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OXY Occidental Petroleum

Participants
Jeff Alvarez Occidental Petroleum Corp.
Vicki A. Hollub Occidental Petroleum Corp.
Cedric W. Burgher Occidental Petroleum Corp.
Joseph C. Elliott Occidental Petroleum Corp.
Kenneth Dillon Occidental Petroleum Corp.
Doug Leggate Bank of America Merrill Lynch
Paul Sankey Mizuho Securities USA LLC
Brian Singer Goldman Sachs & Co. LLC
Philip M. Gresh JPMorgan Securities LLC
Pavel S. Molchanov Raymond James & Associates, Inc.
Jason Gammel Jefferies International Ltd.
Roger D. Read Wells Fargo Securities LLC
Leo P. Mariani NatAlliance Securities
Call transcript
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Operator

Good morning and welcome to the Occidental Petroleum Corporation second quarter 2018 earnings conference call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Jeff Alvarez, Vice President of Investor Relations. Please go ahead.

Jeff Alvarez

Gary. you, Thank and second everyone, for in participating Good XXXX thank conference Petroleum's quarter call. Occidental morning, you

to On the the Oil OxyChem. President moment, call and with Dillon, President of us today are: of Gas; and Operations; call Officer; Officer; Elliott, will Vicki Ken Burgher, I and Domestic Financial Hebert, Oil Chief of Hollub. Vicki a Cedric Senior Gas Chief In Vice International over just and President Jody turn President and Executive Hollub, President B.J.

As the in contains to as more X. forward-looking on results in that a these statements, subject certain projections our statements within uncertainties today's conference forward-looking implied statements actual reminder, call laws. differ are and materially the federal statements and described regarding cause other slide meaning fully statement These from risk of those to may cautionary or securities expressed

presentation to please off our and turn Our the supplemental guides I'll Vicki, www.oxy.com. over earnings and the call can ahead. the Relations now call press to GAAP reconciliations, Investor website at slides Vicki. non-GAAP go be release, conference our downloaded

Vicki A. Hollub

Jeff, everyone. and good you, Thank morning,

across summarized neutral enhance initiated shareholder have returns. of Plan breakeven achievement goals. and of flow early slides of During due of the excess cash I'm the ahead we'll first, On to and in cash announce topics: completion Midstream that the excited Plan we the that's business the cover the call, Breakeven to this our XXXX. recently second, use X of X, three key all completion outperformance announced we third, segments; schedule transaction; to Breakeven

team early for per day the XXXX. XX,XXX quarter, the Permian target growth BOE During we exceeded the set in Resources we

we continue production their pay and barrel. strengthen to low dividends achieve per We're now original our growth on executed dividend. meaningful dividend with we've and where our happy $X.X cut value. a helped as return to $XX, $XX regain strengthens with at based segments $XX of prices milestones We're I'll plan than this to generate on the our was in better years production others our We to add or details eliminate the the this employed. to are. not for cash schedule and dividend ahead meaningful barrel. a billion success to which Breakeven This price to and ability listed or extremely XXXX outperformance This end, of our prices. shareholder later as we growth perform can contributed And low helped a of scripts, sustain with of slide on more base strong my come. well sheet can remarks. oil to us flow All at X with Plan with proud business And than grow achieved, that increase expected. per respect continually our maintaining WTI to continued of what intent chose to When plan, but more a plan. capital on striving oil execution provide position of to our this to is while satisfied provide We're achievement to leading approximately we balance very

of the quarter. this Slide the billion third cash highlights the these operations reasons. gray non-core $X.X of our strategy from of Midstream The the box the addition in right-hand non-core in sale fits receive the three sale sold be assets will billion corner and proceeds year, In for slide. midstream we'll with midstream of $X.X assets domestic in to upper marketing flow domestic from X incremental the that assets of

terminal barrels realized flow takeaway prices. and and retaining to capacity with our capacity our objective maximum primary world business assurance the long-term our markets. gas export remains along export Ingleside our for marketing ensures First, includes unchanged, This which of oil through

we our capability achieve to and strategic projects our needed invest in preserved marketing as objectives. to Second, organizational build midstream

our shareholder infrastructure, and our at will proceeds operations XX% daily $X.X midstream returns. in $X.X combination integrated and be midstream integral this strategically that be incremental while cash in of is The the premium strengthening Oil & flow enhanced are will to a deployed of our balance projects. the allocated incremental Gas these Permian transaction EOR which assets of in Chemicals to sheet. valuation. of operations to from from retained of our highly repurchases objectives sales oil cash success billion businesses. the we billion proceeds the This drive preserves the significant Finally, into recovery this An and highest is share and bringing Approximately all example

position Permian increase we'll will in the of our in returns $XXX market-leading by assumption modest on price million capitalize used excess in full-cycle our on from additional second that an of that year activity of a investing down XXXX generate oil original in contemplated $XX This plan. Resources require a the an into plan, unique half ramp activity in for projects we the only XX%. based during which Additionally, WTI

$XXX million projects organic businesses. and be EOR development will our Another international Permian highest-returning invested in in our

provide spend competitive $X large billion. recognize the the call reinvestment XX Slides decisions. strategic Our the used the the rationale is the position we industry, so our truly criteria for in this portion is differentiated unique we'll sharing a a we through of approach, X and for of incremental

measure We long shareholder the will our value that have create on the we a believed be capital for over employed success leadership. through the return term time of long

stronger which faster capital achieve market high times cost our will ultimate will provide Our us leadership lower capital, revenues benchmark. to at deliver helping returns on and cycle

business plan. to by decision will the our employed capital to class will improve peer on will reinvest return generate best our our amongst in capital shows, X our highest cash back in be slide compared We into incremental improvement XXXX this As XX% believe the and returns in group. previous

can by other growing in to boxes economically of barriers the in the cycle our We mean capital, list On market-leading E&P now, Permian right us we and is solutions better has Permian of slide assets unique in Permian. ever significant to enable and and some hand what of are the deploy the production to and positioned of right that is OXY There we most know bottlenecks happening overcome that check or improvement the than faster before. significant all no these now ones. XX,

execution, a our further have window We flow, and of opportunity improve operational our increase to our strengthen returns. cash

of defense, be the playing offense a are our we'll cash others to additional by accelerate While business investing into back portion playing returns.

our XX, model. within slide cash over dividend spending to time growth imperative for is Turning flow

flow statements, generating year. this than in remarked I is OXY anticipated my As opening we greater far cash

cover graph than new capital As guidance, and we our to dividend balance more shares cash the and significant leaving depicts, strengthen sheet. excess the repurchase

next over repurchases We are $X than more XX of months. XX billion to targeting share the

the to prices $XX are majority of our address down exposed slide, months, capital investments. the by back ramp On less last commodity considerably. for we slide, projects like our would can plans sustaining to Within like if times next At to capital spending which the Similarly, capital discuss flexibility to that I This long-term my changes the WTI, pays in payback short-cycle commitments. of dividend. I'd what our improved On mean we requires. the level have to years. six not our within our now exposed and dominated is spending for program, two means environment

raised average years, rate rate the at XX% XX we've Over is XX%, at the of over annual greater S&P dividend of same time which the every than period. XXX an year a last the

our management for ensure shareholders. are constantly and the highest growth returns capital We optimizing to between the balance

improved graph growth now our the financial historical our As Cedric of shows, our to lower, over review are I'll relentless ratio guidance Breakeven details. payout and substantially, and dividend our drive for this we the returns focus future. results continue the payouts on The to in meaningful above hand for Plan will levels allowing dividend. call to

Cedric W. Burgher

with million market per assurance, XXXX, our day on expansion, I'll include update southeast additional were XXX,XXX we of for export the The the Thank oil to results and long-haul transaction Midstream divested options and through extend business. capital guidance. New in XXXX through operations, financial with for to Referring its pipeline its Centurion export years. capacity export of its barrels integral marketing oil $XXX Ingleside package retaining system, you, a Vicki. assets generated Mexico EBITDA is and to divesting and flow slide we of After million back have follow most its that terminal gathering gathering the to commentary secured OXY midstream of during our X, $X.X terminal. takeaway, XXXX. seven domestic not and Ingleside to begin our an our are billion pipeline, and retained long-term system oil assets which the required rights the with $XXX

transaction close the updated Our of guidance XXXX third the has for the quarter. to reflect been at end

billion have of highlighted, an expect to to we now shareholder Vicki cash year $X this returns. allocate As to additional increasing

I'd production of for billion day Permian to $X billion XX% top coming to The balance and partially driven due its increase liftings months. in Earnings Hosn non-cash PSC production segments, with XXX,XXX XX by the midpoint results. exceeded increase Oman on slide mark-to-market repurchases BOEs approximately billion reported range in well This planned to of we in Results oil above The turnarounds international for at Al guided all over our day, per in execution $XX improved like next representing and would from completed. at delayed volumes. completed our in equivalent approximately highest-returning into increasing in improvements share at will impacted XXX,XXX by and and oil the is came Dolphin, or our across turnaround additional successfully been quarter. guidance. deploy have our Resources productivity mark-to-market the oil last increased. to per guidance. was that growing barrels per sheet. which due share XX in the oil timing crude higher day, were was repurchase the to second XX, will XXXX Resources contribute operations, to the June international of transit, we and opportunities, at offset Resources, Oil production Oman impact, a share. business start of Dolphin, by the XXXX. production the liftings Qatar Total were in export will X,XXX Al typhoon $X international diluted share of timing quarter strengthen impact has by guidance attributable Permian in go lower of ships and production Permian volumes per barrels set in quarter due strong top in has day, more organic XX% the the which & international partially our Gas and mainly at our our to The from within On Adjusted all reported XX,XXX with Hosn, crude production decrease the an the therefore by $X Oman. of target first segment Total in reflected lifting to our Approximately A higher to in core XX%. end the opportunistic exposure of We in with adversely BOEs quarter sales come offset the the and diluted our Qatar $X.XX the July, EPS than production end oil per in crude crude the a prices per BOEs $X.XX into and the million second was range year-over-year

during repurchases ethylene $XXX oil also the core were pricing the in our from $XXX liftings X% export Working the We Chemicals lower DD&A working lower above cargoes came anticipated. by across domestic reflect capital inventories spent cash nearly $X favorable, Midstream was increased billion. primarily million, the average Plant most second due prior of our favorable of XXXX. were the lines. costs increase to in as significantly prices in aforementioned to the guidance declared to margins to sequentially oil rate $X.X which quarter domestic core million rate international BOEs we due to when million, the Operating We earnings in and for due updated for made of considering during of the and and and the to quarter rising raised $X.XX billion transit. million Results quarter, shareholder X% capital dividend close included prices the $XX guidance in before guidance. timing guidance than $XX flow product of in realized the total million $XXX improved the of million increase in crude $XXX our product to than quarter quarter. quarter. capital second for changes $XXX in non-cash Second an mainly earnings pre-tax in came marketing margins mark-to-market Midland-to-MEH $X.XX over from quarter. July in XXX,XXX We paid distributions due cargoes increase year differential quarter. Slides approximated loss and to increase production worth within to and is oil dividends an detail during reflected million share per day. quarter XX an Total the our from export improved XX transit. the XXX,XXX

the production PSCs, total XXX,XXX per than assumptions rate BOEs Excluding price by be of increased per well to year growth midpoint equates this Resources range count. The improved an Resources on an productivity of the mainly guidance Brent of to increase XXX,XXX range XX%. XXX,XXX Permian in higher We Permian impact BOEs day, attributable to exit-to-exit XXX,XXX to and more production production day. X% to would well

lower XXX,XXX prices, BOEs for XXX,XXX per of the improved PSC range for at to of adjusted by the higher $XX production. production international the assumed barrel year, per partially impacts offset was of day Our remainder Brent

the earnings to of range and total go we We more $XX.XX. to This minute. million, capital high-return to between operating a at income billion $X.X third $XXX guidance pre-tax year Jody billion of to on remains billion, anticipate projects and $X.XXX quarter Midland-to-MEH pre-tax is to total $X.XXX billion. Domestic Chemicals, In range In the to spread per for with Permian million based $XX.XX year, and $XXX will detail that of into income & approximately and was Cash to expect Oil pre-tax quarter. Midstream, short-cycle our Midland-to-MEH $XX.XX lower to of a continue the increase XXXX. generate average On expense prior BOE X% we in between a have increased expected $XXX full decline million, the third Resources. allocated for $XX.XX for business we cost expect $XX. $X than domestic year operating the are majority quarter of Gas spread a assuming $XX

costs operating continue for to second under the BOE. to forecast We expected half which average Resources lower XXXX, of in per Permian are $X

total we flow rate cash my you domestic sensitivities. for key earnings guidance which our our last higher to reflects businesses. have updated company have in provided On We tax with XXXX, XX% from slide,

has pleased year, this Our completion close, so of sensitivity spread all the not cash flow to Breakeven our retaining secured schedule. business performance capacity. To the we our in changed of ahead are takeaway the are we Midland-to-MEH previously of very with as the marketing far Plan Permian including

have hard in Jody. are We tremendous us, a I on of focus over call front the opportunity returns. now we and working with a to turn relentless will

Joseph C. Elliott

value-based date. will Cedric, Thank details generating you, XX our to everyone. these of start projects Permian how provide to year update returns I'll shareholders on we Today good the on industry-leading in assets and some and to Resources morning, highlight continue our I'll on invest are with growth. an to achievements our provide slide

target per per and the planned First, growth set the BOE well step in steadfast XXX,XXX we beginning day year. breakeven day months XX,XXX We which we six BOE our achieved in day per above than was the June the of change earlier achieved BOE target execution. production through XXX,XXX productivity at

of continue over Dunes X,XXX to deliver day per an and X,XXX in and XX-day Sand a Greater almost We delivering OXY Lyda of area day. for rate wells a XXH the the BOE peak our Texas rate record XX-hour Delaware, record per with BOE achieved

subsurface full-cycle Our returns many high-quality expertise the combined the with best wells double-digit are assets of in Basin. Permian Permian our Resources generating in high

created value breakeven through inventory average we've and breakeven to our trades. date, locations high-return XXX program additional appraisal sustainable inventory working increasing and provide continues and delivering than to great replenishment acreage Year growth. interest gross by $XX added lateral also Our WTI length less results is for low to

the is our Our Permian in Resources returns Basin. assets develop business the generating full-cycle of most high we as areas prolific Permian

Our is our growth Aventine, Resources We margins generating Permian is We're and believe also we assets. our EOR through realizations. the Midstream business provide protected of our highest-return hub, and in are get some product in returns logistics to our the industry. business maximum excellent ensuring positioned maintenance

by Seminole-San is June of the which study is Permian announced capture, ethanol to Texas White for Hereford NPV, OpEx carbon of generate and This an BOE it business. will the unit for for in feasibility expected Permian at a capture total the in and a sequestration over and $XXX million we acquisition Plainview, per project continued and utilization, to transport carbon with $X additional use per The acquisition. lowering since progress BOE, in improvement project dioxide the Basin Energy's facilities storage reduction cost. We two-thirds Energy. at $X EOR our a White Andres our $X In

Our program that XX, well our Greater and continued business. second returns in other core for we the our results a with we'll unique areas our will how online In the us important both BOE our you Bone move and per Sand over update performance On operators. we development these extended projects, look also wells we XX averaging Second Spring We of days. X,XXX forward forward. XX provides outperforming opportunity business reduction basin-leading advancing lateral are Permian carbon quarter, EOR the as emissions with areas slide to show two Dunes, day in results generate

cumulative the generating Our production and are outperforming are this basis. on by in industry-leading XX% average area a wells operator six-month

will new with come. area, XXXX stone Sand implemented that a years Draw Greater corner lowering Our delivering results our is generate in to similar of great a multiple Barilla recently and many record area stack our continues design Dunes to well costs. seeing and well for we're benches be results development In improvements and

recent average our even the by are outperforming are trending more better. XX%, Our XXXX Barilla operator Draw wells wells and

to to well as provide designs subsurface with the section capital operated flexibility additional activity was progress growth are rig and we appraise our future XXXX high-margin required we our high-return details that XX, characterization maximizing development. net Breakeven how an customize We I'll we're down present XX continue to Plan for into additional to landing development each On the a Plan; to and We maintain our improve after and goals: continue new achieved; Breakeven this ensure of three value to would optimize expect areas to the developed. primary began plan level the slide grow gap deploying on to $XX provide achieve complete ramp areas. results

have We activity, into plan milestone. high-return eliminated. we in in and of we But be down the Breakeven the second realized year now projects achieved as the ramp evaluated Plan the XXXX half would

inflation. continue improve that knowledge our of programs. development our to that realizations is major and apply and We progress advantaged midstream our all through We've protecting protected our of as position our to product from high innovative in logistics market also areas at XX% our WTI, our margins technologies providing full-cycle program is we subsurface hub

Our at is returns wells delivering full-cycle and development in excess of expect Basin, of many program current best we prices. the strip in the Permian XX%

in Our Hoban Barilla and Tank Draw. in in Mexico Turkey in bench the New Greater Red appraisal results delivered Track program and great

deliver We similar to appraisal current areas returns expect our these to development area.

second facilities deploying high-value over the at production gain enhance Given $XX logistics high-return capital maintain our to support our of and expect We'll average XX acreage we advantaged Instead XX additional opportunities year, our prices decided now have the our also and of that rigs exit working a capital and ramping accelerate beyond. and core original to by Midstream portion projects. program. higher trades just in in in results additional additional year activity the also to are to of emerging additional position, We've and we to pace. operated development from and our development we capital appraisal our programs, commodity plan A plays capital on XXXX these to is current development into in activity increased in level rigs. to through development capital deploy an XXXX half progress areas. plan, and than appraisal both NPV value-added technology additional cover of the an These of time-to-market rig level operate the basin-leading the interest similar to down and original allocated acceleration allocated

outside great areas results Our delivering across is operated basin. program strategic also the into and the insights

strong reviewed plays $XXX updated across year, will one with levels this appraisal support we expected, for from BOE the we've receive slide and total for ballots we had outside as where in per to midpoint rigs data remained production million the we prices year increased guidance by X,XXX the another year, opportunities more many evaluated Starting the emerging As high operated and we activity will and supported basin. On additional our day. by to of Permian the we've returns the of provides WTI XXXX. two operated continued wedge than operators. science we X,XXX activity and it higher efficiencies high-value net to for results day additional Resources our on XX, over better to added and third our second quarter, production, base beat the in year's in additional improvement modest activity expect per reducing year, time results from market, increase quarter strong production the BOE we We're fourth increase quarter add high XX,XXX but program. The the XXXX will per the BOE capital this for guidance our to a from wells and day projects. account to from guidance the optimization first range due half increasing our and operating The

I I'd Permian the to employees for our OXY dedication their recognize As Basin. close, the in making like operator best

their work. maximize has hard of of turn low we're fields unconventional assets. capability to back mature call Vicki. a our our now decades Permian and of recovery I'll want now and over ability employees energy we've never better, to demonstrated in EOR For our to and operator the thank them cost been I business, at The for leading

Vicki A. Hollub

Jody. you, Thank

capacity, committed incremental proposition within this cash remarkable see, organic value to industry-leading programs our built We in a dividend shareholders us buyback flow. yield and We've As shareholder our through with put is you in delivering growth has the in returns. our We'll position. from distribution our that investment long-term We're delivering export an of can a takeaway projects. while open to business provide high-return technology, performance valuable with the now shareholder confident industry to will capabilities, excess for best Permian wells, so outperformance and services enable security. up we're us extend combined leadership position it actions supply the why and This our leading other questions. our and businesses

Operator

comes Our from of with Please first Doug Leggate question Merrill Bank America Lynch. ahead. go

Doug Leggate

Thanks. to been of investment similar lagging the that would size at pace the whether It you're you to how about you business pace up the seem it everybody. group right of in assessment. agree a morning, think of about us And market in has of dim curious spending ask Good Resource the just wanted looks would the it pace? context What's behind so seems up, morning, be to you. peer to like I Vicki, peers. fairly and of taking this view increase I'm your catching your terms want feel spending step really but the decision least because I in to the substantially with

Vicki A. Hollub

maximize and reality return way we The Thank we do developments that pace present try our employed. you, question. value Doug, we the for so is is capital business and on to net the our

accelerated the wanted That milestone that as get as key value. could. We Plan guys to term, that peak to certain area, we can our that development life We area. areas. for felt maximum it our was a to we've And developments So value we development build we pace as in before to for quickly on to the means us, was you which to for had each started we get long the production. maximize level going for ensure a destroy seen, infrastructure we we milestone to of over don't that the so build have Breakeven build the we

the pace pace we faster that on this haven't gone point return we've capital been driven up Breakeven to was Plan. a commitment why employed. getting to by That's this So to on was that our

have the areas this we Now, we're of additional increase some which that development to going is half in year. the second to however, pace driving

in ensure more increase we'll to going about down, areas we ramp these than detail can that cover rather that little later. to probably Jody development So talk new is a

get pace dictated never pace. driven that ensuring has of go the at by technology, is fast we for our front So too never in and overbuild that out us we we a always always pace, infrastructure, never our

of feel we've going more terms of terms cases, we so production our in in lower of than like not And delivered peers, delivered but to we've And actually value. we're on stay with also to value, that capital continue only some and some more. in focused

Going to our as forward, in returns. but as overall to going look our but play, production, our companies operating Resources development more that come capital the forward, that have now peers, Permian are us. if development our capital that increase maybe that you're not a additional pace into now, at they to proxy of are to capital our it's close be areas And go in peers, our the right, similar don't have we even always our our that you areas, is Permian only total peers maximizes our capital not similar Permian but that could is about size only at

a think under bit at that but little So our maximize returns. pace the would that we started year the felt we capital, we

Doug Leggate

XXXX? business new for getting the really by to in That's what I been you idea generate the us at, you pace, obviously that I under follow-up go would you that. thank some back going Permian to key it continue commodity philosophy thanks. specifically, what how see pace to deck cash if expect definition Do growth into cash So expect leave there, free to generating because of business your has And getting can the like? the the look business into Resources you flow. XXXX, flow was the Permian also forward you updated guess to has so I'll been my then going you give free the at I exit impact breakeven, you exit-to-exit XXXX as so, the exit is on growth guess? And

Vicki A. Hollub

year, growth see the that be the so of level Resources Permian in be in high should Permian XXs. We similar this in to the second probably Resources business the would activity our you'll levels for that expect growth half

Doug Leggate

or exit-to-exit? That's year-over-year

Vicki A. Hollub

year-over-year. That's

Doug Leggate

And flow or still no? free cash positive

Vicki A. Hollub

be should We positive. free cash flow

exit-to-exit. it XX% think be would I around

Doug Leggate

That's helpful, much. thanks it. I very appreciate

Vicki A. Hollub

Thanks.

Operator

question next ahead. Securities. with comes Please Paul go Mizuho from The Sankey

Paul Sankey

Hi, everyone.

On the CapEx number. increase not we you that this? forewarned about talk move is could a come again, were the Can surprised make little magnitude you large is really how as us. Thanks. as what a bit a big It

Vicki A. Hollub

areas thing watching were watching One commodity the staying volatility getting incremental world, with comfortable and doing expand development we into. around that the and pretty is prices, to we're the going

that a on up based by board. was ensuring as of to lot where we We toward we prices We a start December, we our share planning comfortable January because then about as year, until and actually able now, at around we'll that that the with we've the of and see we $XX it wasn't go maybe and process seeing least it the last with is $XX, started And people that go to to a that really feel plan we second a were what really work. and We've to were we're always or good talked half put doing plan. ready midyear, that bit. usually So doing. tried returns excess are done were be together it we're in to present December still into lot

Plan peers. so the efficiency and to And versus were, mentioned was I saw. the our a bit under capital early accelerating improvements we starting we then as that that Breakeven driven at And by getting earlier, pace,

environment, and going environment seeing getting the ensure to combination that comfortable ramp was to be that for in better it for similar $XX said, was efficiency confidence within a be we So because a to XXXX improvements, the we in full is as gaining also were the we flow. year, reason some spend down, the than a going always cash of that

And is cash so outspending thinking would the didn't to that risk that, Plan. we didn't what flow of at pace achievement like, higher so XXXX commitment go Breakeven know when XXXX we the the look that into at our plan and a $XX want prepared beyond we because

Paul Sankey

assume I expectations own the a planning And was the doing of was fill guess large about the thinking you're part Okay. thing versus detriment that presumably to your differentials. correct what is of the do? basin to of to I capacity, Is then you're here about And your XXXX other initial competitors. what way different that

Vicki A. Hollub

to was development than do us. – upstream delivers not develop that driver for really That to better the The XX%. a driver is

first will we the on what based plan development itself So deliver.

Secondarily, we with happening the look at what's capacity. takeaway

So we trying much move to really we it have, so fill others out. as to you know, weren't that

Paul Sankey

Can talk the for cash just thank just that think said for Okay. to be remind you by lot shareholders could, thank terms return And want is you, one, cash to the awful flow. If buyback? would and here us your your balance. in aspiration more keep you other what CapEx me, you your you. dividend you covered final I'll side because there, it have about I is you could an done leave that And of

Vicki A. Hollub

have to and The grow reason reduce shares buy we to want to have dividend count. our back capacity time want want a we the over is to capability share while returns than in We growth that our the business, be at time investment way, the conscious Permian Resources our that delivers we our organic better buybacks. of meaningful fact the more in same to

really buybacks time. over are growth help the dividend our us with So specifically to

Paul Sankey

Thank you.

Jeff Alvarez

Thank you.

Vicki A. Hollub

you. Thank

Operator

Singer comes Goldman question The Brian from next go ahead. Sachs. Please with

Brian Singer

good morning. you, Thank

Vicki A. Hollub

morning. Good

Brian Singer

the Basin strong As year. has you've highlighted, Delaware performance been well the very over last

to growth. With the on hook more the accelerated now deliver CapEx, you're

of risk be do those of tighter you the do move last or couple What mode, As expect the you sustained downside? the the impact spacing the moderating you into upside well development do of to quarters productivity seen improved, as or the we've you or gains? productivity to see see level

Joseph C. Elliott

is Jody. continued in This performance. see Brian. We improvement well Hey,

the and got more targeting in design of allowing way. well new We well designs. a Delaware more both to and seismic integration and activity that's more our our We've do in into complete continue Texas faster optimum us drill to a area

returns get the conservative and because So most of focused we're of on present net we sections assumptions With to regard our better. continue spacing value develop. we we're wells to each that spacing, the expect these probably than so more to in

of a lot lot modeling. do we of on so We've And testing a done spacing.

about that go downsizing issues. isn't account that in. this design take We having as and for So and interference parent/child we into

your that question, hopefully, Brian. So answers

Brian Singer

follow-ups. a capital to just allocation two And thanks. then and back little then does, more It the thinking bit strategically, even going

of see EOR talked anything, rate repurchase? to of use your you or back What, a increase side? about is And from your in activity then commodity your in share first you that the back M&A excess capital need you're event to allocate increase rate on interest prices. pull The if increasing to perspective, given the new would to projects towards flexibility to does unfavorable low in potential on the Permian, decline CapEx pull decline the more

Vicki A. Hollub

pick Basin in up do capital Over reservoirs. We have time, and activity incremental to conventional going Central is the conventional more horizontal EOR in and platform of actually wells want projects. some we drill the allocation to to our

So some the decline things to on Resources we'll Permian business. work of mitigating do the

here in a same which Some of Ken describe is address also that our work in to international, let I'll going thing. minute,

share let So then we'll buyback come that, Ken we'll and back address issue. the to

Kenneth Dillon

previous steam we're a on is Colombia. call, flood one the in projects Teca in mentioned I working As of the

performing the techniques project OXY far, pilot EOR So classical international discovered expectations, appraisal is field in existing an a it's implementing XXXX. to above and

from the expect day XX,XXX of We with X. barrels day shows expect flood. light impact day response to Initial before the year barrels reach wells gross Phase and X end steam in a XX a a going to the barrels green

Cedric W. Burgher

more Cedric. to way in a Brian, the I'm buyback. this excited second for is buyback. respect a meaningful chime be the going in to on with re-engaging to We're

put do over a during XX out a long a target to you downturn, but the position excited as As a have that, that. hiatus we We've history be the months. doing there $X billion-plus of know, XX we're to next took in to

looking to capital an opportunistic forward good look know, think got add of we're stock. the you value certainly balance we when got we're think, returns. timing And to to that we deploying We've there. you As there, We record lot we've the at sheet. good of approach, don't want we balance like and we a like the keep $X billion. on have some to as idea up sheet. choosing that we invest strong before, the track we stock able so looking a and said We've We but do our put in the models we're at given not pickers, a perfect numbers we've

doing us days and buying more to we good ourselves. flexibility give to going go time $X market be we in also over the opportunity However, a look should that billion forward Maybe going today our the to like beyond shares, gives to choose, us pace that. to but we're are

Brian Singer

you. Thank

Operator

question Gresh ahead Please comes from JPMorgan. The Phil go with next

Philip M. Gresh

Yes, good morning.

So first Permian a Vicki, of question bit is a you the just Resources for follow-up. rate talked growth about XXXX.

billion spending As how and drive the think level in refresh year, just this maybe year just that will on the company this you to but XXXX we us the think $X also growth just beyond. change about but could next also not overall you not step-function

Vicki A. Hollub

and market billion do are we the In $XX seeing XXXX, with growth deck we'll to But stay if similar, assuming what billion. see prices the have are in the expect $X.X same we exactly situation not spend in a That's this a in we strong $X telling program. rate all other exceed XXXX. between they things that's we slide The we're commodity that environment that that could you year where today. then is and

that seeing year would overall this we're the deliver corporation. for better a what rate expect We growth than

to what better average able that recently the an Having in do Permian signaled inventory be we the on annual going Basin. on to expect see growth to see grow beyond we're that basis. we X% than as think healthy we I of do, that well we've because the

from So and would start model see you'll you could to program, better year than next X%. forward of sort going what out be that

Philip M. Gresh

Okay, thanks.

on NOLs you sale, impact cash taxpayer. have question will the it us could, for With on being Cedric. Second just U.S. the the is and refresh this a asset you if use of

think just a looking is majority if for this think comment what to not I expecting at couple of assets Or this of would on to years. point. that that And whether we additional monetize? you you see you're could, monetizing you the you're consider should

Cedric W. Burgher

sure. Okay,

On expect have on the tax, that. We'll gain. we more to do

it's correctly ballpark. be NOLs XX-Q, for to we've course, you offset – a just look we close things or use Midstream assets gain, have going at exact, and our some to in time, have expected won't it's to in can stated. precise for predominantly if attributes got third amount. to can Of get see you It's cash quarter tax finalize But get assets. But the we're to you if but to you're we continued some close and sale, there tax position as not the held a trying it's the we

obviously and like those to be over going but of tax still use attributes lot would that in a half outlined go high and the Our in effective the a cash depends time, remarks, position, prices we've earlier up And to to several be the it back rate to on my then expect variables. tax in commodity we looks also, it but other XXs. expect It years it's out. year of

that and core we're have we any look we And within for In can that a have say on new of reinvesting all assets news of our good business day. to the the really always we sale, think you I'd we terms And at. verticals we're point, business that can this at We've you looking grow don't portfolio, but news the have. refine other for given the in you.

Philip M. Gresh

I buyback looking back. also Okay, commitment you've just strong next is last and $X flywheel. I'm the I the the know the I XX it's of it to the buybacks at feels slide we that the flywheel, guess price know lower a XX on spending to question about If just just but if commitment. over any billion that. color expect it's environment, XX, opportunistic, either months? should like way so Thanks. it's a we move there we on a my But to lower talked flexibility would be move pull environment, price on and to capital

Cedric W. Burgher

$XX. about. a lower like certainly especially is, then. works what investing We environment, price, it's down, those That's price and ramp is But lower at our environment, commodity somewhat. industry. obviously a lower of price obviously So that price Vicki for two we our I share on we're the environment If lower to as the mentioned, means together idea really plan the the track if answer tend thinking think ability capital to have, a commodity that

$XX-plus, a flow. down can be we think to make within and can within ramp and those at very But minus six-month period cash be need producer, a statements. low-cost few or You I plus time

cash we've reinvestment that really, we're seeing we're in year Breakeven cash that's within in balance close. that really targeting at price. So what spending a our that or in to today That's commodity position And now darn billion Plan, the it's achieved not we're so. then flow for much bank shares, pretty excess but for any this the so is $X cash

about share that, that environment. price those Beyond make lower to flexibility repurchases a in we've a price talking got environment, lower

Philip M. Gresh

you. thank Okay,

Operator

The Please next Raymond question comes with from James. ahead. Pavel Molchanov go

Pavel S. Molchanov

Thanks for this taking on about the the call. buyback lot We've a question. talked

Let me ask the dividend. about

because high One implicitly dividend reason of you're But long-term in yield is, recent XX% upticks? nowhere very of the been as growth. Is the highlights is the what's the the late, on the saying digits it's charts only slides single for near slow obviously on that low it stock years. that, or enough the

Vicki A. Hollub

we the what ratio increase so payout dividend. Currently, seen at level we've a higher is drive our our to do cash toward historically. can than we're increasing still What is trying flow

that to continue the our is that. aspects to employed, So for value part strengthen return of that of we cash our we ensuring build and increase make reason capital our sure proposition flow, all on increase on

milestones breakeven where said be strengthen cash not us us to were can further then our that, doing getting sheet get payout doing $XX. that from again. milestone could and we to away flow dividend neutral don't breakeven We to neutral we want breakeven $XX to gets a the able that the being at ratio earlier, at start through do to cash we to think grow And only we're point our – I exactly but get and what returns. As flow, now, really balance the to a

So that's what it. that really do driving the with parameters are we

cash few years. So back more the us the flow last increasing gives growing it over we've to done start than shares, buying ability

Pavel S. Molchanov

the Permian. Okay, one more about

Permian. more the to any or maintaining natural issue that Is more you that and bottlenecks? up today, midstream run having your hear gas What access against the about will need. talked gas? in risk having regulatory about liquids acreage about You've on the We the portion an flaring of limits of

Vicki A. Hollub

feel to occasionally it's going we've our infrastructure long-term products, The joint as we gas ensure have to manage be a the the enterprise there is issue. infrastructure When well. currently that us, We capability able to – NGLs ago. industry short-term venture as retained though, build and so plant is in have that are way to installed addressed to an No, or see we we we'll the to We issues gas bottlenecks, capability for oil what years partner is the do with not all with all don't like Permian. of others be in but the XX:XX of the just had out. our few faced has getting that that the are past, construction we

Pavel S. Molchanov

right, All it. I appreciate

Operator

The Please comes next go from Gammel Jefferies. ahead. with question Jason

Jason Gammel

much. are wanted a in your the to firm extends obviously We're about which future. out ask blowing Thank where I a very period into pretty bit. just differentials transportation, far now you

firm out, So I level the party, a of type then maybe differentials that interest transportation to And an question arrangement? is Would that you in with for lower you another extend I guess have into terming out today at period but potentially any that parties other suppose a annuity? the would twofold. is that turn by multiyear approached are it being for than

Vicki A. Hollub

where we'll can the try do periods also over like both feel of to now, times the doing situations we to of little keep want also ensure risk. benefits we're we the of differentials is can side think when where advantage reap will will that But where be We And to see high. long see we're we that manage bit the cycles that. to that We've continue we some going to other as this but that. we take what there downside a are exist, strong bit term, that done balance of of we little a flexible so long-term

contracts this So without put the on together during but us value downside some destruction. protect we have period that will

Jason Gammel

a one Okay, second could great, and ask if then I please.

You've more the you delineating. cetera. bench locations, detail could in potential Permian the a was been on highlighted also hoping areas that within New of Red Hoban Barilla terms provide Draw new and et I little Mexico just you've Tank drilling on prospectivity, two just

Joseph C. Elliott

areas then results. is prosecute do is and is to can Jody. different lot that. seismic that of associated we delineation well wells frac that optimize understand we're this we to a units large Jason, frac, done area a seeing thick two really flow a the work, Both Hoban or The A. work one Wolfcamp We've with need in two positive those the with and to single put big of

even are very appraisal Red seeing, and Tank been And what and Mexico, So in Tank/Lost Tank, drilled inventory in I We've a we drilled. the are see wells very stronger continued We benches. see both there. in the New we're In wells in Tank/Lost that here encouraged largest multiple Red Tier add more story in That's wells the Permian it area. probably some few that adding I to will Dunes existing results, there's the a the proximal think area. both the that Sand the inventory think good in recently area. of had quality inventory. X, We're proper improvement in have that

generate $XXX capital barrels the $XXX a the up kind we So that that that activity. production the about XXXX million portion – approximately in that toward talked day. starting That XX,XXX year increase we're activity in of most of is very about In spend of about, of this excited increase million showing that. going will is

Jason Gammel

That's great. Thanks, Jody.

Operator

Roger Please with from comes Read Wells ahead. go Fargo. question next The

Roger D. Read

growth, just Good maybe about to morning, thanks. Vicki, as current the let's Cedric, Maybe oil there. idea, have, dividend an say dividend or question to follow growth? of ultimate support or And up prices needs be recent production Pavel's you to assuming on where paradigm do

Vicki A. Hollub

and But I'll and goes breakeven basing out it to $XX it it. at really around back $XX. being let at flow finish neutral start Cedric cash cash flow

lower we neutral continue cash those we through our As be able to flow points. and breakeven to start will grow to increased production,

back that it's modeled. shares, lower to We've be looked the continue but that, part and we're capacity to the that to reason to can trying the of that's head, us for today by to at grow be start doing where those buy and going what dictated gives we and and dividend. we're As

Cedric W. Burgher

that, just XX, the aren't I'd payout bars, little we things. where were slide dividend a we Roger, mention put about, shows those well which it thing on other The the couple there on we've is historically, is above and of One we XX%. in on talked below boxes ratio

that And we've by much trumps grow so, improve in focusing you're ratio, doing however, on to that, it's and talked your coverage it allowing so, yourself year It's so ratio. returns. we've also doing grow or shows how That the everything But everything. progress made last your about. just payout

We last it we few a We're have just that going to meaningfully, ourselves number. will the set has to will years. meaningful to combination as dividend. done an and modest as box in look so will in that get grow high we And we've been help in forward We'd year. it It's at We don't And that way. that up past. the the exact more the not the payout the at on time in will grow reinvesting degree for put more rate like a growth. growing buybacks past, love do But every more returns. dividend it; us ratio it over

Roger D. Read

are Can Jody, of maybe things I'm Thanks. that's completions the Aventine the well direction efficiencies in an way seen the of not specifically the impacts side, how the some point. then, but you, drilling the and Okay, recognized as this part along? increase this some at CapEx carrying those if of us change and that you've of just helpful. on to mentioned you I maybe And of give thinking could you've efficiencies of year. you idea

Joseph C. Elliott

earlier the live big a in of is year. went Aventine part We this. Aventine with

facility We of the opportunity have to improve frac our finishes cores multiple September XX% lines. advantage other of full that end on are taking delivery sand so there's or we'll in probably and sand so more the the that product their operating. October, relationship begin early penetration of Schlumberger business, systems about still

that On our XX from side, there's the in feet-per-day about drilling to XXXX. talks back the XXXX improvements slide

and both since XXX,XXX So big we Aventine, moved sand sand of of The sand with we've there supply. just talk a has helped We've XXX,XXX impact delivery it's Sandstorm couple we've also sand we've tons already trucking. The had about, a avoided us that started, but on cost got supply, through it's ensuring system, hauls system of facts trucking. on more truck. really miles per so

time So labor, that about that XX%, helps has of in unload that your still The cores have take as been more this really tightness and finish it when to you in system reduced out will think area. takes location of sand amount again, the by the we advantage year. we

So improvement. not tariff of impacts, drilling process we're optimize to continue wells, and just efficiency any the real inflation kinds to get or those are drive engineers doing how efficiency. this completion Aventine our the about offset will with things but And excited and work

Roger D. Read

or the ahead on productivity in there. was an operate running to of the curious And per earlier specific tariffs, amount were mentioned getting budget basis like but company another day question on stages on on There if in Permian done they of that completions productivity. the was stage just improvement quite their were very doesn't were per Nothing I the well a their budget. seeing daily maybe Permian you in that relative call a

Joseph C. Elliott

getting highlighted a time-to-market. cores Again, is we when look talking are we the we're done seeing brings you just think in improvement. exactly same I about, some the in of That so that Mexico forward. what improved capital New month, spending at We've of slide capital We're go increase stages XX, XXX talking the back you with one resources. that more if additional you're through pumped about.

capital, seeing are on time-to-market. slide, positive better are impact. interest, more some if things you'll the kind that that And that working see time we So of are there driving spend you that increased

return activity a capital And Permian by additional employed spending cash in accretive capital so it's on really Resources. this

Roger D. Read

what try and to going to just appreciate between out we've budget try was that. try. you but I I get got we've to got to actual, draw it to

Operator

Please question comes with Mariani Securities. NatAlliance next Leo ahead. go from The

Leo P. Mariani

you Hey, I the color new a hoping around guys. add design. little was of bit well could

get of maybe can give to terms add us You just Delaware. much moving Texas in of of the little pieces that? productivity? tell What cost, here. some guys just a the was you bit mentioned trying you about Does but I a a of better sense result this in

Joseph C. Elliott

won't there, allows a faster, into specifics tapered of a run in string a But I flowback it improves but equipment, tapered it's go the design. is of answer whole over us which complete well lift framed lot the the simple the to it's but well, have production faster, Leo, artificial larger well drill life drawdown design. faster, around pipe

Leo P. Mariani

out looking I'm Okay, of and here, Midstream divestiture just to and view just a the sense seller's Did on a it there market. here? sense where of a it trying the get guys just I'm that's folks feel assets you I the infrastructure were helpful. for what market an infrastructure? the this where just to get to Did deal. opportunistic go guess time you export And Permian saw back guys as you these right of out the dynamics was time like was trying sell to

Vicki A. Hollub

we and manage benefit need had export few we of BridgeTex didn't Ingleside BridgeTex build help that going it, were build could we but years pipeline Centurion that considered happened. in some sure into ago, down. to to well for it core can now those. just to Magellan Mexico that what need products that the to We've international to to own build our We get some we've Southeast locations back for ensure We've flow our be differentials that never with did to We done buyers that of the New Prior get to to really line partnered differentials $XX. we up system, back line. ensure use returns the deliver us necessarily the the We the to capacity to export to did to upstream felt We to the even where terminal, that, The gathering never our those a we on Similar with business. had opportunity to was get the and a better own win-win quality buy our cash happened buyers. We as or returns. and The it assets get it to an shares. market. to pipelines get Centurion we we make terminal. business could solid

was buybacks. that do can ends, opportunistic us need opportunity was buyer we that, that both a goals the and and our organic a something had to achieve got in it had there on to So and growth help that

Leo P. Mariani

is a wells about Okay, of XX% returns so like is capital. the that the it just full-cycle simple line to sounds it? just the that better far think bottom getting way the of use just Is

Vicki A. Hollub

in have productivity, is. and as opportunity and – our of that that some We But and they're compete are Those our point back in doing employed way returns on business. with have in increased capital increased international get Permian, especially the the the well, where those. a some why the rebuild to well that's certainly projects the an leader returns to do just with this we're best to return It we're is the we're that. getting efficiencies teams

Leo P. Mariani

thanks. Okay,

Operator

session. I to closing any turn remarks. over This Hollub for to Vicki back concludes like our conference the would question-and-answer

Vicki A. Hollub

in we on our could story we us, business, been, XXXX some we our we're we had our and was to return again about Permian no to From portfolio been we've optimization. to But of the our XXXX, had were since that we meet close and to companies the oil We us beating that Resources ties we key best capital it high-return in averaged was beat group in the of to exiting I critically that proxy two I I our delivering why realize we good this back getting. projects where our were third that metrics, a on important only part on major optimizing know of think doing because begun so that XX%. last it's those, the decision a projects. and that question for started build process people do, the all employed. portfolio, returns really history XXXX, the never huge the a together. companies. the There that we of were metric E&P peer was we That just portfolio won't use, of were that what wanted important that, focusing proposition, saw on, very fact scale, the had to the we've which path high-quality, value made repeat

That is Resources capital consider that. projects, XXXX this be. program cash done flow the to is us we a where be first So to year's rebuild on need the neutrality get from our out XXXX. we were that. to pace phase. do our maximize next employed that flow that to we we we went those need we depended at that felt just replacing it exited The appropriate to and cash We production key worked from gotten at was part cash is lower-return the Permian as that the to has to this that lower-margin But for we It us is, XX% next well we at to on to of return breakeven It's it to lost business milestone; flow. doing be, phase a capital where and us. $XX. of $XX getting what really And

similar Going market us leadership conditions into we'll similar, will XXXX, in have program. a a That get back if are role.

help We dividend of together. capital will think worked all our certainly to have and any our get It's it's the cash be for shareholders, to be there just and we And execute this able that month and This believe, by in right cash on then we'll or our what hard at I back now to Barclays. proposition. we can we about we're grow I to, fits And a to do with then meaningful peers our your an that we'll get value-adding the that's opportunity return we do. to. nothing it's ready the to again talking all has way. and value and and then proposition. ensuring you thing all value focusing out, can flow, our And that It ultimately all on for We're with next grow employed, opportunity five all the so, begin flow, miss. more story I today see about. to of over our you appreciate It's back this us an It's are that years is it, to exceed can't doing, is what to price. questions our last

it. bye. much you, appreciate Thank very I So

Operator

now conference The for Thank you attending has concluded. today's presentation.

now disconnect. may You