Good afternoon, and welcome to Occidental's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jeff Alvarez, Vice President of Investor Relations. Please go ahead.

Thank you, Jason. Good afternoon, everyone, and thank you for participating in Occidental's Second Quarter 2022 Conference Call. On the call with us today are Vicki Hollub, President and Chief Executive Officer; Rob Peterson, Senior Vice President and Chief Financial Officer; and Richard Jackson, President, Operations, U.S. Onshore Resources and Carbon Management. This afternoon, we will refer to slides available on the Investors section of our website. The presentation includes a cautionary statement on Slide 2 regarding forward-looking statements that will be made on the call this afternoon. I'll now turn the call over to Vicki. Vicki, please go ahead.

Thank you, Jeff, and good morning or good afternoon, everyone. We achieved a significant milestone in the second quarter as we completed our near-term debt reduction goal and activated our share repurchase program. At the beginning of this year, we established a near-term goal of repaying an additional $5 billion of debt, before further increasing the amount of cash allocated to shareholder returns. The debt we completed in May brought the total debt repaid this year to over $8 billion, surpassing our target at a quicker pace than we had originally anticipated. With our near-term debt reduction goal accomplished, we initiated our $3 billion share repurchase program in the second quarter and have already repurchased more than $1.1 billion of shares. The additional allocation of cash to shareholders marks a meaningful progression of our cash flow priorities as we have primarily allocated free cash flow to debt reduction over the last few years. Our efforts to improve the balance sheet remain ongoing, but our deleveraging process has reached a stage where our focus is expanding to go to additional cash flow priorities. This afternoon, I'll cover the next phase of our shareholder return framework and second quarter operational performance. Rob will cover our financial results as well as our updated guidance, which includes an increase in our full year guidance for OxyChem. Starting with our shareholder return framework. Our ability to consistently deliver outstanding operational results, combined with our focus to improve our balance sheet, have positioned us to increase the amount of capital returned to shareholders. Considering current commodity prices expectations, we expect to repurchase a total of $3 billion of shares and reduce gross debt to the high teens by the end of this year. Once we have completed the $3 billion share repurchase program and reduced our…

Thank you, Vicki, and good afternoon. In the second quarter, our profitability remained strong, and we generated a record level of free cash flow. We announced an adjusted profit of $3.16 per diluted share and a reported profit of $3.47 per diluted share, with the difference between the 2 numbers primarily driven by gains in early debt extinguishment and positive mark-to-market adjustments. We were pleased to be able to allocate cash to share repurchases in the second quarter. To date, we have purchased over 18 million shares as of Monday, August 1, for approximately $1.1 billion for a weighted average price below $60 per share. Also, during the quarter, approximately 3.1 million publicly traded warrants were exercised, bringing the total number exercised to almost 4.4 million with 11.5 million -- 111.5 million remaining outstanding. As we said, when the warrants were issued in 2020, the cash proceeds received will be applied towards share repurchases to mitigate potential dilution to common shareholders. As Vicki mentioned, we are excited to enhance and expand our relationship with EcoPetrol in the Permian Basin. JV amendment closed in the second quarter with an effective date of January 1, 2022. To maximize this opportunity, we intended to add an additional rig late in the year to support the JV development activity in the Delaware Basin. The additional activity is not expected to add any production until 2023, as the first Delaware JV wells will not come online until next year. Similarly, the JV amendment is not expected to have any meaningful impact on our capital budget this year. We expect the Delaware JV and the enhanced Midland JV and to allow us to maintain or even lower industry-leading capital intensity in the Permian in 2023 onwards. We will provide further details when we provide 2023 production…

We're now prepared to take your calls.

[Operator Instructions] The first question comes from John Royall from JPMorgan.

So can you talk about the various moving pieces in the CapEx guidance? I know that you raised the Permian number, but kept the total the same. So what are the areas that were the source of funds for that raise? And then any early look into some of the moving pieces for next year with this new FID for Chems and then the change in structure with EcoPetrol? Just anything you can give us on kind of the puts and takes going into next year would be helpful.

I'll let Richard cover the changes in the CapEx, and then I'll follow up with the additional part of that question.

John, this is Richard. Yes, so a few moving pieces as we look across the U.S. onshore. And as we look at it, a couple of things occurred during the year. I think, first, from an OBO perspective, we had a wedge assumed in our production plan. And early in the year, that became a bit slower in terms of delivery. And so we went ahead and made the move to reallocate some of that capital into our operated, which did a few things. One, it secured that production wedge for us, but it also added resources for the back half of the year to give us some continuity on the back half of the year. We like that we did that. As Rob mentioned in his comments, these are high-return projects that are very good. So that was a good move. And then securing some of those resources early in the year in terms of rigs and frac core has played out well in terms of our timing to manage inflation and improve performance as we hit this ramp-up for the back half of the year. The other piece of that, so step 2 is really reallocation from Oxy. And so part of that is coming from LCV. We can talk in more detail on that if we need to. But that's really -- as we hit the back half of the year, we look to be coming in closer to midpoint for low carbon ventures. That's really just more certainty around the direct air capture development in some of the CCUS hub work that we've got in place. And so that, plus, I think, some other savings around the rest of Oxy, really contributed to that balance. So if you think about that extra [ 200 ], I'd say 50% of that is really around activity adds. So we were a bit front-end loaded in our plan for the year. That allows us to take that capital and keep continuity, especially across drilling rigs, which will give us optionality as we go into 2023. And then the other piece is really around inflation. We've seen that pressure on that. We've been able to mitigate a large piece of that. But we've outlooked an additional 7% to 10% sort of outlook compared to plan on the year. We've been able to again make up an incremental 4% of that in operation savings. So pleased with the progress against that. But we did start to see some inflationary pressures come up. And so that capital helps address that uncertainty, I would call it, for the rest of the year.

I would say, on capital for 2023, it's still way too early for us to determine what that would be. But the EcoPetrol JV would fit into the resources allocation, and we'll compete with the capital within that program.

Okay. Great. And then switching over to chemicals. If you guys could just talk a little bit about the fundamentals in that business. Coming off a very strong 2Q, but a big step down in guidance for the second half. So if you could just give some color on the source of the strength in 2Q and what you see changing in the second half?

Sure, John. I would say conditions in both the vinyls and caustic soda business that are largely the ones that determine how we perform overall. In Chemicals, they were obviously very favorable in the second quarter. And when we see both conditions -- both businesses and favorable points, you have the significant earnings impact leading to the record performance we had in the second quarter. If you go into the third quarter, I would say, the extreme tightness that we've been experiencing for quite some time in the Vinyls business has become more manageable. And that's really from improved supply and some softening in the domestic market, while conditions in the caustic soda business remain very strong and continue to improve. I would say the macroeconomic conditions are still indicative that when you look at interest rates, housing starts, GDP, they're kind of trading unfavorably, which is why we talked about a softer second half relative to the first half. But we're also entering a very unpredictable time of the year being the latter part of the third quarter here in terms of weather, which can certainly upset supply or demand either way. And so this is -- it's very difficult to look out very far as we enter the very beginning of the hurricane season or the peak of hurricane season. And the other thing I would say that has impacted the business a bit that we're trying to incorporate into the outlook is the Chinese shutdowns related to COVID, sort of the no COVID tolerance policies is backing up their demand in terms of needs for chemicals and pushing other Asian chemicals into other parts of the world, including impacting exports from the U.S. And so there's a bit of a softening there effect. But again, these are…

The next question is from Raphaël DuBois from Societe Generale. Raphaël DuBois: The first one is related to Algeria. Now that you have signed this 25-year contract extension, I was wondering if you could maybe give us some better color on what is the production potential for Algeria and whether there is a change in the mix between liquids and gas that we should be expecting?

Currently, under the agreement that we signed, we're still -- we'll be producing basically oil production with associated gas. And primarily from the fields, we've already been developing just expanding those out. So I'd say that from the standpoint of our production outlook currently, it's going to be -- look a little bit lower next year than it looks this year because of the structure of the contract. But our cash flow is going to be approximately the same. So it's just based on the terms. And we have a lot of potential, we believe, in the existing fields to continue to develop those out. So the remaining reserves that we'll be able to add as a result of just the contract extension will be about 100 million barrels. Other than that, there's a lot of potential for further evaluation. So we've included the 3D seismic survey as a part of the evaluation, so that we can start to better increase our recoveries from those conventional sales because they're all relatively low decline and supported with gas injection and potentially ultimately some CO2 injection. Gas is not a part of what we're developing over there yet, but could be in the future, should there be an opportunity for us to find it commercially competitive with the other projects that we have internally. Raphaël DuBois: Great. And my follow-on question would be about chemicals. This Battleground CapEx project that you have announced, you said earlier that you would have more plans that you will consider for modernization. When could we hear about the next one to be modernized? And could you maybe remind us of the capacity of Battleground so that we can have a feel for the CapEx intensity of such project and what we could be expecting going forward for other projects.

Sure, Raphael. So we have talked about potential conversions beyond the Battleground project. So at this point, we've made the decision to move forward with the Battleground conversion. As indicated in the remarks, we will continue to operate the facility throughout the construction process. There may be some short periods where we'd take very short outages for important connections between existing infrastructure in the facility. We're confident, throughout that process, we can build inventory and continue to build product with no impact on our customers. And so as you think about the Battleground process, you should not assume any loss of sales or margin during the actual project itself. So when you look at the other facilities, once we convert the Battleground facility, we already have membrane technology and polyramics, which is a non-asbestos type diaphragm technology, at our Wichita and Geismar facilities. And we're in the process right now of making a conversion change at our [ Wichita ] facility to polyramics. So the announced project, that will not only convert Battleground but increase its capacity by 8%, we'll only leave our Convent Ingleside facilities utilizing asbestos diaphragms. And we'll begin the conversion studies on those as we get further underway with the actual Battleground conversion. We'll do them sort of in series together. We won't wait for one to be completed to make a decision on the other, but we'll sort of stagger them together. But obviously, what we're going to do with those facilities isn't as pertinent as to moving forward the Battleground project right now. And so from a capital intensity standpoint, we don't provide individual capacities of our facilities. But what I would say though is that the amount -- cost of $1.1 billion that we've included in the slide deck, I would not use…

Raphael, this is Jeff. I'd add one thing to what Rob said. The EBITDA number we've provided would be, the way I'd look at that is more of a mid-cycle EBITDA, not at current pricing or current marketing conditions. So you can use that for your estimates.

The next question comes from Devin McDermott from Morgan Stanley.

So I wanted to ask on low carbon ventures. One of the moving pieces in the cap guidance this year was LCV spend coming in toward the midpoint. I was wondering if you could just talk a little bit more broadly about the progress you've been making towards some of the milestones that you set forth earlier this year. And as part of that, the Inflation Reduction Act that's recently been introduced has some supportive language in there for carbon capture and also direct air capture. So can you talk about if that were to move forward, how that might impact the cadence of investment over the next few years?

Devin, I'll start, and then pass it over to Richard. And while we're on the Inflation Reduction Act, I just want to cover a little bit more about what's in there. There's a lot of things in there, ranges from alternative fuels to renewable energy, EVs, hydrogen, methane, emission reduction and carbon capture use and sequestration. But some of the things that impact us are the -- on federal land, oil and gas royalty rates increasing, increased minimum bid rates for leases, increases in annual rental rates, but not excessively, and increasing bond requirements, also offshore royalty rate increases. And one of the good things is that it does require oil and gas lease sales ahead of granting right of ways to wind and solar. It requires royalties in oil and gas produced, whatever it's used for, unless it's played for safety reasons or used for the benefit of the lease. But one of the interesting things about the act is that it reinstates the Lease Sale 257 from the Gulf of Mexico, in which we had gotten some key leases. And so that's really important for us as a company. The other thing is that it requires the resumption of the scheduled lease sales for the GoM from 2017 to 2022. And with respect to carbon capture, which is probably the most impactful to us, is there are a lot of things around the enhancement to 45Q. And when you look at the Gulf of Mexico benefit to us and you look at the requirements for the methane emissions and emission reductions and that sort of thing, which are things we already were doing, this is turning into for us a net very positive bill should it get passed. So I'll turn it over to Richard, so he can give you a little more color on what the CCUS enhancements are.

Yes. Devin, let me start with just a few kind of progress points on both our direct air capture and CCUS, and then get a couple of specifics on, like Vicki said, how this can potentially help our development plans. I think from direct air capture, the critical pieces are continuing to move well. I think from a technology and engineering standpoint, we were able to finish FEED. We're on track and plan to begin construction by the end of this year. And we're really taking that feed and working hard on putting together specific bid packages and being very thoughtful about the supply chain behind that as we go into the end of the year. So we're spending time with that. From a market support, continue to have very strong support from the carbon dioxide removals in terms of the sequestered CO2 offtakes. And so continue to see good movement on that. Obviously, the policy support couples with that to help really backstop our development plan. And then in terms of capitalization, as we continue to derisk, we are thoughtful on how to think about capitalization not only for Plant One but beyond and continue to see and know that those partnerships will be meaningful. And so really, on that piece, for the end of the year, again, looking to start construction, finish detailed engineering and then work our innovation work streams. We've got our innovation center with carbon engineering going, seeing really good progress there, lots of pieces in learning, again, for Plant One. But I think one of the things we picked up in that facility is really thinking about how do you continue to reduce the cost to capture for the life of a plant. And so it provides lots of opportunity for that. Just briefly…

And just to conclude on that, I'd say that the federal leasing, onshore, offshore, the methane emission reductions in carbon capture, while we talked about what it does for Oxy, this is very good for our industry. Lots of companies will benefit from this. It will provide jobs and it will help the country meet the goals that the President has set out for emission reduction.

A lot of positives to look forward to there. My second question is just on inflation. You mentioned in the prepared remarks that you've been able to take some steps to offset inflationary pressure. I was wondering if you could talk a little bit more on the underlying inflationary trends and also the offset initiatives that you have in place?

Yes. We had originally assumed $250 million for our 2020 -- based on our 2020 actuals, that incremental of $250 million this year. Our current assessment is $350 million to $450 million. And unfortunately, for Richard, it's all falling in his area. But they're dealing with it very well. I'll pass it to him to give you the details.

Yes. Perfect. Thanks, Vicki. Yes, just to walk through that, I mean, a couple of things. Certainly, we have seen that 7% to 10% incrementally for us this year. But in our base plan, we had assumed a 2% offset, and we're now up to 6%. And so part of our strategy, and I'll talk through a couple of pieces on this whole thing, was securing quality resources. If we get into the production cadence for the second half of the year, that delivery schedule and performance is very important. And so working with the right vendors to secure that has been important for us. But let me just rattle off a few. Like most people, OCTG has seen some of the highest sort of inflationary pressures. We work with 1 key supplier and 1 distributor for that. And so when we think about sort of inflation, you think about what is the supply security and then what is the pricing. In the supply security, we feel good out a year and really have worked that hard over this year. Developing in core areas like we do gives us a lot of ability to do that. And in pricing, we secure out about 6 months. And so we feel good going into the end of the year and then into 2023, that we're timing that fairly well in terms of how that looks. Rigs and frac core, as I mentioned earlier, securing some of those operated resources. Shifting the OBO dollars allowed us to get in front of that and get, again, the right rigs and frac cores for that. We're contracted with a little over 50% of our rigs through the first part of next year. And our frac core's similar as we look out. And so feel good about that, but we've really narrowed again to the core frac and rig providers that we feel like can secure performance. And then finally saying, again, we've worked a lot on that. I think, one, we've gone to more integrated frac providers, and they continue to help us on logistics and sand supply. But then our sand supplier, our logistics facility in Aventine has allowed us to get ahead on that. And so we feel like supply is secured, and most of our price is secured through the second half of the year. So those have been the big areas that have moved up for us. It has definitely been drilling and completion focused facilities has seen a lot less, 5% OpEx, a lot less as well. So hopefully, that provides some detail in terms of what we've been doing.

The next question comes from Doug Leggate from Bank of America.

Vicki or Rob, I wonder if I could go back to the discussion around potentially being a bit more aggressive than a $4 cash return in 2023? And I guess my question is, where do you see the, I guess, the flexibility regarding trying to pay down the preference burden, I guess, the $10 billion, versus continuing to pay down debt? What's the trade-off between those 2, if you could try and frame it for us? I guess I'm trying to understand how much more than $4 per share you'd be prepared to go?

Doug, it really depends on the macro. Right now, we're really trying to -- we can't even forecast from 1 hour to the next or even 1 minute to the next what prices are going to be. So a lot of our strategy around the preferred would depend on the macro because of -- as you know, the terms of the deal are challenging if not planned out in a way that enables you to take advantage of the trigger point. So currently, we're really trying to assess what the macro will look like, and we're going to be prepared to make the best value decision, whether that's continued debt reduction along with preferred and along with common. But right now, the reality is that from our capital framework, we have always had a priority to reduce debt. We'll continue to do that. And we'll do that at a faster pace than the maturities. We just don't know how fast we'll do it. And with respect to the preferred, it really depends on what we see getting through the end of this year and looking into next year what the macro will be, whether the recession, if there is one, will be short or long or deep, and what the other opportunities may look like from a debt perspective, and that could depend on what inflation does.

I appreciate the answer, Vicki. And I'm going to stay with you, if I may, as a quick follow-up. So before things got crazy over the last couple of years, you had talked about low single-digit growth in production. And of course, the priorities all changed with the balance sheet. So as you kind of get line of sight to the balance sheet and back to perhaps where you want it to be, what are you thinking now in terms of what happens to the growth element of prioritizing in terms of where you relatively prioritize capital? And I'll leave it there.

Well, the good thing is what we see that we have today is a great opportunity, and that is that we don't have to grow our cash flow right now. And we have an opportunity because of the valuation of our stock right now to continue to make that a key part of our value proposition going forward. We'll do a little bit of dividend increase. We'll certainly mature our debt faster than what the current schedule is in terms of maturities because we want to accelerate that. But we'll also buy back a significant volume of shares, or at least we hope to over the next few years. And we don't feel the need to grow production until we get beyond that point because we feel like one of the best values right now is investment in our own stock.

The next question comes from Neal Dingmann from Truist.

Vicki, maybe just to follow on that last one. On M&A, are you saying that sort of given the current upstream, midstream OxyChem, you'll likely stand pat with either you don't really obviously need to divest anything and still the best spend on the money is in livestock, would it be fair to say the biggest M&A might be coming from the low carbon area?

Yes, I think that the only M&A that we see that would make sense for us is what we have been doing, and that's just to get bigger in the areas that we are. So increasing our working interest and/or trading acres for bolt-ons to where we are right now in the resources business and in the EOR business. So we have opportunities to do that. We picked up a little bit offshore. So that's -- those are the kind of M&A. So we're not talking big M&A here. That's not something that we feel like we need to do. But with respect to low carbon ventures, that is a bit of a different story because we're growing a business there. And the -- what we're doing there is looking for technologies that fit within our strategy and that support our strategy. We're not going to take the shotgun approach, where we're putting dollars into 100 different little small tech companies. We're looking for technologies that make our strategy better. And where we find those, we're going to make equity investments when we feel it's a part of what we want to build ultimately. I think the team has spent with just about $200 million, they have gotten us into 2 technologies I really think are revolutionary. One is NetPower, which generates electricity at a fairly low cost, lower than a traditional gas plant with carbon capture. So this -- NetPower technology generates electricity, but also captures the emissions. So there are no emissions and no volatile organics or anything like that. So NetPower is really important for us. And then direct air capture. Back to NetPower, it's going to be revolutionary, I believe, for the electric power generation industry around the world. So that's the technology that's critically important. Direct air capture is, too. And we're looking at some other technologies. There are a few things that we're putting money into that we believe has a real chance to improve our business. And those are -- that's the way we kind of look at investments and low carbon opportunities.

Okay. And then one last for either Robert or Jeff maybe. Just on the preferred, has there been any conversation about maybe just direct repurchase of those given obviously the same firm mind. Obviously, a lot of equity in the company. I'm just wondering, is there -- or is that just going to be sort of, I guess, buying back as you would your debt and all?

It's really going to be a part of a more comprehensive evaluation as we go forward. So we'll look at that as time passes, and we'll certainly keep you guys updated. But what we intend to do is make the best value decision and proceed with the capital framework that we've laid out.

The next question comes from Jeanine Wai from Barclays.

Our first question, I guess, maybe heading back on cash returns and a follow-up to a couple of the other questions. The plan for 2023-plus now is to retire debt maturities as they come due. We're looking at your debt schedule, and there's really nothing more than like $2 billion coming due in any one year, so super manageable until 2030. You've got cash building on our model to, call it, like $12 billion on strip by the end of the year. So lots of options. You had some helpful comments on the macro governors on how you're going to allocate capital over the next year or 2. Do you have an updated view on your reserve cash level? We realize there's a lot of reasons to hold cash above that, but that's always a helpful number for us.

Yes. Before I pass that to Rob for the answer to that question, I just want to say that you're right about our debt maturities. So we expect this year to be able to lower our debt based on what we see from the macro by another $2 billion to $2.5 billion, which would get us close to $18 billion. Then to get us down to the $15 billion that Rob mentioned in his script is that we would have -- those maturities would come due, all of them, before August, end of August of 2025. We don't want to wait 3 years to get our debt down to $15 billion. So we would expect to, assuming the macro allows, to cut that considerably. We do want to get to the $15 billion sooner rather than later. So we'll fit that in. And that is still a priority for us. I'll pass it to Rob now for the other question.

Yes, Jeanine. And so certainly based on what Vicki just said and the fact we'll target, we should be able to do well beyond $1.9 billion that we have for the balance of the year on the share repurchase program, assuming the macro is consistent or relatively consistent to the strip prices right now. And part of targeting that will be some of the maturities you listed off. So -- but we've been able to opportunistically balance between short- and long-term debt maturities. As we move on year-to-date, it's about 45%. In the current decade, about 55% later in the [ date ] [indiscernible]. And so we continue to be opportunistic between knocking out near-term maturities, including ones that are higher interest rate coupon ones now because of the way they've come down with interest rates, but also achieving discount on longer-dated bonds. So you can expect that mix to stay together. As far as cash reserves, certainly with a very manageable debt maturity profile, we've been holding higher cash levels historically. We ended last year about $2.5 billion. I think we'd be comfortable with something closer to $1.5 billion by the end of this year, providing another certainly $1 billion of cash to work with this year just from the reduction on reserves.

Okay. Great. That's very helpful. Maybe if we could turn to operations and the Permian. You probably provided some really helpful color on the Q3 Permian guide in your prepared remarks. And the implied 4Q Permian guidance calls for, I think we calculated 12% increase quarter-on-quarter to hit the midpoint. And it sounds like from your comments, there are some third-party stuff that's going on that may come back online in Q4, which will help. But any comments that you have around kind of how you try to stack the deck in your favor on execution in Q4 in the Permian, that would be really helpful just because I think a lot of people are looking at the Permian at the end of the year and trying to figure out implications for next year.

Yes. I appreciate it. Well, there are a few pieces. You're exactly right was we thought about sort of this building security in our production delivery for the year. There are several pieces that were important to us. If I go back even to where we started and entered the year from a rig count perspective, we've added -- if you go back to second half of '21, we went from about 11.5 rigs to the first half of this year over 15, to second half of the year at 19. And so being able to secure those operated rigs early to get the performance was really important to us. So same thing in the back half of this year. If I look at first half versus second half, we look to add about 78 more wells online compared to the first half. So a tremendous step-up in activity. We're able to utilize our frac cores more efficiently with the development plans that we've put together. We're adding 1 additional in the second half of this year, but we're really creating much more smooth operations with what we've done and transition with that OBO capital. And I guess the pieces I'd point to, what's been important to us operationally is, again, back to performance. Most of the capital for the second half of the year and the production deliveries in the Delaware, we have about 80% of those wells that are coming online are Third Bone Springs to Wolfcamp A. So it derisks a lot in terms of that production delivery. We've added lateral length. We're 1,000-foot longer compared to last year to when we look at the second half of this year. Our 24-hour IP is about 14% better than the first half of last year. And so all of that has added in terms of derisking the second half of the year. Drilling completion efficiencies improved. Our feet per day is up quarter-to-quarter about 10%. Our nonproductive time is reduced about 7% in the Delaware. And so what we've seen as we've added these rigs, we've been able to work as an operational team, the performance continues to improve. And we're looking at the second half of the year expecting about a 10% time-to-market improvement with those operations. So put a lot of pieces in place in the first half of this year, now we just need to go execute. But really, the plan has been built to achieve that production growth you noted, and we're well on our way.

The final question comes from Neil Mehta from Goldman Sachs.

The first question is just the path to investment grade. Can you provide any color in terms of the milestones that you're getting to in order to achieve that? How are -- how should the investment community think about timing recognizing it's out of your control? And what would getting to investment grade mean to your business?

Yes, Neil. Sure. So year-to-date, as we mentioned, we paid $8.1 billion of debt, certainly far beyond the $5 billion initial target we established for the year. And included in that, in the second quarter, we knocked out [ 60% ] of what I would call the annual risk associated with our 0 coupon bonds. That was occurring every October. If you look back to July of last year -- or June of last year, we retired almost $15 billion of debt. So very meaningful progress on the debt reduction side of it. But in addition to the debt reduction, all 3 agencies have their own other metrics. I'll call them, the [ return IG ]. And so they're all sitting, as we discussed, 1 notch below. Our forecast that we have internally have us exceeding the majority of these criteria before the end of the year or, in many cases, we're actually ahead of now on the last 12-month basis. But the conversation we've been having with the agencies would suggest, I just want you to get more comfortable, that in a different oil price environment, and all of the agencies have long-term oil prices well below current oil prices, that they would be comfortable that we would not slip back into being a high-yield type credit. But again, like I said, take something like Moody's, for example, they want to look at retained cash flow to adjusted debt to be greater than 40% and essentially the retained cash flow exclusive preferred dividends. But the adjusted debt does include half of the Berkshire. So the Berkshire does factor into that. And so we're well ahead of that forecast. And even we're adjusting for Moody's price forecast relative to ours. And in the case of Fitch, I'll give you an…

In the interest of time, this concludes our question-and-answer session. I would like to turn the conference back over to Vicki Hollub for any closing remarks.

Just want to thank you all for your participation in our call today, and have a good day. Thanks.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.