CONOCOPHILLIPS Q4 FY2024 earnings call

• 2024 was a strong year with 4% production growth, above guidance range, and 123% reserve replacement ratio. • Acquired Marathon in late November, adding high-quality, low-cost supply inventory, aiming for over $1 billion in run-rate synergies by end of 2025. • Delivered $9.1 billion in capital returns to shareholders in 2024. • Progressed global LNG strategy with regasification and sales agreements, and planned to sell $2 billion of non-core assets, with $600 million in non-core lower 40 assets to sell in first half of 2025.

In the fourth quarter, ConocoPhillips produced 2,183,000 barrels of oil equivalent per day. This included one month of production from the acquired Marathon assets, adding 126,000 barrels per day. Excluding Marathon's production, underlying growth was 8%, above guidance range. Lower 48 produced 1,308,000 boe/d, with Permian at 833,000, Eagle Ford at 296,000, and Bobcat at 151,000. In 2024, the company achieved a 123% preliminary organic reserve replacement ratio, with a three-year average of 131%.

• 2025 production expected to be in the range of 2.34 to 2.38 million barrels of oil equivalent per day, accounting for planned turnarounds. • Full-year capital spending guidance is approximately $12.9 billion, with a $1.4 billion reduction in lower 48 spending, $400 million increase in long-cycle projects, and $200 million increase in Alaska International spending. • Target to return $10 billion to shareholders in 2025, consisting of $4 billion in ordinary dividends and $6 billion in buybacks.

• Commodity price volatility, which can impact cash flow and financial results. • Regulatory changes, such as potential tariffs and policy shifts, which could affect operations and market access. • Operational risks related to turnarounds and maintenance activities that could impact production levels.

Q: Arun Jayaram asked about the quantum of cash return in 2025 and potential flex due to commodity price changes.

A: Ryan Lance responded that the $10 billion cash return target was set considering the forward curve, company's view on commodity markers, strong balance sheet, and planned asset sales providing flexibility. He noted the company has torque to the upside on commodity prices and a strong balance sheet with over $7.5 billion in cash and long-term investments.

Q: Steve Richardson inquired about long-cycle CapEx and outlook for projects like Port Arthur phase two and Alaska.

A: Andy O'Brien mentioned Port Arthur phase two is a great project with cost sharing on common facilities, and long-cycle capital spending is peaking in 2025 with projects starting to come online from 2026-2029. Kirk Johnson provided an update on Willow project progress, with peak construction season in 2025 and positive progress in ice road and other construction activities.

Q: Doug Leggett asked about production growth go-forward and philosophy on activity levels.

A: Ryan Lance stated that production growth is an outcome of plans, focusing on driving efficiencies from Nick's team, integrating Marathon assets, and operating within an efficient window to avoid whipsawing the organization. The Marathon transaction allowed resetting optimized plateaus in Bakken and Eagle Ford.

Q: Betty Jiang asked about lower 48 CapEx reduction drivers.

A: Nick Olds explained the $1.4 billion reduction includes $500 million from Marathon synergies, operational improvements, modest deflation, and activity optimization, with efficiencies driving production growth at flat activity levels.

Q: Devin McDermott inquired about Alaska Willow project progress and policy environment.

A: Kirk Johnson provided an update on Willow project progress, with peak winter construction season, early mobilization, and positive progress in ice road and other activities. He also discussed the impact of the Trump administration's executive order on reversing prior rulings, expecting to partner with DOI and Alaska for continued exploration west of Willow.

Q: Neil Mehta asked about reserve replacement and geographies.

A: Andy O'Brien stated the 123% reserve replacement ratio was achieved while growing production and despite price falls, with key drivers including lower 48 organic reserve replacement over 100%, initial booking on NFS project, and progress with Sirmont development plans.

Q: Bob Brackett asked about US domestic power demand and LNG strategy.

A: Ryan Lance mentioned ConocoPhillips is assessing power demand opportunities due to natural gas production and commercial power desk, but the main thrust is in LNG, leveraging North American gas volumes for higher value markets.