You're watching the [Music] Midland Chamber of Commerces, State of Oil and Gas on Basin PBS, presented by ConocoPhillips.

>>Evan>> Well, good morning everybody.

My name is Evan Thomas, and I'm honored to serve as president and CEO of the Midland Chamber of Commerce.

And it is also my pleasure to welcome you to the Midland Chamber's ninth annual State of Oil and Gas Luncheon.

And today we'll have uh invocate and invocation, excuse me, which will be offered by Allan Stanglin, senior minister at GCR Church of Christ.

So please stand if you're able.

[Chairs pushing] >>Allan>> Good morning.

Let's pray together.

Please.

Father, our hearts are full of gratitude.

We thank you, father.

In the name of Jesus, for all of the blessings that we have through your son.

We thank you, God, today for the righteous relationships that we have with you and with each other, because of the life and the death and the resurrection of your Son.

Father, we thank you for this good food in front of us and for the way it reminds us that every good gift we have comes from your gracious hand.

We thank you.

Father we thank you for those who serve on our Chamber of Commerce.

And we pray, father, today, in Jesus name, that you would bless them as they work with and cooperate with our nonprofits and our businesses and our government and our churches to make life better for everyone who calls Midland home.

And father, we thank you today for those who work in oil and gas.

Increasingly, father, that feels like it's all of us.

But father, we pray today in Jesus name, thanksgiving for the resources and the blessings you give us.

And we pray for wisdom.

We pray for courage.

We pray for boldness to use the gifts and use the resources that you've blessed us with to make life good, to make life abundant for all who call Midland home.

Bless this gathering, father.

May your will be done in us and through us, just like it is in heaven.

In Jesus name, Amen.

- Thank you.

Thank you very much, Allan, for that invocation.

And I want to thank you all for joining us today.

This is an incredible, incredible showing of of our business community.

And we're we're really pleased to have you all.

And it's for an important conversation.

The state of oil and gas, which is one of our most important that we hold all year here in the Permian Basin.

We are blessed with world class resources beneath our feet and even more importantly, the grit, talent and innovation of the people who develop them every day.

Many of you are in this room.

in Midland oil oil and gas is not just an industry.

It's the foundation of our economy, a defining part of our identity.

Even if your business isn't directly in the field and we all know this, that you feel the impact in your customer base, your workforce, your growth and your future.

And so because of that impact and because the decisions made here in the region have real consequences for jobs, investments and our energy security, these conversations matter.

And today we're gathered not just to reflect on where the industry has been, but to hear perspective, uh perspectives excuse me on where it's headed.

And now it's my pleasure to welcome to the stage Dr.

Darin Wood, to introduce today's speakers.

Dr.

Wood is the chairman of the board of directors for our Midland Chamber of Commerce and the senior pastor at First Baptist Baptist Church of Midland.

Let's give him a hand.

[Applause] >>Dr.

Wood>> Thank you Evan, appreciate it.

Welcome, friends.

Good to see you guys.

Not so long ago, I was at a group meeting of pastors in the Dallas-Fort worth area, and one of my friends pulled me aside and said there.

Darin how many of your people at First Baptist Church are engaged in the oil and gas industry?

I smiled and I said, all of us.

This is the backbone of who Midland is.

We're grateful you've come today.

Your presence here signifies your interest not only in that industry, but in our greatest resource.

People.

God has granted us a great privilege of living and working here, and I know that we've all tried to recruit people here who didn't see the beauty of Midland.

God bless them.

Anyway.

I'm glad we're here.

The Permian is still one of the biggest stories in energy, as it should be.

What happens here impacts jobs not just in the Permian Basin, but all over the U.S.

and around the world, and impacts prices and the global economy.

Today, we're going to talk about where the industry is headed, and we're fortunate to hear from some true experts to that end.

I'd like to introduce our keynote speaker for our luncheon today.

Nick Olds is the Executive Vice President for ConocoPhillips, overseeing the company's operations in the lower 48.

The global health and safety environment.

Beginning his career with the company's predecessor company, Conoco, in 1992.

Nick has 33 years of oil and gas experience holding numerous leadership positions located around the world.

He's originally from Montana, which might not be the first time you hear that today.

We're excited to hear all that he has to say, and we'll hear that shortly after his keynote remarks.

He'll be joined by Aaron Hunter and Mike Sommers for a conversation to dig deeper into the issues.

Aaron Hunter is the President of the Permian for ConocoPhillips.

He's been in the industry for 21 years, and most of the time he spent right here, most recently serving as the Vice President for the Delaware Basin ConocoPhillips.

He's a board member of the Permian Basin Petroleum Association and also a native of Montana.

Mike Sommers is the President and CEO of the American Petroleum Institute, also known as API.

Mike has been in that role since 2018.

He's overseeing the strategic realignment of API's priorities and advocacy efforts since that time.

Prior to the API, Sommers headed the American Investment Council, and before that he held critical leadership roles in government.

And you'll never guess where he's from.

Illinois.

[Laughter] We invite you to scan the code that's at the place to get full information on both each of the speakers, and we now welcome our friend Nick Olds to the stage.

Nick come on my friend.

[Applause] >>Nick>> Well, good morning, everyone.

It's a pleasure to be here today.

Um.

We're going to we got quite a bit to cover, and then we got, um Mike and Aaron coming up, but um let's see um a couple key things that I wanted to set the stage with obviously here today.

And uh, there's so many here that have deep roots in Midland, uh in the greater community in the oil and gas aside.

I know that the industry means to Midland.

Obviously, you can see it in this room is great turnout.

It's not just economic impact, but it's the identity and pride of the region.

Families have built their lives here, supported through opportunities that the industry creates.

And there's that sense of connection and commitment that is deeply felt that we share.

I see that day in and day out with my ConocoPhillips colleagues, that commitment that uh here with Midland, but also the industry friends that are present here today.

Like you, I want to see Midland succeed and the Permian Basin succeed not just today, but we're going to talk about decades and decades to come.

When Midland thrives, the industry thrives.

And when the industry thrives, we provide reliable energy that powers homes, businesses and communities around the world.

I'm grateful for the opportunity to share a little bit about ConocoPhillips and talk about our deep, durable, diverse global portfolio.

Then I get into the lower 48 and then specifically the Permian, and then after that, I'm going to invite Mike Sommers and Aaron Hunter to towards the stage for a fireside chat.

So but before, like all typical presentations, I got to give you a cautionary eye test.

So I'll give you a few minutes to review that.

Okay.

Just kidding.

Um, we talked about Montana already, but I thought I'd give you a little bit of background on myself.

I grew up in Montana.

Hunting, fishing.

Loving the outdoors.

Camping.

Backpacking with my dog in the Bob Marshall Wilderness.

My grandfather is the one that sparked math, science, uh and hands on experience.

I remember many times we would go to geological formations, coal seams, hydroelectric dams.

He ultimately encouraged me to go to petroleum engineering at Montana Tech.

Go Diggers.

I know I've got a few of those Diggers out there.

I've been fortunate to share my life with, uh with my wife, Kerry.

We grew up probably.

Or we met probably.

We were six years old.

So uh, back in Great Falls, Montana.

My career has taken me, uh across the globe about 17 years.

Have been overseas in various locations.

Uh, Alaska, Canada, Europe, Kazakhstan, the Middle East two oldest kids were born there.

And now in the lower 48.

So let's take, a moment to talk about our portfolio since becoming an independent uh ENP company in 2012, we created a differentiated resource, uh portfolio that is deep, durable and diverse.

Today, our estimated resource base exceeds 20 billion barrels with a break even less than $40 cost of supply.

Now, to put that in perspective, this would be sufficient to maintain our current production levels for 20 years, a clear sign of strength and resilience of our portfolio.

This resource position is underpinned by our lower 48 unconventional position, and it's complemented by our Alaska Energy International assets.

Looking at uh our most recent quarter, total production for the company was 2.4 million barrels of oil equivalent per day in Q3 2025.

Now, a third of that production comes from the Alaska International assets, which are diverse, uh and across several megatrends like oil sands and LNG.

Canada is predom predominantly oil sands, but also includes Montney, which is an unconventional play that we can share deep knowledge and expertise right from here in the lower 48.

The equity affiliates on the top are LNG, Qatar and Australia.

And then we have a number of conventional oil and gas positions in Alaska, Europe, the Middle East and North Africa.

Now, nearly 65% of that production, 65% is right here in the lower 48.

Um and a large portion of that comes from the Permian Basin, which we'll talk about in more detail.

Okay.

The lower 48 business represents the largest ConocoPhillips area of activity based on production and capital investment.

Although I'm always getting requests from Aaron for more capital, we have uh 2.3 million net unconventional uh acres top tier positions in the Delaware, Midland, Eagle, Ford and BOC.

And in the last five years, we have transformed that lower 48 uh portfolio through several acquisitions.

In 2021, we completed the Permian focused acquisitions of Conoco, Concho Resources, Shell Permian, and that followed by the more recent Eagle Ford and BOC and focused acquisitions in 2024.

Now, to put that in perspective.

Within the last five years, we've almost quadrupled our lower 48 production.

And if we zoom in to the Permian, our production has grown from less than 90,000 barrels equivalent per day to over 900,000 barrels equivalent per day.

That's a tenfold increase.

I'll tell you a little story.

I was uh running Permian back in 2016.

We had Delaware in the draw, and a big day was 25,000.

So remarkable shift there.

Our ability to seamlessly integrate and optimize these assets has enabled us to become one of the largest unconventional producers in the lower 48 that can deliver moderate growth for the next decade and beyond.

We're proud of our lower 48 assets and are confident it is well positioned to compete for capital amongst the other Alaskan and international opportunities.

So now let's take a look at the North America resource here.

The vast US resource base is uniquely positioned to become competitive with energy for years to come.

That's a key strength that underpins our industry and our country.

Now the data you see here is lots of lines and colors, and there must have been some reservoir engineering that put these together.

Um but from third party data it estimates 110 billion barrels, a resource in North America that have break evens that are less than $50 per barrel.

If you go up to 60 and above, that nearly doubles.

So you think about that.

Such a powerful, powerful foundation with significant upside for long term supply, right in North America.

Now in the Permian, third party estimates show 50 billion barrels of tier one remaining resource.

And that's a significant differentiator compared to the next closest unconventional basin, The Montney in Canada.

Our company has built a leading position across the four North America positions here in the Permian, Eagle Ford, BOC and and also in the Montney.

According to third party estimates, we roughly had about 10,000 well, locations that are in the portfolio, and about 7000 of those are our tier one inventory, which is recognized, uh as very competitive as we know, inventory depth is a critical differentiator, and our depth enables us to sustain growth decades to come.

And specifically, the Permian position will be key to delivering growth, uh well into the future.

So let's talk a little bit about the Permian.

As we all know in this room, the Permian Basin is truly prolific.

Big fields get bigger, and it roughly has 6.5 million barrels of oil produced per day in 2025.

That's roughly half of the U.S.

production.

Now, to put that in perspective, on a global basis, Permian is in par with the with Canada production and is larger than most OPEC members, excluding Saudi Arabia.

That's some significant volumes.

We expect Permian to remain the largest US Basin, rising from 6.5 million barrels of oil per day in 2025, and to plateau through the 2030s.

Now, that plateau level, as we all know, will be dependent on the market price as we go forward.

This is underpinned by a highly competitive inventory with 50,000 well locations.

I still try to get my head around that, um.

That has a break even below $50 per barrel.

And and so it's easy to understand when you look at the capital investment that 50% of drilling and completions are going into the Permian Basin.

Now, ConocoPhillips holds a strong position here in the Permian, with more than two decades of drilling inventory at current rig activity levels in the Delaware Basin were well over 20 years.

And in the Midland Basin, we have over a decade of running room.

We're proud of the role that this asset plays in the portfolio, and I'm confident that the Permian will grow, will be the growth engine for decades to come, along with many operators that are in this room.

And that confidence is backed by years of industry efficiency gains and deeper characterization of secondary formations that unlock new development opportunities.

For example, operators are evaluating new horizons like the Upper Sprayberry Deeper Zone, such as Wolf Cap Dee, uh Barnett and that resource potential, uh is beyond the core benches that we're currently executing.

It's that ability to organically refill the tank year after year.

That makes the Permian Basin so special.

And truly big fields get bigger.

So to get together, our industry keeps pushing the envelope, advancing drilling and completion efficiencies, extending laterals, deploying new technologies which optimize recovery and ultimately lead to improved capital efficiency.

So let's talk about that next.

So Permian operators have delivered remarkable, remarkable efficiency improvements over time.

Third party reports show drilling footage per day and completed lateral footage per crew have improved 50% since 2020, and that's not too long ago.

Um.

That's a big step forward.

And it's driven by innovation.

These gains, uh from all these techniques that we're all familiar with, uh like automated drilling, extended laterals, salmo frack, continuous pumping, and that list goes on and on and on.

In the Permian, operators are combining multiple technologies, maybe a hybrid approach of these to improved overall capital efficiency, such as 24 over seven drilling, monitoring, troubleshooting and optimization where operations personnel are and use engineers to analyze real time data.

Leveraging cutting edge automation to improve overall drilling performance and the application of auto frack or the use of wet sand usage or super spreader rigs.

And that's all improving the capital efficiency.

Now another key lever is extending lateral links.

And that happens by optimizing, your acreage coring up with our fence line neighbors.

And we've done a remarkable job in that.

If I look back from 2020 for the industry, less than 20% of the wells were two miles or greater.

Today, that's 45%, nearly doubling or over doubling the two mile laterals.

And consistently, operators are drilling three mile laterals and four mile laterals as well as an industry we see firsthand in the value they deliver.

Extended laterals consistently drive down the break evens.

And that's a proven approach.

And we're going to do more and more.

And to summarize on this, it's a combination of all these techniques that improve capital efficiency.

And the next step is really pushing those boundaries, pushing those boundaries even more, embracing new technologies that will help us push that curve.

And I'll speak to that on the next panel.

Across the Permian the industry is unlocking more value from every well, every pad, every facility, every day.

I mean, that's a constant focus for the in the industry.

This focus is working on both sides of the equation, enhancing recovery from existing producers and driving continuous improvement and new pad developments to maximize ultimate recovery and capital efficiency.

It's also about smarter developments and improving well productivity in the most cost effective way possible.

That means advance [clears throat] uh subsurface models to optimize frac design and in real time.

And as you'll see on the left hand side, [clears throat] the first ever trial here in the Permian showcased a new technology providing real time downhole measurements via temporary fiber optics, where we can adjust automatically from the surface equipment the frac parameters such as sand concentration and fluid rate.

The result was frac stage volumes went from -5% to greater than 25% total volume, compared to the original design basis, and that enabled placement of fracs and profit for more reservoir contact and improve recovery and lower cost.

Now, while it's still early [clears throat] days, I mean, I think we're all evaluating this this technology, automated fracturing shows real promise.

The benefits are twofold cost reduction, potentially reducing completion costs 5 to $15 a put and performance, better oil recovery and less frac kits.

Moving to the middle example, um is that where the industry is using data artificial intelligence to improve field operations, reliability and productivity of existing wells.

So, for example, monitoring digital workflows or reducing operator site visits to pads, improving efficiency and improving safety as well.

Also with this, the sheer number of wells that we all have and produce, along with gas compression units, gas lift optimization is leading the way with operators standardizing data, automating processes, and applying AI driven recommendations to boost performance.

Now, with ConocoPhillips, we've realized very measurable gains through the application of lift optimization, such as higher oil output, lower gas injection, and lower cost.

In addition, with gas optimization, we're aggregating compression units.

We're leveraging central facilities and rerouting gas to higher potential wells, proving a lift efficiency and lowering costs hitting the bottom line.

The bottom line is industry leaders remain focused on maximizing capital efficiency while minimizing operational costs through scalable, data driven initiatives.

And then finally, on the right hand side, we're working to get our products globally.

We're working to connect Permian gas to global markets through expanded LNG capacity on the U.S.

Gulf Coast, the Permian and Haynesville led North America gas growth thanks to low break evens and proximity to infrastructure.

In addition, new pipelines are being built to ease takeaway constraints and improve access to LNG export facilities.

And the LNG projects provide market optionality.

We can go into Europe, we can go into Asia.

We could market at TTF or JKM uh in Asia.

In addition, these efforts strengthen North America's role in global energy and create long term value.

The last slide uh before closing is related to community investment.

That's a key component, for all of us.

One thing the way we think about, uh strong communities is as important as strong operations over the last five years.

We've invested $42 million in community initiatives across the Permian, and we've done that through a clear focus on three pillars of our community investment strategy education, conservation, and quality of place.

Now, quality of place means a term that brings in health care.

It brings in recreation centers, parks, museums and nature centers.

77% of those investments have gone right here in Midland.

That's intentional.

As we all know, the impacts start right here at home.

One of the most significant ways we've put that commitment into action is through the Permian Strategic Partnership.

This isn't just a sponsorship.

It's a long term investment in the people, in the communities we work and live in.

The companies and universities involved in the PSP bring people, bring expertise, resources and leadership to develop solutions to partner for long term impacts on our communities.

Through the PSP, we are helping strengthen education, health care and workforce development.

These things are what open doors for West Texans and build a future we can all be proud of.

Now the the PSP represents one of the best in the industry, a unique public private partnership coming together to solve challenges dedicated to improving the quality of life, where we live and where we work in the Permian Basin.

Now, Aaron Hunter is going to speak a little bit more to that in the fireside chat.

So to wrap it up, the picture is clear.

The industry's focus is on smarter development, greater efficiency.

Cutting edge technology is what keeps the Permian at the forefront.

Now, the Basin isn't just strong today.

It's positioned to lead for decades and decades to come.

As we look ahead, success will come down to how well we adapt and how well we innovate.

The ability to embrace new ideas, apply data driven solutions, and keep pushing the boundaries is what will separate the leaders from the pack.

And that's what's exciting.

That's the exciting part.

And there's so much opportunity in front of us.

So now I'll invite Mike Summers, Aaron Hunter to the podium for a fireside chat.

So thank you.

[Applause] >>Mike>> All right, Nick, great job.

Yeah.

Uh, good afternoon everyone it is great to be in the Permian Basin.

Uh, my name is Mike Summers.

I'm president and CEO of the American Petroleum Institute, and I'm honored to be here in Midland.

This is the beating heart of the American oil and gas industry.

And I believe that there's no industry in the history of humanity that has done more to improve the human condition.

And these are the people here in this room that make sure that this energy, this energy, uh provides the world with the energy that it needs to continue to thrive.

Uh and the energy security that this country needs to provide energy dominance for our world, uh and particularly here in the United States.

So it is a true honor to be here.

Um, I get to Midland at least once a year because I know how important this area is, uh to our continued prosperity as a country.

And it is a true honor to be here today with Nick and Aaron.

So thank you very much for your time.

- Thank you Mike.

So we're going to start off uh with kind of a basic question.

I'd like to get your view of where we are, uh in the Permian Basin.

You kind of touched on this, uh Nick, in your remarks, but give us a broad perspective of where you see the Permian now and where you see it's going.

- Yeah.

I mean, obviously, there's significant resource that we I just talked about in the Permian Basin, you think about 50 billion barrels of resource that's below, uh $50, breakeven, a lot of potential.

Uh I think one of the key things that uh we look at is how can we make it even better?

We talked about all the efficiencies on the drilling side, the completion side, um the real time frac optimization.

But I think one of the key focus areas in addition to lowering those, the cost improving capital efficiency, is how can we get more out of the reservoir.

You just think about if you can move the needle 1%, 5%, 10% a recovery, that's significant.

The size of the Permian is significant.

That would really bring a lot of resources in for all these companies.

So, uh we've done a lot, as I've shown in the last five years, the efficiency gains, 50% improvement that continues on.

And there's one industry that I would not bet against, and that is this industry to come up with another mousetrap, another solution to unlock uh potential there.

And then I guess the last thing in the in the Permian Basin is the key thing is around those communities I just talked about, we can do all the innovation and all the execution, but we need to continue to develop health care opportunities, increased education, all that development around the community.

So that is so important.

So those two Mike go hand in hand.

- Aaron.

>>Aaron>> Yeah.

So I've worked Permian for quite a while or all of my career basically.

Um, so I'll take a little more hometown approach, but when I kind of points back to Nicks slide created by some reservoir engineer that likes to look at colors.

[Laughter] Um when you look at that, back to that slide, the green was being the Permian and fundamentally the Permian.

The green side of that chart was, um a ton of resource, huge amount of resource under that break even cost of life um $40 roughly.

And I think that points back to the multiple decades of inventory we as an industry have in here.

And and we as a company thankfully have as well.

But what I love about the Permian, there's other companies call them the kind of midsize companies right now that are turning towards tier two acreage and funding through efficiency and through geologic work, turning that tier two acreage into very competitive tier one acreage to bringing that forward.

Then again, Midland, functioning like it does for the Permian, really functional function like it does with the entrepreneurial spirit and kind of get it, get it done attitude.

The private equity startups are working on tier three acreage or finding, you know, pushing the boundaries, pushing the depths and working on tier three acreage.

As far as economics go, it's still great rock and pulling that forward, making it more and more efficient for more and more decades to come.

- So, um API, we host a big event at the beginning of every year.

We called our State of American Energy that we hosted, uh just um last week in Washington, DC.

Um and one of the things that we talked about at our big event was what we're calling the Demand decade, that we're at the precipice of the demand decade where we expect energy demand to be going up by about 50% just in the next ten years.

So the key point is, is that we're going to need a lot of energy going forward.

So the efficiency gains that you all are talking about, I think are really key to us meeting what we know is going to be growing demand because of of course, everyone talks about AI, more data centers, but we're also going to be using just a lot more energy for everything else that we do in our lives.

So these efficiency gains are really, really important.

Nick, maybe you could talk a little bit more about how you how what you see the future look like in terms of how you get more resource uh out of that.

You know what we projected to be 50 billion, uh, barrels, but it's probably even more than that if we continue to improve efficiencies the way that we have just in the last decade.

- Yeah, absolutely.

Maybe a little bit [Coughing] more on the efficiencies that I didn't talk about.

And Aaron can jump in here.

We have like what we call the drilling intelligence group, where we can monitor our wells 24 seven.

We can troubleshoot, we can optimize that for plan real time with AI and machine learning techniques.

And that's just been a a game changer for us uh out there.

And that's where you see, you know, 50% feet per day improvement.

Uh and the fact that we can actually do more with less, less rigs and more lateral footage, I think the example I shared on there on the left hand, uh panel was a real time about real time frac optimization where we can actually drive capital efficiency [Clears throat] and say, Mike, you had a two mile lateral with 50 different stages.

We can change that basis of design real time.

We can inject, uh less profit less, water, maybe 5% less or go 25% more when you have 25% more.

Mike, you know, you're actually fracturing more rock, therefore more recovery.

So techniques like that are what's going to be able to improve recovery and get more capital efficiency and more resource and more value for this industry.

- Uh, so so tell me, Aaron, you've been here for, you know, as you mentioned, basically your entire career, um.

What changes have you seen just in the last decade?

- Yeah.

So we moved here um, late 04 early early 05.

Um, we moved into our house, started with Chevron, and I had a great, great career so far in the Permian.

We've loved it.

Little did I know at that time.

04 05 Jim Henry, um Dennis Johnson, they were experimenting with calling marginal Sprayberry Wells with Wolfe Camp tales.

It's kind of the precursor to what we all know today is the Wolf Sperry Play.

And of course, it extended in the Delaware Basin, too.

And that little, little note at the time got more known kind of 2008, 2009, got a somewhat of a price collapse in that time frame.

I think locally it was concerning, but it was such a short collapse.

It wasn't the people here, whether it it then you fast forward to the price drop in 14 15.

Again it was challenging times for the industry.

But go back to the Permian spirit operators, service companies, everybody look for efficiencies and we power through that.

And there was there were people in impacted for sure, but we also powered through that and come out of it more efficient.

Then we go through the Covid timeframe, you know, negative oil prices.

And again, there was some people impacted, no doubt on that.

But we come out of that and some of our most efficient, well, whatever metric you want to look at cost per foot footprint, whatever our efficiency metrics are, some of our most efficient times were coming out of that Covid and oil price crisis.

- So we're going to come back to the Permian Basin, uh because this is we're sitting in the Permian Basin, but there's also a kind of an elephant in the room.

Uh and that's the Venezuela question.

And so ConocoPhillips had a significant position in Venezuela for a long time.

I'd love to get, Nick, your perspective on Venezuela in the post Maduro Chavez regime.

- I knew this was coming.

Right, Mike?

[Laughter] So maybe a back up, obviously, Ryan Lancer CEO, met with uh President Trump, the administration officials and other industry execs um, here not recently, uh too long ago.

I think the key thing for us, Mike, is really wanting to to work with the administration and really understand the energy policy that, that they're thinking of.

We got to really understand what that looks like for sustainable, uh impact on energy that impacts the Venezuelan American, uh people as well.

If you unpack that, there's a lot to be done.

When you think about um energy policy, it's probably revamping the hydrocarbon law in Venezuela.

We got to have sanctity of contract, the durability of the contract.

Um and the rule of law.

We need safety and security, uh out there.

We need to understand the kind of the topsides, the facilities and pipelines and vessels and what state are they in and the subsurface as well.

You know, we we're in with, you know, in Jamaica.

Petros, what are their fish bones?

There's a lot of different infrastructure in the subsurface, so a lot to unpack.

We're going to engage with the Trump administration to work through those policies.

If I take you back to my presentation, ConocoPhillips, we we sit on 20 billion barrels of resource that's less than $40, cost of supply, an amazing uh resource base.

Anything we do, if it's M&A or if it's Venezuela, it has to compete.

It has to generate returns.

It has to make our plan better.

And so that's the lens we're going to be looking through as well as uh looking at the arbitration awards as well, that integrated package.

But I think the key thing for us is this engaging with the Trump administration, understanding the policy and helping navigate through that.

- Yeah.

So, you know, I just to put this in perspective, we looked at these numbers.

And, you know, both Iran and Venezuela have been significant oil producers throughout their histories.

But if you put those two resources together, those two countries together, they produce less oil than the entire United States.

Right.

And those are two of the most prolific countries in the world.

Even at their peaks, they produce less than the United States.

And it's actually pretty close to, if you put them together.

What, the Permian alone Yeah, yeah.

- 6.5.

Yeah.

- Pretty incredible.

- Pretty Incredible.

- Pretty incredible.

So, Aaron, uh again, you've been here for a long time.

Uh tell us what, you think are some misconceptions about the Permian Basin.

- Yeah, there's a couple of them.

I kind of answer that two different ways.

The biggest one, kind of the elephant in the room um and probably to the frustration of some of my family.

Um, Midland is not like it is on Landman.

[Laughter] There's a core in there.

That is true.

We have hardworking people every day, and they care about safety and want to make energy for the globe so that that's true within the show.

All the other stuff made for TV drama, as far as I know, my wife's not bringing retirees around town to see the culture.

[Laughter] So yeah, so there is some grain of truth in that um but it it's not like it is in the show, just like most shows on TV.

Um but the other, other misnomer I would put out there or maybe kind of, there's two different tranches within in Midland, a lot of people move here and they think, okay, I'll just do my Permian rotation work here 2 to 3 years and then rotate out and do something else.

But I think, again, we've been here 21 years now.

I think the more you look around and the longer you stay, frankly, there is a core group that want to stay in Permian for Midland as long as they can.

If you look across the uh the demographics of Midland right now, I think the average age is 31, 32 years old.

We have a healthy amount of kind of more seasoned and seasoned employees here, a lot of retirees in Midland.

So then to balance that out at the average of 32, 33 years old in Midland, we've got a very young, also a very young demographic in Midland as well.

I think I've heard it before in other presentations.

The number, the largest demographic we have in Midland are now 0 to 5 years old, which goes back to some of the challenges we're fighting with with PSP and not just PSP, but broadly.

But I know PSP is a great advocate for this is okay with that that early ramp of, young young families, young kids, what does that mean for education in schools and capacity?

What does that mean for for pediatrics and for health care and doctors and, and that's kind of the softer side of what we're it's not it's a hard problem, but it's not tactical, just more capital, more and more stuff.

It's harder problem to fix.

- So yeah, I often joke with people that if you want to get a real taste of West Texas, watch Friday Night Lights, not Landman.

But, you know, we've uh API has done this sponsorship, uh with Landman over the course of the last two seasons.

And we jumped into this because we were concerned about how safety would be portrayed uh in this, this Hollywood production.

Uh and it turned out we hit that on the head.

Right?

We know that this industry is so focused on on safety and environmental performance and that's not portrayed, you know, in the show itself.

And the second season, we really have portrayed work to portray real landmen.

U and we're industry, the industry workforce.

So if you go to api.org slash uh real landman, you can see some of the ads that we've been we've been on this.

Thank you, thank you.

- Yeah.

Really good.

Glad you did.

You know safety technology innovation and that last one is hard working individuals to deliver affordable energy.

- Well done Mike.

- Thank you.

So we have two incredible, uh industry leaders here.

And one of the things that I'm really curious to ask is if we know that this industry is constantly innovating.

You know, this is the industry that uh you know, when in 2007, you know, we used this statistic all the time, um when ConocoPhillips left Venezuela, the United States was only producing 5 million barrels of oil every single day.

Right.

And just in that time, from 2007 to 2025, producing over 13 million barrels a day, it's because of the revolution that that you all were a key part of.

So as you look ahead, is there an innovation that you would love to be able to fast track for this industry, - Mmhmm - whether it's on drilling techniques or, or water uh or technology?

- Aaron, Ill let you go.

[Cough] - Yeah, yeah, just near and dear to my heart.

If I could fix advance one technology, fix one problem ahead of us.

It's water.

It has to be water for the water challenge we have.

We we brag on how much oil we make.

And it's amazing.

We make half of the United States oil and gas from right here in the Permian.

The flip side of that is, for every barrel of oil we pull out of the ground locally here in Midland, we produce about two barrels of water.

So it's even more when you look at southeast New Mexico and further west Texas.

We make a lot of water in the Basin.

Um and for the longest time we've been disposing in these shallower zones.

And Andrus or dealer mountain Group on the Delaware Basin side of things.

And at some point in time, those are filling up.

The industry dabbled its toes in the deeper injection zones that led to some uh but, certain areas anyway of in do seismicity, um great work with the Texas Railroad Commission and industry to pull back on those injection.

The corresponding seismicity dropped off, but it still leaves the remaining water problem there.

If we make a ton of water, we got to find a solution for this.

So I'd like to jump through all the way to maybe the next ten years down the road of we have to find a way to fit through regulation through pub, honestly public comfort of using this water for some beneficial reuse.

Whether it's growing non consumptive crops, um like cotton or something like that, or getting to the point where we can trust it to be able to put it on the ground, let it soak back down and replenish our thirsty aquifers.

So to me that if I could advance one technology, it'd be definitely fixing the water future.

But if I if I can cheat a little bit.

The other problem we have in the Permian, the only one key way to fix the water problem is also the fixing the power problem.

We can't process all this water and fix them [Clears throat] without reliable cheap power as well.

- Mike, I have to go back to recovery.

[Clears throat] You know, we we don't recover 15%.

Just think again.

If you could go 5% more, 10%, 15% more, that is what's the new mousetrap that's going to really going to move the industry and make this uh Basin even bigger.

So I think anything on the on the technology front, we talked about the real time frac optimization.

There's other techniques out there.

We need to continue to explore that as an industry because again, the Permian will grow.

We'll find deeper horizons.

Like Barnett, uh like Woodford, like Barnett.

But it's really figuring out how do you create more stimulated rock volume that leads to more drain rock volume, which leads to higher recovery?

Obviously, capital efficiency is a part of it.

We all have returns focused, uh financial systems.

So it has to be low cost to supply in order to deliver that recovery.

- And Nick, you talked a little bit about this in your presentation, uh which is how you're using artificial intelligence.

- Mmhmm - How do you see that, uh entering your operations, going forward?

- Yeah, absolutely.

I mean, it's it is going to it's transforming the business now.

And we've we've been at this for a long period of time.

You know, we we were using machine learning way back when to even predict track [Clears throat] gets a needle for, you know, we stirred that field up in 2009.

Uh and we continue to see applications like that using machine learning to optimize customized, fracking, designs, for example, in the Bakken, uh we recently Mike just went through and overhauled our whole ERP system.

It was a 25 year old SAP system, did a lot of data cleanup so we could access data quicker, more, faster decisions on completions.

One of the key ones I just mentioned is using the data to make sure we're putting our operators to the pads, where it has the largest impact.

And so rerouting our operators on a day in, day out basis through AI, using the data that we have in front of us.

And then, um we talked about, again, the drilling intelligence group, 24 seven, where we can use that to for plan wells and improve the feet per day.

- So it's it's incredible, you know, I've said a few times publicly that, you know, it could be AI is the next fracking revolution if it allows us to capture more of that resource that we haven't been able to access.

- Yeah, absolutely.

- Mike.

Yeah.

And I think one of the things we're also seeing and we're seeing this all across the country, you know, AI data centers, they're starting to be it's almost the next fracking fight.

Right.

We we won the war over fracking.

And it you know, time will tell whether data centers and AI companies start to fight back in a way where people actually understand that this is good for their future.

- Yeah.

- And I verdict I think is still out.

- It is.

- Yep yep yep.

- So, uh want to talk a little bit, uh Nick, if we can, um obviously the industry saw a significant wave of consolidation a few years ago.

Uh, ConocoPhillips, of course, was part of that with both Concho, uh and Marathon, of course.

Um do you think, uh we should expect more consolidation in this industry?

Uh, or are we done with it for a while?

- Yeah.

Great.

Great question.

Mike.

I mean, I think [Clears throat] if you look at the basins within the lower 48, [{Clears throat] excuse me, you see, as basins mature, you're going to see consolidation as basins mature, you'll see consolidation, as you pointed out the last five years.

We did Concho, we did Shell, we did Marathon pretty significant transformative transactions in that period of time, we also were able to add to our Sermont equity.

You got 100% equity in Sermont.

We added to Australia Pacific LNG out there.

um, I think as you look at the lower 48 in general is as you as companies work through their tier one inventory, they work in their tier to maybe bring in tier three into tier two.

There may there may be aggregation opportunities amongst companies when you only have five, six, seven years of inventory.

So I think there's going to be more in that space.

When you look at ConocoPhillips in general, we don't see any gaps in the portfolio.

We really transformed it in the last five years.

If you look at 20 billion barrels, a resource, it's less than $40 cost of supply.

That's very competitive.

When we look at opportunities in the M&A space, we've got to say, does it make our financial plan better, our strategic plan better, and can we do something with those assets either through synergy opportunities or using our development or best management practices to improve the overall value?

And so it's a pretty darn tall bar right now for us.

But I think consolidation will continue as these basins mature.

And as you work through the tier one and tier two inventory.

- So I feel like every year we have to answer the question about peak Permian.

- Yes.

- Aaron, do you want to take this and how do you feel about all these conversations about hitting peak Permian production?

- Yeah, it's a great question and it's hard to analyze.

There's so much activity in the Basin.

Back to the efficiencies conversation.

Uh, I would say it points back to kind of the three things or any 2 or 3 things that are pushing the operators.

You mentioned consolidation.

There's already been a lot of consolidation to larger companies.

And within those larger companies that the investors or shareholders of those companies are pushing them for capital discipline, return on, um dividends, return on investment.

So within that public company, you're seeing those public public companies bring back capital programs and focus on distribution and dividends.

So there's that, that pressure.

Um as well, I think that the whole yeah, it's kind of how would I answer that.

Yeah - Any thoughts?

- Uh no, I think you covered it.

Well, yeah.

I mean, I mean, I think on the plateau, I mean, I if we take a look at the be the larger global demand, uh if you look at that, we're robust, uh very constructive on a million barrels per day per year overall.

You know, we look when we take a look at, and I'll come back to the plateau, component, we take a long term view, Mike, when we look at overall, uh supply demand, we currently are sitting kind of at $65 per barrel WTI.

Um in that space, um, I think you're going to see headwinds.

I think I don't know if we're what $60 WTI right.

Today.

Um, we're looking at inventory levels both on land on and onshore.

Uh probably could see some headwinds the first half of this year.

But when you look at demand fundamentals, and we were surprised in 2025 that we see that demand, uh definitely going in the foreseeable future, 1 million barrels a day for, you know, per year.

That's pretty sizable.

When I come back to the plateau question and we talk about, even though I mentioned 50,000 well locations out there in the Permian as companies go through their tier one into their tier two, the one question we have, Mike, is where is that next conventional barrel of oil, or where is that next unconventional barrel of oil?

And it's not, um evident at this point in time where that is.

And so and the other key question is, is how much spare capacity OPEC, I'm sure you get that.

So you take that back to the Permian plateau.

Folks are working through that.

And as I mentioned in my prepared remarks, you know, we hit 6.5 million barrels of oil per day based on commodity prices.

That'll probably go up slightly, but then we can plateau well, in the 2030s.

But then you got this demand going up a million barrels oil per day.

There's a gap.

And where does that going to come from?

And so, um I think folks that are positioned with a lot of resource, low cost supply, so it's durable through the cycles, there's going to be a, you know, winning value proposition.

- You know, someone once said to me, um, I'll show you peak oil when you show me peak innovation.

- Yeah.

- And I think one thing that you said today that really resonated with me is that your company and all of the companies in the Permian are constantly innovating, uh to find this resource and continue to discover, you know, the, the, the resource that that's going to need to be there to supply the world.

- Yeah, absolutely.

- It's pretty incredible.

- It's exciting.

I mean, it's it's exciting.

It's amazing.

I again, I wouldn't bet against this industry in any way.

- Yeah.

- They're going to crack the code.

- Yeah.

- It's fascinating.

So, uh Aaron, you live here?

You've been here for a long time.

I want to talk a little bit about your relationship with this community and how ConocoPhillips.

Nick, uh mentioned this a little bit in his presentation to have you given back and what are your plans to continue to give back to the broader community?

- So through through companies and then through personal side of things.

I think one of the core tenets we try to do in the Permian, thinking through Conoco through the company side of things, it's back to the three pillars Nick, Nick talked on is education, quality, place and conservation, which also we're we're kind of called core tenants of Conch, the Concho culture that still and it's more than just a Concho culture.

It's the Permian independent mindset culture that remains.

But on the education piece, we've kind of talked on that the the on ramp of the age of students and kids right now, there's a big wave coming of people that are going to need quality education, quality schools, all the things and quality facilities, um that we need that.

But also on the quality of place.

We're, we're doing a lot of, a lot of um infrastructure.

I don't know, Laura.

You do a ton right now as well.

We're looking at infrastructure buildout, education, a lot of health stuff going on right now.

I know through PSP and Tracee, we're looking to try to get pediatrics to come here and actually stay here.

Um, I know they're working on the medical facility, um between Midland Odessa right now.

So we're trying to do everything we can we as Conoco, we as an industry to inspire and promote that kind of growth.

Personally, I try to serve on as many boards as time will allow and just try to volunteer where we can.

So I firmly believe that's the right path forward.

And I think one area that sets us unique a little bit differently from some other people in the Basin is our drive towards conservation as well.

Um for those that don't know, we've got, we own certain surface lands across Midland Basin, Delaware Basin, that's all rolled up under an entity entity called Quail Ranch.

But under that entity we're looking at quail habitat conservation.

Natural, um natural grass reseeding efforts.

I see Jesse Wood over here who's leading a lot of the effort for us.

Um Jesse and team have been recognized across the state for their, um work and dedication towards conservation efforts through surface land we own.

- You know, I mean, it's truly incredible.

I've been able to visit some of these incredible environmental projects that you've done, and both Texas and Louisiana and the partnerships that you have with Ducks Unlimited and Quail Unlimited.

It's truly an inspiration, what this entire industry does to give back, any other thoughts, Nick, on.

- No.

You hit the nail on the head.

I think as we continue to advance this industry and unlock more resource potential drive efficiencies, we got to continue to push and push, uh like the Permian Strategic Partnership in education, health care, in the quality of place.

And that's going to be, absolutely necessary.

- So let's, look ahead a little bit.

Uh we're about out of time here, so I want to I want to wrap this up by giving you an opportunity to think about five years from now, if you could write the headline in the Midland paper here about what the Permian Basin has become five years ahead, what would that what would that headline say Aaron?

- Yeah, I'd love to wake up, read the headline of technology X, whether it's CLR or, um refracs any and any kind of technology, basically unlocking another 50% resource recovery.

Taking our right now where we recover, nobody really knows, but 8 to 12% of the oil that's currently under the ground is what we can extract today.

That leaves 90 some percent remaining.

So I would love to read a headline that says industry finds another way to increase that by another 50%.

- I love it.

[Laughter] - Is that your headline?

- That would be my headline.

[Laughter] [Clears throat] - But I think the, you know, look, five years out, the question will be, you know, Permian continues to deliver maybe a low cost of supply, affordable energy for for the global, uh uh market uh and we're in we're innovation leaders.

We're coming back to that.

We're all innovation leaders driving efficiency.

And then another key part of that headline is just what we're doing with the communities.

We're advancing education.

We're advancing health care.

That has to be it's the total integrated package.

- So my last question for you too, is really a policy question, which is to say, you know, we spend a lot of time at the American Petroleum Institute talking about both federal policies, state policies, local policies that affect your businesses.

Uh, we have, you know, the mayors here, Representative Craddick is here would love to hear what your views are.

If if what's the what's the one thing you that the state or the federal level that we think we still have to get done, uh to really unlock this industry?

- Yeah.

For me, I'd go back to the another passion.

I talked about water.

We love to in Texas, New Mexico.

We would love more collaboration with governing bodies and agencies around how can we clean up a barrel of water, a gallon of water, whatever measurement of water?

How can we clean up that barrel to a certain standard?

Nobody wants to pollute, but we know people care about water quality.

So what certain quality?

What's certain quantities of water?

Uh what it's certain, um constituents of chemicals, like like, you know, calcium, magnesium, stuff like that.

Can we leave in water?

Because for those that don't know, if you clean it up to pure distilled water and put it on the ground, it's actually going to hurt the grout in the ground more than it's going to help it.

So it has to be certain key minerals in that water that help flourish and help things grow.

That's where we would love more collaboration with any kind of entity that will help defining regulations around water, to the point where we can clean it up and do a better thing with it than just put it back on the ground.

- Yeah.

- Mike, I would say power.

I think, Aaron you mentioned it.

I think we look at where we're at now, probably in ten years, 15 years time, we're going to be 4X5X.

And that doesn't include data centers.

So the question really is to getting into New Mexico and Texas because we need those big power transmission lines.

And so we need a vehicle through permitting, uh in order to for that to come to fruition.

And I know that's being worked between New Mexico and the state of Texas, but that's going to be a key thing as we go forward and think about 50,000 inventory locations, all those pads, all those facilities that demand on power.

But we need the permitting infrastructure and the policy to make that happen.

- You know, that's key.

That is key.

You know, one of when, uh the June before the last presidential election, API put out what we called our five point policy roadmap, and this was the policies that we would request any new president focus on to make sure that we have a secure energy future and to reduce inflation.

And, you know, we're at about the one year anniversary of President Trump's election.

And we're proud to say that almost 90% of that five point policy roadmap has already been enacted.

And that included getting rid of those terrible EV mandates, allowing us access to federal lands and federal waters.

Leasing on federal lands right now is 55%, up from the Biden administration.

We have a new five year leasing program coming for the offshore.

Uh we got rid of that you know LNG pause that President Biden put into place, but that one last thing that has to get done is comprehensive permitting reform done at the federal level on a bipartisan basis.

So we're working very hard right now to see if we can unlock permitting reform in a sustainable way, uh between Republicans and Democrats, because there is common ground here between those that want to build out more supplemental energies and those of us that just want to build pipelines and get transmission to where it needs to be to to power our future.

So hopefully we can in the next couple of months, really work on on getting that done on a bipartisan basis.

And I know, Congressman Pfluger here, uh in, in this congressional district is working hard on that as well.

So with that, uh Aaron, Nick, thank you very much for your time.

I also want to thank Evan Thomas, uh from the Midland Chamber, who just does a fantastic job here for, uh thank you for inviting us to this great lunch, and we'll look forward to doing it again and in 2027.

Thanks, Evan.

- Let's give him one more round of applause as they exit.

[Applause] With that, Um I want to just again extend my thanks to this entire room for being here.

Uh, your support means everything to us at the Chamber and to our business community.

And just let us know how we can serve you.

So with that.

Thank you.

I hope you have a great day.

And let's continue to making Midland the best place to live, work and do business.

Thank you all.

[Music] [Applause]