ConocoPhillips

During the call, we'll make forward-looking statements based on current expectations. Of course, actual results may differ due to the factors described in today's release and our periodic SEC filings. And finally, we'll also make reference to some non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in this morning's release and on our website. With that, let me turn the call over to Ryan.

Thank you, Mark. Before we get into the results for the quarter, I'd like to touch on a couple of other items that are top of mind for us. The first is the war in Ukraine. In a world already ravaged by the pandemic, this unprovoked invasion is having tragic consequences, as we all see in heartbreaking detail in the news every day. The bravery of the Ukrainian people is inspiring, and we pray for a peaceful resolution at the earliest possible moment. This deeply troubling war is also disrupting supply chains at a time of recovering global economic growth and energy demand. It is affecting every aspect of the global economy and impacting the energy security of our allies in Europe, and it's driving significant volatility in commodity prices. We are fortunate that the United States has abundant resources to ensure our own energy security. These resources also provide vital geopolitical benefits. Secure U.S. energy exports serve as a market-stabilizing factor, enabling our allies to better withstand energy blackmail by hostile and unreliable resources. Like the rest of industry, we've quickly restored activity levels from the lows driven by the pandemic-related energy price collapse, despite lingering service and supply chain shortages, infrastructure permitting delays, and lag time required for workforce and equipment redeployment. As a result, total U.S. oil and gas production is growing meaningfully despite these headwinds. And ConocoPhillips will continue to do our part as we fulfill our triple mandate of reliably and responsibly meeting energy transition demand, delivering competitive returns on and of capital, and achieving our net zero ambition. Now, the other topic I'd like to touch on are the leadership changes we announced a couple of days ago. I suspect you all saw the release on Monday, but for those who might have missed it, Tim will be transitioning from leading our lower 48 business, which he's done incredibly well since we combined companies a little over a year ago, to serving in an advisory role to myself and the entire leadership team. Tim has truly been an industry visionary, founding Concho almost 20 years ago and growing it into one of the Permian's largest and best-run companies before joining ConocoPhillips. He's also been instrumental in driving value realization as we've integrated the assets into the company. I'm appreciative that we'll continue to benefit from Tim's significant experience and strategic relationships in this new capacity and, of course, as a member of our board. I'm also very pleased to welcome Jack Harper, who most of you know, to our leadership team as Executive Vice President of our Lower 48 business. Jack is an experienced, proven leader who will help ensure that our Lower 48 business fulfills its key role in delivering on our triple mandate. Reflecting now on the quarter, once again, we've made significant progress working on all levers across the company. We efficiently and safely delivered our capital scope globally and successfully integrated the Shell Permian assets. We also took important steps to further strengthen our balance sheet and continue to upgrade our portfolio with the sale of our mature Indonesian business and the acquisition of an additional 10% stake in our long-life, high-quality APL&G business. We're running well and with very strong financial performance. Now, building on two very successful Permian transactions, we have truly transformed ConocoPhillips. We're a premier E&P company with a large, low-cost-to-supply, low-GHD-intensity resource base, returns-focused strategy, and a balance sheet strength to thrive through the price cycles of the evolving energy transition. And underscoring this last point, we also recently published our plan for our net-zero energy transitions. which is available on our website. I'm going to let Bill cover the first quarter results, but before turning the call over to him on the topic of returns, I want to highlight the fact that for the second consecutive quarter, we've again increased our targeted 2022 shareholder distributions, this time with an incremental $2 billion, or a 25% increase, to be distributed through the blend of share repurchases and additional variable cash returns. We continue to make significant strides in all elements of our triple mandate. And as you know, we have now a five-plus-year track record of returning well over 30% of our CFO to our shareholders. The increased $10 billion target for 2022 further demonstrates our commitment to return significant value to investors through the price cycles. So now let me turn the call over to Bill, and he'll cover the results for the quarter, starting with our returns on capital.

Picking up where Ryan left off, we generated a return on capital employed of 19% on a trailing 12-month basis. That's 21% on a cash-adjusted basis. We understand and appreciate that returns on and of capital matter to our investors, and we are fully focused on delivering to our shareholders. In the first quarter of 2022, we generated $3.27 per share in adjusted earnings. That's driven by strong realized prices and production of 1,747,000 barrels of oil equivalent per day, a record level of production since we became an independent EMP 10 years ago. And it's bolstered by our two highly accretive Permian acquisitions over the past 18 months. Lower 48 production averaged 967,000 barrels of oil equivalent per day for the quarter, including 640,000 from the Permian, 208 from Eagleford, and 97 from the Bakken. Operations across the rest of our global portfolio also ran well, allowing us to generate $7 billion in cash from operations, excluding working capital in the quarter. We also continue to enhance our low-cost-to-supply, low-greenhouse gas intensity portfolio, closing on both the sale of our Indonesian assets and the acquisition of an additional 10% of APL&G. taking ownership there to 47.5%. Both of these transactions enhance our overall margins going forward. Illustrating this point, we realized roughly $500 million in cash distributions from APL&G in the first quarter, and we've already received $400 million so far in the second quarter. While the full year distributions will continue to depend on prices going forward, if you assume Brent averages $100 per barrel for the year, we would expect roughly $2.3 billion of total distributions from APL&G in 2022. Turning back to focus on the first quarter, in addition to the $7 billion in CFO, we generated $1.4 billion in cash the sale of our remaining 93 million shares of Synovus. And this $1.4 billion fully refunded the share repurchased here of our $2.3 billion total returns to shareholders in the quarter. We also made significant strides toward our $5 billion debt reduction target, executing a successful refinancing through which we reduced our total debt by $1.2 billion. We decreased our annual interest expense by about $100 million and extended our overall debt maturity by three years. Also, in April, we called our $1.3 billion note, which was due in 2026. So, we'll have achieved approximately half of our $5 billion debt reduction target by the end of May. And with the progress we've made in the first two quarters of this year and our remaining natural maturities, we'll reduce our debt by $3.3 billion this year. We are now positioned to meet our overall $5 billion reduction target in 2025. That's one year earlier than our prior projections. As you will have noted, we also invested roughly $1.8 billion back into the business in the first quarter of the year. While this is rateable with the $7.2 billion full-year capital estimate we provided last December, we're increasing our guidance to $7.8 billion. About half of the increase is due to additional low-cost-of-supply drilling and completion activity in some of our partner-operated areas in the lower 48s. And the rest is modestly higher inflation, as we believe supply chain constraints will be prolonged as a result of the ongoing conflict in the Ukraine. From a production standpoint, we've adjusted our full-year target from an approximate 1.8 million barrels of oil equivalent per day to roughly 1.76 million per day. That's reflecting the net impact of closed A&D activity through this point in the year, as well as some expected impacts from weather and well-timing. So we've had a strong quarter to open the year. We've returned $2.3 billion to our shareholders and ended the quarter with $7.5 billion of cash in short-term investments. We further enhanced our low-cost supply portfolio, and we strengthened our balance sheet. And, of course, our operations around the globe are well-positioned to deliver on our commitments through the rest of this year and through the energy transition that's ahead of us. With that, let's go to Q&A.