ConocoPhillips provided significant insights into its Permian Basin operations during its Q4 2024 earnings call, highlighting efficiency improvements, capital discipline, non-core asset sales, and potential growth opportunities tied to increasing U.S. power demand.
The company remains committed to capital efficiency and production optimization, with a focus on delivering value-driven growth while maintaining operational discipline. Below, we break down the key takeaways from ConocoPhillips’ latest updates on its Permian strategy.
Production Growth and Efficiency Gains
ConocoPhillips continues to maximize efficiencies in the Permian, enabling the company to grow production without increasing drilling activity. The company reported 833,000 barrels of oil equivalent per day (boe/d) in the Permian for Q4 2024, attributing its success to significant efficiency improvements.
According to CEO Ryan Lance, the company is benefiting from improved well designs, drilling and completions efficiencies, and optimized rig and frac schedules:
“A huge shout-out to Nick [Olds] and his team— they keep delivering some amazing efficiencies with the horizontals, the larger well pads, and just the frac and drilling efficiencies that we experienced are really good.”
The company emphasized its ability to deliver 15% more scope—meaning more feet drilled, more stages per day, and more wells online—with the same level of activity. This improvement has allowed ConocoPhillips to maintain its low single-digit production growth target while reducing overall capital spending.
“At flat activity, we can grow the Lower 48 business. The teams have continued to drive operating efficiencies, and we do see that for years to come at flat activity.” – Nick Olds, EVP of Lower 48
Non-Core Asset Divestitures in the Permian
As part of its portfolio optimization strategy, ConocoPhillips announced the sale of non-core Permian assets for $600 million, with the transaction expected to close in the first half of 2025.
These assets, located in the Southern Delaware Basin, produced approximately 15,000 boe/d in 2024 and were identified as non-strategic in ConocoPhillips’ broader Permian development plan.
“As we announced today, we signed PSAs for about $600 million. That’s non-core Permian assets, and we expect those to close in the first half of the year.” – Andy O’Brien, SVP of Strategy, Commercial, Sustainability, and Technology
While these sales represent a shift away from certain assets, ConocoPhillips remains a dominant player in the core Permian Basin, where it continues to focus on high-return, low-cost supply opportunities.
Marathon Synergies and Inventory Optimization
Following the Marathon Oil acquisition, ConocoPhillips has gained 2,000 new well locations, split primarily between the Eagle Ford, Bakken, and Permian Basin. The company expects to integrate these assets into its existing steady-state development approach, further reducing well costs and improving efficiencies.
“We don’t see anything different from the acquisition case. We’ve got 2,000 competitive well locations, as Ryan mentioned, around that $40 per barrel cost of supply. Roughly half of that is in Eagle Ford, and then the remaining is split between Bakken and Delaware.” – Nick Olds, EVP of Lower 48
In the Bakken, ConocoPhillips is seeing opportunities for longer laterals, which could translate into similar efficiencies in the Permian. This suggests further cost savings and productivity gains across its Lower 48 portfolio.
Potential Impact of Tariffs and Permian Crude Pricing
The potential U.S. tariff on Canadian crude oil imports could indirectly benefit Permian crude differentials, especially for Midwest refiners who might struggle to replace heavy Canadian crude.
According to Andy O’Brien, while ConocoPhillips sells about half of its Surmont (Canada) production into the U.S., any tariffs would create wider spreads in favor of domestic producers, such as those in the Permian, Bakken, and Alaska.
“If tariffs were to be implemented, it’s pretty difficult to say exactly who is going to carry the burden where. But refiners in the Midwest and Rockies have fewer options to substitute compared to Gulf Coast or West Coast refiners. We’d likely see strengthening differentials for Bakken, for ANS, and possibly even the Permian.”
This could lead to stronger pricing for Permian crude, providing a potential tailwind for ConocoPhillips in the region.
Permian Growth Opportunities: Data Centers and Power Demand
One of the most intriguing points raised during the call was the growing power demand in the U.S., particularly for AI-driven data centers, which require large-scale, reliable energy sources.
ConocoPhillips sees opportunities to monetize its Permian natural gas production by supplying fuel for power generation, which could potentially support new data center developments.
“We’re getting a lot of inbounds on the power side, primarily because we obviously have a lot of natural gas we’re producing. We have a commercial power desk, and we have a large land position throughout the U.S. So there are some natural advantages that we have in that space, and we’re assessing some of those opportunities right now.” – Ryan Lance, CEO
While still in the early stages, ConocoPhillips is evaluating potential partnerships and infrastructure investments to support this growing energy demand.
Final Thoughts: Permian Positioned for Long-Term Success
ConocoPhillips remains one of the most disciplined operators in the Permian, focused on capital efficiency, operational improvements, and portfolio optimization. Key takeaways from the Q4 2024 earnings call include:
- 833,000 boe/d production in Q4 2024, with further efficiency gains expected.
- $600 million in non-core asset sales, primarily in the Southern Delaware Basin.
- 2,000 new well locations from the Marathon Oil acquisition, optimizing development strategy.
- Potential crude price benefits from proposed U.S. tariffs on Canadian oil imports.
- Exploring opportunities in natural gas-fired power generation to meet AI-driven data center demand.
With these strategic moves, ConocoPhillips is well-positioned for long-term value creation in the Permian Basin, balancing growth with strong shareholder returns.
