Speaker 1: Bloomberg Audio Studios, Podcasts, Radio news at Syria Week right
Speaker 1: now with Ryan Lance, CEO of Conicco Phillips. Hey, Alex, all.
Speaker 2: Right, thanks so much. Really appreciate it, guys. That's right
Speaker 2: Ryan Lance, CEO and chairman of Conicgo Phillips, which is
Speaker 2: the largest independent oil and gas producer right here into
Speaker 2: the US. It has shale, has offshore drilling, and it
Speaker 2: has lergy. It's got all the stuff. Ryan, It's always
Speaker 2: good to see you.
Speaker 1: Thank you, Alex. Great to be here.
Speaker 2: It's a tough tape right now. If you're a commodity producer, right,
Speaker 2: I mean oil was at a six month low yesterday. What's
Speaker 2: your outlook for the price?
Speaker 1: Well, we were always probably a little bit very in
Speaker 1: the short term, but we thought that w'd probably be
Speaker 1: the second half through the year as inventory build started
Speaker 1: to come into the system. Obviously with the Opeck plus
Speaker 1: announcement that's gotten probably accelerated into the first half of
Speaker 1: the year. But I think long term we're we're very
Speaker 1: still very constructive. We see demand growing at over a
Speaker 1: million barrels a day first about as far as the
Speaker 1: I can co see. We will work off the spare
Speaker 1: capacity that people think is sitting in the OPEC. Plus
Speaker 1: there's still room for more US growth in production as well,
Speaker 1: So pretty constructive over the next five, ten, fifteen years.
Speaker 1: But there we're going to go through some short term volatility.
Speaker 2: Yeah, and the short term churn is obviously also around
Speaker 2: recession fears and demand fears with those Harrap headlines. Or
Speaker 2: you see any indication of slowing economic growth.
Speaker 1: Yeah, we're starting to see some early signs of inflationary
Speaker 1: forces sitting in the in the system today. Kind of
Speaker 1: post COVID coming out, you accelerate to today. So I
Speaker 1: think there's a bit of inflationary forces that are impacting
Speaker 1: kind of the savings that people have, and they're they're
Speaker 1: wondering about the spend that they're going to have as
Speaker 1: a consumer today. But still the US economy is still
Speaker 1: pretty stronger underlying that, so I would I would still
Speaker 1: bet on what we're doing here in the US rather
Speaker 1: than some of the other places that I go around
Speaker 1: the globe. Got of other structural problems to fix, for sure.
Speaker 2: We're not the only one with problems, that's definitely for sure.
Speaker 2: But here in the US, you still think it's a
Speaker 2: good place to do business. But will be a more
Speaker 2: expensive place to do business if we have tariffs on
Speaker 2: aluminum and steel a fifty percent, say from Canada, superable
Speaker 2: tariffs come April.
Speaker 1: Well, yeah, I think it's got some inflationary forces. But
Speaker 1: we've got to let the system equilibrate a little bit,
Speaker 1: and I think we have to give the administration a
Speaker 1: bit of an opportunity to work through this. I think
Speaker 1: they're you know, some of the border issues, certainly the
Speaker 1: fentanyl issues and stuff like that. Take them for what
Speaker 1: they're saying that, you know, these are important issues for
Speaker 1: the United States. So I think there is probably some
Speaker 1: short term influence on the prices at all, but I
Speaker 1: think we need to let the system equilibrate a little
Speaker 1: bit and see how it's going to work longer term.
Speaker 2: So you're telling me, Alex, give it some time, and
Speaker 2: I'm going to say, no, run. How much does this
Speaker 2: increase your well costs on a short term basis?
Speaker 1: Well, I think we're driving efficiencies and then we can
Speaker 1: get into the generator day I and some of the
Speaker 1: offsets that we have that we've been able to do
Speaker 1: over the last couple of years, and that's not stopping either.
Speaker 1: So from the inflation. On the capital side, we've had
Speaker 1: some efficiencies in the business that we've been driving ten
Speaker 1: to fifteen percent improvements every year and that's not stopping
Speaker 1: as well.
Speaker 2: Okay, well that's something so you can upset it. I
Speaker 2: think it is what I'm hearing. Okay, Drill, baby, drill
Speaker 2: is a sexy catchphrase of the Trump administration. Right, what
Speaker 2: would you need to see to be incentivized to drill
Speaker 2: more on the policy side or the price side or whatever.
Speaker 1: Yeah, you know, Alex, I don't get it's a great
Speaker 1: bumper sticker, as you say, but I think it's a
Speaker 1: manifestation of an overall energy a dominance theme sort of
Speaker 1: for the US, recognizing that we're blessed with a lot
Speaker 1: of resource, we have a lot of infrastructure here. We're
Speaker 1: the poster child for kind of building in the US
Speaker 1: and our industry over the last thirty forty years, building refineries,
Speaker 1: taking crude import from Canada, from Mexico from other places,
Speaker 1: upgrading that and then exporting the product. So our industry,
Speaker 1: industrial complex, and the energy space has done exactly what
Speaker 1: this president is talking about in some of these other
Speaker 1: other verticals. So I think it's important to step back
Speaker 1: from it and say the energy industry is actually done
Speaker 1: what they're talking about wanting to do in some of
Speaker 1: these other pieces of the pieces of the business that's
Speaker 1: going on. The energy business has been the poster for this.
Speaker 2: Fair enough, As I mentioned before, the oil price has
Speaker 2: been struggling. What also set out to me is just
Speaker 2: last week kind of go hit a fifty two week low.
Speaker 2: Analysts do talk about the fact that your stock is
Speaker 2: not valued the way it shouldn't be. I mean, that's
Speaker 2: actually a conversation the analyst community. Why aren't shareholders giving
Speaker 2: you love?
Speaker 1: You know? It's yeah, it's been a tough tape certainly
Speaker 1: for the last year or so, and we've been struggling
Speaker 1: with that a little bit, and it's disappointing to watch.
Speaker 1: But I think it's a confluence of events. Certainly, the
Speaker 1: downdraft and the commodity price has hit all of us.
Speaker 1: We've probably surprised a little bit a few people with
Speaker 1: the Marathon transaction that we announced last year, but it's
Speaker 1: probably a little bit of a show me story because
Speaker 1: the synergies are there. We'll see that. We'll put the
Speaker 1: runs on the board every quarter, we'll show how we're
Speaker 1: making the company more efficient and how we build more
Speaker 1: scale inside the company. That's really really important in this
Speaker 1: chat next chapter that's coming in the unconventional space. So
Speaker 1: I think it's a confluence of events. But maybe the
Speaker 1: last couple of days we've had a little bit of
Speaker 1: downdraft or updraft in our share price maybe portends things
Speaker 1: to come.
Speaker 2: Is it also sort of where you're like, how much
Speaker 2: are you spending? What's your CAPBAC shareholders want dividends and
Speaker 2: they want buybacks. You're giving them dividends and buybacks, but
Speaker 2: you're also spending Where are you spending and what's your
Speaker 2: commitment there?
Speaker 1: Yeah, so both of our spends certainly sits here in
Speaker 1: the US of A. So we're big into the unconventional,
Speaker 1: spending five to six billion dollars a year right there.
Speaker 1: We're leaning into Alaska. We have a very large project
Speaker 1: up there called the Willow Project. We're leading into LNG
Speaker 1: investments both in offshore in Qatar but also right here
Speaker 1: in our home at Port Arthur and the Gulf Coast,
Speaker 1: So we are leaning in. We'll be spending about twelve
Speaker 1: point nine billion dollars in capital this year, so we
Speaker 1: are investing for the future growth and development, and we're
Speaker 1: leaning into some longer cycle projects and at the same time,
Speaker 1: the shareholders getting their share back, so they're getting over
Speaker 1: forty nearly forty four percent of our cash flow back
Speaker 1: via the dividend channel and buying some of our shares
Speaker 1: back today. So I think we're very competitive on free
Speaker 1: cash flow, free cash flow yield, despite spending three billion
Speaker 1: dollars this year on longer cycle project that are for
Speaker 1: the future growth and development of the company, which I
Speaker 1: think are important. Cheryls should like it because it's really
Speaker 1: going to the sustainability of our business model, what we're
Speaker 1: doing and maintains our leading position in this business.
Speaker 2: And a big part of that will be LG exports.
Speaker 2: And I'm curious is to your outlook on gas. If
Speaker 2: we get a peace deal in Ukraine, do we see
Speaker 2: Russian gas come online even more than it already is
Speaker 2: into Europe and what does that mean for US LG exports.
Speaker 1: I think it's probably not able to believe that Russian
Speaker 1: gas is going to stay out of the market for
Speaker 1: a very long time, and certainly if they're able to
Speaker 1: come to some agreement with Ukraine, we would expect some
Speaker 1: gas to start flowing back to the European markets. Will
Speaker 1: they ever go to sixty seventy eighty percent rely ont
Speaker 1: on that one source. I would hope not. That would
Speaker 1: that will not pretend well to I think the future
Speaker 1: of Europe as well. But we do think gas probably
Speaker 1: flows back in over time into Europe. But we're pretty
Speaker 1: constructive on the LNG market. Today it's a four hundred
Speaker 1: million ton market. We think it's growing over the next
Speaker 1: decade over six hundred million ton, Which is why we're
Speaker 1: leaning into the LG space, both in Katar and both
Speaker 1: here at home, taking some of the natural gas that
Speaker 1: we're producing in the US, liquefying it and moving it
Speaker 1: to markets both in Europe and a nation.
Speaker 2: Even if there is an export import tax on US
Speaker 2: lergy into China.
Speaker 1: You know, I think there's other markets that we're still
Speaker 1: pretty pretty thoughtful about, but also pretty excited about. We
Speaker 1: think this business is going to grow in US is
Speaker 1: going to set the set the floor for gas prices
Speaker 1: globally because we have so much gas. You know that
Speaker 1: three point fifty to four dollars means B two range.
Speaker 1: We're just blessed with a lot of resource. It's going
Speaker 1: to dig it's going to be that source of volume
Speaker 1: into Europe and Asia.
Speaker 2: Before I let you go, you mentioned a marathon by
Speaker 2: marathon last year and all the synergies you look into
Speaker 2: other stuff. We are you going to cool it for
Speaker 2: a while.
Speaker 1: Well, we got our played pretty full with the capital
Speaker 1: investments that we're making. We're making a lot of progress
Speaker 1: on the transaction that's closed. The synergies are there. Like
Speaker 1: I said, we'll just show that continued improvement quarter in
Speaker 1: quarter out, and a lot of said, did this is
Speaker 1: what we said we're going to do. Gonna go do it?
Speaker 2: Okay? Fair enough? Hey Ryan, it's really good to see you.
Speaker 2: Thank you so much.
Speaker 1: Really enjoyed talking to you. Ryan Lance