Cash Return Strategy
Q: Why target $10B cash return in 2025?
A: ConocoPhillips set a $10 billion cash return target for 2025 to demonstrate ongoing commitment to shareholder returns, even amid commodity price volatility. Despite a recent downdraft in WTI prices, management feels comfortable with this figure due to their strong balance sheet and significant flexibility. They highlight that for every $1 movement in WTI, cash flow changes by about $400 million, indicating significant upside potential. The company has over $7.5 billion in cash and long-term investments and is on track to dispose of $2 billion in non-core assets, providing further flexibility.

Capital Expenditure Peak
Q: Is major project CapEx peaking in 2025?
A: Yes, 2025 is expected to be the peak year for major project capital expenditure, primarily due to the largest winter construction season for the Willow project. Beyond 2025, major project spend will step down each year as projects like NFE, Port Arthur, NFS, and Willow come online, delivering over $6 billion in free cash flow relative to the 2025 starting point.

Lower 48 Production Growth
Q: Will you accept current production growth?
A: Production growth is an outcome of ConocoPhillips' efficiency-driven plans. The company aims to maintain efficient operations without whipsawing the organization. Despite significant growth, they haven't added any rig lines over the past few years, relying instead on operational efficiencies. The addition of Marathon assets has provided over 2 billion barrels of resources at sub-$40 cost of supply, allowing integration and optimization across key basins.

Maintenance Capital Guidance
Q: What's your maintenance CapEx number?
A: Sustaining capital is somewhat hypothetical, but normalizing the 2025 capital of $12.9 billion, which includes $3 billion of pre-productive capital, suggests about $9 billion would be needed to stay flat in the current environment. Previously, the sustaining capital was estimated at $6 billion in a $40 world, but with acquisitions like Marathon and Surmont, it would now be closer to $7.5 billion under similar conditions.

Lower 48 CapEx Reduction
Q: What drives the $1.4B CapEx reduction?
A: The $1.4 billion reduction in pro forma CapEx is driven by operational improvements, synergy captures from the Marathon acquisition, and modest deflation. Key factors include delivering 15% more scope with similar rig and frac activity by increasing efficiencies, capturing $500 million in synergies, and expecting around $200 million in deflation for 2025. At flat activity levels, the company expects to continue low single-digit production growth in the Lower 48.

Willow Project Update
Q: Update on Willow and spending plans?
A: The Willow project is progressing well, with construction activities modestly ahead of plan. 2025 is the peak year of spend, with approximately one-third of annual capital spent in the first three to four months. Capital expenditure will stair-step down in subsequent quarters and years, with first oil expected in 2029. Recent executive orders have positively influenced exploration opportunities west of Willow, aligning with the company's long-term plans in Alaska.

Reserve Replacement Ratio
Q: How should we interpret your reserve replacement?
A: The company achieved an organic reserve replacement ratio of 123%, despite falling prices causing downward revisions. This was driven by over 100% replacement in the Lower 48, initial bookings from the NFS project, and new pad developments at Surmont. Including acquisitions, the total reserve replacement ratio was 244%, increasing reserves to 7.8 billion BOE and improving the R/P ratio from 10 to 10.7 years. Additional PUD bookings from the Marathon assets are expected later this year.

Divestiture Program Progress
Q: Status of asset sales and Port Arthur equity?
A: ConocoPhillips has signed PSAs for about $600 million of non-core Permian assets, expected to close in the first half of the year. The company anticipates achieving the majority of its $2 billion asset disposition target in 2025. Regarding Port Arthur Phase 1 equity, they are considering potential sell-downs but can be patient as the project progresses and de-risks without additional capital contributions.

M&A Opportunities Outlook
Q: Are M&A opportunities better or worse now?
A: The landscape for M&A opportunities is changing, with fewer high-quality names available. While consolidation is expected to continue, opportunities must meet ConocoPhillips' strict criteria: fitting the financial framework, improving assets within their portfolio, and enhancing the company's 10-year plan. The unique acquisition of Marathon aligned with these criteria, but similar opportunities are becoming scarcer.

Potential Tariff Impacts
Q: How might tariffs affect your business?
A: Potential tariffs could impact ConocoPhillips' sales of Surmont liquids into the U.S., which account for about half of their production from that asset. However, the company's diversified portfolio offers mitigation, with potential strengthening differentials in regions like Bakken and the Permian. While there are many moving parts, including foreign exchange rates, the company focuses on controlling what it can—producing low-cost supply volumes and optimizing value.

Marathon Assets Inventory
Q: What's the quality of Marathon's assets?
A: The Marathon assets offer 2,000 competitive well locations with a cost of supply around $40 per barrel. Roughly half of these are in the Eagle Ford, with the remainder split between the Bakken and Delaware basins. Current well performance is strong, meeting type curve expectations, and there are opportunities to optimize and improve the combined inventory, such as increasing long laterals in the Bakken.

Alaska's Nuna Project Impact
Q: Will Nuna affect your production volumes?
A: Yes, the Nuna project, which saw first oil in December after drilling initial wells, is expected to more than offset production declines in Alaska. Plans include drilling 8 more wells in 2025, contributing to modest growth over the next couple of years. Nuna exemplifies investment opportunities in Alaska, leveraging existing infrastructure and derisking targets before expanding.

LNG Contracting Environment
Q: Any changes in LNG demand outlook?
A: The LNG market continues as expected, with Europe heavily dependent on LNG due to the cessation of the Russia-Ukraine pipeline gas deal, removing 1.5 Bcf of capacity. Cold winters are drawing down inventories, reinforcing the need for LNG. ConocoPhillips remains on track with its strategy to build out 10 to 15 MTPA of offtake capacity, including regasification facilities in Europe and sales into Asia.

Domestic Power Demand Strategy
Q: Plans for U.S. power demand opportunities?
A: ConocoPhillips is exploring opportunities in domestic power demand, particularly supplying natural gas to data centers and potentially setting up power generation. With natural advantages like abundant gas supply, a commercial power desk, and land positions, the company is assessing growth opportunities. Any ventures must fit their financial framework and be competitive for capital, aligning with their broader LNG strategy.

White House and Production Levels
Q: Will you increase U.S. production per White House?
A: The company is focused on driving efficiencies rather than accelerating production. Emphasis is on permitting reform and infrastructure development to enable faster movement within the regulatory environment. Improved permitting processes would enhance operational efficiency and potentially lead to sustained growth in U.S. production, but current plans remain centered on efficient, steady operations.