ConocoPhillips (NYSE:COP) Q3 2023 Earnings Call Transcript

Operator: Our next question comes from the line of Kevin MacCurdy [ph] with Pickering Energy Partners.

Unidentified Analyst: I wonder if you can provide your current thoughts on adding activity in the Lower 48. I know you said that you can grow production without adding, but others are looking at the current service prices and commodity prices and seeing this is a good time to add. So I just want to hear your most recent thoughts on that.

Ryan Lance: Well, I think that will be part of the process we’re going through right now, Kevin. I think we’re trying to think about what 2024 looks like, but our starting point is, we’re seeing the efficiencies and we’re seeing growth coming out of our assets. So we started to a place that says, let’s just think about flat scope, and then we’ll think about these other drivers like commodity price or service capability to your point and make a decision as we go into next year about what the scope and the resulting capital will look like.

Operator: Our last question will come from the line of Leo Mariani with ROTH MKM.

Leo Mariani: I wondered if you could just comment on what you’re seeing in terms of — kind of Lower 48 service cost trends. I think there was a lot of expectations a handful of months ago that costs may be falling, but now kind of commodities that have kind of recovered. Maybe just give us kind of your perspective of what you’re seeing there on leading edge costs.

Dominic Macklon: Yes. Leo, it’s Dominic. So as we talked about in the last quarter, we’re certainly seeing some areas of deflation of Lower 48. I think, if you look at our capital spend this quarter, that’s part of that trend is in there, in terms of being lower capital this quarter than the previous. But we still expect our overall company capital inflation to average out in the mid-single digits this year over last year, and that’s all reflected in our guidance. I would say that as we approach the end of the year, and this is something that is in our thought process right now is — kind of Ryan was alluding to. We do think the market is kind of finally balanced. We do see some deflation coming through, but we have seen oil and gas prices recently strengthened.

So what we’re looking very hard is, how we think that will trend into next year. But I think, as I said earlier, in terms of our overall capital expectations next year, very much in line with what we laid out at AIM, of course, plus our additional interest in Surmont. So that’s just something that we’re watching closely, but that gives you a good sense of how we’re thinking. So…

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.