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