ConocoPhillips

Nick Olds, Executive Vice President of Lower 48 and Global HSE, and Kirk Johnson, Executive Vice President of Global Operations and Technical Functions. Ryan and Andy will kick off the call today with opening remarks, after which the team will be available for your questions. For the Q&A, we will be taking one question per caller. A few quick reminders. First, along with today's release, we published supplemental financial materials and a slide presentation which you can find on the Investor Relations website. Second, during this call, we will make forward-looking statements based on current expectations. Actual results may differ due to factors noted in today's release and in our periodic SEC filings. We will make reference to some non-GAAP financial measures. Reconciliations to the nearest corresponding GAAP measure can be found in today's release and on our website. With that, I'll turn the call over to Ryan.

Thanks, Guy, and thank you to everyone for joining our fourth quarter 2025 earnings conference call. 2025 was another very strong year for ConocoPhillips, marked by consistent financial and operational execution and a number of important strategic accomplishments for our company. First, we outperformed all our major guidance drivers from the beginning of the year, CapEx, operating costs, and production. demonstrating the strength of our team's quarter-to-quarter execution. On a pro forma basis, we grew production by 2.5% in 2025, while driving significant reductions to both our capital and costs. On return of capital, we met our objective to return 45% of our CFO to shareholders, consistent with our long-term track record while again increasing our base dividend at a top quartile S&P 500 growth rate. And we did so while further strengthening our investment grade balance sheet, certainly a differentiated accomplishment. Our cash balances are higher today than a year ago, and our net debt is lower, putting us in a very strong financial position to start the year. We successfully integrated Marathon Oil, outperforming our acquisition case on the most important metrics. We added more high-quality, low-cost-to-supply resource, doubled our synergy capture, realized a further $1 billion of one-time benefits, and completely eliminated the Marathon Capital Program while still delivering pro forma production growth. And as part of our drive for continuous improvement, we launched and have already made great progress on our incremental $1 billion cost reduction and margin enhancement initiative. We progressed our commercial LNG strategy, growing our offtake portfolio to approximately 10 million tons per annum. And finally, we improved our lower 48 drilling and completion efficiencies and advanced our differentiated major projects. which we expect to drive peer-leading free cash flow growth through the end of the decade. So 2025 was a great year for the company. Yet while these are significant achievements, we're not stopping there. We will build on this success. Turning to 2026, our primary focus is on delivering $1 billion combined reduction across our capital spending and operating costs, while growing our production on an underlying basis. On shareholder returns, we once again expect to return about 45% of our CFO to shareholders while continuing to grow our base dividend at a top quarterly S&P 500 rate. Top quartile dividend growth is sustainable as we expect our free cash flow breakeven to decline into the low $30 per barrel WTI range by the end of this decade. Looking beyond 2026, I believe ConocoPhillips continues to offer a compelling value proposition that is differentiated both within our sector and relative to the broader S&P 500. As I've said before, I believe we have the highest quality asset base in our peer space, a distinguishing competitive advantage, especially in the context of a US shale industry that continues to mature. We are resource rich in a world that is looking increasingly resource scarce. We have the deepest, most capital efficient lower 48 inventory in the sector. And outside the lower 48, we have an abundance of high quality, low cost of supply legacy assets. And we are uniquely investing in our diverse major projects to transform the free cash flow generation profile of our company. As a reminder, the four major projects we have underway combined with our cost reduction and margin enhancement initiative, are expected to drive a $7 billion free cash flow inflection by 2029 that will double our 2025 free cash flow generation. And that free cash flow inflection is now underway. We anticipate realizing approximately $1 billion of incremental free cash flow each year from 26 through 2028. with another $4 billion from Willow coming online in 2029. And that's a growth profile that's unmatched in our industry. Now with that, let me turn over the call to Andy to cover the fourth quarter performance and 2026 guidance in more detail.

Thanks, Brian. Starting with our fourth quarter performance, we reported another quarter of strong execution across the portfolio. We produced 2,320,000 barrels of oil equivalent per day consistent with the midpoint of our production guidance. We generated $1.02 per share in adjusted earnings and $4.3 billion of CFO. Capital expenditures were $3 billion, which brought our full-year capital spend to $12.6 billion. We returned $2.1 billion to our shareholders during the fourth quarter, including just over $1 billion in buybacks and $1 billion in ordinary dividends. bringing the full-year return of capital to $9 billion, or 45% of our CFO, consistent with our guidance and our long-term track record. We closed over $3 billion of asset sales during 2025, demonstrating strong progress against our recently-upsized $5 billion divestiture target, with $1.6 billion of proceeds received in the fourth quarter. For the full year, we paid down $900 million of debt, and cash balances were up $1 billion, resulting in net debt reductions of nearly $2 billion, highlighting our commitment to both returning cash to shareholders and our investment-grade balance sheet. Cash and short-term investments finished at $7.4 billion, along with $1.1 billion in long-term liquid investments. On reserves, 2025 was another solid year, our organic reserve replacement ratio was just under 100%, while our trailing three years was 106%. Turning now to our guidance for 2026. As Ryan said, we continue to expect a significant reduction in both our capital spend and our operating costs, combining to drive a year-on-year improvement of about $1 billion. 2026 capital spend guidance of about $12 billion is consistent with the preliminary outlook provided last quarter, down about $600 million year on year due to significant capital efficiency gains in the lower 48 and a decline in our major project spending. 2026 operating cost guidance of about $10.2 billion is also consistent with the preliminary outlook, down about $400 million compared to 2025. The improvement in 2026 is driven by a combination of our cost reduction program and a full year of marathon oil synergies. 2026 production guidance is 2,230,000 to 2,260,000 barrels of oil equivalent per day, providing modest growth for the year. First quarter production is expected to be in the range of 2,300,000 barrels to 2,340,000 barrels of oil equivalent per day, including the estimated impacts of weather-related downtime from winter storm ferns. In the lower 48, once again, we expect to deliver more production for less capital, as we continue to benefit from the highest quality asset base in the sector. We are a clear leader in inventory debt, with over two decades of low-cost supply inventory across the Permian, Eagleford, and Barkland. We're also the clear leader when it comes to bottom-line results, capital efficiency, the amount of oil we recover for every dollar of capital we invest. We have the best rock in the best part of the best plays, and our team continues to execute really well. In 2025, we improved our drilling and completion efficiencies by more than 15%. We expect our capital efficiency improvements to continue in 2026, again driven by strong world productivity, ongoing DNC excellence, and further increases in our longer lateral developments. Now turning to Alaska and international, a few important themes stand out for 2026. First, we continue to progress our Advantage major projects, consistent with the comprehensive update we provided last quarter. Our LNG projects are more than 80% complete, with NFV expected to start up in the second half of this year. While Willow is nearing 50% complete, and on track for first oil in early 2029. Second, we remain focused on infrastructure-led exploration and are shifting our focus this year to Alaska, where we have four wells fully permitted and are looking to unlock additional resources near to our infrastructure hubs, building on our decades of disciplined exploration and appraisal spend in Alaska. And third, we'll continue to leverage our diverse, low-cost supply legacy assets for ongoing capital-efficient development, including at Sermont, where we've delivered our most recent pad ahead of schedule and on budget, with another pad expected online early next year. To wrap up, 2025 was a very strong year for ConocoPhillips, and we're looking to build on this success in 2026, starting with a $1 billion improvement in our CapEx and costs, as the multi-year free cash flow growth profile we've discussed is now well underway. And we'll continue to find ways to enhance our differentiated investment thesis, unmatched portfolio quality, including leading lower 40 inventory debt, attractive long cycle investments, strong returns on and off capital, and a sector-leading free cash flow growth profile through the end of the decade. That concludes our prepared remarks. I'll now turn it over to the operator to start the Q&A.