, the company's view on the A&D environment, and for an update on the Zama project and asset sale in Mexico.

Answer

Interim Co-President and CFO Sergio Maiworm deferred defining specific strategic priorities until the new CEO, Paul Goodfellow, is onboard, but emphasized the team is excited for his arrival. He stated the near-term focus is on organic execution, but bolt-on acquisitions remain possible given the strong balance sheet. He confirmed the Zama project remains important and the previously announced sell-down to the Carso Group is awaiting regulatory approval.

Neil Mehta from Goldman Sachs inquired about the nature of the one-time start-up and commissioning costs for the GTA project and sought clarity on the sustainability of the reduced capital expenditure guidance for 2025 and beyond.

Answer

Chairman and CEO Andrew Inglis explained that 2025 is a transition year for GTA costs, which are expected to be higher before normalizing lower over time as one-off commissioning work ends and volumes ramp up. CFO Neal Shah added that normalized operating costs are expected to be in the $4 to $5 per Mcf range, with FPSO financing adding about another $1 per Mcf long-term. Inglis also affirmed the company's focus on free cash flow, stating the reduced CapEx reflects a disciplined balance between sustaining the business and pacing growth, not a shift to a harvest mode.

Neil Mehta asked when Kosmos expects to reach its 90,000 boe/d production target and inquired about the 2025 assumption for lease operating expense (LOE) per barrel, including the impact of the GTA project.

Answer

CEO Andrew Inglis stated the 90,000 boe/d target is expected around year-end 2024, with a focus on maintaining that level in 2025. CFO Neal Shah projected that on the gas side, normalized recurring OpEx for GTA would be around $4 per Mcf, and noted that overall OpEx could decrease if an FPSO refinancing is completed.

Neil Mehta inquired about the key operational milestones for the Giddings asset in the upcoming year and asked about the sustainability of the company's dividend growth and the balance between dividends and buybacks.

Answer

President and CEO Christopher Stavros highlighted that key Giddings milestones will involve appraisal work to expand the field's boundaries, with more updates expected in the second half of the year. On shareholder returns, he stressed that the dividend's security is paramount and is stress-tested at low prices. He explained that the consistent share repurchase program is a key component that supports per-share dividend growth, creating a balanced and sustainable return policy.

Neil Mehta asked for confirmation that the midstream interruptions from the quarter have been fully resolved and then asked for the company's philosophy on its no-hedge policy for oil and gas production.

Answer

President and CEO Christopher Stavros confirmed that the midstream issues were fully resolved. On hedging, he explained the philosophy is to avoid it entirely, viewing it as a complication and a cost. He stated that the company's strong balance sheet and low debt provide downside protection, allowing shareholders to have full, unhedged exposure to commodity price upside, which he believes is the optimal position.

Neil Mehta inquired about the company's capital return strategy, specifically the balance between dividends and buybacks, and also asked about the outlook for M&A activity after a quiet year.

Answer

CFO Nancy Buese reaffirmed the commitment to return 60-80% of free cash flow to shareholders, anchored by a growing dividend and supplemented by opportunistic share repurchases. Regarding M&A, she stated the focus remains on tuck-in acquisitions and small technology investments, particularly in new energy, to complement the existing portfolio.

Neil Mehta inquired about the softer-than-expected margins at the El Dorado refinery, asking about one-time impacts and the path to improvement. He also questioned the potential pace of the share repurchase program given the company's valuation.

Answer

President and CEO Avigal Soreq and EVP of Operations Joseph Israel addressed the El Dorado refinery, highlighting its strong configuration and outlining specific initiatives to add approximately $2 per barrel in net margin by mid-next year, including producing jet fuel and commercial optimization. Regarding capital allocation, Avigal Soreq emphasized a balanced approach, prioritizing a strong dividend while actively repurchasing shares in Q3 and Q4 due to the perceived value in the stock.

Neil Mehta inquired about the expected evolution of mining operating expenses per ton through 2025 and 2026, and sought details on the company's capital return philosophy, particularly the balance between buybacks and dividends.

Answer

Executive Chris Scholla reiterated that OpEx per ton should improve to the low double-digit range in 2025, with a further step-down in 2026 upon the arrival of new dredges. CFO Blake McCarthy explained the capital return strategy: the common dividend is set at a sustainable level for down cycles, while the new buyback authorization provides flexibility to return significant excess cash flow that the business is expected to generate as the market improves.

Neil Mehta of Goldman Sachs requested a geographic breakdown of market momentum and an outlook on free cash flow generation and capital return policy for 2025 and beyond.

Answer

Chairman, President and CEO Clay Williams identified deepwater offshore (Golden Triangle) and international unconventional plays (Middle East, Argentina) as key growth areas. SVP and CFO Jose Bayardo reaffirmed the company's target to convert at least 50% of EBITDA to free cash flow, expecting this trend to continue into 2025 and beyond, with a commitment to return at least 50% of excess free cash flow to shareholders.

Neil Mehta inquired about the specific drivers behind the revision to the 2024 financial outlook and asked for the key building blocks for achieving the company's medium-term target of $2 billion in revenue and a 25% adjusted EBITDA margin.

Answer

CFO Quinn Fanning attributed the 2024 guidance change primarily to softness in the North and Latin America (NLA) market, including a temporary activity hiatus in Mexico. He stated the path to long-term targets relies on activity mix, operating leverage, and pricing, but the timeline might now extend into 2026. CEO Michael Jardon added that customer feedback suggests project delays rather than cancellations and clarified the financial impact of the Congo project.

Questioned the sustainability of capital efficiency and production levels beyond 2024, and how the weak natural gas price environment is influencing the company's capital allocation strategy for the year.

Answer

The company is confident in its ability to maintain capital efficiency beyond 2024 through various operational levers. The 2024 plan is already designed to mitigate low natural gas prices by focusing capital on its oil-heavy basins, prioritizing value and returns over total volume growth.