Ryan Lance: Yes. Thanks Nitin. I say first now on the Citgo, we’re watching that process. Look we’re a creditor in that process. So, we own quite a bit of money by the Venezuelans. So, we’re watching that process pretty closely. Look I’m not trying — we’re not trying to become an integrated refining or major with refining in our portfolio. This is the way to protect what’s the company and the credit that we have against the Venezuelan government. So. we’re watching that and following that process pretty closely. but that’s to get the money that they owe us for the judgments that we have against the Venezuelan government for the expropriation of our assets. Look we’re obviously optimizing the portfolio. I think in the last call, Andy mentioned the acquisition of some APLNG interest a couple of years ago.
We’ve secured the full interest at Surmont here in the last year. So, we’re always looking at opportunities that make the company better. And those are two great opportunities that came along at the right time and we are at the right place to add to the portfolio. We think about the disposition side, we sold assets over the last couple of years where they don’t compete in the portfolio and our cost of supply thresholds. Then the team knows that they need to improve or move out of the portfolio and we do that constantly. We don’t have any major large disposition programs that we’re thinking about inside the company. We just do that as a normal course of business just to improve the company. With regard to Port Arthur, look, we’ve had some inbounds on the equity interest that we have and we’re taking a look at that.
Trying to understand as what’s right for the company going forward. As Andy mentioned in the last question, look we’re not — we don’t necessarily need to be an equity owner in these things. We wanted Port Arthur to launch the project in Phase 1. So, we did that. But we’re not married to it if the right opportunity comes along. So, we continue to look at those opportunities at all. We’re in the market every day. And we’re trading in the market and we’re looking at the market and doing things that we think make the company better.
Operator: Our next question comes from the line of Paul Cheng with Scotiabank. Your line is now open.
Paul Cheng: Hey guys. Good morning. AI is a best word in many other sectors but we haven’t heard the producer talking much about that. But one of the largest oil services companies in their conference call just talk about how they believe their revenue will be up because there’s a lot of interest on their product using the AI that will improve the EUR and well productivities. You guys is always on the cutting edge and trying to improve those aspects in the shale. Can you tell us that is it being openly optimistic or then within the next two or three years or three or four years you actually think the AI is going to help you dramatically improve your EUR or well productivities or that this is really much longer term maybe at some point it will happen.
Ryan Lance: Yes. Thanks Paul. Look I think AI is going to be — is going to revolutionize a lot of things in our industry other industries around the world as well. I think Nick in his response to a previous question talked about some of the things we’re doing on the digital space with the date the automation and some of what we’re trying to improve our company improve our operating efficiency. I can’t comment on what somebody else said on their conference call. I think it’s going to have an impact on the business I think it goes to things like learning curve and its pace. Look if we can help optimize and improve our learning curve and get digitized and understand these — the application of all this deep machine learning to our company that I think it is going to have an impact.
And I think about it as acceleration of a learning curve. So, it’s the pace. It’s a pace at which we can optimize and get better and get more efficient as a company. And it cuts across the whole company. It’s not just sort of the technical and the operating side of the company, but it’s the back office and other places. The challenge is going to be getting this deep machine learning in this the semi to an enterprise like ConocoPhillips, enterprises all around the world. How do you get out of the retail space and into the large enterprise space where you have a lot of data, a lot of visual data, a lot of machine learning data that you have to combine together and to see some of that efficiency. So yes, it’s going to improve us. It’s going to make us better.
We got to get everybody in the company embracing kind of what we’re doing in this AI space.
Operator: One moment for our next question. Our next question comes from the line of Ryan Todd with Piper Sandler. Your line is now open.
Ryan Todd: Thanks. Maybe just to follow up on some of your LNG conversations from earlier, you clearly talked about there’s still work ongoing on the commercial and marketing side and building out some of those kind of things. Is there still appetite to add on the supply side, Qatar announced another LNG expansion in North Field West. Is that the type of thing you’d be interested in more of that in the portfolio or more supply-side LNG within the portfolio? And then are you seeing signs, we’ve seen — or some compliance for others about signs of cost inflation on global LNG projects. What are you seeing as you look at the development of your LNG liquefaction trends across the portfolio right now in terms of cost inflation?
Ryan Lance: Yeah. Thanks, Ryan. I think Andy outlined sort of our ambition to hit 10 million to 15 million in tons and you add up the volumes that Andy talked about, and it doesn’t reach that kind of a level. So do we have an ambition to grow some more of this space? Absolutely, we do. We want to make sure we’re in the right spots with the right kinds of opportunity and certainly, North America is a great spot, both on the Gulf Coast and on the West Coast, if there’s some good opportunities. It’s about having the best liquefaction fees. It’s about the better projects that we see out there. And I think when it comes to Qatar, we’ve demonstrated where we’ve landed a couple of interest in a couple of trains there in NFE and NFS and if they put more out there, the terms are susceptible and competitive, we’re certainly interested in expanding that relationship with Qatar down the road.
We’ll have to see when they make their decision on what they want to do with any future expansions out of the North Field. But our relationships are strong and our participation is strong. I think you’re — in some of those areas, we’re seeing the execution of Port Arthur is going pretty well. We don’t have any concerns about inflation or what’s happening there and certainly watch the market in terms of the liquefaction spend that we have or what future may come but we’re pretty comfortable with it. We’re getting into these projects because they’re competitive in the portfolio, and they’re filling a strategic long-term vision that we have for the company.
Operator: One moment for our next question. Our next question comes from the line of Neal Dingmann with Truist Securities. Your line is now open.
Neal Dingmann: Good morning. Thanks for the time. My question is on — around your Lower 48 marketing associated realized prices. Specifically, you all suggest on slide 6 that your Permian differentials remain maybe a little bit pressured. I’m just wondering, are there any changes you can make on the marketing side to continue to stabilize and improve this? I know you’ve materially done this, of course, since you bought the Concho assets versus what they sort of just accepted at wellhead. So I’m just wondering, are there further improvements or things that you potentially could do on the marketing side to even — see even more improvement on the realizations.
Bill Bullock: Yeah, Neal, this is Bill. As we talked about, we have off-take capacity both to West Coast and the Gulf Coast, and we’re interested in additional takeaway capacity on Matterhorn, like I talked about, so we are constantly looking for ways of optimizing that portfolio. Our commercial organization is in the market daily. We’re doing orders of magnitude on that production. So we really have a good sense of where volumes are moving and what rates are going. And so I think that the improvement on margins and as you’re looking at that, that’s really going to come down to getting additional takeaway capacity coming out of Permian. And as we’ve gone into the second quarter, we’ve had some maintenance going on there with El Paso and a couple of other pipelines and a couple of outages that’s putting pressure on Waha pricing.
I think everybody has been seeing that. That will likely clear through the system here as we go through this quarter. But the real relief doesn’t come until you get additional takeaway capacity here towards third quarter with Matterhorn coming online. At that point in time, I would expect that you’re going to see more normal differentials and you’re going to see a return for our portfolio at more than about 80% of capture of Henry Hub across the portfolio. So I think it’s a transitory type thing that you’re seeing until you get additional pipeline capacity built, and so I think the important thing here again is that flow assurance matters at a point in time where you’re constrained in the basin and we’ve got excellent flow assurance given our commercial capabilities.
Operator: One moment for our next question. Our next question comes from Bob Brackett with Bernstein. Your line is now open.
Bob Brackett: Good morning. In the prepared remarks you mentioned the new pad at Surmont 267. And I recall under the old operating structure, the partner wasn’t that eager about new capital, the new technology, clearly now you control the pace. Can you talk about that pad? How different is it technologically than some of the older pads? And what are you seeing in early results?
Kirk Johnson: Hi, Bob, this is Kirk. First, I’ll probably just start out by saying our operational performance that this past year has been really strong and that’s important having come through the acquisition of the remaining 50% interest in that asset. And, of course, we brought on that new pad. Certainly as you’ve heard from us before 1st on 267 and started earlier this year. And then we achieved first oil in December. And we’ve been seeing a really steady strong ramp on Pad 267, having started that in December here through first quarter. Production for first quarter is up 3 MBOE and we really have just seen 267 start to grow, and we expect that to continue to offset decline especially when we normalize that for the third quarter turnaround that we have coming up.
Bob, you’ve also heard from us in the past we’ve spoken to the fact that we intend to add about a new pad about every 12 to 18 months about every year. And we just continue to find new efficiencies and new opportunities as we bring that pad online. It’s really performing against our expectations. The team spent a lot of time as we’ve done a lot of infill work mitigating base field decline. We’ve experimented with a number of technologies around our liners and we have prospects of drilling longer laterals here in the future as well. So expect to hear more from us on this front. But certainly Pad 267 is coming in strong and really just pleased with how this is shaping up our ability to continue to grow the asset here in the future having control of it.
Operator: One moment for our next question. Our next question comes from the line of Alastair Syme with Citi. Your line is now open.
Alastair Syme: Thanks so much. Good morning, everyone. Can I come back just again to the question of the lower gas prices, because I’m not really sure I understand whether you’re making any near-term changes to your capital program? I’m thinking both the Permian and the Eagle Ford here given that low prices must surely be impacting on near-term cash flow. Thank you.
Ryan Lance: Yeah. We’re not making any capital allocation decisions. It’s all driven by the liquid side of the business. I think as Bill articulated, we need more takeaway capacity out of the Permian to get the Waha prices back up and we’re advantaged a bit because we have El Paso volumes we can take to the West Coast. They’ve been in a bit of a turnaround as well and some maintenance activities going on that pipeline. So there’s a dynamic happening in the basin that is impacting Waha prices. So again as Bill said getting evacuating your gas is pretty important, so you don’t go flare because we’re not going to routinely flare gas we’ve made that commitment. So having the takeaway is really, really important in these periods of time and then having the flexibility with your commercial team, we know where we can get a premium price and we’re after that every single day.
Operator: One moment for our next question. Our next question comes from the line of Kevin MacCurdy with Pickering Energy Partners’. Your line is…
Kevin MacCurdy: Hey Good morning.
Operator: … now open…
Kevin MacCurdy: Hey. Good morning. Thank you for taking my question. I wanted to ask on the first quarter capital trajectory. If I remember correctly, you had soft guided to over $3 billion of capital for the first quarter, but you came in lower at $2.9 billion. Can you bridge that gap for us? And is this lower CapEx the result of just timing? Or is there anything structural that could carry forward? Thank you.
Andy O’Brien: Yeah. Hi. This is Andy. Yeah, I can take that question. It’s a pretty simple answer. As you said we came in at $2.9 billion for the quarter which was slightly less than our guidance. As I understand was a result of some Willow capital shifting from the first quarter into April. So if you exclude in that timing our capital spend came in accordance with our expectations. Now as you look ahead to the second quarter, capital is expected to be slightly higher than the first quarter driven by PALNG and the Willow timing. And then as you look forward to the second half of the year capital is expected to be lower than in the second half than the first half primarily due to the $400 million of Port Arthur LNG equity capital spend that rolls off as we go into project financing.
Operator: [Operator Instructions] Our next question comes from the line of Leo Mariani with ROTH MKM. Your line is now open.
Leo Mariani: I was hoping you could speak a little bit more to the expected trajectory of your Eagle Ford volumes. I know you had kind of the frac holiday a bit which kind of impacted volumes in the last couple of quarters. I know they’ve been kind of trickling down here. I guess is that over? Do you have more of a normal activity cadence? And should we start seeing growth in those volumes as we roll into the second quarter and the second half of the year?
Nick Olds: Yeah. Leo, just for the group again, we did take that frac gap, as you just mentioned in the second half of 2023 that impacted 4Q has also impacted the first quarter of this year, because the wells coming online after we reinstated that frac crew came online kind of the second half of this last quarter. So we’re not only going to see that until you hit 2Q. Again, we took that frac gap because of just the strong operating efficiency that we’re seeing in the fracs versus the drilling side as we apply the different technologies out there. So that’s a good thing. Looking ahead, just to 2Q and beyond, we expect to see higher production from the previous two quarters as we bring those wells online and had reinstate of that frac gap. So this is all in line with our full year guidance and is consistent with the production growth that we laid out. Again, that’s low-single digits in that 2% to 4% range.
Operator: We have no further questions at this time. Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
