ConocoPhillips’ (COP) at Bernstein Strategic Decision Conference

Ryan Lance – CEO

Their strategy

“…in a range of $50 to $60 a barrel, we will maintain a strong balance sheet and we’ll allocate cash between per share and absolute growth. At higher prices and at lower prices, we’ll exercise flexibility and take the highest value actions for our shareholders.”

Do expect some volatility

“…we see there is probably going to be a lot of volatility. There is a reasonable case that says the lack of investment over the last 5 years, 6 years might lead to higher prices coming over the next couple.”

They are not worried about inflation

“…when I look across our whole portfolio today and I compare 80% of our capital is going internationally into areas that are deflating. So, I don’t worry in our portfolio about the inflationary pressures but I am certainly worried about the activity that we are doing in certain basins and in certain categories of spend.”

But they will evaluate the impact of persistent inflation

“…we will look at our plans later this year. But if we see persistent inflation that starts to erode the margins, we will allocate capital, the lowest cost to supply highest margin opportunities in the portfolio.”

Oil at $50 is not going away any time soon

“…back about 4 years, 5 years ago I was invited to the Vienna meeting. I was on the stage like this in front of all the big OPEC crowd with at the time, Ali Naimi, who is the Minister of Saudi Arabia, the Venezuelan oil minister, the Iranian and I got up and I told them that U.S. would surpass Saudi Arabia in production in 5 years. And I got laughed off the stage. And 3 years later, Naimi invited me back. He said, I will be damned, you are right. And we need to understand this a little bit more. And the message to him at the time was this isn’t going away in 3, 4, 5 years. So to put it in perspective, our industry has found over 400 billion barrels of resource in the last 10 years, 400 billion. That’s 10 crude oil days in the last 10 years in this business. And so I think the recognition that’s now coming is one that it’s real, that it is competitive at a $50 barrel price deck and it ain’t going away.”

Bob Brackett – Bernstein

Too much cash, too few projects

“And then in a world of extremely low interest rates, we have changed I always joke, if you fly to California and you go talk to Google or you go talk to Apple and say I have got capital for you to commit to technology and new ideas. They will say no thanks, we got more cash than we know what to do with. If you stop instead halfway in West Texas and ask people, hey, do you have anything you can use with all this capital, they will say yes, I can stick it in the ground.”