ConocoPhillips (NYSE:COP) Q4 2022 Earnings Call Transcript

So we’re starting to see that category spend sort of roll over. We’re seeing the rate of increase kind of in the onshore rig market start to lessen a little bit, which is good. We need that €“ and so when we kind of wrap all those categories to spend together for the company, it kind of manifests itself in an annual year-over-year inflation in the mid-single digits.

Jeanine Wai: Great. Thank you.

Phil Gresh: Thanks, Jeanine. Michelle, next question.

Operator: Our next question comes from Ryan Todd with Piper Sandler.

Ryan Todd: Thank you. Maybe a follow-up on the Permian, I am not sure if you mentioned this earlier, but can you talk a little bit about what is assumed in your current guidance, I guess, both capital and production for the year. It sounds like the guide assumes kind of flat activity levels in the Permian versus late 2022. Is that correct? And in terms of how we think about activity levels and how should we think about the trajectory of production in the Permian over the course of 2023?

Nick Olds: Yes, Ryan, this is Nick. Yes, let me talk €“ walk you through that. So as you mentioned, we’ve assumed a level-loaded steady-state program for 2023 based on that second half of 2022 for rigs and frac crews. The focus for this year will really be around improving capital and operating efficiency. Now we do expect some modest growth in partner activity as the year progresses. And then we have some larger operated pads that will come online in kind of 2Q, 3Q. So our Lower 48 plan will deliver production in that mid-single digits, with the majority of that growth weighted to the Permian. Now with respect to the profile shape, it will be kind of mid to back-end weighted in 2023. And as we talked about, Dominic mentioned this, we do have that Eagle Ford Sugarloaf stabilizer maintenance that’s going on.

And actually, I’m pleased to mention that the turnaround that Dominic referred to is 5 days, and we completed that successfully in January. Now we will have a little bit of brownfield modifications on that stabilizer through mid-February as well. And then I’ll mention two kind of month-to-month, we will have wells, a little bit of lumpiness. But in the back end, we will be weighted in 2023 for a production profile.

Ryan Todd: Great, thank you. That’s very helpful. And then €“ as we think about your emerging kind of global gas strategy, how should we think about your approach to the gas portfolio on these projects? Should we expect the majority sold under long-term contracts with a percentage held for spot cells? When you look to correspondingly build out your global gas trading capability similar to our European peers and maybe as you’re out marketing these volumes, are you seeing anything to comment on in terms of the environment, whether global gas tightness is helping the sales pricing out there? So any high-level views on your global gas strategy there would be great.