• Production Growth: 4% year-over-year, with 5% growth in Lower 48 and 3% growth in Alaska and International.
• Organic Reserve Replacement Ratio: 123% for 2024, with a three-year average of 131%.
• Return on Capital Employed: 14%, or 15% on a cash-adjusted basis.
• Capital Returned to Shareholders: $9.1 billion, representing 45% of CFO.
• Adjusted Earnings per Share: $1.98 for the fourth quarter.
• Fourth Quarter Production: 2,183,000 barrels of oil equivalent per day, including 126,000 barrels per day from Marathon assets.
• Cash Flow from Operations: Over $5.4 billion in the fourth quarter.
• Capital Expenditures: $3.3 billion in the fourth quarter.
• Cash and Short-term Investments: $6.4 billion at year-end.
• 2025 Production Guidance: 2.34 million to 2.38 million barrels of oil equivalent per day.
• 2025 Capital Spending Guidance: Approximately $12.9 billion.
• Adjusted Operating Costs Guidance: $10.9 billion to $11.1 billion for the full year.
• AP LNG Distributions: Expected to be about $1 billion for the full year 2025.

• Warning! GuruFocus has detected 9 Warning Sign with AVB.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ConocoPhillips (NYSE:COP) delivered 4% production growth year-over-year, exceeding the high end of their full-year guidance.
• The company achieved a 123% preliminary organic reserve replacement ratio in 2024, with a three-year average of 131%.
• ConocoPhillips (NYSE:COP) closed the acquisition of Marathon, adding high-quality, low-cost supply inventory to their portfolio.
• The company returned $9.1 billion of capital to shareholders, representing 45% of their cash flow from operations.
• ConocoPhillips (NYSE:COP) announced a target to return $10 billion to shareholders in 2025, consisting of $4 billion in dividends and $6 billion in buybacks.

Negative Points

• ConocoPhillips (NYSE:COP) recorded over $400 million in transaction and integration-related expenses due to the Marathon acquisition.
• The company faced a $1 billion operating working capital headwind in the fourth quarter, primarily due to changes in accounts receivable and payable.
• ConocoPhillips (NYSE:COP) expects 2025 to be the peak year for long-cycle project spending at around $3 billion.
• The company anticipates a 20,000 barrels per day impact on first-quarter production due to January weather events.
• ConocoPhillips (NYSE:COP) faces potential challenges from tariffs and regulatory changes, which could impact their operations and financial performance.

Q & A Highlights

Q: Ryan, you outlined a 10% increase in cash return to $10 billion. What drove your decision for this cash return in 2025, and how might it flex with commodity price changes? A: Ryan Lance, CEO: Our strategy since 2016 has been to return significant cash to shareholders. Despite recent WTI downdrafts, we felt comfortable with the $10 billion target. We have flexibility with a strong balance sheet and asset sales, and we typically share upside from commodity price increases with shareholders.

Q: Can you discuss the outlook for long-cycle CapEx, particularly in Alaska, Qatar, and Port Arthur Phase 2? A: Andy O'Brien, SVP: Port Arthur Phase 2 is progressing, but our focus is on building out offtake and re-gas capacity. For long-cycle projects, 2025 is the peak year of spending at $3 billion, with a steady stream of project start-ups expected from 2026 to 2029, leading to significant cash flow improvements.

Q: With the extraordinary performance in the Lower 48, do you plan to accept this production growth or adjust activity levels? A: Ryan Lance, CEO: Production growth is an outcome of our plans. We focus on efficiency and capital returns, not just growth. The Marathon acquisition allows us to optimize plateaus in the Bakken and Eagle Ford, maintaining efficient operations without whipsawing the organization.

Q: Can you provide more color on the $1.4 billion reduction in Lower 48 CapEx and its impact on production growth? A: Nick Olds, EVP: The reduction is driven by operational improvements, synergy capture, and modest deflation. We expect to maintain low single-digit growth with flat activity levels, leveraging efficiencies and synergies from the Marathon assets.

Q: What is the status of the Willow project in Alaska, and how does the policy environment affect your plans? A: Kirk Johnson, SVP: Willow is progressing well, with peak construction this winter. The recent executive order reversing NPRA restrictions doesn't affect our current activities but supports future exploration west of Willow. We remain focused on delivering the project on time and budget.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.