ConocoPhillips

Good morning, and welcome to the ConocoPhillips 3rd Quarter 2019 Earnings Conference Call. My name is Zanara, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-answer session. During the question-answer session, if you have a question, please press star, then 1 on your touchstone phone. Please note that this conference is being recorded. I will now turn the call over to Ms. Ellen DeSantis. Ellen, you may now begin.

Thanks, Venera. Hello, everyone, and welcome to our third quarter earnings call. Today's prepared remarks will be delivered by Don Wallett, our EVP and CFO, and Matt Fox, EVP and our Chief Operating Officer. Our three region presidents are also in the room with us today. They are Bill Bullock, the President of our Asia-Pacific Middle East region, Michael Hatfield, the president of our Alaska, Canada, and Europe region, and Dominic Macklin, the president of our lower 48 region. Page two of today's presentation deck shows our cautionary statement. We will make some forward-looking statements during today's call. Actual results could differ due to the factors described on this slide and also in our periodic SEC filings. We will also refer to some non-GAAP financial measures today. and reconciliations to the nearest corresponding gap measure can be found in this morning's press release and also on our website. One final comment before I turn the call over to Don. Given that our November analyst and investor meeting is only a few weeks away, we're going to limit questions to one per person and ask that questions address today's earnings release or recent announcements. And with that, I'll turn the call over to Don.

Thanks, Ellen, and good morning, all. I'll begin with the third quarter highlights on slide four. Starting on the left with our financial performance, we realized adjusted earnings of $0.9 billion, or 82 cents a share. Higher LNG realizations and higher production volumes combined with lower overall costs to mitigate the impacts of reduced market prices. Cash from operations was $2.6 billion, resulting in free cash flow of $1 billion in the quarter and $4 billion year-to-date. We ended the quarter with $8.4 billion of cash in short-term investments, and our strong financial returns continued, with a return on capital employed at just under 11% on a trailing 12-month basis. Moving to the middle column, operationally in the quarter, we produced 1.32 million barrels of oil equivalent a day up 7% on an underlying basis compared with the year-ago quarter, and up 12% on a per-share basis. Matt will cover the rest of the operations highlights in a moment. On the strategic side, earlier this month we announced a 38% increase to our quarterly dividend, which reflects the company's improved underlying financial strength, as well as our commitment to peer-leading capital returns to shareholders. In addition, we repurchased $750 million of shares in the quarter and announced our plan to buy back $3 billion of shares in 2020. In both the third quarter and year to date, we've returned over 40% of CFO to our shareholders. We closed the sale of our EMP assets in the UK in September, which generated $2.2 billion in proceeds. And as recently announced, we entered into definitive agreements for the sale of our Australia West business. If you turn to slide five, I'll wrap up with a look at our cash flows for the quarter. We began the quarter with cash and short-term investments of $6.9 billion. Moving to the right, cash from operations was $2.6 billion. There were a couple of items impacting cash from operations in the quarter that are noted here. First, in conjunction with the UK sale, we made a one-time top-up contribution to the pension plan such that it is now fully funded and essentially self-sufficient. That $320 million can be viewed as an acceleration of future pension contributions. And second, as we do each quarter, we note the cash received during the quarter associated with the pay-to-vesa settlement. To date, we received over $750 million related to the $2 billion settlement agreement reached in the third quarter of last year. Working capital was a $300 million use of cash, and as mentioned, we recognized $2.2 billion in proceeds from closing of the UK disposition. Capital spending was $1.7 billion, resulting in free cash flow of $1 billion in the quarter. And we distributed 1.1 billion or 41% of CFO to shareholders during the quarter through dividends and share buybacks, ending the quarter with a cash balance of $8.4 billion. So as you can see, this past quarter once again continued our trend of consistent, strong operational and financial performance. It also demonstrates our unwavering commitment to financial returns, capital discipline, free cash flow generation, and returning capital to shareholders. We firmly believe that ours is a sustainable, distinctive, and compelling value proposition, one that is highly competitive not only within the energy sector, but also across the broader market. With that, I'll turn the call over to Matt.