Phillip Jungwirth

Phillip Jungwirth inquired about the Permian base decline rate, referencing Vital's past figures (42% for oil, 36% for BOEs), and sought confirmation on whether Permian oil production is expected to trend flat through 2026.

Answer

CFO Brandi Kendall confirmed expectations for relatively flat oil volumes in both the Eagle Ford and Permian throughout 2026. She added that on a corporate level, post-merger and divestitures, the base decline is in the high twenties, with a target to reach 25% or below over the next 12 to 18 months.

Phillip Jungwirth asked if there's an upper limit on M&A transaction size for Permian Resources, given its recent growth, and to remind him of the balance sheet parameters for larger deals. He also sought a framework for thinking about the 2027 gas premium relative to Waha, or a discount to Henry Hub, considering the expected tightening of Waha differentials.

Answer

CFO Guy Oliphint stated that the limiter for M&A is comfort with leverage, not access to capital, with capacity for $1-3 billion in deals within leverage comfort zones at $60-65 oil. Co-CEO James Walter added that they have the 'horsepower' but will be thoughtful, not risking the business for near-term accretion. Guy Oliphint clarified that for 2027, with over 90% exposure to HSC or DFW, gas pricing will be discussed relative to those benchmarks, which can be converted to Henry Hub, rather than a Waha premium.

Phillip Jungwirth asked about any upper limit on transaction size and balance sheet parameters for larger deals, given that historical consolidators are now divesting. He also sought a framework for understanding the gas premium to Waha (or discount to Henry Hub) in 2027.

Answer

Guy Oliphint, EVP and CFO, stated that ample liquidity, low leverage, and nearing investment-grade status mean access to capital is not a limiter, with capacity for $1-3 billion in deals within leverage comfort zones, while remaining selective. He confirmed that in 2027, gas pricing will be discussed relative to Gulf Coast benchmarks (HSC or DFW), not Waha, which can be converted to Henry Hub.

Phillip Jungwirth from BMO Capital Markets questioned the company's gas marketing strategy regarding new takeaway projects beyond the Gulf Coast and asked how achieving a full investment-grade rating could enhance marketing and deal-making opportunities.

Answer

Co-CEO James Walter stated their goal is to reverse their gas sales mix to 80% outside the Waha hub to maximize netbacks, exploring all new pipeline options. CFO Guy Oliphint added that an investment-grade rating is modestly helpful for marketing agreements and provides broader benefits like better debt terms and increased credit availability through cycles.

Phillip Jungwirth asked about the optimal artificial lift solutions for deeper, higher-pressure, and higher-GOR zones in the Permian Basin, such as the Woodford Barnett, and the potential opportunities for Flowco in these developments.

Answer

President and CEO Joe Bob Edwards stated that it's early for these new zones, with operators still evaluating techniques. He highlighted that higher pressures and GORs favor gas lift solutions, which are challenging for ESPs, but Flowco now offers both and is actively engaging with customers. Jungwirth also inquired about Flowco's strategy for penetrating non-Permian markets with ESPs, specifically the Bakken and MidCon, and how quickly this penetration might occur while maintaining comparable margins. Edwards confirmed Flowco's existing footprint in these markets, active customer dialogues, and an expectation of similar margin profiles to the Permian, acknowledging a slightly more complex ESP supply chain.

Phillip Jungwirth of BMO Capital Markets asked about the optimal artificial lift solutions for deeper, higher-pressure, and higher-GOR zones being targeted in the Permian Basin, such as the Woodford Barnett, and the potential opportunities for Flowco given its expanded HPGL and ESP offerings. He also questioned Flowco's strategy for penetrating non-Permian markets with Valiant's ESPs and how the company plans to maintain comparable margins in these new basins.

Answer

President and CEO Joe Bob Edwards acknowledged that it's early for these new zones, but Flowco is actively collaborating with customers to evaluate early production data. He noted that higher pressures and GORs favor gas lift solutions, particularly HPGL, over ESPs, but emphasized that Flowco now offers both. For non-Permian ESP market penetration, Mr. Edwards highlighted Flowco's existing footprint and infrastructure in key markets like the Bakken and MidCon, which are established ESP markets. He expects margin profiles in these regions to be similar to the Permian, despite being less deep.

Phillip Jungwirth of BMO Capital Markets inquired about the impact of reduced Permian spending, specifically the differences between public and private operators, and asked for clarification on the outlook for maintenance versus growth capital expenditures into 2026.

Answer

President & CEO Joe Bob Edwards noted that private operators are reducing activity more aggressively than public ones, but the overall slowdown is beginning to impact broader production trends. He emphasized FloQo's resilience due to its OpEx-focused model. CFO Jon Byers added that 2025 growth CapEx will likely be below the $110 million guidance and that 2026 maintenance CapEx is expected to be slightly above the current $20 million range, with growth CapEx likely moderating.

Phillip Jungwirth asked for perspective on the reduction in Permian spending, specifically the differing impacts from public versus private operators and the implications for FloQo's customer base. He also requested clarification on maintenance CapEx and a framework for thinking about growth capital sensitivity.

Answer

President, CEO & Director Joe Bob Edwards noted that private operators are reducing activity more aggressively than public ones, but the overall slowdown is beginning to impact broader production trends. He reiterated that FloQo remains well-positioned due to its non-discretionary, OpEx-focused services. CFO Jon Byers added that maintenance CapEx is around $20 million annually, while 2026 growth CapEx is expected to be more moderate than in prior years, partly due to the Archrock acquisition.

Inquired about the nature of spending reductions in the Permian (public vs. private) and its impact, and asked for details on the 2026 capital expenditure outlook, including maintenance and growth components.

Answer

The company noted that private operators are cutting back more aggressively than publics. They feel well-positioned due to the non-discretionary nature of their services. For 2026, they expect growth CapEx to be lower than in recent years, partly due to the Archrock acquisition, while maintenance CapEx will be slightly above $20 million.

Phillip Jungwirth asked about the primary factors influencing rental margins for the remainder of the year and questioned whether HPGL's reliability and lower upfront cost are becoming more critical selling points as producers focus on managing cash flow.

Answer

CFO Jonathan Byers indicated that rental margins are expected to remain stable in the 70% range, with pricing power being a key lever. CEO Joseph Edwards confirmed that HPGL's mechanical availability and avoidance of high upfront ESP capital costs are crucial selling points, resonating strongly with customers who are trimming CapEx and focusing on the reliability of their existing production base.

Asked about the key factors influencing rental margins for the second half of the year and whether HPGL's reliability and lower upfront cost are becoming more significant selling points in the current market.

Answer

The CFO indicated rental margins are expected to remain stable around 70%, driven by pricing power. He confirmed that HPGL's high mechanical availability and lower capital outlay are key advantages that resonate strongly with customers focused on production maintenance and cash flow management.

Phillip Jungwirth asked for details on the new 'e-Grizzly' electric multi-well HPGL unit and its market opportunity. He also inquired about the benefits of Flowco's vertically-integrated manufacturing and how it manages execution risk and inflation.

Answer

CEO Joe Bob Edwards described the e-Grizzly as a technological evolution for customers with available power infrastructure, building on their multi-well lift capabilities. He emphasized that their U.S.-based, vertically-integrated manufacturing provides a competitive advantage by allowing rapid capital adjustments and reducing exposure to overseas supply chain risks and tariffs.

Inquired about the new e-Grizzly electric multi-well HPGL unit and the strategic advantages of the company's vertically-integrated manufacturing and supply chain.

Answer

The e-Grizzly is an electric-powered version of their multi-well HPGL system, suitable for customers with available power infrastructure, and is in the early stages of rollout. The company's U.S.-based, vertically-integrated manufacturing allows them to quickly adjust capital investment and provides a competitive advantage by reducing exposure to international supply chain risks and tariffs.

Phillip Jungwirth asked about Matador Resources' 'better wells for less money' slide, specifically regarding the forecasting of EURs and the bottom-up build, and the footnote excluding wells drilled by Ameredev or Advance, inquiring if this had historically impacted EURs and if Matador-designed wells show improvement on this acreage.

Answer

Tom Elsener, EVP for Reservoir Engineering, expressed pride in the continued improvement in well productivity (BO per foot of lateral) through better targeting, spacing, completions, and geoscience. He noted a 25% improvement in cost per foot, significantly boosting rates of return and inventory quality. Joe Foran, Founder, Chairman, and CEO, added that these efficiencies have generated additional cash flow, allowing for debt reduction (e.g., $200 million last year), which strengthens the balance sheet and provides more options.

Phillip Jungwirth of BMO Capital Markets asked about Matador Resources Company's 'better wells for less money' slide, specifically regarding the forecasting of EURs and the bottom-up build. He also inquired about the footnote excluding wells drilled by Ameredev or Advance, and whether this had been a drag on historical EURs, and if Matador-designed wells are showing improvement across this acreage.

Answer

Tom Elsener (EVP of Reservoir Engineering) expressed pride in the continued improvement in well productivity, measured by BO per foot of lateral year-over-year. He attributed this to improved targeting, spacing, completions, and operational efficiencies, as well as geoscience teams finding better acreage and well landing spots. Elsener noted that combined with an approximately 25% improvement in cost per foot over the years, these factors significantly improve rates of return and inventory quality. He affirmed that Ameredev and Advance acquisitions have been great for the portfolio. Joe Foran (Founder, Chairman, and CEO) added that these efficiencies generate additional cash flow, enabling debt reduction (e.g., $200 million paid down last year), which strengthens the balance sheet and provides more options.

Phillip Jungwirth of BMO Capital Markets asked about the importance of Matador's organic growth profile versus third-party volume visibility for a potential public valuation of the San Mateo midstream asset.

Answer

EVP & CFO William Lambert stated that Matador considers itself a relative grower and the integrated nature of the business is key to its success. EVP of Midstream Brian Willey noted that San Mateo has growth opportunities from both Matador and third parties, with the new Marlin plant being fully committed on reserve capacity. Chairman & CEO Joseph Wm. Foran emphasized that attracting third-party business has always been a core strategy to validate the asset's quality and has resulted in significant repeat business.

Phillip Jungwirth of BMO Capital Markets inquired about the importance of Matador's organic growth profile versus third-party volumes for a potential San Mateo IPO from a public investor's perspective.

Answer

EVP and CFO William Lambert stated that Matador considers itself a relative grower and that the integrated business model is key to both Matador's free cash flow and San Mateo's growth. EVP Brian Willey added that San Mateo has growth opportunities from both Matador and third parties, noting the new Marlin plant is about half full but fully committed on reserves. CEO Joseph Foran emphasized that attracting third-party business, supported by a 99% runtime, is a crucial test of quality.

Phillip Jungwirth from BMO Capital Markets inquired about a potential San Mateo IPO, asking how important Matador's own organic growth profile is versus third-party volumes for public investors.

Answer

EVP and CFO William Lambert positioned Matador as a 'relative grower' that balances growth with free cash flow, a key factor for San Mateo's profile. EVP Brian Willey noted that San Mateo has growth opportunities from both Matador and third parties, with its new Marlin plant already fully committed on reserves. CEO Joseph Foran emphasized that attracting third-party business was a foundational strategy to prove quality, resulting in repeat customers and high reliability.

Phillip Jungwirth of BMO Capital Markets asked about the importance of Matador's organic growth profile versus third-party volumes for the San Mateo midstream asset from a public investor's perspective, should an IPO occur.

Answer

EVP and CFO William Lambert positioned Matador as a 'relative grower' and stated the integrated partnership with San Mateo is key to its strategy. EVP of Midstream Brian Willey confirmed that San Mateo sees growth opportunities from both Matador and third parties, noting the new Marlin plant is fully committed on reserve capacity. CEO Joseph Wm. Foran emphasized that attracting third-party business is a key test of the asset's quality.

Phillip Jungwirth questioned the low single-digit oil growth in EOG's multiyear scenario, asking how the company would resume oil production growth and which assets would drive it. He also inquired about the impact of assuming current cost structures versus actual outperformance and the drivers behind the early achievement of Encino synergies, including future improvements and marketing initiatives.

Answer

Chairman and CEO Ezra Yacob explained that the scenario's current cost assumption is for line of sight, but EOG has a track record of lowering costs. He attributed future low single-digit oil growth to global demand and potential growth from multiple basins, particularly the Utica. COO Jeff Leitzell detailed Encino synergy drivers, including drilling, completions, procurement, self-sourced sand, water infrastructure, and automation, and outlined marketing initiatives to improve netbacks through in-field infrastructure and optimized agreements.

Phillip Jungwirth questioned the low single-digit oil growth in EOG's multi-year scenario, asking how EOG would resume oil production growth, which assets would drive it, and how actual cost performance in 2023-2025 compared to the 'current cost structure' assumption. He also asked about the drivers and positive surprises behind meeting Encino synergy targets ahead of schedule, ongoing improvement initiatives like in-basin sand, and marketing efforts to enhance netbacks.

Answer

Ezra Yacob, Chairman and CEO, explained that the 'current cost structure' assumption provides line of sight, acknowledging EOG's track record of lowering costs. He attributed the low single-digit oil growth forecast to the demand outlook and spare capacity, noting that growth could come from multiple basins, with the Utica contemplating significant growth in the three-year scenario. Jeff Leitzel, Chief Operating Officer, detailed the success of Encino synergies, driven by operational improvements in drilling, completions, and procurement, reducing well costs to below $600/foot. He outlined future initiatives including self-sourced local sand, water infrastructure, automation, and leveraging scale to reduce GP&T and optimize marketing agreements.

Phillip Jungwirth from BMO Capital Markets asked for details on the nine new development targets in the Delaware Basin and the potential maximum well density per unit. He also questioned if the Delaware's finding and development cost trend could replicate the Eagle Ford's success.

Answer

SVP Keith Trasko confirmed the new targets are across the Leonard, Bone Spring, and Wolfcamp zones, with shallower zones now delivering returns comparable to the Wolfcamp. He expressed confidence that the Delaware is on a similar trajectory to the Eagle Ford, with falling costs and rising productivity set to continue lowering finding costs.

Phillip Jungwirth inquired about Range Resources' capital allocation strategy beyond 2027, specifically between liquids and dry gas acreage, and the need for additional processing capacity. He also asked about the macro outlook for global naphtha cracking rationalization and its impact on U.S. NGL supply, considering current petchem margins.

Answer

CEO Dennis Degner stated that dry gas inventory will continue to be 20-35% of the program, with flexibility to increase. He noted that the Harmon Creek 3 expansion and debottlenecking at Majorsville provide sufficient processing capacity through 2028. Regarding NGLs, Mr. Degner discussed elevated 2025 stock levels due to weak demand and resilient supply, but anticipates renormalized stock levels and healthier pricing by year-end 2026 due to increased export capacity and lower Permian NGL growth.

Phillip Jungwirth questioned Range Resources' capital allocation strategy beyond 2027, specifically how it would balance liquids versus dry gas acreage, the need for additional processing capacity or infrastructure for growth, and the willingness to focus more on dry gas and accept in-basin pricing. He also asked for clarification on the new macro slide regarding global naphtha cracking rationalization, its incremental impact on US NGL supply, and operating rate assumptions given current low petchem margins.

Answer

CEO Dennis Degner stated that dry gas inventory will continue to be a significant part of the program (20-35% annually, with flexibility to increase). He noted that the Harmon Creek 3 processing expansion provides momentum through 2027-2028, and debottlenecking at the Majorsville facility (with MPLX) offers incremental capacity without new plant construction. Regarding NGLs, Mr. Degner discussed elevated stock levels in 2025 due to weak propane demand, sticky production, and lagged infrastructure run rates. He expressed optimism for 2026, citing increased utilization of current and new dock capacity, and incremental demand from projects like Ineos and Sinopec, expecting stock levels to normalize and pricing to improve by year-end 2026.

Phillip Jungwirth asked for an update on the sentiment around federal permitting reform following a recent energy summit in Pennsylvania. He also requested Range's latest outlook on the propane market, given recent inventory builds and the export situation.

Answer

CEO Dennis Degner expressed significant optimism for permit reform, citing growing bipartisan support and positive signals from state leadership, which could accelerate project timelines. Regarding propane, he remains constructive, attributing recent inventory builds to temporary Gulf Coast congestion. He noted that strong export levels and new global demand infrastructure support a positive long-term outlook.

Phillip Jungwirth (BMO Capital Markets) asked about the prospectivity of the Barnett and Woodford formations across Ovintiv's Midland acreage, including their geographic distribution and any plans for testing these zones. He also asked about the impact of LNG Canada's second train ramp-up on the AECO market and Ovintiv's potential to supply it, also inquiring if changes in facility ownership could create strategic partnership or marketing opportunities.

Answer

Brendan McCracken (President and CEO, Ovintiv) expressed satisfaction with the team's assembly of a Barnett position. Greg Givens (EVP and COO, Ovintiv) elaborated that Ovintiv holds meaningful Barnett rights on approximately 100,000 acres in the Permian. He noted plans to test the deeper, higher-cost Barnett zone with a first well this year, while remaining prudent and patient, leveraging peer learnings, as this resource is separate from existing cube development. Regarding LNG Canada, Brendan McCracken expressed satisfaction with its recent ramp-up to full capacity but cautioned that the AECO market remains challenged due to the facility's relatively small takeaway capacity compared to basin productivity. He reiterated Ovintiv's commitment to diversifying its Canadian gas portfolio into alternate markets and expects to grow its LNG exposure over time.

Phillip Jungwirth (BMO Capital Markets) asked about the prospectivity of the Barnett Woodford across Ovintiv's Midland acreage, its location (north/south), and plans for testing. He also inquired about the implications of LNG Canada ramping up its second train for the AECO market and potential strategic partnership or marketing opportunities for Ovintiv.

Answer

EVP and COO Greg Givens stated that Ovintiv has Barnett rights on about half of its Permian acreage (around 100,000 acres) and plans to test its first well this year, while prudently observing peer de-risking due to higher costs and depth. President and CEO Brendan McCracken expressed pleasure at LNG Canada's ramp-up but cautioned that its total takeaway is still relatively small compared to basin potential, maintaining a cautious view on AECO. He confirmed interest in diversifying Canadian gas into alternate markets, including growing LNG exposure over time.

Phillip Jungwirth asked if there is a tipping point where consolidation in the Montney leads to greater supply discipline and inquired about Ovintiv's long-term gas marketing strategy as existing fixed-price contracts approach renewal.

Answer

President and CEO Brendan McCracken suggested that consolidation directionally points toward more discipline, similar to what has occurred in the Lower 48. He also noted that legacy firm transportation contracts have renewal rights in perpetuity, and the company sees a strong, diversified North American gas market evolving due to LNG and data center demand.

Phillip Jungwirth questioned the Barnett's variability across the basin and Diamondback's outperformance in well productivity. He also asked about a sustainable growth rate given the company's nearly two decades of inventory.

Answer

CFO Jere Thompson explained that western Barnett wells have lower maturity and bottom hole pressures, leading to weaker performance than wells deeper in the basin. CEO Kaes Van't Hof added that Diamondback focused on the best resource quality and potential to drain both Barnett and Woodford. Kaes Van't Hof stated that a sustainable growth rate depends on the macro, with the company currently in a 'yellow light' scenario, emphasizing inventory duration and growth.

Phillip Jungwirth asked about the variability of the Barnett across the basin and why Diamondback's Barnett well productivity has significantly outperformed the industry. He also inquired about the company's sustainable growth rate over a multi-year period, given its deep resource base and the 'two decades of inventory' comment.

Answer

CFO Jere Thompson explained that the distinction lies in the western side of the basin having lower maturity and bottom hole pressures, leading to less robust well performance compared to the higher bottom hole pressures and gas content deeper in the basin. CEO Kaes Van't Hof added that the focus is on finding the best, thickest resource and the potential to drain both Barnett and Woodford reservoirs. Regarding growth, Kaes Van't Hof stated it's macro-dependent, with a current 'yellow light' scenario focused on flat production and maximizing free cash flow, but acknowledged that organic growth could become an output in the future.

Phillip Jungwirth asked about a 'green light' scenario for the Permian, specifically how capital efficient it is to grow versus maintain production when crude prices are in the $70-$80 range, and if the industry has the capacity to accelerate. He also questioned Diamondback's leadership in average wells per section (slide 8), asking if it's due to more core acreage or if peers are leaving behind child wells, given Viper's unique perspective.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) believed the industry has the capability to accelerate, with capital spending yielding higher returns at $70-$80 crude on a shrunken balance sheet and share count. He noted current good returns at $60 but deemed adding crude to an oversupplied market imprudent. He stated geology matters significantly, but the key is multiplying wells per section by well productivity for more oil per section/DSU at lower cost. Danny Wesson (COO, Diamondback Energy) added that Diamondback's development style is differential, optimizing returns for every DSU and investment.

Phillip Jungwirth asked about a 'green light' scenario for the Permian, specifically how capital efficient it is to grow versus maintain production and the industry's capacity to accelerate. He also inquired about Diamondback's leadership in average wells per section, asking if it's due to core acreage or superior development styles compared to peers.

Answer

Kaes Van't Hof (CEO, Diamondback Energy) stated that in a 'green light' scenario (crude in the $70-$80 range), capital spending would yield much higher returns on a shrunken balance sheet and share count. He noted that adding crude to an oversupplied market is not prudent at $60 oil. Regarding development, Kaes Van't Hof acknowledged that geology matters significantly but emphasized that Diamondback's approach of multiplying wells per section by well productivity per well results in more oil per section at a lower cost structure, leading to more PV per acre. Danny Wesson (COO, Diamondback Energy) added that Diamondback's development style is differential, optimizing returns for every DSU and dollar invested.

Phillip Jungwirth of BMO Capital Markets asked about the relative cost of capital between Viper and Diamondback and its impact on capital allocation, and also inquired about Permian cycle times.

Answer

CEO Kaes Van't Hof acknowledged temporary technical factors affecting Viper's stock but pointed to its recent successful investment-grade debt deal as a sign of strong investor support. COO Danny Wesson described full DSU development as a roughly twelve-month cycle, longer than often perceived. Van't Hof added that despite these cycle times, the significant rig count reduction in the Permian will inevitably lead to a production response.

Phillip Jungwirth asked about the industry's ability to 'high-grade' capital in the current downturn compared to past cycles and inquired about Diamondback's appetite for new natural gas pipeline commitments.

Answer

Chairman and CEO Travis Stice argued that most high-grading has already occurred in recent years. President Kaes Van’t Hof added that capital decisions are now more about preserving scarce inventory than protecting balance sheets. He also confirmed Diamondback will continue to support new gas pipelines out of the Permian, believing in the long-term gas thesis.

Philip Jungwirth asked about the commercial opportunity for Devon on a standalone basis, given Jeff Ritenour's new role heading up commercial, and the company's current focus in this area.

Answer

Clay Gaspar, President and CEO, noted that the question ventured into post-merger topics but generally stated that the combined company would have an exciting platform to re-evaluate capital allocation, asset rationalization, and long-term opportunities. He emphasized that the strong financial and operational foundation would open doors to additional possibilities.

Philip Jungwirth inquired about the commercial opportunity for standalone Devon Energy and its current focus, particularly with Jeff Ritenour heading up commercial post-merger.

Answer

President and CEO Clay Gaspar stated that discussing post-merger commercial opportunities would be premature. He reiterated that the combined company's strong financial and operational foundation would open doors to more possibilities, including capital allocation and asset rationalization, once the new management team and board are in place.

Phillip Jungwirth of BMO Capital Markets asked for an expansion on potential midstream investments and inquired about Delaware Basin production performance versus expectations so far this year.

Answer

President & CEO Clay Gaspar explained that their midstream strategy is about value creation, highlighting both the recent sale of the Matterhorn pipeline interest for a large gain and the acquisition of Cottondraw Midstream to control a core asset. SVP John Raines stated that Delaware well results are consistent with expectations, cautioning that Q1 data was skewed to deeper, less productive zones and that productivity should normalize in coming quarters. He also noted they are continuously optimizing completion designs.

Phillip Jungwirth of BMO Capital Markets asked for more detail on potential future midstream investments and questioned the Delaware Basin's well performance versus expectations for the year.

Answer

President & CEO Clay Gaspar and EVP & CFO Jeff Ritenour explained that their midstream strategy is opportunistic and focused on value creation, citing the recent sale of Matterhorn and acquisition of Cottondraw as examples. They emphasized that investments support E&P cost reduction and marketing goals. SVP John Raines stated Delaware well productivity is consistent with expectations, cautioning that Q1 data was skewed by a higher mix of less-productive Wolfcamp B wells and that performance should normalize.

Phillip Jungwirth of BMO Capital Markets asked for more detail on potential future midstream investments and inquired about Delaware Basin well performance versus expectations and the current state of completion design optimization.

Answer

President & CEO Clay Gaspar and EVP & CFO Jeff Ritenour emphasized that their midstream strategy is driven by value creation, whether buying or selling, to support E&P and marketing goals. SVP John Raines noted that Q1 well productivity was skewed by well mix but that overall performance is consistent with expectations, and the company is continuously optimizing completion designs.

Phillip Jungwirth asked for an update on EQT's LNG offtake discussions, including buyer perspectives on Henry Hub versus oil-linked deals beyond 2030, and international buyer motivation to own physical Henry Hub-linked gas. He also inquired about the value of EQT's gas storage and plans to consolidate the MVP venture.

Answer

EQT CFO Jeremy Knop described strong international demand for physical molecules, noting a unique interest in EQT's volumes due to its vertical integration and the perceived short inventory in the Haynesville. President and CEO Toby Rice highlighted storage's role in energy reliability, mentioning strategic curtailment as a key lever. Knop added that while EQT has Gulf Coast storage, the market needs salt storage there, and EQT is studying it for shareholder value. The MVP consolidation question was not directly answered regarding accounting, but the ownership increase was confirmed.

Phillip Jungwirth asked for an update on EQT's discussions and plans for LNG offtake in Asia and Europe, securing regasification capacity, and how purchasers view Henry Hub versus oil-linked deals beyond 2030. He also inquired about the value of adding storage further from the wellhead and plans to consolidate the MVP venture now that EQT owns 53%.

Answer

CFO Jeremy Knop stated that EQT's team is very active, finding international demand for LNG to be more real than perceived, with unique interest in buying directly from a producer like EQT due to its vertical integration. He noted that international buyers are realizing the Haynesville's short inventory for 2030 and beyond, leading to more interest in Appalachia and Permian molecules. President and CEO Toby Rice highlighted storage as crucial for energy reliability, mentioning strategic curtailment as a key lever. Jeremy Knop added that while EQT has Gulf Coast storage, the market needs salt storage there to buffer volatility, and they are studying how to express long volatility through storage in a value-accretive way for shareholders. The question about MVP consolidation was not directly answered.

Philip Jungwirth inquired about an update on MVP Southgate, whether market changes warrant revisiting its scope, and how LNG offtake terms have evolved before and after the LNG export pause.

Answer

Toby Rice, President and CEO, expressed increased excitement for MVP Southgate's future potential given strong demand signals and federal support, and confirmed they are studying optimization. Jeremy Knop, CFO, explained that LNG offtake terms became more favorable for buyers after the export pause, allowing EQT to secure better credit conditions and project quality, strategically entering at the tail end of the current wave.

Philip Jungwirth asked for an update on MVP Southgate and whether market changes provide reason to revisit its scope. He also inquired about how LNG offtake terms have evolved before and after the LNG export pause, specifically if EQT is seeing more favorable deals.

Answer

Toby Rice (President and CEO, EQT) stated that MVP Boost's strong pull environment increases excitement for Southgate's future potential and expansion, with Jeremy Knop (CFO, EQT) confirming EQT is moving ahead with the project. Jeremy Knop explained that the LNG export pause shifted the market to a buyer's favor, allowing EQT to secure more favorable credit terms and strategically enter at the tail end of the current FID wave.

Phillip Jungwirth from BMO Capital Markets asked if EQT expects to supply the gas for the West Virginia power project where it is building midstream infrastructure. He also inquired about the MVP Boost open season and the likelihood of other third-party pipelines reaching FID given potentially high tariffs.

Answer

CFO Jeremy Knop confirmed the expectation is that EQT will supply the ~100 MMcf/d of gas for the West Virginia project, which should reach FID in H2 2025. President and CEO Toby Rice added that being an integrated player provides a significant competitive advantage. Regarding MVP Boost, Mr. Knop was cautious due to the active open season but expects new pipelines will be driven by demand-pull from end-users rather than supply-push from producers.

Philip Jungwirth asked about the benefits of the NG3 pipeline now flowing volumes for Expand Energy, the advantages of selling gas to the Perryville hub versus Gillis, and how the marketing strategy is tailored for each.

Answer

Dan Turco, EVP of Marketing and Commercial for Expand Energy, stated that NG3 provides increased market optionality, bringing gas to Gillis, which is expected to become a premium market as LNG demand grows. He described Perryville as another great market with strong pull from Southeast utilities, partly due to gas redirection to Gillis. Expand's strategy leverages the ability to structurally sell to both markets and dynamically move molecules between them to capture optionality value.

Philip Jungwirth from BMO Capital Markets asked about the benefits Expand Energy expects from the NG3 pipeline now flowing volumes this year, and whether there's a benefit to maintaining ownership in the Golden Pass project long-term or through a potential expansion. He also inquired about the advantages of selling gas to the Perryville hub (2 Bcf/day capacity) compared to Gillis, and how the go-forward marketing strategy would be tailored for Perryville volumes.

Answer

Dan Turco, EVP of Marketing and Commercial, stated that NG3, which came online in October last year, provides market optionality and brings gas to Gillis, a growing premium market. He noted that currently, the capacity payments and uplift are about even, but Gillis is expected to become more premium with increasing LNG demand. Turco explained that Perryville is also a great market due to strong pull from Southeast utilities, driven by gas redirection to Gillis and new pipeline capacity. He emphasized Expand Energy's advantage in being able to structurally sell to both markets and dynamically move molecules between them to capture optionality value.

Phillip Jungwirth asked for an update on the status of small refinery exemptions (SREs) for Woods Cross, Parco, Casper, Tulsa, and Artesia, specifically what has been submitted or resubmitted and what decisions are pending. He also inquired about the company's progress on its refining reliability, integration, and operating cost improvement journey, asking if it was still in the 'fifth inning' and if there was ambition for more commercial improvements to enhance capture rates.

Answer

Steve Ledbetter, EVP of Commercial, confirmed that petitions for SREs for all listed refineries for 2025 have been submitted, and the company is awaiting EPA deliberation, anticipating a decision soon. Valerie Pompa, EVP of Operations, stated that the company's strategies continue to be reflected in improved OpEx per barrel, with $87 million in cost reductions this year, and expects to continue towards the $7.25 goal. Mr. Ledbetter added that commercial opportunities are being pursued, including the multi-phase midstream project, the Green Trail JV, the El Dorado project, and an aggressive crude slating strategy, noting year-over-year capture improvement of 6% excess RIN and 9% excess RIN in RVO.

Phillip Jungwirth asked for an update on the status of SREs for Woods Cross, Parco, Casper, Tulsa, and Artesia, specifically what had been submitted or resubmitted and what decisions were pending. He also inquired if the company still considered itself in the 'fifth inning' of its refining reliability, integration, and operating cost improvement journey, asking about the progression this year and ambitions for commercial side improvements.

Answer

Steve Ledbetter (EVP of Commercial, HF Sinclair) confirmed that petitions for all listed facilities for 2025 had been submitted and the company was awaiting EPA deliberation, anticipating a decision shortly. Valerie Pompa (EVP of Operations, HF Sinclair) affirmed that the strategies for OpEx improvement were continuing, reflected in cost reductions, and progress was being made towards the $7.25 goal. Mr. Ledbetter added that commercial opportunities included the multi-phase midstream project, the marketing JV, the El Dorado project (improving light product yield and heavy crude processing), and an aggressive crude slating strategy, noting year-over-year capture improvement.

Phillip J. Jungwirth asked about HF Sinclair's financing strategy for its pipeline expansion projects and the rationale behind the potential reversal of the Medicine Bow pipeline.

Answer

Steve Ledbetter, EVP of Commercial, stated that HF Sinclair has multiple financing options for the pipeline projects but is not at FID. Tim Go, CEO, noted the overall cost is expected to be significantly lower than other rumored projects. Steve Ledbetter, EVP of Commercial, explained the Medicine Bow reversal is to move Rockies barrels west due to increased Mid-Con supply into Denver, with longer-term plans to move Mid-Con barrels into PADD 5.

Phillip Jungwirth asked about HF Sinclair's financing strategy for the pipeline expansion projects, including potential build multiples. He also sought clarification on the rationale for reviewing the Medicine Bow pipeline reversal, considering its current service to the Denver market.

Answer

Steve Ledbetter, EVP of Commercial, stated that financing options include balance sheet liquidity and joint venture partners, but they are not at FID. Tim Go, CEO, added that the overall project cost is expected to be significantly lower than other rumored lines. Steve Ledbetter explained the Medicine Bow rationale: managing market value due to an expansion bringing Mid-Con barrels to Denver by Q3 2026. Phase 1 would move 35,000 bbl/day west, and longer-term, Medicine Bow could be reversed and expanded to move more equity barrels from Mid-Con to PADD 5. Tim Go confirmed Medicine Bow primarily moves equity barrels.

Phillip Jungwirth of BMO Capital Markets asked for details on the margin trajectory in the Lubricants segment beyond the turnaround and FIFO headwinds, and how the third quarter is shaping up. He also sought thoughts on a proposed California bill regarding a uniform gasoline spec for Western states.

Answer

Matt Joyce, SVP of Lubricants & Specialties, explained that in addition to FIFO and turnaround impacts, long supply in Group 2 and Group 3 base oils pressured margins, a trend expected to continue into Q3. CEO Timothy Go added that the business is now more stable and less susceptible to market fluctuations. Regarding the gasoline spec, Steven Ledbetter, EVP of Commercial, expressed skepticism about a more stringent regional spec being adopted but affirmed HF Sinclair's flexibility to adapt and supply the markets regardless of the outcome.

Philip Jungwirth asked about Antero's strategy for managing its firm transportation (FT) portfolio, including ethane C3+, through the decade, focusing on long-term margin optimization through recontracting or acquiring new FT. He also questioned the company's competitive advantage in its organic leasing program, given its existing footprint and infrastructure, and the challenges for smaller E&Ps to develop their positions efficiently.

Answer

Michael Kennedy, CEO and President, highlighted Antero's strong position for FT optimization, leveraging flexibility with local dry gas and assessing long-term agreements for future upside in transport path and cost structure. He emphasized Antero's role as the premier West Virginia natural gas and NGL producer, using its size and scale for efficient asset development and continuing consolidation through organic leasing or small transactions.

Philip Jungwirth asked how Antero plans to manage its firm transportation (FT) portfolio, including ethane C3+, through the decade, exploring opportunities for long-term margin optimization through recontracting or acquiring FT from other players. He also questioned Antero's competitive advantage in its organic leasing program, specifically how its existing footprint and infrastructure might make it prohibitive for smaller E&Ps to efficiently develop their positions.

Answer

Michael Kennedy, CFO and SVP of Finance, highlighted Antero's strong position for FT optimization, with the flexibility to choose the best paths and leverage local dry gas. He noted that as long-term agreements mature, Antero will assess recontracting for cost structure and margin optimization. Mr. Kennedy emphasized Antero's role as the premier natural gas and NGL producer in West Virginia, stating that its size and scale enable more efficient asset development, allowing for continued consolidation through organic leasing or small transactions.

Phillip Jungwirth inquired about the potential ceiling for the TGP 500 leg premium due to LNG demand and whether the Appalachian supply response to in-basin demand might differ from historical patterns.

Answer

SVP of Gas Marketing, Justin B. Fowler, suggested the TGP 500 premium could see additional upside as LNG facilities ramp up, creating a 'Citygate' type dynamic. CFO Michael Kennedy acknowledged that while industry consolidation could alter the supply response, Antero will not plan on it, remaining prepared to grow into any sustained price improvement with its vast dry gas inventory.

Philip Jungwirth asked about PBF Energy's Q1 throughput guidance, noting the East Coast is light and the West Coast implies mid-90% utilization after Q1, and the confidence in achieving higher utilization. He also inquired about the sustainability of wider crude differentials (seasonal vs. structural) into the mid-year and second half, considering various market factors.

Answer

CEO Matt Lucey expressed high confidence in the West Coast utilization, noting Martinez has a Q2 hydrocracker turnaround but Torrance will be clean. He stated there's nothing extraordinary on the East Coast. EVP Tom O'Connor viewed the Venezuela crude market liberation as a structural change, potentially taxing US coking capacity. He also highlighted persistent improvement in the light barrel, strong Dated Brent due to disruptions, and the push and pull on crude differentials. CEO Matt Lucey added that strong Canadian and Gulf of Mexico growth, Venezuelan barrels, and relatively flat shale are long-term dynamics not seen in a long time.

Philip Jungwirth inquired about PBF Energy's Q1 throughput guidance, noting that the East Coast figures seemed light without planned turnarounds, suggesting a potential winter storm impact. He also asked about the confidence in achieving mid-90% utilization on the West Coast for the rest of the year after the Torrance turnaround and Martinez startup, given the expected higher margin environment. Additionally, he sought management's view on the sustainability of wider crude differentials into mid-year and the second half, distinguishing between seasonal and structural factors like Venezuela's crude liberation, rising Canadian production, OPEC actions, and new complex refinery startups.

Answer

CEO Matt Lucey expressed high confidence in the West Coast utilization, noting Torrance is finishing work and Martinez will be operational, though Martinez has a hydrocracker turnaround in Q2. He confirmed no extraordinary issues on the East Coast. EVP Tom O'Connor addressed crude differentials, categorizing Venezuela's crude liberation as a structural change, as it frees up barrels previously constrained by sanctions, potentially taxing U.S. coking capacity. He also pointed to persistent improvement in the light side of the barrel, with less prolific U.S. shale growth and strong Dated Brent prices due to disruptions. Mr. Lucey added that strong Canadian and Gulf of America growth, combined with relatively flat shale, are long-unseen dynamics supporting wider differentials.

Phillip Jungwirth inquired about well-cost reductions and their contribution to capital efficiency and lower F&D, seeking expectations for 2026 service costs. He also asked about Magnolia's share buyback strategy, specifically if it's more programmatic or tactical given recent equity performance.

Answer

Chris Stavros, Chairman, President, and CEO, indicated Giddings well costs are trending towards $1,000 per foot, with service costs flat to slightly down for 2026, and some locked in for the first half. On buybacks, Mr. Stavros explained the programmatic portion is a minimal 1% commitment, while the tactical approach allows leaning in during periods of stock underperformance or 'disconnects,' as observed in Q4.

Phillip Jungwirth inquired about well-cost reductions and their contribution to Magnolia's capital efficiency and lower finding and development (F&D) costs, asking for expectations on service costs for 2026. He also asked about the company's share buyback strategy, specifically if it's more programmatic or tactical to leverage market volatility.

Answer

Chris Stavros, Chairman, President, and Chief Executive Officer, indicated that the cost of a standard Giddings well has trended down to around $1,000 per foot. He noted that service costs are currently flat to slightly down, with key provider costs locked in for the first half of 2026. Regarding buybacks, Mr. Stavros explained a programmatic component (minimum 1% commitment) and a tactical approach, allowing the company to 'lean in' during periods of stock price disconnect.

Phillip J. Jungwirth inquired about the impact of the recently restructured Delaware gas contracts with Western Gas and whether this, along with acreage swaps, could enhance capital efficiency in developing ConocoPhillips' Permian assets, particularly the Shell-acquired acreage.

Answer

Nick Olds, Executive Vice President of Lower 48 and Global HSE, ConocoPhillips, confirmed that strategic trades and 'coring up' acreage are ongoing to increase lateral length, which significantly drives capital efficiency. He noted that the Western Midstream contract contributes to the $1 billion cost savings run rate. He highlighted that Permian future well inventory with laterals of two miles or greater increased from 60% in 2023 to 80% today (90% for the 2026 program), improving cost of supply by 25% for 1-to-2 mile laterals and an additional 10-15% for 3-4 mile laterals.

Phillip J. Jungwirth asked about the impact of the Delaware gas contract restructuring with Western Gas on Shell-acquired acreage and the potential for acreage swaps to enhance capital efficiency.

Answer

Nick Olds, EVP of Lower 48 and Global HSE, explained that strategic trades are continuously used to 'core up' and increase lateral lengths, driving capital efficiency. The Western Midstream contract directly contributes to the $1 billion cost savings. He noted that 80% of Permian future well inventory is now 2+ miles (up from 60% in 2023), with 90% of 2026 wells being 2+ miles, improving cost of supply by 25% for 2-mile laterals and an additional 10-15% for 3-4 miles.

Phillip Jungwirth of BMO Capital Markets asked how the projected free cash flow inflection from major projects will improve Return on Capital Employed (ROCE) and how that compares to accelerating Lower 48 growth.

Answer

Chairman and CEO Ryan Lance responded that all new projects meet their stringent cost of supply hurdles, ensuring they will drive ROCE improvement. He stated the ultimate goal is to deliver returns competitive with the broader S&P 500, not just energy peers. As free cash flow and CFO grow, distributions to shareholders will also grow, directly contributing to superior, through-cycle returns.

Phillip Jungwirth from BMO inquired about Weatherford's lower year-over-year capital expenditure despite increased ERP system spending, asking which product lines are under scrutiny, the new CapEx focus, and how business mix changes (e.g., growth in lower capital-intensive completions, Argentina divestiture) are contributing.

Answer

Executive Vice President and CFO Anuj Dhruv confirmed CapEx would remain within the 3-5% range, with a stringent focus on tangible returns for deployment. He highlighted a doubling of ERP system spend in 2026 as a multi-year journey to drive efficiencies in supply chain, procurement, working capital, and inventory management. Mr. Dhruv emphasized improving asset utilization ("do more without spending more") and strategically leveraging existing capital or trading CapEx for OpEx, citing the Petrobras contract as an example of driving incremental business without new capital outlay.

Phillip Jungwirth from BMO asked about Weatherford's lower CapEx year-over-year despite increased ERP spend, inquiring about specific product lines under review, the new focus areas for CapEx, and the impact of business mix changes.

Answer

Anuj Dhruv, Executive Vice President and CFO, confirmed CapEx would remain within the 3%-5% range, with a hard look at deployment requiring tangible line of sight. He highlighted doubling ERP spend in 2026 for multi-year efficiency gains in supply chain, procurement, and working capital. Dhruv emphasized improving asset utilization and leveraging existing CapEx for incremental business, such as the Petrobras contract, to optimize cash and margin on deployed capital.

Phillip Jungwirth inquired about the nice uptick in DRE (Drilling, Reaming, and Evaluation) margins in the quarter, asking about the drivers of improvement and whether the segment is past earlier headwinds.

Answer

Girish Saligram, President and CEO, attributed the DRE margin improvement to increased activity in Latin America and the Middle East, coupled with a focus on cost structure stabilization. He highlighted that DRE, being a service-oriented business, experiences exaggerated fall-throughs as revenues improve, leading to a higher positive impact on margins compared to other segments.

Phillip Jungwirth inquired about the significant uptick in DRE (Drilling & Evaluation) segment margins in Q3, asking about the drivers behind these improvements despite a 20% year-on-year top-line decline.

Answer

Girish Saligram, President and CEO, attributed the margin improvement to the recovery in Latin America, a stabilized cost structure, and strong activity in the Middle East. He explained that DRE's service-oriented nature leads to exaggerated fall-throughs and higher margin impact as revenues improve.

Phillip Jungwirth asked about the benefits to Chevron of increasing its ownership in CPChem, potential operational or strategic changes compared to the current JV structure, and other avenues for growth in petrochemicals.

Answer

Chairman and CEO Mike Wirth praised CPChem as a well-run company and a positive investment, noting the long-term positive outlook for chemicals despite the current tough cycle. He expressed a desire for more exposure to the sector, acknowledging that acquisitions depend on willing counterparties and competitive pricing. He also mentioned Chevron's large aromatics position at GS Caltex in North Asia as another avenue for petrochemical exposure.

Phillip Jungwirth asked about Chevron's view on chemicals (CPChem), the benefits of owning more of CPChem versus the current JV structure, and other avenues for growth in petrochemicals.

Answer

Chairman and CEO Mike Wirth praised CPChem as a well-run company and a good investment, expressing a positive long-term outlook for the chemicals sector despite the current tough cycle. He stated Chevron would like more exposure to the sector but requires a willing counterparty and competitive terms for deals. He also mentioned Chevron's large aromatics position in North Asia (GS Caltex) as another avenue for petrochemical exposure.

Phillip Jungwirth asked about Chevron's strategy for maximizing value from Permian gas, given its approximately 2 bcf/day net production, inquiring about current marketing efforts and future opportunities.

Answer

Chairman and CEO Mike Wirth explained that Chevron markets all company-operated Permian production and just under half of its NOJV production, resulting in approximately 70% of total production receiving U.S. Gulf Coast pricing. He noted that WAHA exposure varies, sometimes reduced by utilizing excess firm transportation capacity to capture arbitrage. He stated that Chevron is well-covered for out-of-basin transportation across all three streams (oil, NGLs, gas) and will continue to optimize value through its steady, well-planned program and advance commitments.

Phillip Jungwirth asked about maximizing value for Permian gas, given Chevron's significant production and existing strong position, inquiring about current marketing strategies and future opportunities amidst new pipeline announcements.

Answer

Chairman and CEO Mike Wirth explained that Chevron markets all company-operated production and just under half of NOJV production, with approximately 70% of total production receiving U.S. Gulf Coast pricing. He noted that WAHA exposure varies, sometimes reduced by using excess firm transportation capacity to capture arbitrage. Wirth stated Chevron is covered on all three streams for out-of-basin transport and will continue to optimize value through its steady, well-planned program, which allows for advance commitments.

Phillip Jungwirth of BMO Capital Markets asked about Kazakhstan's petrochemical investment plans, the importance of domestic production to these ambitions, and the potential of the untapped gas resource at Tengiz.

Answer

Chairman & CEO Michael Wirth acknowledged Kazakhstan's goal to diversify its economy using its energy wealth. He noted that a large portion of associated gas at Tengiz is currently reinjected. Chevron engages with the republic on these opportunities and supports its goals, though it has not directly participated in a petrochemical plant there. He also mentioned the need for domestic infrastructure investment.

Phillip Jungwirth asked about the future development pipeline in the Gulf of America, including prospects for Paleogene or brownfield tiebacks, and how the cost structure of deepwater now compares to shale.

Answer

CEO Mike Wirth stated the near-term focus is on infill and staged developments for recent startups, like 'Anchor Phase 2' and 'Ballymore 2'. He noted 80% of their exploration portfolio is within tieback range of existing hubs. He also emphasized that deepwater development costs have fallen to the low teens, making them highly competitive with shale.

Philip Jungwirth asked about the impact of EU refinery loophole sanctions on diesel markets, the potential for increased demand for U.S. Gulf Coast barrels, and the interplay between fundamental and geopolitical tightness in diesel cracks. He also inquired if Valero might revisit its stance on the CITGO auction given recent regime changes in Venezuela.

Answer

Gary Simmons (EVP and COO, Valero Energy Corporation) noted the EU shying away from Russian diesel, leading South American markets to return to the U.S. Gulf Coast, which supports the market. He had no insight into future drone attacks on Russian refineries. R. Lane Riggs (Chairman, CEO and President, Valero Energy Corporation) reiterated Valero's decision to stay out of the CITGO auction due to process uncertainty, noting that Venezuela changes haven't clarified the situation, but they remain interested in assets with more certainty.

Philip Jungwirth followed up on the CITGO auction, asking if Valero might revisit its stance of staying out, given the regime changes in Venezuela and potential process developments.

Answer

R. Lane Riggs, Chairman, CEO, and President, reiterated Valero's decision to stay out due to the uncertainty, length, and difficulty of the process, noting that changes in Venezuela have not clarified it. He stated that Valero is always interested in assets that become open or have more certainty around their process, which might change their perspective.

Philip Jungwirth asked about the dynamics of the heavy sour crude mix in the Gulf Coast, considering declining Mexican production, Venezuelan uncertainty, Canadian TMX capacity, and the role of fuel imports. He also inquired about coker margins, given high diesel cracks but still tight differentials. Additionally, he asked about the 'point of no return' for the planned Benicia refinery closure, considering the state's desire to keep it open and scheduled turnarounds.

Answer

Gary Simmons, Executive Vice President and COO, noted that declining Mexican production is largely offset by increased Canadian volumes and returning Venezuelan barrels, with additional OPEC+ production (Basra, Kirkuk) leading to a heavier crude diet in Q4. He stated that high sulfur fuel oil has been strong, limiting the incentive to buy it for cokers. Rich Walsh, Executive Vice President and General Counsel, confirmed that discussions with California regarding Benicia have not materialized, and Valero's plans for closure are moving forward as scheduled, with no changes anticipated.

Phillip Jungwirth asked about the planned Benicia refinery closure, specifically when Valero would reach the 'point of no return' given preparations and a scheduled turnaround, recognizing the state's desire to keep it open.

Answer

Rich Walsh, Executive Vice President and General Counsel, stated that discussions with California have not materialized into any changes, and Valero's plans for the Benicia refinery closure are moving forward as previously shared, with no anticipated alterations.

Phillip Jungwirth of BMO Capital Markets asked if Valero's outlook on vehicle efficiency gains has changed and inquired about the supply and affordability conversation in Europe following recent refinery closures.

Answer

EVP & COO Gary Simmons stated that while EV penetration may slow, the main driver of efficiency gains, CAFE standards, remains a factor. He also explained that the Lindsay refinery closure in the UK will likely tighten the local gasoline market, creating an opportunity for Valero's Pembroke refinery to increase local sales, potentially reducing its exports.

Phillip Jungwirth of BMO Capital Markets asked for Valero's medium-term outlook on vehicle efficiency gains and whether a slowdown is possible. He also inquired about the supply and affordability conversation in the UK and Europe, especially in light of recent refinery closures like Lindsay.

Answer

EVP & COO Gary Simmons stated that while EV penetration may slow, CAFE standards continue to drive efficiency gains in the vehicle fleet. Regarding Europe, he noted the Lindsay refinery closure creates a supply void for gasoline in the UK, which Valero's Pembroke refinery is positioned to fill. This could increase local netbacks and potentially reduce product available for export to other markets.

Phillip Jungwirth asked about the drivers behind the improvement in the offshore inventory, noting a shift of more projects to the sub-$40 break-even category, and how the seven new blocks in the Gulf of America would contribute, whether through tie-back potential or exploration. He also questioned the core view of the Tupper Montney position, considering the strong A&D market and potential for recycling capital or drilling partnerships.

Answer

Eric Hambly, President and CEO, and Atif Riaz, VP, Investor Relations and Treasurer, stated that the seven new Gulf of America blocks are exploration-oriented, including a northern extension of the Ocotillo field. They clarified that annual updates to project economics involve minor fine-tuning of costs and resource estimates, not a wholesale reassessment. Regarding Tupper Montney, they confirmed active internal assessment of all assets for M&A opportunities. While they like Tupper Montney for its tremendous, long-life resource, capital efficiency, and cash flow generation in high gas price periods, they are aware of its market value and continuously consider opportunities, though currently, they don't see a transaction that would allow for deployment into something 'even better.'

Phillip Jungwirth asked about the drivers behind the improvement in offshore inventory economics, with more projects shifting to the sub-$40 break-even category, and how the seven new blocks in the Gulf of America (GOA) would contribute. He also questioned the core view of the onshore Canada position, considering a strong A&D market for Montney valuations, and if recycling capital or drilling partnerships were being considered.

Answer

Eric Hambly (President and CEO) clarified that the seven new GOA blocks are exploration-oriented, and offshore project economics updates involve minor fine-tuning, not a dramatic change. Regarding the Tupper Montney, Hambly confirmed active assessment of M&A opportunities for all assets. He highlighted the Tupper Montney's tremendous resource length, stable value, capital efficiency, and cash flow generation, making it a valuable long-term asset, and currently doesn't see a transaction that would allow for better capital deployment.

Phillip Jungwirth asked about the confidence level in the Eagle Ford inventory following strong well results and sought details on the Vietnam appraisal well, questioning if it provides a clear path to the company's long-term production goals for the region.

Answer

President, CEO & Director Eric Hambly expressed high confidence in the Eagle Ford inventory, noting that recent successful infill wells have significantly derisked future locations. For Vietnam, he explained the appraisal well is testing reservoir continuity, and confirmed that existing discoveries already support the 30,000 to 50,000 net BOE/day target, with a successful appraisal potentially pushing output to the higher end of that range.

Phillip Jungwirth asked about Marathon Petroleum's planned crude slate for Q4, specifically the higher percentage of sweet crude expected in the Gulf Coast and Midcon, and their strategy for sourcing advantageous barrels. He also inquired about the availability of dock space for waterborne refined product imports into California, asking if it could become a bottleneck for future supply as additional refineries close.

Answer

CCO Rick Hessling explained that GBR's logistical position allows for running significant sweet discounted crude, while Garyville toggles between sweet and sour based on economics, noting increased looks at Iraqi barrels and Canadian heavy barrels. He identified dock space as a significant deterrent and headwind for waterborne imports into California, citing delays from fog, incidents, weather concerns, and high freight rates, all of which serve as tailwinds for MPC.

Phillip Jungwirth asked about Marathon Petroleum's planned crude slate for the Gulf Coast and Midcon, noting an expected higher percentage of sweet crude in Q4, and inquired about market observations for sourcing advantaged barrels. He also asked about the availability of dock space for waterborne refined product imports into California, and if it poses a bottleneck to future supply given refinery closures.

Answer

CCO Rick Hessling explained that GBR is advantaged to run sweet discounted crude due to its location, while Garyville toggles between sweet and sour based on economics, noting increasing looks at Iraqi barrels. He also mentioned running discounted Canadian heavy barrels. On California dock space, Rick Hessling confirmed it is a significant deterrent and headwind for waterborne imports, citing fog, delays, unexpected incidents, and high freight rates as factors that make waterborne supply less reliable than in-state refining, creating tailwinds for MPC.

Phillip Jungwirth inquired about potential midstream growth opportunities in Appalachia and how regulatory changes in California could affect market conditions.

Answer

CSO David Heppner detailed NGL and natural gas strategies focused on Gulf Coast integration and Permian takeaway. On California, SVP James Wilkins noted that state agencies have become more receptive to discussions on expediting permitting to ensure adequate fuel supply, signaling a potentially more collaborative environment.

Phillip Jungwirth inquired about updates and takeaways from major projects in Culberson this year, specifically Barber Row Phase One and Valor Row, regarding costs, efficiencies, and early-time productivity. He also asked if Coterra Energy is considering lightweight proppant in its Delaware development.

Answer

Blake Sirgo, Executive Vice President of Business Units, confirmed that projects in Culberson County are performing well, contributing significantly to the Q3 oil beat, and continue to demonstrate excellent capital efficiencies, calling it the 'crown jewel.' Michael Deshazer, Executive Vice President of Operations, stated that Coterra has an ongoing trial for new lightweight proppant, investigating its potential for improved productivity, though no results are available yet.

Philip Jungwirth asked for updates and takeaways on major projects in Culberson this year, specifically Barber Row Phase One and Bowler Row, regarding costs, efficiencies, and early-time productivity, including the Valor startup in Q4. He also inquired if Coterra has looked at lightweight proppant and would consider implementing it in Delaware development through third parties.

Answer

Blake Sirgo, Executive Vice President of Business Units, confirmed that projects are performing well, contributing to the Q3 oil beat, ramping up throughout the year, and benefiting from the capital efficiencies in Culberson County. Michael DeShazer, Executive Vice President of Operations, confirmed an ongoing trial for new lightweight proppant, with hopes for improved productivity, but no results to share yet.

Phillip Jungwirth of BMO Capital Markets asked for an expansion on the delineation of new zones on the Avant acreage and how results compare to acquisition underwriting. He also asked if the proposed Northeast Supply Enhancement (NESE) project would benefit Coterra and impact the attractiveness of other projects like Constitution.

Answer

EVP Michael Deshazer noted that shallower intervals like the First Bone Spring and Avalon are showing tremendous results, playing to Coterra's geological strengths. Regarding infrastructure, CEO Thomas Jorden and EVP Blake Sirgo explained that NESE is prioritized over Constitution due to more immediate market access, but any commitment requires a differentiated price structure that enhances their portfolio.

Phillip Jungwirth asked about ExxonMobil's view on refining margins, considering factors like OPEC actions, supply disruptions, and resilient demand, and how the Baytown project positions the business based on the longer-term outlook.

Answer

Darren Woods, Chairman and CEO, explained that refining margins are influenced by two supply-demand balances: a looser crude market (cheaper feedstock) and a tightening product market (capacity offline, disruptions). He noted that ExxonMobil achieved its highest reliability in Q3, benefiting from global operations organization work that drives down maintenance costs and boosts reliability. He highlighted the strategy of high-grading the refinery footprint to diversified, advantaged, low-cost sites, citing the Singapore resid upgrade project and the Baytown project as examples of converting low-value products into high-value ones with strong, resilient returns.

Phillip Jungwirth asked about ExxonMobil's refining margins, which have been supportive this year, and the market outlook considering OPEC actions, supply disruptions, and resilient demand. He also inquired about the Baytown project and how the business is positioned based on the longer-term outlook.

Answer

Darren Woods, Chairman and Chief Executive Officer, explained that refining margins benefit from a looser crude market (cheaper feedstock) and a tighter product market (capacity offline, disruptions). He highlighted ExxonMobil's record reliability and high-grading of its refinery footprint, focusing on diversified, advantaged, low-cost sites. The Baytown project is a continuation of converting low-value products to high-value ones, similar to the Singapore resid upgrade.

Phillip Jungwirth asked about the importance of Phillips 66's integrated midstream and refining capabilities in the Western Gateway project, the confidence level regarding regulatory permitting risks, and the potential impact of China's anti-involution policies on balancing the chemicals market.

Answer

Mark Lashier, Chairman and CEO, emphasized that the Western Gateway project emerged from cross-functional collaboration, leveraging refining, commercial, and midstream integration, and noted enthusiastic support from federal and California state levels. Don Baldridge, EVP of Midstream and Chemicals, added that initial feedback on regulatory permitting has been encouraging. Mark Lashier compared China's anti-involution policies in chemicals to past refining rationalization, expecting it to lead to the retirement of older, less efficient assets.

Phillip Jungwirth asked about the importance of Phillips 66's integrated midstream and refining capabilities in the Western Gateway project's design and execution, and the company's confidence regarding regulatory permitting risks, distinguishing between the greenfield pipe and the California reversal. He also followed up on China's 'anti-involution' policies and their potential to rebalance the chemical market.

Answer

Chairman and CEO Mark Lashier stated that the project emerged from cross-functional collaboration (refining, commercial, midstream) and leverages Phillips 66's unique position to provide an industry solution for Midwest refineries and West Coast supply deficits. Midstream and Chemicals executive Don Baldridge reported encouraging and positive initial feedback from state and federal levels, expressing confidence in project completion. Mark Lashier added that federal and California state officials are enthusiastic about the project's energy security benefits. Regarding chemicals, Mark Lashier noted that China's anti-involution policies, similar to past refining rationalization, could lead to the retirement of older, less efficient chemical assets, potentially rebalancing the oversupplied market.

Phillip Jungwirth of BMO Capital Markets asked if more non-core Midstream asset divestitures are planned. He also sought to understand the drivers of the Central Corridor's strong refining performance and opportunities for improvement in the Gulf Coast.

Answer

Chairman & CEO Mark Lashier confirmed that the company has a considerable list of non-core, primarily non-operated, midstream assets that it could continue to monetize. EVP of Marketing & Commercial Brian Mandell attributed Mid-Continent strength to commercial positioning and high reliability. SVP of Refining Richard Harbison noted an opportunity in the Gulf Coast is to better utilize secondary processing units to generate more clean products.

Phillip Jungwirth of BMO Capital Markets asked for President & COO Clay Carrell's initial impressions of Civitas's operations, including areas of strength and opportunities for improvement. He also inquired about the rationale behind the specific asset package chosen for divestiture and the potential for future sales.

Answer

President & COO Clay Carrell shared positive impressions, highlighting strong assets and improving operational execution, with ongoing progress in facility optimization. CFO & Treasurer Marianella Foschi explained that the divested assets were chosen because they had minimal near-term development plans, and the company was patient to achieve a strong valuation. She added that while Civitas is not proactively marketing more assets, it remains open to opportunistic offers.