cop20213q10qp1i0.gif
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-Q
(Mark One)
[X]
QUARTERLY
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2021
or
[ ]
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
to
Commission file number:
001-32395
001-32395
cop-20220331_g1.jpg
ConocoPhillips
(Exact name of registrant as specified in its charter)
Delaware
01-0562944
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification
Delaware01-0562944
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
925 N. Eldridge Parkway,
,
Houston,
,
TX
77079
(Address of principal executive offices)
(Zip (Zip Code)
281281-293-1000
-
293-1000
(Registrant's telephone number,
including area code)
Securities registered pursuant to
Section 12(b) of the Act:
Title of each classTrading symbolsName of each exchange on which registered
Common Stock, $.01 Par ValueCOPNew York Stock Exchange
7% Debentures due 2029CUSIP—718507BK1New York Stock Exchange
Trading symbols
Name of each exchange on which registered
Common Stock, $.01 Par Value
COP
New York Stock Exchange
7% Debentures due 2029
CUSIP—718507BK1
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes☒ No ☐
[x]
No [
]
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to
be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that
the registrant was required to submit such files).
Yes
[x]
☒No [
]☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated
filer, a non-accelerated
filer, a smaller
reporting company, or
an emerging growth company.
See the definitions of “large accelerated filer,”
“accelerated “accelerated filer,”
“smaller
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
[x]
☒Accelerated filer [
]
☐Non-accelerated filer [
]
☐Smaller reporting company☐
[ ]
Emerging growth company☐
[ ]
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the
extended transition period for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [
]☐
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [
]☐ No
[x]☒
The registrant had
1,318,946,867
1,293,449,547 shares of common stock, $.01 par value, outstanding at September 30,March 31, 2022.

2021.

Table
of Contents
Page
1
Part I—Financial Information
Item 1. Financial Statements
Consolidated Income Statement
2
Consolidated Statement of Comprehensive Income
3
Consolidated Balance Sheet
4
Consolidated Statement of Cash Flows
5
Notes to Consolidated Financial Statements
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3. Quantitative and Qualitative Disclosures About Market Risk
53
Item 4. Controls and Procedures
53
Part II—Other Information
Item 1. Legal Proceedings
53
Item 1A. Risk Factors
53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
54
Item 6. Exhibits
55
56
Commonly Used Abbreviations
1
Part I—Financial Information
2
3
4
5
6
33
59
60
60
60
62
63
64
Commonly Used Abbreviations
Table of Contents
1
ConocoPhillips
2021 Q3 10-Q
Commonly Used Abbreviations
Table of Contents
Commonly Used Abbreviations
The following industry-specific, accounting
and other terms, and abbreviations may
be commonly used in this
report.
Currencies
Accounting
$ or USD
U.S. dollar
ARO
asset retirement obligation
CAD
Canadian dollar
ASC
accounting standards codification
EUR
Euro
ASU
accounting standards update
GBP
British pound
DD&A
depreciation, depletion and
amortization
Units of Measurement
FASB
CurrenciesAccounting
$ or USDU.S. dollarAROasset retirement obligation
CADCanadian dollarASCaccounting standards codification
EUREuroASUaccounting standards update
GBPBritish poundDD&Adepreciation, depletion and amortization
Units of MeasurementFASB
Financial Accounting Standards
BBL
barrel
Board
BCF
billion cubic feet
FIFO
first-in, first-out
BOE
barrels of oil equivalent
G&A
general and administrative
MBD
thousands of barrels per day
GAAP
generally accepted accounting
MCF
thousand cubic feet
principles
MBOD
thousand barrels of oil per day
LIFO
last-in, first-out
MM
million
NPNS
normal purchase normal sale
MMBOE
million barrels of oil equivalent
PP&E
properties, plants and equipment
MMBOD
million barrels of oil per day
SAB
staff accounting bulletin
MBOED
thousands of barrels of oil
VIE
variable interest entity
MMBOED
equivalent per day
millions of barrels of oil equivalent
per day
MMBTU
million British thermal units
Miscellaneous
MMCFD
million cubic feet per day
EPA
Environmental Protection
Agency
ESG
Environmental, Social and
Corporate Governance
Industry
EU
European Union
CBM
coalbed methane
FERC
Federal Energy Regulatory
E&P
exploration and production
Commission
FEED
front-end engineering and design
GHG
greenhouse gas
FPS
floating production system
HSE
health, safety and environment
FPSO
floating production, storage
and
ICC
International Chamber of
offloading
Commerce
G&G
geological and geophysical
ICSID
World Bank’s
International
JOA
joint operating agreement
Centre for Settlement of
LNG
liquefied natural gas
Investment Disputes
NGLs
natural gas liquids
IRS
Internal Revenue Service
OPEC
Organization of Petroleum
OTC
over-the-counter
Exporting Countries
NYSE
New York Stock Exchange
PSC
production sharing contract
SEC
U.S. Securities and Exchange
PUDs
proved undeveloped reserves
Commission
SAGD
steam-assisted gravity
drainage
TSR
total shareholder return
WCS
Western Canada Select
U.K.
United Kingdom
WTI
West Texas
Intermediate
U.S.
Board
BBLbarrel
BCFbillion cubic feetFIFOfirst-in, first-out
BOEbarrels of oil equivalentG&Ageneral and administrative
MBDthousands of barrels per dayGAAPgenerally accepted accounting principles
MCFthousand cubic feet
MBODthousand barrels of oil per dayLIFOlast-in, first-out
MMmillionNPNSnormal purchase normal sale
MMBOEmillion barrels of oil equivalentPP&Eproperties, plants and equipment
MMBODmillion barrels of oil per dayVIEvariable interest entity
MBOEDthousands of barrels of oil equivalent per day
MMBOEDmillions of barrels of oil equivalent per dayMiscellaneous
MMBTUmillion British thermal unitsDE&Idiversity, equity and inclusion
MMCFDmillion cubic feet per dayEPAEnvironmental Protection Agency
ESGEnvironmental, Social and Corporate Governance
IndustryEUEuropean Union
BLMBureau of Land ManagementFERCFederal Energy Regulatory Commission
CBMcoalbed methane
CCUScarbon capture utilization andGHGgreenhouse gas
storageHSEhealth, safety and environment
E&Pexploration and productionICCInternational Chamber of Commerce
FEEDfront-end engineering and designICSIDWorld Bank’s International
FPSfloating production systemCentre for Settlement of
FPSOfloating production, storage andInvestment Disputes

offloadingIRSInternal Revenue Service
G&Ggeological and geophysicalOTCover-the-counter
JOAjoint operating agreementNYSENew York Stock Exchange
LNGliquefied natural gasSECU.S. Securities and Exchange
NGLsnatural gas liquidsCommission
OPECOrganization of PetroleumTSRtotal shareholder return
Exporting CountriesU.K.United Kingdom
PSCproduction sharing contractU.S.United States of America
PUDsproved undeveloped reservesVROCvariable return of cash
SAGDsteam-assisted gravity drainage
WCSWestern Canada Select
WTIWest Texas Intermediate
1ConocoPhillips      2022 Q1 10-Q
Financial Statements
Table of Contents
PART I. Financial Information
Item 1.    Financial Statements
Table of Contents
ConocoPhillips
2021 Q3 10-Q
Consolidated Income StatementConocoPhillips
2
PART
I.
Financial Information
Item 1.
Financial Statements
Consolidated Income Statement
ConocoPhillips
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Revenues and Other Income
Sales and other operating revenues
$
11,326
4,386
30,708
13,293
Equity in earnings of affiliates
239
35
500
346
Gain (loss) on dispositions
2
(3)
294
551
Other income (loss)
49
(38)
884
(983)
Total
Revenues and Other Income
11,616
4,380
32,386
13,207
Costs and Expenses
Purchased commodities
4,179
1,839
11,660
5,630
Production and operating expenses
1,389
963
4,151
3,183
Selling, general and administrative
expenses
128
96
556
249
Exploration expenses
65
125
206
410
Depreciation, depletion and amortization
1,672
1,411
5,425
3,980
Impairments
(89)
2
(90)
521
Taxes
other than income taxes
403
179
1,154
570
Accretion on discounted liabilities
61
62
186
195
Interest and debt expense
219
200
665
604
Foreign currency transaction
(gain) loss
(10)
(5)
19
(88)
Other expenses
17
20
78
7
Total
Costs and Expenses
8,034
4,892
24,010
15,261
Income (loss) before income taxes
3,582
(512)
8,376
(2,054)
Income tax provision (benefit)
1,203
(62)
2,924
(171)
Net income (loss)
2,379
(450)
5,452
(1,883)
Less: net loss attributable to noncontrolling
interests
0
0
0
(46)
Net Income (Loss) Attributable
to ConocoPhillips
$
2,379
(450)
5,452
(1,929)
Net Income (Loss) Attributable
to ConocoPhillips Per Share
of Common Stock
(dollars)
Basic
$
1.78
(0.42)
4.10
(1.79)
Diluted
1.78
(0.42)
4.09
(1.79)
Average Common Shares
Outstanding
(in thousands)
Basic
1,332,286
1,077,377
1,327,216
1,079,525
Diluted
1,336,379
1,077,377
1,330,652
1,079,525

Millions of Dollars

Three Months Ended
March 31
20222021
Revenues and Other Income
Sales and other operating revenues$17,762 9,826 
Equity in earnings of affiliates426 122 
Gain on dispositions817 233 
Other income286 378 
Total Revenues and Other Income19,291 10,559 
Costs and Expenses

Purchased commodities6,751 4,483 
Production and operating expenses1,581 1,383 
Selling, general and administrative expenses187 311 
Exploration expenses69 84 
Depreciation, depletion and amortization1,823 1,886 
Impairments2 (3)
Taxes other than income taxes814 370 
Accretion on discounted liabilities61 62 
Interest and debt expense217 226 
Foreign currency transaction loss24 19 
Other expenses(136)24 
Total Costs and Expenses11,393 8,845 
Income before income taxes7,898 1,714 
Income tax provision2,139 732 
Net Income$5,759 982 
Net Income Per Share of Common Stock (dollars)
Basic$4.41 0.75 
Diluted4.39 0.75 
Average Common Shares Outstanding (in thousands)
Basic1,301,930 1,300,375 
Diluted1,307,404 1,302,691 
See Notes to Consolidated Financial Statements.
ConocoPhillips      2022 Q1 10-Q2
Financial Statements
Table of Contents
3
ConocoPhillips
2021 Q3 10-Q
Financial Statements
Table of Contents
Consolidated Statement of Comprehensive IncomeConocoPhillips
Consolidated Statement
of Comprehensive Income
ConocoPhillips
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss)
$
2,379
(450)
5,452
(1,883)
Other comprehensive income (loss)
Defined benefit plans
Reclassification adjustment for
amortization of prior
service credit included in net income (loss)
(9)
(8)
(28)
(24)
Net actuarial gain (loss) arising during the period
8
(78)
113
(73)
Reclassification adjustment for
amortization of net actuarial
losses included in net income (loss)
45
45
133
81
Income taxes on defined benefit
plans
(9)
10
(49)
3
Defined benefit plans, net of tax
35
(31)
169
(13)
Unrealized holding gain (loss) on securities
0
0
(1)
3
Income taxes on unrealized
holding gain on securities
0
0
0
(1)
Unrealized holding gain (loss) on securities,
net of tax
0
0
(1)
2
Foreign currency translation
adjustments
(237)
188
(72)
(302)
Income taxes on foreign
currency translation adjustments
(1)
2
(1)
4
Foreign currency translation
adjustments, net of tax
(238)
190
(73)
(298)
Other Comprehensive Income (Loss), Net of Tax
(203)
159
95
(309)
Comprehensive Income (Loss)
2,176
(291)
5,547
(2,192)
Less: comprehensive income attributable
to noncontrolling interests
0
0
0
(46)
Comprehensive Income (Loss) Attributable
to ConocoPhillips
$
2,176
(291)
5,547
(2,238)
Millions of Dollars
Three Months Ended
March 31
20222021
Net Income$5,759 982 
Other comprehensive income
Defined benefit plans

Reclassification adjustment for amortization of prior
   service credit included in net income
(10)(9)
Net change(10)(9)
Net actuarial gain arising during the period— 75 
Reclassification adjustment for amortization of net actuarial
   losses included in net income
16 25 
Net change16 100 
Income taxes on defined benefit plans(2)(21)
Defined benefit plans, net of tax4 70 
Unrealized holding loss on securities(4)(1)
Income taxes on unrealized holding loss on securities1 — 
Unrealized holding loss on securities, net of tax(3)(1)
Foreign currency translation adjustments141 69 
Foreign currency translation adjustments, net of tax141 69 
Other Comprehensive Income, Net of Tax142 138 
Comprehensive Income$5,901 1,120 
See Notes to Consolidated Financial Statements.

Financial Statements
ConocoPhillips
2021 Q3 10-Q
4
3ConocoPhillips      2022 Q1 10-Q
Consolidated Balance Sheet
ConocoPhillips
Financial Statements
Table of Contents
Millions of Dollars
Consolidated Balance SheetConocoPhillips
September 30
December 31
2021
2020
Assets
Cash and cash equivalents
$
9,833
2,991
Short-term investments
678
3,609
Accounts and notes receivable (net of allowance
of $
2
and $
4
, respectively)
5,336
2,634
Accounts and notes receivable—related
parties
129
120
Investment in Cenovus Energy
1,416
1,256
Inventories
1,043
1,002
Prepaid expenses and other current
assets
1,746
454
Total
Current Assets
20,181
12,066
Investments and long-term receivables
8,058
8,017
Loans and advances—related parties
0
114
Net properties, plants and equipment
(net of accumulated DD&A of $
65,223
and $
62,213
, respectively)
56,689
39,893
Other assets
2,376
2,528
Total
Assets
$
87,304
62,618
Liabilities
Accounts payable
$
4,101
2,669
Accounts payable—related
parties
30
29
Short-term debt
920
619
Accrued income and other taxes
2,082
320
Employee benefit obligations
691
608
Other accruals
2,625
1,121
Total
Current Liabilities
10,449
5,366
Long-term debt
18,748
14,750
Asset retirement obligations
and accrued environmental costs
5,721
5,430
Deferred income taxes
5,630
3,747
Employee benefit obligations
1,162
1,697
Other liabilities and deferred credits
1,479
1,779
Total
Liabilities
43,189
32,769
Equity
Common stock (
2,500,000,000
shares authorized at $
0.01
par value)
Issued (2021—
2,089,046,718
shares; 2020—
1,798,844,267
shares)
Par value
21
18
Capital in excess of par
60,431
47,133
Treasury stock
(at cost: 2021—
770,099,851
shares; 2020—
730,802,089
shares)
(49,521)
(47,297)
Accumulated other comprehensive
loss
(5,123)
(5,218)
Retained earnings
38,307
35,213
Total
Equity
44,115
29,849
Total
Liabilities and Equity
$
87,304
62,618
Millions of Dollars

March 31 2022December 31 2021
Assets


Cash and cash equivalents$6,414 5,028 
Short-term investments730 446 
Accounts and notes receivable (net of allowance of $2 and $2, respectively)7,807 6,543 
Accounts and notes receivable—related parties72 127 
Investment in Cenovus Energy— 1,117 
Inventories1,174 1,208 
Prepaid expenses and other current assets1,389 1,581 
Total Current Assets17,586 16,050 
Investments and long-term receivables8,309 7,113 
Net properties, plants and equipment (net of accumulated DD&A of $64,711 and $64,735, respectively)64,642 64,911 
Other assets2,771 2,587 
Total Assets$93,308 90,661 
Liabilities

Accounts payable$4,875 5,002 
Accounts payable—related parties22 23 
Short-term debt1,160 1,200 
Accrued income and other taxes3,162 2,862 
Employee benefit obligations446 755 
Other accruals1,959 2,179 
Total Current Liabilities11,624 12,021 
Long-term debt17,586 18,734 
Asset retirement obligations and accrued environmental costs5,815 5,754 
Deferred income taxes6,556 6,179 
Employee benefit obligations1,085 1,153 
Other liabilities and deferred credits1,424 1,414 
Total Liabilities44,090 45,255 
Equity

Common stock (2,500,000,000 shares authorized at $0.01 par value)
Issued (2022—2,098,495,534 shares; 2021—2,091,562,747 shares)
Par value21 21 
Capital in excess of par60,907 60,581 
Treasury stock (at cost: 2022—805,045,987 shares; 2021—789,319,875 shares)(52,344)(50,920)
Accumulated other comprehensive loss(4,808)(4,950)
Retained earnings45,442 40,674 
Total Equity49,218 45,406 
Total Liabilities and Equity$93,308 90,661 
See Notes to Consolidated Financial Statements.
ConocoPhillips      2022 Q1 10-Q4
Financial Statements
5
ConocoPhillips
2021 Q3 10-Q
Financial Statements
Table of Contents
Consolidated Statement
Consolidated Statement of Cash FlowsConocoPhillips
ConocoPhillips
Millions of Dollars
Nine Months Ended
September 30
2021
2020
Cash Flows From Operating Activities
Net income (loss)
$
5,452
(1,883)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities
Depreciation, depletion and amortization
5,425
3,980
Impairments
(90)
521
Dry hole costs and leasehold impairments
7
114
Accretion on discounted liabilities
186
195
Deferred taxes
895
(428)
Undistributed equity earnings
258
450
Gain on dispositions
(294)
(551)
(Gain) loss on investment in Cenovus
Energy
(743)
1,302
Other
(866)
(188)
Working capital adjustments
Decrease (increase) in accounts and notes
receivable
(1,619)
1,132
Increase in inventories
(13)
(74)
Increase in prepaid expenses and other current
assets
(800)
(49)
Increase (decrease) in accounts payable
682
(583)
Increase (decrease) in taxes
and other accruals
2,648
(808)
Net Cash Provided by Operating
Activities
11,128
3,130
Cash Flows From Investing Activities
Cash acquired from Concho
382
0
Capital expenditures and investments
(3,767)
(3,657)
Working capital changes
associated with investing activities
79
(229)
Proceeds from asset dispositions
792
1,312
Net sales (purchases) of investments
2,846
(1,089)
Collection of advances/loans—related parties
105
116
Other
(386)
(31)
Net Cash Provided by (Used in) Investing
Activities
51
(3,578)
Cash Flows From Financing Activities
Issuance of debt
0
300
Repayment of debt
(363)
(234)
Issuance of company common stock
27
(2)
Repurchase of company common
stock
(2,224)
(726)
Dividends paid
(1,750)
(1,367)
Other
6
(27)
Net Cash Used in Financing Activities
(4,304)
(2,056)
Effect of Exchange
Rate Changes on Cash, Cash Equivalents
and Restricted Cash
(3)
(62)
Net Change in Cash, Cash Equivalents and
Restricted Cash
6,872
(2,566)
Cash, cash equivalents and restricted
cash at beginning of period
3,315
5,362
Cash, Cash Equivalents and Restricted
Cash at End of Period
$
10,187
2,796
Restricted cash of $
95
million and $
259
million are included in the "Prepaid expenses and other current assets" and "Other
assets" lines,
respectively, of our Consolidated Balance Sheet as of September 30, 2021.

Millions of Dollars

Three Months Ended
March 31

20222021
Cash Flows From Operating Activities
Net income$5,759 982 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization1,823 1,886 
Impairments2 (3)
Dry hole costs and leasehold impairments7 6 
Accretion on discounted liabilities61 62 
Deferred taxes373 203 
Undistributed equity earnings220 81 
Gain on dispositions(817)(233)
Gain on investment in Cenovus Energy(251)(308)
Other(152)(581)
Working capital adjustments

Increase in accounts and notes receivable(1,535)(785)
Decrease (increase) in inventories27 (51)
Decrease (increase) in prepaid expenses and other current assets58 (43)
Increase (decrease) in accounts payable(204)424 
Increase (decrease) in taxes and other accruals(303)440 
Net Cash Provided by Operating Activities5,068 2,080 
Cash Flows From Investing Activities

Capital expenditures and investments(3,161)(1,200)
Working capital changes associated with investing activities363 61 
Acquisition of businesses, net of cash acquired37 382 
Proceeds from asset dispositions2,332 (17)
Net purchases of investments(263)(499)
Collection of advances/loans—related parties55 52 
Other26 6 
Net Cash Used in Investing Activities(611)(1,215)
Cash Flows From Financing Activities
Issuance of debt2,897 — 
Repayment of debt(3,964)(26)
Issuance of company common stock271 (28)
Repurchase of company common stock(1,425)(375)
Dividends paid(864)(588)
Other(52)2 
Net Cash Used in Financing Activities(3,137)(1,015)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash21 (2)
Net Change in Cash, Cash Equivalents and Restricted Cash1,341 (152)
Cash, cash equivalents and restricted cash at beginning of period5,398 3,315 
Cash, Cash Equivalents and Restricted Cash at End of Period$6,739 3,163 
Restricted cash of $
94
$0 million and $
230
$325 million are included in the "Prepaid expenses and other current assets" and "Other assets"
lines, respectively, of our Consolidated Balance Sheet as of March 31, 2022.
Restricted cash of $152 million and $218 million are included in the "Prepaid expenses and other current assets" and "Other assets" lines, respectively, of our Consolidated Balance Sheet as of December 31, 2020.2021.
See Notes to Consolidated Financial Statements.
5ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
Notes to Consolidated Financial Statements
ConocoPhillips

2021 Q3 10-Q
6
Notes to Consolidated
Financial Statements
Note 1—Basis of Presentation
The interim-period financial information
presented in the financial statements
included in this report is unaudited
and, in the opinion of management, includes all known accruals and
adjustments necessary for a fair presentation
of the consolidated financial position of ConocoPhillips,
,
its results of operations and cash flows
for such periods.
All such adjustments are of a normal and recurring
nature unless otherwise disclosed.
Certain notes and other
information have been condensed
or omitted from the interim financial statements
included in this report.
Therefore, these financial statements
should be read in conjunction with the consolidated
financial statements and
notes included in our 20202021 Annual Report on Form
10-K.

Note 2—Inventories
Millions of Dollars
March 31 2022December 31 2021
Crude oil and natural gas$611 647 
Materials and supplies563 561 
Total Inventories$1,174 1,208 
Inventories valued on the LIFO basis$353 395 
Millions of Dollars
September 30
December 31
2021
2020
Crude oil and natural gas
$
485
461
Materials and supplies
558
541
Total
Inventories
$
1,043
1,002
Inventories valued on
the LIFO basis
$
305
282
Note 3—Acquisitions and Dispositions
Announced Acquisition of Shell Enterprise LLC's (Shell) Permian Assets
In SeptemberDecember 2021, we signed a definitive agreement
to acquire Shell Enterprises LLC’s
completed our acquisition of Shell's assets in the Permian based Delaware
Basin in an all-cash transaction for $
9.5
$8.6 billion beforeafter customary
adjustments (Shell Permian Acquisition).
adjustments. Assets
to be acquired include approximately
225,000
net acres and producing properties
located entirely in Texas,
as well
as over
600
miles of operated crude, gas and
water pipelines and infrastructure.
Texas. The acquisition is anticipated to
close in the fourth quarter of 2021, subject to regulatory
approval and other customary
closing conditions.
Under
the terms of the agreement, we paid a deposit of $
475
million which is presented within “Cash
Flows from
Investing Activities - Other” on our consolidated statement
of cash flows.
Acquisition of
Concho Resources Inc.
(Concho)
We completed our acquisition
of Concho on
January 15, 2021
and as defined under the terms of the transaction
agreement, each share of Concho common stock
was exchanged for
1.46
shares of ConocoPhillips common stock,
for total consideration
of $
13.1
billion.
Total Consideration
Number of shares of Concho common stock issued
and outstanding (in thousands)*
194,243
Number of shares of Concho stock awards
outstanding (in thousands)*
1,599
Number of shares exchanged
195,842
Exchange ratio
1.46
Additional shares of ConocoPhillips common stock
issued as consideration (in thousands)
285,929
Average price per share of ConocoPhillips
common stock**
$
45.9025
Total Consideration
(Millions)
$
13,125
*Outstanding as of January 15, 2021.
**Based on the ConocoPhillips average stock
price on January 15, 2021.
Notes to Consolidated Financial Statements
7
ConocoPhillips
2021 Q3 10-Q
The transaction was accounted
for as a business combination under FASB
Topic ASC 805 using the acquisition method,
which requires assets acquired and
liabilities assumed to be measured at their acquisition date
fair values.
Fair
value measurements were made
for acquired assets and liabilities, and
adjustments to those measurements
may
be made in subsequent periods, up to one year
from the acquisition date as we identify new information
about
facts and circumstances that
existed as of the acquisition date to consider.

consider.
Oil and gas properties were valued
using a discounted cash flow approach
incorporating market participant
and internally generated price
assumptions; assumptions, production profiles;profiles, and operating
and development cost assumptions.
Debt assumed in the
acquisition was valued based on observable
market prices.
The fair values determined for
accounts receivables,
receivable, accounts payable, and most
other current assets and current liabilities were
equivalent to the carrying value
due to
their short-term nature.
The total consideration
of $
13.1
$8.6 billion was allocated to the identifiable
assets and
liabilities based on their fair values as of January 15, 2021.at the acquisition date.

ConocoPhillips      2022 Q1 10-Q6
Assets Acquired
Millions of Dollars
Cash and cash equivalents
$
382
Accounts receivable, net
745
Inventories
45
Prepaid expenses and other current
assets
37
Investments and long-term receivables
333
Net properties, plants and equipment
18,968
Other assets
62
Total assets
acquired
$
20,572
Liabilities Assumed
Accounts payable
$
638
Accrued income and other taxes
49
Employee benefit obligations
4
Other accruals
510
Long-term debt
4,696
Asset retirement obligations
and accrued environmental costs
310
Deferred income taxes
1,123
Other liabilities and deferred credits
117
Total liabilities
assumed
$
7,447
Net assets acquired
$
13,125
Notes to Consolidated Financial Statements
Table of Contents
Assets AcquiredMillions of Dollars
Accounts receivable, net$337 
Inventories20 
Net properties, plants and equipment8,582 
Other assets50 
Total assets acquired$8,989
Liabilities Assumed
Accounts payable$206 
Accrued income and other taxes6 
Other accruals20 
Asset retirement obligations and accrued environmental costs86 
Other liabilities and deferred credits36 
Total liabilities assumed$354
Net assets acquired$8,635

With the completion of the ConchoShell Permian transaction,
we acquired proved and unproved
properties of approximately
$
11.8
$4.2 billion and $
6.9
$4.3 billion, respectively.
We recognized approximately
$
157Supplemental Pro Forma (unaudited)
million of transaction-related costs,
all of which were expensed in the first
quarter of 2021.
These non-recurring costs related
primarily to fees paid to advisors
and the settlement of share-
based awards for certain Concho
employees based on the terms of the Merger Agreement.
In the first quarter of 2021, we commenced
a company-wide restructuring program,
the scope of which included
combining the operations of the two companies
as well as other global restructuring activities.
For the three-
and
nine-month periods ending September 30, 2021, we recognized
non-recurring restructuring costs
of approximately
$
52
million and $
209
million, respectively,
mainly for employee severance
and related incremental
pension benefit
costs.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
8
The impact from these transaction and restructuring
costs to the lines of our consolidated income statement
for
the nine-month period ending September 30, 2021, are
below:
Millions of Dollars
Transaction
Cost
Restructuring Cost
Total
Cost
Production and operating expenses
$
110
110
Selling, general and administration
expenses
135
64
199
Exploration expenses
18
4
22
Taxes
other than income taxes
4
2
6
Other expenses
0
29
29
$
157
209
366
On February 8, 2021, we completed a debt
exchange offer
related to the debt assumed from Concho.
As a result
of the debt exchange, we recognized
an additional income tax related
restructuring charge of $
75
million.
From the acquisition date through
September 30, 2021, “Total Revenues
and Other Income” and “Net Income
(Loss) Attributable to ConocoPhillips”
associated with the acquired Concho business
were approximately $
4,499
million and $
1,600
million, respectively.
The results associated with the Concho business
for the same period
include a before- and after-tax
loss of $
305
million and $
233
million, respectively,
on the acquired derivative
contracts.
The before-tax loss is recorded
within “Total Revenues
and Other Income” on our consolidated
income
statement.
The following table summarizes the unaudited
supplemental pro forma financial information
for the three-month period ending March 31, 2021, as if we had completed the
acquisition of ConchoShell's Permian assets on January 1, 2020:

Millions of Dollars
Millions of Dollars
Three Months Ended
March 31, 2021
Supplemental Pro Forma (unaudited)As ReportedPro forma ShellPro forma Combined
Total Revenues and Other Income10,559 596 11,155 
Income before income taxes1,714 119 1,833 
Net Income982 91 1,073 
Earnings per share ($ per share):
Basic net income$0.75 00.82 
Diluted net income0.75 00.82 
Supplemental Pro Forma (unaudited)
Three Months Ended
September 30, 2020
Nine Months Ended
September 30, 2020
Total
revenues and other income
$
5,019
16,384
Net loss
(565)
(1,184)
Net loss attributable to ConocoPhillips
(565)
(1,230)
$ per share
Earnings per share:
Three Months Ended
September 30, 2020
Nine Months Ended
September 30, 2020
Basic net loss
$
(0.41)
(0.90)
Diluted net loss
(0.41)
(0.90)
The unaudited supplemental pro forma
financial information is presented
for illustration and comparative purposes
only and is not
necessarily indicative of the operating
results that would have occurred
had the transaction been completed on
January 1, 2020, nor is it necessarily indicative of future
operating results of the combined entity.
The unaudited
pro forma financial information
for the three-
and nine-month periodsthree-month period ending September 30, 2020March 31, 2021, is
a result of
combining the consolidated income statement
of ConocoPhillips with the results of Concho.
the assets acquired from Shell. The pro forma results
do not include transaction-related
costs, nor any cost savings
anticipated as a result of the transaction.
The pro
forma results include adjustments
to reverse impairment expense
of $
10.5
billion and $
1.9
billion related to oil and
gas properties and goodwill, respectively,
recorded by Concho in the nine-month
period ending September 30,
2020.
Other adjustments made relate
primarily to DD&A, which is based on the unit-of-production
method,
resulting from the purchase price allocated
to properties, plants and equipment.
We believe the estimates
and
assumptions are reasonable, and the relative
effects of the transaction
are properly reflected.

7ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
9
ConocoPhillips
Notes to Consolidated Financial Statements
Table of Contents
Acquisition of Concho Resources Inc. (Concho)
In January 2021, Q3 10-Qwe completed our acquisition of Concho, an independent oil and gas exploration and production company in an all-stock transaction. In conjunction with this acquisition, we commenced, and completed in 2021, a company-wide restructuring program, the scope of which included combining the operations of the two companies as well as other global restructuring activities for which we recognized non-recurring restructuring and transaction costs. Further information regarding the Concho acquisition can be found in the following footnotes: Note 7—Changes in Equity; Note 9—Contingencies and Commitments; Note 10—Derivative and Financial Instruments; and Note 13—Cash Flow Informationand should be read in conjunction with the notes included in our Annual Report on Form 10-K.

Assets SoldAcquisition of Additional Shareholding Interest in Australia Pacific LNG Pty Ltd (APLNG)
In 2020,February 2022, we completed the saleacquisition of an additional 10 percent interest in APLNG from Origin Energy for approximately $1.4 billion after customary adjustments in an all-cash transaction resulting from the exercise of our Australia
-West assetpreemption right. This increases our ownership in APLNG to 47.5 percent, with Origin Energy and operations.
The sales agreement entitled us to a
$
200
million payment upon a finalSinopec owning 27.5 percent and 25 percent, respectively. APLNG is reported as an equity investment
decision (FID) of the Barossa development project.
On March 30,
2021, FID was announced and as such, we recognized
a $
200
million gain on disposition in the first
quarter of 2021.
The purchaser failed to pay the
FID bonus when due.
We have commenced an arbitration
proceeding against the
purchaser to enforce our contractual
right to the $
200
million, plus interest accruing from the
due date.
Results of
operations related to
this transaction are reflected
in our Asia Pacific segment.

Assets Sold
In March 2022, we completed the third quarterdivestiture of our subsidiaries that held our Indonesia assets and operations, and based on an effective date of January 1, 2021, we sold our interests
in certain noncore assets in our Lower 48 segment
for
approximately $
150
received net proceeds of $731 million after customary adjustments
recognizing and recognized a $534 million before-tax and $462 million after-tax gain
on sale of approximately
$
26
million.
Production from these noncore Lower
48 properties averaged
approximately
15
MBOED related to this transaction. Together, the subsidiaries sold indirectly held our 54 percent interest in the nine-
months ended September 30, 2021.
We also completedIndonesia Corridor Block Production Sharing Contract (PSC) and 35 percent shareholding in the saleTransasia Pipeline Company. At the time of our
noncore exploration interests
in Argentina,
recognizing athe disposition, the net carrying value was approximately $0.2 billion, excluding $0.2 billion of cash and restricted cash. The net book value consisted primarily of $0.3 billion of PP&E and $0.1 billion of ARO. The before-tax
loss earnings associated with the subsidiaries sold, excluding the gain on disposition of $
179
million.noted above, were $138 million and $122 million for the three-month period ended March 31, 2022 and 2021, respectively. Results of operations
for Argentinathe Indonesia interests sold were reported
in
our Other InternationalAsia Pacific segment.
For the three- and nine-monthsthree-months ended September
30, 2021,March 31, 2022, we recorded contingent
payments of $
121
$250 million, and
$
222
million, respectively,
relating to the previous dispositions.
dispositions of our interest in the Foster Creek Christina Lake Partnership and western Canada gas assets as well as our San Juan assets. The contingent payments are
recorded as gain on
disposition onin our consolidated income statement
and are reflected within our Canada
and Lower 48 segments.
NaN
In the first quarter of 2021, we recorded contingent payments wereof $26 million.

recorded
Assets Held for Sale
In January 2022, we entered into an agreement to sell our interests in 2020.certain noncore assets in the Lower 48 segment for $440 million, before customary adjustments. These assets have a net carrying value of approximately $289 million, which consisted primarily of $400 million of PP&E and $111 million of liabilities, primarily noncurrent AROs. These assets met held for sale criteria in the first quarter, and as of March 31, 2022, we reclassified the PP&E to "Prepaid expenses and other current assets" and the noncurrent liabilities to "Other accruals" on our consolidated balance sheet. The before-tax earnings associated with these assets were $23.1 million and $0.5 million for the three-month periods ended March 31, 2022 and 2021, respectively. This transaction closed in April 2022.
ConocoPhillips      2022 Q1 10-Q8
Notes to Consolidated Financial Statements
Table of Contents
Note 4—Investments,
Loans and Long-Term
Receivables
Australia Pacific LNG Pty Ltd
(APLNG)APLNG
APLNG executed project financing
agreements for an $
8.5
$8.5 billion project finance facility in 2012.
All amounts were
drawn from2012 which became non-recourse following financial completion in 2017. Following restructuring efforts, the facility.
The project financing facility has been restructured
over time and at September 30, 2021,
this facility wasis currently composed of a financing agreement
with the Export-Import Bank of the United States,
a
commercial bank facility and
2
two United States Private
Placement note facilities.
APLNG made its first principal
and interest repayme
ntpayments commenced in March 2017 and isare scheduled to make
bi-annual paymentsoccur bi-annually until September
2030.
At
September 30, 2021, March 31, 2022, a balance of $
5.7
$5.5 billion was outstanding on these
facilities.

DuringIn February 2022, we completed the fourth quarteracquisition of 2020,an additional 10 percent interest in APLNG from Origin Energy for approximately $1.4 billion resulting from the estimated
fair valueexercise of our investment
preemption right. This increases our ownership in APLNG declined to an amount
below carrying value, primarily due to the weakening
of the U.S. dollar relative to the Australian
dollar.
Based on a
review of the facts and circumstances
surrounding this decline in fair value, we concluded
the impairment was not
other than temporary under the guidance of FASB
ASC Topic
323, “Investments – Equity
Method and Joint
Ventures.”
Due primarily to improved outlooks for
commodity prices and the strengthening
of the U.S. dollar
relative to the Australian
dollar during the first nine months of 2021, the estimated
fair value of our investment
increased and is above carrying value at
September 30, 2021.
On October 25, 2021,47.5 percent, with Origin Energy Limited agreed
to the sale of
10
percent of their interest
in APLNG for
approximately $
1.6
billion which is expected to close in the fourth
quarter of 2021.
The transaction is subject to
preemption rights in favor
of ConocoPhillips and Sinopec among other considerations.
We will continue toowning 27.5 percent and 25 percent, respectively.
monitor and evaluate the relationship
betweenAt March 31, 2022, the carrying value and fair value
of APLNG, including any impact
from this announced transaction.
At September 30, 2021, the carrying value
of our equity method investment
in APLNG was $
6.4
$6.8 billion.
The
balance is included in the “Investments and
long-term receivables” line on our consolidated
balance sheet.
Loans
As part of our normal ongoing business operations,
and consistent with industry practice, we enter
into numerous
agreements with other parties to pursue
business opportunities.
Included in such activity are loans made to
certain affiliated and non-affiliated
companies.
At September 30, 2021,March 31, 2022, significant loans
to affiliated companies
included $
114
$59 million in project financing to Qatar Liquefied
Gas Company Limited (3), which is recorded
included within
the “Accounts
and notes receivable—related
parties” line on our consolidated balance sheet
sheet.
.

Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
10
Note 5—Investment in Cenovus
Energy
Our investment inDuring 2021, we initiated disposal of our Cenovus Energy
(CVE) common shares isand at March 31, 2022, we are fully divested of our investment.

At December 31, 2021, we held 91 million shares, which approximated 4.5% of the issued and outstanding common shares of CVE. Those shares were carried on our consolidated
balance sheet at fair value of $
1.4
$1.1 billion based on the closing price of $
10.06
per share on the NYSE on the last trading
day of $12.28 per share. During the quarter.
At
September 30, 2021 and December 31, 2020,first quarter of 2022, we held
141
million and
208
sold our remaining 91 million shares, of CVE common stock,
respectively.
At September 30, 2021, our investment
approximated
7
percent of the issued and outstanding
CVE
common stock.
During the third quarter,
we sold
47
million shares of our CVE common stock, recognizing
proceeds of $$1.4 billion.
404
million.
Since we began disposing of our CVE shares
in May 2021, we have sold
67
million shares for total proceeds
of $
584
million, of which $
569
million was received by the end of the third
quarter.
Subject to market conditions, we
intend to continue to decrease
our investment over time.
All gains and losses are recognized
within “Other income (loss)”"Other income” on our consolidated
income statement.
Proceeds
related to the sale of our CVE shares are
presented included within “Cash Flows from Investing
Activities” on our
consolidated statement
of cash flows.
Millions of Dollars
Three Months Ended
March 31
20222021
Total Net gain on equity securities$251 308 
Less: Net gain on equity securities sold during the period251 — 
Unrealized gain on equity securities still held at the reporting date$— 308 
for information related
to fair value measurement
.
9ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
Note 6—Debt
Millions of Dollars
March 31 2022December 31 2021
2.4% Notes due 2022$329 329 
7.65% Debentures due 202378 78 
3.35% Notes due 2024426 426 
2.125% Notes due 2024900 — 
8.2% Notes due 2025134 134 
3.35% Debentures due 2025199 199 
2.4% Notes due 2025900 — 
6.875% Debentures due 202667 67 
4.95% Notes due 20261,250 1,250 
7.8% Debentures due 2027203 203 
3.75% Notes due 2027196 1,000 
4.3% Notes due 2028223 1,000 
7.375% Debentures due 202992 92 
7% Debentures due 2029112 200 
6.95% Notes due 20291,195 1,549 
8.125% Notes due 2030390 390 
7.4% Notes due 2031382 500 
7.25% Notes due 2031400 500 
7.2% Notes due 2031447 575 
2.4% Notes due 2031227 500 
5.9% Notes due 2032505 505 
4.15% Notes due 2034246 246 
5.95% Notes due 2036326 500 
5.951% Notes due 2037645 645 
5.9% Notes due 2038350 600 
6.5% Notes due 20391,588 2,750 
3.758% Notes due 2042785 — 
4.3% Notes due 2044750 750 
5.95% Notes due 2046329 500 
7.9% Debentures due 204760 60 
4.875% Notes due 2047319 800 
4.85% Notes due 2048219 600 
3.8% Notes due 20521,100 — 
4.025% Notes due 20621,770 — 
Floating rate notes due 2022 at 1.06% – 1.41% during 2022 and 1.02% –1.12% during 2021500 500 
Marine Terminal Revenue Refunding Bonds due 2031 at 0.07% – 0.65% during 2022 and 0.04% – 0.15% during 2021265 265 
Industrial Development Bonds due 2035 at 0.07%% – 0.65% during 2022 and 0.04% – 0.12% during 202118 18 
Other35 35 
Debt at face value17,960 17,766 
Finance leases1,308 1,261 
Net unamortized premiums, discounts and debt issuance costs(522)907 
Total debt18,746 19,934 
Short-term debt(1,160)(1,200)
Long-term debt$17,586 18,734 

Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Total
Net gain (loss) on equity securities
$
17
(162)
743
(1,302)
Less: Net gain (loss) on equity securities sold during
the period
(50)
0
177
0
Unrealized gain (loss) on equity securities
still held at
the reporting date
$
67
(162)
566
(1,302)
ConocoPhillips      2022 Q1 10-Q10
Note 6—Impairments
During the three-
and nine-month periods ended September 30, 2021 and
2020, we recognized before
-tax
impairment charges within the following
segments:
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Alaska
$
0
0
3
0
Lower 48
(89)
1
(93)
514
Europe, Middle East and North Africa
0
1
0
7
$
(89)
2
(90)
521
In the three-month period ended September 30, 2021,
we recorded a credit to impairment
of $
89
million in our
Lower 48 segment due to a decreased ARO
estimate for a previously
sold asset, in which we retained the ARO
liability.
Notes to Consolidated Financial Statements
Table of Contents
In the first quarter of 2020,2022, we recorded
impairmentscompleted a debt refinancing consisting of $
511
million relatedthree concurrent transactions: a tender offer to repurchase existing debt for cash; exchange offers to retire certain noncore
natural gas assets
debt in exchange for new debt and cash; and a new debt issuance to partially fund the cash paid in the Lower 48 segment which were written
down to fair value.
tender and exchange offers.

Notes to Consolidated Financial StatementsTender Offer
TableIn March 2022, we repurchased a total of Contents
11
ConocoPhillips
2021 Q3 10-Q
Note 7—Debt
Our$2,716 million aggregate principal amount of debt balance at September 30, 2021, was
$
19.7
billion compared with $
15.4
billion at December 31, 2020.
On January 15, 2021, we completed the acquisition of Concho
in an all-stock transaction.
In the acquisition, we
assumed Concho’s publicly
traded debt, with an outstanding principal balance
of $
3.9
billion, which was recorded
at fairas listed below. We paid premiums above face value of $$333 million to repurchase these debt instruments and recognized a gain on debt extinguishment of $155 million which is included in the "Other expenses" line on our consolidated income statement.
4.7
billion on the acquisition date.
Debt assumed consisted of the following:
●
3.75
%•3.75% Notes due
2027
with principal of $$1,000 million (partial repurchase of $804 million)
1,000
million
●
4.3
%•4.3% Notes due
2028
with principal of $$1,000 million (partial repurchase of $777 million)
1,000
million
●
2.4
%•2.4% Notes due
2031
with principal of $$500 million (partial repurchase of $273 million)
500
million
●
4.875
%•4.875% Notes due
2047
with principal of $$800 million (partial repurchase of $481 million)
800
million
●
4.85
%•4.85% Notes due
2048
with principal of $$600 million (partial repurchase of $381 million)
600
millionExchange Offers
The adjustment to fair value of the senior
notes of approximately $
0.8
billion on the acquisition date will be
amortized as an adjustment to interest
expense over the remaining contractual
terms of the senior notes.
In the first quarter of 2021,Also in March 2022, we completed
a 2 concurrent debt exchange offer
related to the debt assumed from
Concho.
Of the
approximately $
3.9
billion inoffers through which $2,544 million of aggregate principal amount
of Concho’s seniorexisting notes
offered in the exchange,
98
percent, or approximately
$
3.8
billion, were was tendered and accepted.
Theaccepted in exchange for a combination of new debt issued by ConocoPhillips had
the same interest rates
notes and maturity dates as the Concho senior notes.
The portion not exchanged, approximately
$
67
million, remained outstanding across
five series of senior notes issued by Concho.
cash. The debt exchange was
offers were treated as a debt modificationmodifications for
accounting purposes resulting in a portion
of the unamortized fair value
adjustmentdebt discount, premiums and debt issuance costs of the Concho seniorexisting notes being allocated
to the new debt issued by ConocoPhillipsnotes on the settlement
date
dates of the exchange.exchange offers. We paid premiums above face value of $883 million, comprised of $872 million of cash as well as new notes, which were capitalized as additional debt discount. We incurred expenses of $28 million in the exchanges which are included in the "Other expenses" line on our consolidated income statement.

The new debt issuednotes tendered and accepted in the exchange isoffers were:
•7% Debentures due 2029 with principal amount of $200 million (partial exchange of $88 million)
fully
•6.95% Notes due 2029 with principal amount of $1,549 million (partial exchange of $354 million)
•7.4% Notes due 2031 with principal amount of $500 million (partial exchange of $118 million)
•7.25% Notes due 2031 with principal amount of $500 million (partial exchange of $100 million)
•7.2% Notes due 2031 with principal amount of $575 million (partial exchange of $128 million)
•5.95% Notes due 2036 with principal amount of $500 million (partial exchange of $174 million)
•5.9% Notes due 2038 with principal amount of $600 million (partial exchange of $250 million)
•6.5% Notes due 2039 with principal amount of $2,750 million (partial exchange of $1,162 million)
•5.95% Notes due 2046 with principal amount of $500 million (partial exchange of $171 million)

The notes tendered and unconditionally guaranteed by
ConocoPhillipsaccepted were exchanged for the following new notes:
Company.
•3.758% Note due 2042 with principal amount of $785 million
•4.025% Note due 2062 with principal amount of $1,770 million
.New Debt Issuance
On March 8, 2022 we issued the following new notes consisting of:
•2.125% Notes due 2024 with principal of $900 million
We have a•2.4% Notes due 2025 with principal of $900 million
•3.8% Notes due 2052 with principal of $1,100 million

In April 2022, we provided formal notice to holders of our 4.95% Notes due 2026 with principal of $1,250 million that we would retire this debt in full per the provisions in the bond indenture, with settlement scheduled for May 2022. Retirement of this bond will be sourced from cash and further accelerates progress towards our debt reduction target.

In February 2022, we refinanced our revolving
credit facility totaling $
6.0
from a total borrowing capacity of $6.0 billion to $5.5 billion with an expiration date
of
May 2023
.
February 2027. Our revolving credit
facility may be used for direct
bank borrowings, the issuance of letters
of credit totaling up to $
500
$500 million, or as
support for our commercial paper program.
The revolving credit facility is broadly
syndicated among financial
institutions and does not contain any
material adverse change provisions
or any covenants requiring maintenance
of specified financial ratios or credit ratings.
The facility agreement contains
a cross-default provision
relating to
the failure to pay principal or
interest on other debt obligations
of $
200
$200 million or more by ConocoPhillips, or any
of its consolidated subsidiaries.
The amount of the facility is not subject to redetermination
prior to its expiration date.
date.
11ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
Credit facility borrowings may
bear interest at a margin above
rates offered
by certain designated banks in the
London interbank market or
at a margin above the overnight federal
funds rate or prime rates
offered by certain
designated banks in the U.S.
The facility agreement calls for
commitment fees on available,
but unused, amounts.
The facility agreement also contains
early termination rights if our current directors
or their approved successors
cease to be a majority of the Board of Directors.
The revolving credit facility supports
our ability to issue up to $
6.0
$5.5 billion of commercial paper.
Commercial paper
is generally limited to
maturities of 90 days
and is included in the short-term debt on our consolidated
balance
sheet. With no commercial paper outstanding
and
no
direct borrowings or letters
of credit, we had access to $
6.0
$5.5 billion in available borrowing capacity
under our revolving credit facility at
September 30, 2021.
March 31, 2022. At December 31,
2020, 2021, we had $
300
million ofno commercial paper outstanding
and
no
direct borrowings or letters of credit
issued.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
12
Following our September 20, 2021, announcement
regarding the Shell Permian
Acquisition,
the three rating
agencies reviewed their pre-announcement
The current credit ratings on our debt resulting in the
following:
●
Fitch affirmed its rating of our long-term debt asare:
•Fitch: “A” with a “stable” outlook.outlook
●
•S&P affirmed its rating of our long-term debt of&P: “A-” with a “stable” outlook.outlook
•Moody’s: “A3” with a “positive” outlook
●
Moody’s affirmed its rating of our senior long-term debt of “A3” and upgraded the outlook to “positive”
from “stable.”

We do not have any
ratings triggers on any of our
corporate debt that would
cause an automatic default, and
thereby impact our access to liquidity
upon downgrade of our credit ratings.
If our credit ratings are downgraded
from their current levels, it could
increase the cost of corporate
debt available to us and restrict
our access to the
commercial paper markets.
If our credit rating were to deteriorate
to a level prohibiting us from accessing
the
commercial paper market, we
would still be able to access funds under our revolving
credit facility.
At September 30, 2021,March 31, 2022, we had $
283
$283 million of certain variable rate
demand bonds (VRDBs) outstanding with
maturities ranging through 2035.
The VRDBs are redeemable at the option of the bondholders
on any business
day.
If they are ever redeemed, we have
the ability and intent to refinance on
a long-term basis, therefore, the
VRDBs are included in the “Long-term debt” line on our consolidated
balance sheet.
ConocoPhillips      2022 Q1 10-Q12
Notes to Consolidated Financial Statements
13
ConocoPhillips
Notes to Consolidated Financial Statements
Table of Contents
2021 Q3 10-Q
Note 8—7—Changes in Equity
Millions of Dollars
Attributable to ConocoPhillips
Common Stock
Par
Value
Capital in
Excess of
Par
Treasury
Stock
Accum. Other
Comprehensive
Income (Loss)
Retained
Earnings
Non-
Controlling
Interests
Total
For the three months ended September 30, 2021
Balances at June 30, 2021
$
21
60,337
(48,278)
(4,920)
37,116
44,276
Net income
2,379
2,379
Other comprehensive income
(203)
(203)
Dividends paid ($
0.43
Millions of Dollars
Common Stock
Par
Value
Capital in
Excess of
Par
Treasury
Stock
Accum. Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
For the three months ended March 31, 2022
Balances at December 31, 2021$21 60,581 (50,920)(4,950)40,674 45,406 
Net income5,759 5,759 
Other comprehensive income142 142 
Dividends declared
Ordinary ($0.46 per common share)(603)(603)
Variable return of cash ($0.30 per common share)(390)(390)
Repurchase of company common stock(1,425)(1,425)
Distributed under benefit plans326 326 
Other1 2 3 
Balances at March 31, 2022$21 60,907 (52,344)(4,808)45,442 49,218 
For the three months ended March 31, 2021
Balances at December 31, 2020$18 47,133 (47,297)(5,218)35,213 29,849 
Net income982 982 
Other comprehensive income138 138 
Dividends declared
  Ordinary ($0.43 per common share)(588)(588)
Acquisition of Concho3 13,122 13,125 
Repurchase of company common stock(375)(375)
Distributed under benefit plans23 23 
Other1 1 
Balances at March 31, 2021$21 60,278 (47,672)(5,080)35,608 43,155 
per common share)
(579)
(579)
Dividends payable ($
0.46
per common share)
(609)
(609)
Repurchase of company common stock
(1,243)
(1,243)
Distributed under benefit plans
94
94
Balances at September 30, 2021
$
21
60,431
(49,521)
(5,123)
38,307
-
44,115
For the nine months ended September 30, 2021
Balances at December 31, 2020
$
18
47,133
(47,297)
(5,218)
35,213
29,849
Net income
5,452
5,452
Other comprehensive income
95
95
Dividends paid ($
1.29
per common share)
(1,750)
(1,750)
Dividends payable ($
0.46
per common share)
(609)
(609)
Acquisition of Concho
3
13,122
13,125
Repurchase of company common stock
(2,224)
(2,224)
Distributed under benefit plans
176
176
Other
1
1
Balances at September 30, 2021
$
21
60,431
(49,521)
(5,123)
38,307
-
44,115
Millions of Dollars
Attributable to ConocoPhillips
Common Stock
Par
Value
Capital in
Excess of
Par
Treasury
Stock
Accum. Other
Comprehensive
Income (Loss)
Retained
Earnings
Non-
Controlling
Interests
Total
For the three months ended September 30, 2020
Balances at June 30, 2020
$
18
47,079
(47,130)
(5,825)
37,351
31,493
Net income
(450)
(450)
Other comprehensive income
159
159
Dividends paid ($
0.42
per common share)
(454)
(454)
Distributed under benefit plans
34
34
Other
1
1
Balances at September 30, 2020
$
18
47,113
(47,130)
(5,666)
36,448
0
30,783
For the nine months ended September 30, 2020
Balances at December 31, 2019
$
18
46,983
(46,405)
(5,357)
39,742
69
35,050
Net income
(1,929)
46
(1,883)
Other comprehensive loss
(309)
(309)
Dividends paid ($
1.26
per common share)
(1,367)
(1,367)
Repurchase of company common stock
(726)
(726)
Distributions to noncontrolling interests and other
(32)
(32)
Dispositions
(84)
(84)
Distributed under benefit plans
130
130
Other
1
2
1
4
Balances at September 30, 2020
$
18
47,113
(47,130)
(5,666)
36,448
0
30,783
13ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
14
Notes to Consolidated Financial Statements
Table of Contents
Note 9—8—Guarantees
At September 30, 2021,March 31, 2022, we were
liable for certain contingent
obligations under various contractual
arrangements
as described below.
We recognize a liability,
at inception, for the fair value
of our obligation as a guarantor
for
newly issued or modified guarantees.
Unless the carrying amount of the liability is noted below,
we have not
recognized a liability because the
fair value of the obligation
is immaterial.
In addition, unless otherwise stated, we
are not currently performing with any
significance under the guarantee and expect
future performance to be
either immaterial or have only a remote
chance of occurrence.
APLNG Guarantees
At September 30, 2021,March 31, 2022, we had outstanding
multiple guarantees in connection with our
37.5
47.5 percent ownership
interest in APLNG.
The following is a description of the guarantees
with values calculated utilizing September
2021
March 2022 exchange rates:
●
•During the third quarter of 2016, we issued a guarantee
to facilitate the withdrawal
of our pro-rata portion
of the funds in a project finance reserve account.
We estimate the remaining
term of this guarantee
is
9
years
.
years. Our maximum exposure under this guarantee
is approximately $
170
$210 million and may become payable
if an enforcement action is commenced by
the project finance lenders against
APLNG.
At September 30,
2021,March 31, 2022, the carrying value of this guarantee
was $$14 million.
14
million.
●
•In conjunction with our original purchase of an ownership
interest in APLNG from Origin Energy
Limited in
October 2008, we agreed to reimburse
Origin Energy Limited for our share
of the existing contingent liability
arising under guarantees of an existing
obligation of APLNG to deliver natural
gas under several sales
agreements with remaining terms agreements. The final guarantee expires in the fourth quarter of
1 to 21 years
.
2041. Our maximum potential liability for future
payments, or
cost of volume delivery,
under these guarantees is estimated
to be $
670
$910 million ($
1.2
1.6 billion in the event of
intentional or reckless breach) and
would become payable if APLNG fails
to meet its obligations under these
agreements and the obligations
cannot otherwise be mitigated.
Future payments are considered
unlikely,
as
the payments, or cost of volume delivery,
would only be triggered if APLNG does not have
enough natural
gas to meet these sales commitments
and if the co-venturers
co-ventures do not make necessary equity contributions
into APLNG.
●
•We have guaranteed
the performance of APLNG with regard
to certain other contracts executed
in
connection with the project’s continued
development.
The guarantees have
remaining terms of
15 to 24
years
or the life of the venture.
Our maximum potential amount of future payments
related to these
guarantees is approximately
$
180
$290 million and would become payable
if APLNG does not perform.
At
September 30, 2021, March 31, 2022, the carrying value of these guarantees
was $
11
approximately $20 million.
Other Guarantees
We have other guarantees
with maximum future potential payment
amounts totaling approximately
$
720
$720 million,
which consist primarily of guarantees
of the residual value of leased office buildings, guarantees
of the residual
value of corporate aircrafts,
and a guarantee for our portion
of a joint venture’s
project finance reserve accounts.
These guarantees have remaining
terms of
one to five years
and would become payable if certain asset
values are
lower than guaranteed amounts
at the end of the lease or contract term, business
conditions decline at
guaranteed entities, or as a result
of nonperformance of contractual
terms by guaranteed parties.
At September
30, 2021,March 31, 2022, the carrying value of these guarantees
was $
11
$8 million.
Indemnifications
Over the years, we have entered
into agreements to sell ownership
interests in certain legal entities,
joint ventures
and assets that gave rise to
qualifying indemnifications.
These agreements include indemnifications for
taxes
lease commitments and environmental
liabilities.
The carrying amount recorded for these indemnification obligations at March 31, 2022, was $20 million. Those related to environmental
issues have terms that are
generally indefinite and the maximum
amounts of future payments are
generally unlimited.
The carrying amount
recorded for these indemnification
obligations at September 30, 2021, was $
30
million.
We amortize the
indemnification liability over the relevant
time period the indemnity is in effect, if one exists,
based on the facts
and circumstances surrounding each type
of indemnity.
In cases where the indemnification term is
indefinite, we
will reverse the liability when we have
information the liability is essentially
relieved or amortize the liability over
Notes to Consolidated Financial Statements
15
ConocoPhillips
2021 Q3 10-Q
an appropriate time period as the fair
value of our indemnification exposure
declines.
Although it is reasonably
possible future payments may exceed
amounts recorded, due to the nature
of the indemnifications, it is not
possible to make a reasonable estimate
of the maximum potential amount
of future payments.
9for
additional information about environmental
liabilities liabilities.
.
ConocoPhillips      2022 Q1 10-Q14
Notes to Consolidated Financial Statements
Table of Contents
Note 10—9—Contingencies and Commitments
A number of lawsuits involving a variety
of claims arising in the ordinary course of business
have been filed against
ConocoPhillips.
We also may be required
to remove or mitigate
the effects on the environment
of the placement,
storage, disposal or release of
certain chemical, mineral and petroleum
substances at various
active and inactive
sites.
We regularly assess the need for accounting
recognition or disclosure of these contingencies.
In the case of
all known contingencies (other than those related
to income taxes), we accrue
a liability when the loss is probable
and the amount is reasonably estimable.
If a range of amounts can be reasonably
estimated and no amount within
the range is a better estimate
than any other amount, then the low end of the range
is accrued.
We do not reduce
these liabilities for potential insurance
or third-party recoveries.
We accrue receivables for
insurance or other
third-party recoveries when applicable.
With respect to income tax-related
contingencies, we use a cumulative
probability-weighted loss accrual
in cases where sustaining a tax
position is less than certain.
Based on currently available information,
we believe it is remote that future
costs related to known
contingent
liability exposures will exceed
current accruals by an amount that
would have a material adverse
impact on our
consolidated financial statements.
As we learn new facts concerning contingencies,
we reassess our position both
with respect to accrued liabilities and other potential
exposures.
Estimates particularly sensitive to future
changes
include contingent liabilities recorded
for environmental
remediation, tax and legal matters.
Estimated future
environmental remediation
costs are subject to change due to
such factors as the uncertain
magnitude of cleanup
costs, the unknown time and extent of such
remedial actions that may be required,
and the determination of our
liability in proportion to that of other responsible
parties.
Estimated future costs
related to tax and legal
matters
are subject to change as events
evolve and as additional information
becomes available during the administrative
and litigation processes.
Environmental
We are subject to international,
federal, state and
local environmental laws
and regulations and record
accruals for
environmental liabilities based on
management’s best estimates.
These estimates are based on currently
available
facts, existing technology,
and presently enacted laws and regulations,
taking into account stakeholder
and
business considerations.
When measuring environmental liabilities,
we also consider our prior experience in
remediation of contaminated
sites, other companies’ cleanup experience, and data
released by the U.S. EPA
or
other organizations.
We consider unasserted claims in our determination
of environmental liabilities,
and we
accrue them in the period they are both probable and
reasonably estimable.
Although liability of those potentially responsible
for environmental remediation
costs is generally joint and
several for federal
sites and frequently so for other
sites, we are usually only one of many companies
cited at a
particular site.
Due to the joint and several liabilities, we could
be responsible for all cleanup costs related
to any
site at which we have been designated
as a potentially responsible party.
We have been successful to
date in
sharing cleanup costs with other financially sound
companies.
Many of the sites at which we are potentially
responsible are still under investigation
by the EPA or
the agency concerned.
Prior to actual cleanup, those
potentially responsible normally assess the
site conditions, apportion responsibility and determine
the appropriate
remediation.
In some instances, we may have
no liability or may attain a settlement
of liability.
Where it appears
that other potentially responsible parties may
be financially unable to bear their proportional share,
we consider
this inability in estimating our potential liability,
and we adjust our accruals accordingly.
As a result of various
acquisitions in the past, we assumed certain environmental
obligations.
Some of these environmental obligations
are mitigated by indemnifications
made by others for our benefit, and some of the indemnifications
are subject to
dollar limits and time limits.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
16
We are currently participating
in environmental assessments
and cleanups at numerous federal
Superfund and
comparable state and
international sites.
After an assessment of environmental
exposures for cleanup and other
costs, we make accruals on an
undiscounted basis (except
those acquired in a purchase business combination,
which we record on a discounted
basis) for planned investigation
and remediation activities for sites where
it is
probable future costs will be incurred
and these costs can be reasonably estimated.
We have not reduced
these
accruals for possible insurance recoveries
.recoveries.
At September 30, 2021,March 31, 2022, our balance sheet included
a total environmental
accrual of $
191
$184 million, compared with
$
180
$187 million at December 31, 2020,2021, for remediation
activities in the U.S. and Canada.
We expect to incur a
substantial amount of these expenditures
within the next
30 years
.
years. In the future, we may be involved
in additional
environmental assessments,
cleanups and proceedings.
15ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
Litigation and Other Contingencies
We are subject to various
lawsuits and claims including, but not limited to, matters
involving oil and gas royalty
and
severance tax payments,
gas measurement and valuation
methods, contract disputes,
environmental damages,
climate change, personal injury,
and property damage.
Our primary exposures for such matters
relate to alleged
royalty and tax underpayments
on certain federal, state
and privately owned properties, claims
of alleged
environmental contamination
and damages from historic operations,
and other contract disputes.
climate change. We will continue to defend
ourselves vigorously in these matters.
Our legal organization
applies its knowledge, experience and professional
judgment to the specific characteristics
of our cases, employing a litigation management
process to manage and monitor the legal
proceedings against us.
Our process facilitates the
early evaluation and quantification
of potential exposures in individual cases.
This
process also enables us to track those cases
that have been scheduled for trial and/or
mediation.
Based on
professional judgment and experience
in using these litigation management
tools and available information
about
current developments in all our cases,
our legal organization regularly
assesses the adequacy of current accruals
and determines if adjustment of existing
accruals, or establishment of new accruals, is
required.
We have contingent
liabilities resulting from throughput agreements
with pipeline and processing companies not
associated with financing arrangements.
Under these agreements, we may be required
to provide any such
company with additional funds through
advances and penalties for fees related
to throughput capacity not utilized.
In addition, at September 30, 2021,March 31, 2022, we had performance
obligations secured by letters
of credit of
$
281
$340 million (issued as direct bank letters
of credit) related to various
purchase commitments for materials,
supplies, commercial activities and services incident to
the ordinary conduct of business.
In 2007, ConocoPhillips was unable to reach
agreement with respect to the empresa
mixta structure mandated
by
the Venezuelan government’s
Nationalization Decree.
As a result, Venezuela’s
national oil company,
Petróleos de
Venezuela, S.A. (PDVSA),
or its affiliates, directly assumed control
over ConocoPhillips’ interests
in the Petrozuata
and Hamaca heavy oil ventures and
the offshore Corocoro development
project.
In response to this expropriation,
ConocoPhillips initiated international
arbitration on November 2, 2007, with the ICSID.
On September 3, 2013, an
ICSID arbitration tribunal held that Venezuela
unlawfully expropriated ConocoPhillips’
significant oil investments in
June 2007.
On January 17, 2017, the Tribunal reconfirmed
the decision that the expropriation
was unlawful.
In
March 2019, the Tribunal unan
imouslyunanimously ordered the government of Venezuela
to pay ConocoPhillips approximately
$
8.7
$8.7 billion in compensation for the government’s
unlawful expropriation of the company’s
investments in
Venezuela in 2007.
On August 29, 2019, the ICSID Tribunal
issued a decision rectifying the award and
reducing it
by approximately $
227
$227 million.
The award now stands at
$
8.5
$8.5 billion plus interest.
The government of Venezuela
sought annulment of the award,
which automatically stayed
enforcement of the award.
On September 29, 2021,
the ICSID annulment committee lifted the
stay of enforcement
of the award.
The annulment proceedings have
been suspended as a result of Venezuela’s
non-payment of advances
to cover the costs of these proceedings.
Notes to Consolidated Financial Statements
17
ConocoPhillips
2021 Q3 10-Q
In 2014, ConocoPhillips filed a separate
and independent arbitration under the rules
of the ICC against PDVSA
under the contracts that had established
the Petrozuata
and Hamaca projects.
The ICC Tribunal issued
an award in
April 2018, finding that PDVSA owed ConocoPhillips
approximately $
2
$2 billion under their agreements in connection
with the expropriation of the projects
and other pre-expropriation fiscal
measures.
In August 2018, ConocoPhillips
entered into a settlement with PDVSA to recover the full amount of this ICC award, plus interest through the
payment period, including initial payments totaling approximately $500 million within a period of 90 days from the
time of signing of the settlement agreement. The balance of the settlement is to be paid quarterly over a period of
four and a half years.
Per the settlement, PDVSA recognized
the ICC award as a judgment in various
jurisdictions,
and ConocoPhillips agreed to suspend
its legal enforcement actions.
ConocoPhillips sent notices of default to
PDVSA
on October 14 and November 12, 2019, and to
date PDVSA has failed to cure
its breach.
As a result,
ConocoPhillips has resumed legal enforcement
actions.
To date,
ConocoPhillips has received approximately
$
766
$769 million in connection with the ICC award.
ConocoPhillips has ensured that
the settlement and any actions taken
in
enforcement thereof meet all
appropriate U.S. regulatory
requirements, including those related
to any applicable
sanctions imposed by the U.S. against
Venezuela.
In 2016, ConocoPhillips filed a separate
and independent arbitration under the rules
of the ICC against PDVSA
under the contracts that had established
the Corocoro Project.
On August 2, 2019, the ICC Tribunal
awarded
ConocoPhillips approximately
$
33
$33 million plus interest under the Corocoro
contracts.
ConocoPhillips is seeking
recognition and enforcement
of the award in various jurisdictions.
ConocoPhillips has ensured that all the actions
related to the award meet
all appropriate U.S. regulatory
requirements, including those related
to any applicable
sanctions imposed by the U.S. against
Venezuela.
The Office of Natural Resources
Revenue (ONRR) has conducted audits
of ConocoPhillips’ payment of royalties
on
federal lands and has issued multiple orders
ConocoPhillips      2022 Q1 10-Q16
to pay additional royalties
to the federal government.
ConocoPhillips
and the ONRR entered into a settlement
agreement on March 23, 2021, to resolve
the dispute.
All orders and
associated appeals have been withdrawn
with prejudice.
Notes to Consolidated Financial Statements
Table of Contents
Beginning in 2017, cities, counties, governments
governmental and other entities in several states
in the U.S. have filed lawsuits
against oil and gas companies,
including ConocoPhillips, seeking compensatory
damages and equitable relief to
abate alleged climate change impacts.
Additional lawsuits with similar allegations are
expected to be filed.
The
amounts claimed by plaintiffs are
unspecified and the legal and factual issues
involved in these cases are
unprecedented.
ConocoPhillips believes these lawsuits
are factually and legally meritless and
are an inappropriate
vehicle to address the challenges associated
with climate change and will vigorously
defend against such lawsuits.
Several Louisiana parishes and the State
of Louisiana have filed
43
lawsuits under Louisiana’s
State and Local
Coastal Resources Management
Act (SLCRMA) against oil and gas
companies, including ConocoPhillips, seeking
compensatory damages for contamination
and erosion of the Louisiana coastline allegedly
caused by historical oil
and gas operations.
ConocoPhillips entities are defendants
in
22
of the lawsuits and will vigorously defend
against
them.
Because Plaintiffs’ SLCRMA theories are
unprecedented, there is uncertainty
about these claims (both as to
scope and damages) and we continue to
evaluate our exposure in these
lawsuits.
In October 2020, the Bureau of Safety
and Environmental Enforcement
(BSEE) ordered the prior owners of Outer
Continental Shelf (OCS) Lease P-0166,
including ConocoPhillips, to decommission
the lease facilities, including two
offshore platforms located
near Carpinteria, California.
ConocoPhillips is challenging this order.
This order was
sent after the current owner of OCS Lease P-0166
relinquished the lease and abandoned the lease platforms
and
facilities.
BSEE’s order to
ConocoPhillips is premised on its connection to
Phillips Petroleum Company,
a legacy
company of ConocoPhillips, which held a historical
25
percent interest in this
lease and operated these facilities,
but sold its interest approximately
30 years
ago.
ConocoPhillips is challenging the BSEE order but continues to evaluate
its exposure in this matter.
On May 10, 2021, ConocoPhillips filed arbitration
under the rules of the Singapore International
Arbitration Centre
(SIAC) against Santos KOTN
Pty Ltd. and Santos Limited for
their failure to timely pay the $
200
$200 million bonus due
upon FID of the Barossa development project
under the sale and purchase agreement.
Santos KOTN
Pty Ltd. and
Santos Limited have filed a response and counterclaim,
and the arbitration is underway.
In July 2021, a federal securities class action was filed against Concho, certain of Concho’s officers, and ConocoPhillips as Concho’s successor in the United States District Court for the Southern District of Texas. On October 21, 2021, the court issued an order appointing Utah Retirement Systems and the Construction Laborers Pension Trust for Southern California as lead plaintiffs (Lead Plaintiffs). On January 7, 2022, the Lead Plaintiffs filed their consolidated complaint alleging that Concho made materially false and misleading statements regarding its business and operations in violation of the federal securities laws and seeking unspecified damages, attorneys’ fees, costs, equitable/injunctive relief, and such other relief that may be deemed appropriate. We believe the allegations in the action are without merit and are vigorously defending this litigation.

Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
18
Note 11—10—Derivative and Financial Instruments
We use futures, forwards,
swaps and options in various markets
to meet our customer needs, capture
market
opportunities and manage foreign exchange
currency risk.
Commodity Derivative Instruments
Our commodity business primarily consists of natural
gas, crude oil, bitumen, LNG and NGLs.
Commodity derivative instruments
are held at fair value on our consolidated
balance sheet.
Where these balances
have the right of setoff,
they are presented on a net basis.
Related cash flows are recorded
as operating
activities
on our consolidated statement
of cash flows.
On our consolidated income statement,
gains and losses are
recognized either on a gross
basis if directly related to our physical
business or a net basis if held for trading.
Gains
and losses related to contracts
that meet and are designated with the NPNS
exception are recognized
upon
settlement.
We generally apply this
exception to eligible crude contracts
and certain gas contracts.
We do not
apply hedge accounting for our commodity derivatives.
derivatives.
17ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
The following table presents the gross
fair values of our commodity derivatives,
excluding collateral,
and the line
items where they appear on our consolidated
balance sheet:
Millions of Dollars
Millions of Dollars
March 31
2022		December 31
2021
Assets
Prepaid expenses and other current assets$1,471 1,168 
Other assets154 75 
Liabilities
Other accruals1,474 1,160 
Other liabilities and deferred credits143 63 
September 30
December 31
2021
2020
Assets
Prepaid expenses and other current
assets
$
1,601
229
Other assets
109
26
Liabilities
Other accruals
1,681
202
Other liabilities and deferred credits
94
18
The gains (losses) from commodity derivatives
incurred, and the line items where they appear on
our consolidated
income statement were:
Millions
Millions of Dollars
Three Months Ended
March 31
20222021
Sales and other operating revenues$(407)(279)
Other income1 17 
Purchased commodities401 13 
In the three months ended March 31, 2021, we recognized a $305 million loss on settlement of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Salesderivative contracts acquired through the Concho transaction. This loss is recorded within the “Sales and other operating revenues
$
(483)
33
(862)
30
Otherrevenues” line on our consolidated income (loss)
7
(2)
23
3
Purchased commodities
405
(27)
550
(29)
On January 15, 2021, we assumed financial derivative instruments
consisting of oil and natural gas
swaps in
statement. In connection with the acquisitionthis settlement, we issued a cash payment of Concho.
At the acquisition date, the financial derivative
instruments acquired
were recognized at fair
value as a net liability of $
456
$692 million with settlement dates under the contracts
through
December 31, 2022.
Duringin the first quarter of 2021 we recognized
a loss of $
173
million on Concho derivative
contracts with settlement dates
on or before March 31, 2021, and an
additional $
132
million loss related to all
remaining Concho derivative contracts
with settlement dates subsequent
to March 31, 2021, for a total loss of
$
305
million.
This loss associated with the acquired financial
instruments is recorded within the
“Sales and other
operating revenues” line on our
consolidated income statement.
Notes to Consolidated Financial Statements
19
ConocoPhillips
2021 Q3 10-Q
By the end of March 2021, all oil and natural
gas derivative financial instruments
acquired from Concho were
contractually settled.
In connection with the settlement, we issued
a cash payment of $
692
million in the first
quarter of 2021 and $
69
$69 million in the second quarter of 2021.
Cash settlements related
to the Concho derivative
contracts2021 which are presented
included within “Cash Flows From Operating Activities”
on our consolidated statement
of cash
flows.
The table below summarizes our material
net exposures resulting from
outstanding commodity derivative
contracts:
Open Position
Open Position
Long/(Short)
March 31
2022		December 31
2021
Commodity
Natural gas and power (billions of cubic feet equivalent)
Fixed price7 4 
Basis(5)(22)
Long/(Short)
September 30
December 31
2021
2020
Commodity
Natural gas and power (billions
of cubic feet equivalent)
Fixed price
10
(20)
Basis
(19)
(10)
ConocoPhillips      2022 Q1 10-Q18
Notes to Consolidated Financial Statements
Table of Contents
Financial Instruments
We invest in financial
instruments with maturities based on our cash
forecasts for the various
accounts and
currency pools we manage.
The types of financial instruments in which we currently
invest include:
●
•Time deposits: Interest bearing deposits
placed with financial institutions for a predetermined
amount of time.
time.
●
•Demand deposits: Interest bearing deposits
placed with financial institutions.
Deposited funds can be
withdrawn without notice.
●
•Commercial paper: Unsecured promissory
notes issued by a corporation, commercial
bank or government
agency purchased at a discount to
mature at par.
●
•U.S. government or government
agency obligations: Securities issued by the U.S.
government or U.S.
government agencies.
●
•Foreign government obligations:
Securities issued by foreign governments.
●
•Corporate bonds: Unsecured debt
securities issued by corporations.
●
•Asset-backed securities: Collateralized
debt securities.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
20
The following investments are
carried on our consolidated balance sheet at cost, plus accrued
interest and the table
reflects remaining maturities at September 30, 2021March 31, 2022 and
December 31, 2020:2021:
Millions of Dollars
Carrying Amount
Cash and Cash Equivalents
Short-Term
Investments
Investments and Long-Term
Receivables
September 30
December 31
September 30
December 31
September 30
December 31
2021
2020
2021
2020
2021
2020
Cash
$
634
597
Demand Deposits
1,847
1,133
Time Deposits
1 to 90 days
7,226
1,225
469
2,859
91 to 180 days
8
448
Within one year
5
13
One year through five years
2
1
U.S. Government
Millions of Dollars
Carrying Amount
Cash and Cash EquivalentsShort-Term Investments
March 31
2022		December 31
2021		March 31
2022		December 31
2021
Cash$594 670 
Demand Deposits1,459 1,554 
Time Deposits
1 to 90 days4,341 2,363 277 217 
91 to 180 days215 4 
Within one year10 4 
One year through five years
U.S. Government Obligations
1 to 90 days5 431 — — 
$6,399 5,018 502 225 
Obligations
1 to 90 days
16
23
0
0
$
9,723
2,978
482
3,320
2
1
19ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
The following investments in debt securities
classified as available for sale are carried at
fair value on our consolidated
balance sheet at September 30, 2021March 31, 2022 and December 31, 2020:2021:
Millions of Dollars
Carrying Amount
Cash and Cash Equivalents
Short-Term
Investments
Investments and Long-Term
Receivables
September 30
December 31
September 30
December 31
September 30
December 31
2021
2020
2021
2020
2021
2020
Major Security Type
Corporate Bonds
$
0
0
113
130
184
143
Commercial Paper
110
13
69
155
U.S. Government
Obligations
0
0
0
4
6
13
U.S. Government
Agency Obligations
2
0
8
17
Foreign Government
Obligations
10
-
3
2
Asset-backed
Securities
2
0
59
41
$
110
13
196
289
260
216
Millions of Dollars
Carrying Amount
Cash and Cash EquivalentsShort-Term InvestmentsInvestments and Long-Term
Receivables
March 31
2022		December 31
2021		March 31
2022		December 31
2021		March 31
2022		December 31
2021
Major Security Type
Corporate Bonds$— 3 146 128 148 173 
Commercial Paper15 7 75 82 
U.S. Government Obligations— — — — 10 2 
U.S. Government Agency Obligations2 2 8 8 
Foreign Government Obligations3 7 2 2 
Asset-backed Securities2 2 61 63 
$15 10 228 221 229 248 
Cash and Cash Equivalents and Short-Term
Investments have remaining maturities
within one year.
Investments and Long-Term
Receivables have remaining maturities greater
than one year through eightseven years.
Notes to Consolidated Financial Statements
21
ConocoPhillips
2021 Q3 10-Q
The following table summarizes the
amortized cost basis and fair value
of investments in debt securities classified
as available for sale:
Millions
Millions of Dollars
Amortized Cost BasisFair Value
March 31
2022		December 31
2021		March 31
2022		December 31
2021
Major Security Type
Corporate Bonds$298 305 294 304 
Commercial Paper90 88 90 89 
U.S. Government Obligations10 2 10 2 
U.S. Government Agency Obligations10 10 10 10 
Foreign Government Obligations5 9 5 9 
Asset-backed Securities63 65 63 65 
$476 479 472 479 
As of Dollars
Amortized Cost Basis
Fair Value
September 30
DecemberMarch 31,
September 30
December 31
2021
2020
2021
2020
Major Security Type
Corporate bonds
$
296
271
297
273
Commercial paper
179
168
179
168
U.S. government obligations
6
17
6
17
U.S. government agency obligations
10
17
10
17
Foreign government obligations
13
2
13
2
Asset-backed securities
61
41
61
41
$
565
516
566
518
At September 30, 2021 2022 and December 31, 2020,2021, total
unrealized losses for debt
securities classified as available for
sale with net losses were negligible.
Additionally, at
September 30, 2021as of March 31, 2022 and December 31, 2020, investment
s
2021, investments in
these debt securities in an unrealized loss position
for which an allowance for
credit losses has not been recorded
were negligible.
For the three-
and nine-monththree-month periods ended September 30,March 31, 2022 and March 31, 2021, proceeds
from sales and redemptions of
investments in debt securities classified
as available for sale were $
165
million and $
485
million, respectively.
For
the three-
and nine-month periods ended September 30, 2020,
proceeds from sales and redemptions of
investments in debt securities classified
as available for sale were $
109
$115 million and $
298
$147 million, respectively.
Gross realized gains and
losses included in earnings from those sales and redemptions
were negligible.
The cost of
securities sold and redeemed is determined using the specific
identification method.
ConocoPhillips      2022 Q1 10-Q20
Notes to Consolidated Financial Statements
Table of Contents
Credit Risk
Financial instruments potentially exposed
to concentrations of credit
risk consist primarily of cash equivalents,
short-term investments, long-term
investments in debt securities,
OTC derivative contracts
and trade receivables.
Our cash equivalents and short-term investments
are placed in high-quality commercial paper,
government money
market funds, U.S. government
and government agency obligations,
time deposits with major international banks
and financial institutions, high-quality corporate
bonds, foreign government obligations
and asset-backed
securities.
Our long-term investments in debt
securities are placed in high-quality corporate
bonds, asset-backed
securities, U.S. government and government
agency obligations, and foreign
government obligations, and
time
deposits with major international banks
and financial institutions.obligations.
The credit risk from our OTC derivative
contracts, such as forwards,
swaps and options, derives from the
counterparty to the transaction.
Individual counterparty exposure
is managed within predetermined credit limits
and includes the use of cash-call margins when appropriate,
thereby reducing the risk of significant
nonperformance.
We also use futures, swaps
and option contracts that have
a negligible credit risk because these
trades are cleared primarily with an
exchange clearinghouse and subject to
mandatory margin requirements until
settled; however,
we are exposed to the credit risk
of those exchange brokers
for receivables arising from
daily
margin cash calls, as well as for cash
deposited to meet initial margin requirements.
Our trade receivables result primarily
from our oil and gas operations
and reflect a broad national and
international customer base, which limits
our exposure to concentrations
of credit risk.
The majority of these
receivables have payment
terms of
30 days
or less, and we continually monitor this exposure
and the
creditworthiness of the counterparties.
We may require collateral
to limit the exposure to loss including
letters of
credit, prepayments and surety
bonds, as well as master netting arrangements
to mitigate credit risk with
counterparties that both buy from and
sell to us, as these agreements permit the amounts
owed by us or owed to
others to be offset against
amounts due to us.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
22
Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure
exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable
threshold amounts that are contingent on our credit rating. The variable threshold amounts typically decline for
lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if we fall below
investment grade. Cash is the primary collateral in all contracts; however, many also permit us to post letters of
credit as collateral, such as transactions administered through the New York Mercantile Exchange.
The aggregate fair value
of all derivative instruments with such credit
risk-related contingent
features that were in
a liability position at September 30, 2021March 31, 2022 and December 31,
2020, 2021, was $
455
$212 million and $
25
$281 million, respectively.
For these instruments,
0
no collateral was posted at
September 30, 2021 March 31, 2022 or December 31, 2020.
2021. If our credit rating
had been downgraded below investment
grade at September 30, 2021,March 31, 2022, we
would have been required to post
$
396
$163 million of additional collateral, either with cash
or letters of credit.

Note 12—11—Fair Value
Measurement
We carry a portion of our assets and liabilities
at fair value that are measured
at the reporting date using an exit
price (i.e., the price that would be received to sell an
asset or paid to transfer
a liability) and disclosed according to
the quality of valuation inputs under the following hierarchy:
●
Level 1: Quoted prices (unadjusted) in an
active market for identical
assets or liabilities.
●
Level 2: Inputs other than quoted prices that are
directly or indirectly observable.
●
Level 3: Unobservable inputs that are
significant to the fair value of assets
hierarchy.
or liabilities.
The classification of an asset or liability is based on the lowest
level of input significant to its fair value.
Those that
are initially classified as Level 3 are subsequently
reported as Level 2 when the fair value derived
from unobservable
inputs is inconsequential to the overall
fair value, or if corroborated
market data becomes available.
Assets and
liabilities initially reported as Level 2 are subsequently
reported as Level 3 if corroborated
market data is no longer
available.
There were no material transfers
into or out of Level 3 during the three-
and nine-month periodsthree-month period ended
September 30, 2021, March 31, 2022, nor during the year ended December
31, 2020.2021.
21ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
Recurring Fair Value
Measurement
Financial assets and liabilities reported at fair
value on a recurring basis primarily includeincludes our investment
in CVE
common shares, our investments
in debt securities classified as available for
sale, and commodity derivatives.
●
•Level 1 derivative assets and
liabilities primarily represent exchange-traded
futures and options that are
valued using unadjusted prices available
from the underlying exchange.
Level 1 also includes our
investment in common shares
of CVE, which is valued using quotes for shares
on the NYSE, and our
investments in U.S. government
obligations classified as available for
sale debt securities, which are
valued using exchange prices.
●
•Level 2 derivative assets and
liabilities primarily represent OTC
swaps, options and forward
purchase and
sale contracts that are
valued using adjusted exchange
prices, prices provided by brokers
or pricing
service companies that are all corroborated
by market data.
Level 2 also includes our investments
in debt
securities classified as available for sale including
investments in corporate
bonds, commercial paper,
asset-backed securities, U.S. government
agency obligations and foreign
government obligations
that are
valued using pricing provided by brokers
or pricing service companies that are corroborated
with market data.
data.
●
•Level 3 derivative assets and
liabilities consist of OTC swaps,
options and forward purchase and
sale
contracts where a significant
portion of fair value is calculated
from underlying market data
that is not
readily available.
The derived value uses industry standard
methodologies that may consider the
historical relationships
among various commodities, modeled market
prices, time value,
volatility factors
and other relevant economic measures.
The use of these inputs results in management’s
best estimate of
fair value.
Level 3 activity was not material for
all periods presented.
Notes to Consolidated Financial Statements
23
ConocoPhillips
2021 Q3 10-Q
The following table summarizes the
fair value hierarchy
for gross financial assets and liabilities (i.e., unadjusted
where the right of setoff exists
for commodity derivatives accounted
for at fair value on a recurring
basis):
Millions of Dollars
March 31, 2022December 31, 2021
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Investment in Cenovus Energy$— — — — 1,117 — — 1,117 
Investments in debt securities10 462 — 472 2 477 — 479 
Commodity derivatives928 671 26 1,625 562 619 62 1,243 
Total assets$938 1,133 26 2,097 1,681 1,096 62 2,839 
Liabilities
Commodity derivatives$949 528 140 1,617 593 543 87 1,223 
Total liabilities$949 528 140 1,617 593 543 87 1,223 
ConocoPhillips      2022 Q1 10-Q22
Millions of Dollars
Notes to Consolidated Financial Statements
Table of Contents
September 30, 2021
December 31, 2020
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets
Investment in CVE shares
$
1,416
0
0
1,416
1,256
0
0
1,256
Investments in debt securities
6
560
0
566
17
501
0
518
Commodity derivatives
882
788
40
1,710
142
101
12
255
Total
assets
$
2,304
1,348
40
3,692
1,415
602
12
2,029
Liabilities
Commodity derivatives
$
893
723
159
1,775
120
91
9
220
Total
liabilities
$
893
723
159
1,775
120
91
9
220
The following table summarizes those
commodity derivative balances subject to
the right of setoff as
presented on our consolidated
balance sheet.
We have elected to
offset the recognized fair
value amounts for
multiple derivative instruments
executed with the same counterparty
in our financial statements when a legal
right of setoff exists.
Millions of Dollars
Amounts Subject to Right of Setoff
Gross
Amounts Not
Gross
Net
Amounts
Subject to
Gross
Amounts
Amounts
Cash
Net
Recognized
Right of Setoff
Amounts
Offset
Presented
Collateral
Amounts
September 30, 2021
Assets
$
1,710
113
1,597
883
714
0
714
Liabilities
1,775
129
1,646
883
763
34
729
December 31, 2020
Assets
$
255
2
253
157
96
10
86
Liabilities
220
1
219
157
62
4
58
Millions of Dollars
Amounts Subject to Right of Setoff
Gross
Amounts
Recognized
Amounts Not
Subject to
Right of Setoff
Gross
Amounts
Gross
Amounts
Offset
Net
Amounts
Presented
Cash
Collateral
Net
Amounts
March 31, 2022
Assets$1,625 17 1,608 1,095 513 — 513 
Liabilities1,617 8 1,609 1,095 514 44 470 
December 31, 2021
Assets$1,243 85 1,158 650 508 — 508 
Liabilities1,223 82 1,141 650 491 36 455 
At September 30, 2021March 31, 2022 and December 31, 2020,2021, we
did not present any amounts
gross on our consolidated
balance sheet where we had the right of setoff.

Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
24
Reported Fair Values
of Financial Instruments
We used the following methods
and assumptions to estimate the fair value
of financial instruments:
●
•Cash and cash equivalents and short-term investments:
The carrying amount reported on the balance
sheet approximates fair
value.
For those investments classified as
available for sale debt securities, the
carrying amount reported on the balance sheet
is fair value.
●
•Accounts and notes receivable (including
long-term and related parties): The carrying
amount reported on
the balance sheet approximates
fair value.
The valuation technique and methods used to
estimate the
fair value of the current portion of fixed
-ratefixed-rate related party
loans is consistent with Loans and advances—
related parties.
●
•Investment in CVE:
Cenovus Energy: See Note 5.
for a discussion of the carrying value and fair
value of our investment in
CVE common shares.
●
•Investments in debt securities classified
as available for sale: The fair value
of investments in debt
securities categorized as Level
1 in the fair value hierarchy
is measured using exchange prices.
The fair
value of investments in debt
securities categorized as Level 2 in
the fair value hierarchy
is measured using
pricing provided by brokers
or pricing service companies that are corroborated
with market data.
●
•Loans and advances—related parties: The carrying
amount of floating-rate loans
approximates fair value.
The fair value of fixed-rate
loan activity is measured using market
observable data and is categorized
as
Level 2 in the fair value hierarchy.
●
•Accounts payable (including
related parties) and floating-rate
debt: The carrying amount of accounts
payable and floating-rate
debt reported on the balance sheet approximates
fair value.
●
•Fixed-rate debt: The estimated
fair value of fixed-rate
debt is measured using prices available from
a
pricing service that is corroborated
by market data; therefore,
these liabilities are categorized
as Level 2 in
the fair value hierarchy.
●
•Commercial paper: The carrying amount of our commercial
paper instruments approximates
fair value
and is reported on the balance sheet as short-term debt.
debt.
23ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
Table of Contents
The following table summarizes the
net fair value of financial instruments
(i.e. (i.e., adjusted where the right of setoff
exists for commodity derivatives):
Millions of Dollars
Millions of Dollars
Carrying AmountFair Value
March 31
2022		December 31
2021		March 31
2022		December 31
2021
Financial assets
Investment in CVE common shares$— 1,117 — 1,117 
Commodity derivatives530 593 530 593 
Investments in debt securities472 479 472 479 
Loans and advances—related parties59 114 59 114 
Financial liabilities
Total debt, excluding finance leases17,438 18,673 20,150 22,451 
Commodity derivatives478 537 478 537 
Carrying Amount
Fair Value
September 30
December 31
September 30
December 31
2021
2020
2021
2020
Financial assets
Investment in CVE shares
$
1,416
1,256
1,416
1,256
Commodity derivatives
827
88
827
88
Investments in debt securities
566
518
566
518
Loans and advances—related parties
114
220
114
220
Financial liabilities
Total
debt, excluding finance leases
18,815
14,478
22,797
19,106
Commodity derivatives
858
59
858
59
Notes to Consolidated Financial Statements
25
ConocoPhillips
2021 Q3 10-Q
Note 13—12—Accumulated Other Comprehensive
Loss
Accumulated other comprehensive
loss in the equity section of our consolidated balance sheet included:includes:
Millions of Dollars

Millions of Dollars

Defined Benefit
Plans
Net Unrealized
Gain (Loss) on
Securities
Foreign
Currency
Translation
Accumulated
Other
Comprehensive
Loss
December 31, 2021$(31)— (4,919)(4,950)
Other comprehensive income (loss)4 (3)141 142 
March 31, 2022$(27)(3)(4,778)(4,808)
Defined Benefit
Plans
Net Unrealized
Gain (Loss) on
Securities
Foreign
Currency
Translation
Accumulated
Other
Comprehensive
Loss
December 31, 2020
$
(425)
2
(4,795)
(5,218)
Other comprehensive income (loss)
169
(1)
(73)
95
September 30, 2021
$
(256)
1
(4,868)
(5,123)
The following table summarizes reclassifications
out of accumulated other comprehensive
loss and into net
income (loss):
Millions of Dollars

Millions of Dollars

Three Months Ended
March 31

20222021
Defined benefit plans$4 12 
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Defined benefit plans
$
29
30
83
46
The above amounts are included in the computation of net periodic benefit cost and are presented net of tax expense of $
7
$2 million and $
7
$3 million for the three-month periods ended September 30,March 31, 2022 and March 31, 2021, and September 30, 2020, respectively, and $
22
million and $
11
million for the
nine-month periods ended September 30, 2021 and September 30, 2020, respectively
.
respectively. See Note 15.14.
ConocoPhillips      2022 Q1 10-Q24
Notes to Consolidated Financial Statements
Table of Contents
Note 14—13—Cash Flow Information
Millions

Millions of Dollars

Three Months Ended
March 31
Cash Payments20222021
Interest$287 233 
Income taxes1,640 53 
Net Sales (Purchases) of Investments
Short-term investments purchased$(521)(3,432)
Short-term investments sold306 2,966 
Long-term investments purchased(66)(60)
Long-term investments sold18 27 

$(263)(499)

In the first quarter of Dollars
Nine Months Ended
September 30
Cash Payments
2021,
2020
Interest
$
695
591
Income taxes
358
803
Net Sales (Purchases) we acquired Concho in an all-stock transaction for $13.1 billion. In connection with this transaction, we acquired cash of Investments
Short-term investments
purchased
$
(5,487)
(9,662)
Short-term investments
sold
8,478
8,776
Long-term investments purchased
(228)
(271)
Long-term investments sold
83
68
$
2,846
(1,089)
We paid a deposit of $
475
$382 million, under the terms of the agreement of the Shell Permian
Acquisition.
This deposit
which is included within the “Cashin "Cash Flows fromFrom Investing
Activities - Other” Activities" on our consolidated statement of cash
flows.

See Note 3
for additional information on cash
and non-cash changes to our consolidated
balance sheet associated
with our Concho acquisition and information on
the announced Shell transaction.
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
26
Note 15—14—Employee Benefit Plans
Pension and Postretirement
Plans
Millions of Dollars
Pension BenefitsOther Benefits
2022202120222021
U.S.Int'l.U.S.Int'l.
Components of Net Periodic Benefit Cost
Three Months Ended March 31
Service cost$16 13 21 15 — — 
Interest cost12 21 13 20 1 1 
Expected return on plan assets(13)(34)(24)(30)— — 
Amortization of prior service credit— — — — (10)(9)
Recognized net actuarial loss6 2 15 8 — — 
Settlements4 — 2 — — — 
Curtailments— — 12 — — — 
Special Termination Benefits— — 9 — — — 
Net periodic benefit cost$25 2 48 13 (9)(8)
Millions of Dollars
Pension Benefits
Other Benefits
2021
2020
2021
2020
U.S.
Int'l.
U.S.
Int'l.
Components of Net Periodic Benefit Cost
Three Months Ended September 30
Service cost
$
17
15
21
14
0
1
Interest cost
12
19
17
21
1
2
Expected return on plan assets
(22)
(30)
(21)
(37)
0
0
Amortization of prior service credit
0
0
0
(1)
(9)
(7)
Recognized net actuarial loss
9
8
12
5
0
1
Settlements
28
0
27
0
0
0
Net periodic benefit cost
$
44
12
56
2
(8)
(3)
Nine Months Ended September 30
Service cost
$
56
46
63
41
1
2
Interest cost
40
59
51
63
3
5
Expected return on plan assets
(66)
(90)
(63)
(108)
0
0
Amortization of prior service credit
0
0
0
(1)
(28)
(23)
Recognized net actuarial loss
36
24
37
16
1
1
Settlements
72
0
28
(1)
0
0
Curtailments
12
0
0
0
0
0
Special Termination
Benefits
9
0
0
0
0
0
Net periodic benefit cost
$
159
39
116
10
(23)
(15)
The components of net periodic benefit cost,
other than the service cost component, are included
in the “Other
expenses”"Other expenses" line item onof our consolidated
income statement.
We recognized a proportionate
share of prior actuarial losses from other comprehensive
income as pension
settlement expense of $
28
million and $
72
million during the three- and nine-month periods
ended September 30,
2021, respectively.
As part of our company-wide restructuring
program, we concluded that
actions taken during
the first quarter of 2021, would result
in a significant reduction of future service of active employees
in the U.S.
qualified pension plan, a U.S. nonqualified supplemental
retirement plan and the U.S.
other postretirement benefit
plans.
As a result, we recognized an increase
in the benefit obligation as a curtailment
loss of $
12
million on the
U.S. pension benefit plans.
In conjunction with the recognition of pension settlement
expense, the fair market
values of the pension plan assets were updated
and the pension benefit obligations of the U.S.
qualified pension
plan and the U.S. nonqualified supplemental
retirement plan were remeasured
at September 30, 2021.
At the
measurement date, the net pension
liability decreased by $
106
million compared to December 31, 2020, primarily
a result of an increase in the discount rate,
resulting in a corresponding increase to
other comprehensive income.
Notes to Consolidated Financial Statements
27
ConocoPhillips
2021 Q3 10-Q
The relevant assumptions are
summarized in the following table:
September 30
December 31
2021
2020
Expected return on plan assets
3.40
%
5.80
Relevant discount rates
U.S. qualified pension plan
2.80
%
2.40
U.S. nonqualified pension plan
2.30
1.85
During the first ninethree months of 2021,2022, we contributed
$
409
$24 million to our domestic benefit plans and $
104
$72 million
to our international benefit plans.
In 2021, we We expect our total contributions in 2022 to contribute a
total ofbe approximately $
475
$90 million to our
domestic qualified and nonqualified pension and postretirement
benefit plans and $
115
$95 million to our
international qualified and nonqualified pension and
postretirement benefit plans.

Severance Accrual Activity
Millions of Dollars
Balance at December 31, 2020
$
24
Accruals
165
Benefit payments
(102)
Balance at September 30, 2021
$
87
25ConocoPhillips      2022 Q1 10-Q
Accruals include severance costs
associated with our company-wide restructuring
program.
Of the remaining
balance at September 30, 2021, $
51
million is classified as short-term.
See Note 3
Notes to Consolidated Financial Statements
Table of Contents

Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
28
Note 17—16—Sales and Other Operating Revenues
Revenue from Contracts
with Customers
The following table provides further
disaggregation of our consolidated
sales and other operating revenues:

Millions of Dollars

Three Months Ended
March 31

20222021
Revenue from contracts with customers$14,506 7,161 
Revenue from contracts outside the scope of ASC Topic 606
Physical contracts meeting the definition of a derivative3,140 2,974 
Financial derivative contracts116 (309)
Consolidated sales and other operating revenues$17,762 9,826 
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
RevenueRevenues from contracts
with customers
$
8,880
3,078
23,794
9,908
Revenue from contracts
outside the scope of ASC Topic
606
Physical contracts
meeting the definition of a derivative
2,620
1,280
7,348
3,432
Financial derivative contracts
(174)
28
(434)
(47)
Consolidated sales and other operating
revenues
$
11,326
4,386
30,708
13,293
Revenues from contracts
outside the scope of ASC Topic
606 relate primarily to physical
gas contracts at market
prices which qualify as derivatives accounted
for under ASC Topic
815, “Derivatives and Hedging,”
and for which
we have not elected NPNS.
There is no significant difference
in contractual terms or the policy for
recognition of
revenue from these contracts
and those within the scope of ASC Topic
606.
The following disaggregation
of
revenues is provided in conjunction
with
:
Millions of Dollars
Three Months Ended
March 31
20222021
Revenue from Outside the Scope of ASC Topic 606 by Segment
Lower 48$2,444 2,466 
Canada560 303 
Europe, Middle East and North Africa136 205 
Physical contracts meeting the definition of a derivative$3,140 2,974 
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Revenue from Outside the Scope of ASC Topic
606
by Segment
Lower 48
$
2,123
1,018
5,934
2,692
Canada
266
152
776
452
Europe, Middle East and North Africa
231
110
638
288
Physical contracts
meeting the definition of a derivative
$
2,620
1,280
7,348
3,432
ConocoPhillips      2022 Q1 10-Q26
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Revenue from Outside the Scope of ASC Topic
606
by Product
Crude oil
$
215
100
517
218
Natural gas
2,192
1,042
6,423
2,895
Other
213
138
408
319
Physical contracts
meeting the definition of a derivative
$
2,620
1,280
7,348
3,432
Notes to Consolidated Financial Statements
Table of Contents

Millions of Dollars

Three Months Ended
March 31
20222021
Revenue from Outside the Scope of ASC Topic 606 by Product
Crude oil$219 124 
Natural gas2,773 2,727 
Other148 123 
Physical contracts meeting the definition of a derivative$3,140 2,974 
Notes to Consolidated Financial Statements
29
ConocoPhillips
2021 Q3 10-Q
Practical Expedients
Typically,
our commodity sales contracts are
less than 12 months in duration; however,
in certain specific cases
they may extend longer,
which may be out to the end of field life.
We have long-term commodity sales contracts
which use prevailing market prices at the time of delivery, and under these contracts, the market-based variable
consideration for each performance obligation (i.e., delivery of commodity) is allocated to each wholly unsatisfied
performance obligation within the contract.
Accordingly,
we have applied the practical expedient allowed in ASC
Topic 606 and do not disclose the aggregate amount of the transaction price allocated to performance obligations
or when we expect to recognize revenues that are unsatisfied (or partially unsatisfied) as of the end of the
reporting period.
Receivables and Contract
Liabilities
Receivables from Contracts
with Customers
At September 30, 2021,March 31, 2022, the “Accounts
and notes receivable” line on our consolidated
balance sheet, includes
trade receivables of $
4,262
$6,279 million compared with $
1,827
$5,268 million at December 31, 2020,2021, and includes both
contracts with customers
within the scope of ASC Topic
606 and those that are outside the scope of ASC Topic
606.
We typically receive payment within 30 days or less (depending on the terms of the invoice) once delivery is made.
Revenues that are outside the scope
of ASC Topic 606 relate
primarily to physical gas sales contracts
at market
prices for which we do not elect NPNS and are
therefore accounted
for as a derivative under ASC Topic
815.
There
is little distinction in the nature of the customer
or credit quality of trade receivables
associated with gas sold
under contracts for which NPNS
has not been elected compared to trade
receivables where NPNS has been
elected.
Contract Liabilities from Contracts
with Customers
We have entered
into contractual arrangements
where we license our proprietary technology
to customers related
to
the optimization process for
operating LNG plants.
The agreements typically provide for
negotiated payments to
be made at stated milestones.
The payments are not directly related
to our performance under the contract
and
are recorded as deferred
revenue to be recognized
as revenue when the customer can utilize
and benefit from
their right to use the license.
Payments are received in installments over the construction period.
Millions of Dollars
Contract Liabilities
At December 31, 2021$50 
Contractual payments received26 
Revenue recognized(56)
At March 31, 2022$20
Amounts Recognized in the Consolidated Balance Sheet at March 31, 2022
Current liabilities$1
Noncurrent liabilities19
$20
Millions of Dollars
Contract Liabilities
At DecemberDuring the three-month period ended March 31, 2020
$
97
Contractual payments received
7
Revenue recognized
(62)
At September 30, 2021
$
42
Amounts Recognized in the Consolidated
Balance Sheet at September 30, 2021
Current liabilities
$
42
For the nine-month period of 2021,2022, we recognized revenue of $62$56 million in the “Sales"Sales and other operating
revenues” revenues" line on our consolidated income statement. NaN revenue was recognized during the three-month period
ended September 30, 2021. We expect to recognize the noncurrent contract liabilities as of September 30, 2021,March 31, 2022, as revenue during 2026.
during 2022.
27ConocoPhillips      2022 Q1 10-Q
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
30
Notes to Consolidated Financial Statements
Table of Contents
Note 18—17—Segment Disclosures and Related
Information
We explore for,
produce, transport and market
crude oil, bitumen, natural gas,
LNG and NGLs on a worldwide
basis.
We manage our operations
through
6
operating segments, which are primarily defined
by geographic
region: Alaska; Lower 48; Canada; Europe,
Middle East and North Africa; Asia Pacific; and
Other International.
Corporate and Other represents
income and costs not directly associated
with an operating segment, such as most
interest income and expense;
premiums on early retirement of debt;
corporate overhead and
certain technology
activities, including licensing revenues;
and unrealized holding gains
or losses on equity securities.
Corporate
assets include all cash and cash equivalents
and short-term investments.
We evaluate performance
and allocate resources based
on net income (loss) attributable to ConocoPhillips.
. Intersegment sales are at
prices that approximate market.
On January 15, 2021, we completed our acquisition
of Concho, an independent oil and gas exploration
and
production company with operations
across New Mexico and West
Texas.
Results of operations for
Concho are
included in our Lower 48 segment for the current
period.
Certain transaction and restructuring
costs associated
with the Concho acquisition are included in our Corporate
and Other segment.
Notes to Consolidated Financial Statements
31
ConocoPhillips
2021 Q3 10-Q
Analysis of Results by Operating Segment

Millions of Dollars

Three Months Ended
March 31
20222021
Sales and Other Operating Revenues
Alaska$1,918 1,133 
Lower 4811,557 6,513 
Intersegment eliminations(7)(2)
Lower 4811,550 6,511 
Canada1,520 867 
Intersegment eliminations(651)(305)
Canada869 562 
Europe, Middle East and North Africa2,589 978 
Asia Pacific750 577 
Other International— 1 
Corporate and Other86 64 
Consolidated sales and other operating revenues$17,762 9,826 
Sales and Other Operating Revenues by Geographic Location(1)
United States$13,553 7,707 
Canada869 562 
China273 155 
Indonesia159 196 
Libya431 230 
Malaysia318 226 
Norway932 412 
United Kingdom1,226 336 
Other foreign countries1 2 
Worldwide consolidated$17,762 9,826 
Sales and Other Operating Revenues by Product
Crude oil$9,870 4,495 
Natural gas5,998 4,511 
Natural gas liquids879 237 
Other(2)
1,015 583 
Consolidated sales and other operating revenues by product$17,762 9,826 
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Sales and Other Operating Revenues
Alaska
$
1,395
864
3,946
2,396
Intersegment eliminations
0
(30)
0
(11)
Alaska
1,395
834
3,946
2,385
Lower 48
7,566
2,323
19,968
6,859
Intersegment eliminations
(1)
(9)
(5)
(47)
Lower 48
7,565
2,314
19,963
6,812
Canada
967
348
2,636
1,026
Intersegment eliminations
(406)
(20)
(1,063)
(200)
Canada
561
328
1,573
826
Europe, Middle East and North Africa
1,127
432
3,270
1,320
Asia Pacific
673
477
1,880
1,930
Other International
1
1
4
5
Corporate and Other
4
0
72
15
Consolidated sales and other operating
revenues
$
11,326
4,386
30,708
13,293
Sales and Other Operating Revenues
by Geographic Location
(1)
United States
$
8,963
3,148
23,978
9,209
Australia
0
0
0
605
Canada
561
328
1,573
826
China
193
161
519
374
Indonesia
231
167
634
503
Libya
313
6
833
50
Malaysia
249
148
727
447
Norway
678
358
1,708
1,046
United Kingdom
136
68
729
224
Other foreign countries
2
2
7
9
Worldwide consolidated
$
11,326
4,386
30,708
13,293
Sales and Other Operating Revenues
by Product
Crude oil
$
6,433
2,321
16,725
6,981
Natural gas
4,099
1,509
11,422
4,354
Natural gas liquids
414
129
976
364
Other
(2)
380
427
1,585
1,594
Consolidated sales and other operating
revenues by product
$
11,326
4,386
30,708
13,293
(1) Sales and other operating revenues are attributable to countries based on the location of the selling operation.
(2)Includes LNG and bitumen.
ConocoPhillips      2022 Q1 10-Q28
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss) Attributable
to ConocoPhillips
Alaska
$
405
(16)
935
(76)
Lower 48
1,631
(78)
3,274
(880)
Canada
155
(75)
267
(270)
Europe, Middle East and North Africa
241
92
601
318
Asia Pacific
257
25
749
945
Other International
(97)
(8)
(106)
14
Corporate and Other
(213)
(390)
(268)
(1,980)
Consolidated net income (loss) attributable
to ConocoPhillips
$
2,379
(450)
5,452
(1,929)
Notes to Consolidated Financial Statements
Table of Contents
Millions of Dollars
Three Months Ended
March 31
20222021
Net Income (Loss)
Alaska$584 159 
Lower 482,790 468 
Canada291 10 
Europe, Middle East and North Africa412 153 
Asia Pacific1,136 317 
Other International— (4)
Corporate and Other546 (121)
Consolidated net income (loss)$5,759 982 
Millions of Dollars
March 31
2022		December 31
2021
Total Assets
Alaska$14,708 14,812 
Lower 4842,994 41,699 
Canada7,731 7,439 
Europe, Middle East and North Africa9,179 9,125 
Asia Pacific10,472 9,840 
Other International2 1 
Corporate and Other8,222 7,745 
Consolidated total assets$93,308 90,661 
Notes to Consolidated Financial Statements
ConocoPhillips
2021 Q3 10-Q
32
Millions of Dollars
September 30
December 31
2021
2020
Total Assets
Alaska
$
14,617
14,623
Lower 48
33,200
11,932
Canada
6,797
6,863
Europe, Middle East and North Africa
8,956
8,756
Asia Pacific
10,657
11,231
Other International
1
226
Corporate and Other
13,076
8,987
Consolidated total assets
$
87,304
62,618
Note 19—18—Income Taxes
Our effective tax rate
for the three-month periods ended
September 30, March 31, 2022 and 2021 and 2020 was
34
27.1 percent and
12
42.7 percent, respectively.
Both periods were primarily impacted by
shifts The change in our before-tax income between
higher
and lower tax jurisdictions as well as the change in
our U.S. valuation allowance
driven by the fair value
measurement of our CVE common shares.
Our effective tax rate
for the nine-month periods ended September
30, 2021 and 2020 was
35
percent and
8
percent,
respectively,
and both periods were impacted by the
same items noted above.
Our 2021 effective tax
rate was adversely
impacted by $
75
millionfirst quarter of 2022 is primarily due to incremental interest
deductions from the exchangerelease of debt
acquired from Concho offsetting
U.S. foreign source revenue
that would otherwise have been offset
by foreign tax
credits.
The nine-month period ending September 30, 2020,
also reflects reserves related to the taxclosing of an IRS audit, a reduction to our valuation allowance, and the impact of the gain
on dispositioninterest deduction related to our debt exchange, as described below.

In the first quarter of 2022, the IRS closed the 2017 audit of our U.S. federal income tax return. As a result, we recognized for the Australia-West
divestiture.
During the three and nine-month periodsrecovery of 2021,outside tax basis previously offset by a full reserve. In addition, our valuation
allowance decreased by $
4
$53 million, and $
156
million, respectively,
compared to increasesa decrease of $
33
million and $
264
$65 million for the same periodsperiod of 2020.
2021. The
change to our U.S. valuation
allowance for allboth periods relates
primarily to the fair value measurement of our
CVE
common shares and our expectation
of the tax impact related to incremental
capital gains and losses.
The Company has ongoing income
Our 2022 and 2021 effective tax audits
rates were adversely impacted by $37 million and $75 million, respectively, due to incremental interest deductions from debt exchanges in numerous jurisdictions which are occasionally
extended or
completed earlier than anticipated.
Within the next twelve months we may
both periods offsetting U.S. foreign source revenue that would otherwise have audit periods close that could
significantly impact our total unrecognized
been offset by foreign tax benefits.
The amount of such change and the associated
impact on
our financial statements is not estimable
at this time.
Our deferred tax liability
increased by approximately
$
1.1
billion as part of the liabilities assumed through our
Concho acquisition.
Additionally, our reserve
for unrecognized tax
benefits increased by $
150
million related to
tax credit carryovers
acquired from Concho that we do not expect
to recognize.
credits. See Note 3.6.

29ConocoPhillips      2022 Q1 10-Q
Management’s Discussion and Analysis
33
ConocoPhillips
2021 Q3 10-Q
Management’s Discussion and Analysis
Table of Contents
Item 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Management’s Discussion and Analysis is the company’s
analysis of its financial performance and of significant
trends that may affect future performance.
It should be read in conjunction with the financial statements
and
notes.
It contains forward-looking statements
including, without limitation, statements
relating to the company’s
plans, strategies, objectives, expectations
and intentions that are made pursuant to
the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995.
The words “anticipate,”
“believe, “believe,” “budget,”
“continue, “continue,”
“could, “could,”
“effort, “effort,”
“estimate, “estimate,”
“expect, “expect,”
“forecast, “forecast,”
“goal, “goal,”
“guidance, “guidance,”
“intend, “intend,”
“may, “may,”
“objective, “objective,”
“outlook, “outlook,”
“plan, “plan,” “potential,”
“predict, “predict,” “projection,”
“seek, “seek,” “should,”
“target, “target,”
“will, “will,” “would,”
and similar expressions
identify forward-looking statements.
The company does not undertake
to update, revise or correct any of the
forward-looking information unless required to do so under
the federal securities laws.
Readers are cautioned that
such forward-looking statements
should be read in conjunction with the company’s
disclosures under the heading:
“CAUTIONARY “CAUTIONARY STATEMENT
FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS
OF THE PRIVATE
SECURITIES
LITIGATION REFORM
ACT OF 1995,”
beginning on page 57.51.
The terms “earnings” and “loss” as used in Management’s
Discussion and Analysis refer to net income (loss).
attributable to ConocoPhillips.
Business Environment and Executive Overview
ConocoPhillips is the world’s
largest independent E&P company
with operations and activities in 1413 countries.
Our
diverse, low cost of supply portfolio
includes resource-rich unconventional
plays in North America; conventional
assets in North America, Europe, and Asia; LNG
developments; oil sands in Canada; and an inventory
of global
conventional and unconventional
exploration prospects.
Headquartered in Houston, Texas,
at September 30,
2021,March 31, 2022, we employed approximately
9,900 9,400 people worldwide and had total assets
of $87$93 billion.
Completed and Announced Acquisitions
On January 15, 2021, we completed our acquisition
of Concho Resources Inc. (Concho), an independent
oil and gas
exploration and production
company with operations across
New Mexico and West Texas.
The addition of
complementary acreage in the Delaware
and Midland Basins resulted in a significant
Permian presence to augment
our leading unconventional positions
in the Eagle Ford, Bakken and
Montney.
In September 2021, we signed a definitive agreement
to acquire Shell Enterprises LLC
’s assets in
the Delaware
Basin (Shell Permian Acquisition) in an all-cash transaction
for $9.5 billion before customary
adjustments.
Assets
to be acquired include approximately
225,000 net acres and producing properties
located entirely in Texas,
as well
as over 600 miles of operated crude, gas
and water pipelines and infrastructure.
This acquisition further enhances
our already sizeable Permian
position, and we believe that our development,
operational and commercial
expertise will deliver significant incremental
value.
This acquisition is expected to close in the
fourth quarter of
2021, subject to regulatory approval
and other customary closing conditions.
Overview
While commodityCommodity prices in the thirdfirst quarter of 2021 improve
d
2022 increased to pre-pandemic levels
we expect not seen since 2014, in part due to impacts associated with the Russian invasion and conflict in Ukraine and sanctions levied against Russia as a result of the conflict. We anticipate that theyprices will
continue to be cyclical and volatile.
Ourvolatile and our view is that a successful business strategy
in the E&P industry must be
resilient in lower price environments,
while also retaining upside during periods
of higher prices.
As such, we are
unhedged, remain highly disciplined in our investment
decisions and continuallycontinue to monitor market
fundamentals
including the impacts associated with the conflict in Ukraine, OPEC plus supply updates, regarding
supply guidance and inventory
levels.
Demand continues to recover but
has yet to regain pre
-pandemic levels.
The speed and extent of this recovery
will be influenced by continual easing
of COVID-19 restrictions that have
reduced economic activity and depressed
theglobal demand for our products, globally.
Management’s Discussionoil and Analysis
ConocoPhillips
2021 Q3 10-Q
34gas inventory levels, inflation, supply chain disruptions and the fluctuating global COVID-19 impacts.
The energy macro-environment,
,
including energy transition, continues
to evolve.
We believe ConocoPhillips can
will play a valued role in the energy
transition.
We have adopted aare guided by our triple mandate
that simultaneously calls for
meeting us to reliably and responsibly deliver oil and gas production to meet energy transition pathway demand,
delivering deliver competitive returns on and of and on
capital, and achievingdo so with a resilient and sustainable portfolio enabling us to achieve our net-zero
ambition on operational (scope 1 and 2) emissions.
operating emissions ambition. Our triple mandate is supported by financial principles
and capital allocation priorities that
shoulddesigned to allow us to
deliver superior returns through the price cycles
.
cycles. Our financial principles consist of maintaining
balance sheet
strength, providing peer-leading
distributions, making disciplined investment
s,investments, and deliveringdemonstrating ESG excellence,
leadership, all of
which are in service to deliveringgenerating competitive financial
returns.
Our completed and announced acquisitions
this returns through the price cycles.
year further reinforce our value
proposition.
In the thirdfirst quarter,
total company production
was 1,5441,747 MBOED,
resulting in cash provided by operating
activities of $4.8 billion.
In the nine-month period ended September 30,
2021, we generated $11.1$5.1 billion, in
cash provided by operating activities,
returning $1.8with $0.9 billion returned to shareholders
through dividendsour ordinary dividend and $2.2a VROC and $1.4 billion through share
repurchases.
We ended the quarter with cash,
cash equivalents
and short-term investments totaling
$10.5 $7.1 billion.
In February
2021,May 2022, we resumedannounced an increase to our share repurchase
program at an annualized
level2022 expected distributions through our three-tier return of $1.5capital framework of $2 billion, which we
increased in the second quarter to an annualized
level of $2.5now totaling $10 billion for 2021.the year. This framework includes our ordinary dividend, share repurchases and the VROC tier that was introduced last December. In May, we declared our ordinary dividend of 46 cents per share and a third quarter VROC payment of 70 cents per share.
Additionally, in
May 2021During the first quarter of 2022, we announced a pacedcompleted our monetization
program related tofor the
208 million shares of
Cenovus Energy (CVE) common shares
owned at that time.
We plan to fully disposewe obtained as partial consideration in a 2017 asset divestiture, selling our remaining 91 million shares and recognizing proceeds of our CVE$1.4 billion. Since we began selling shares
by year-end
2022, however,
the sales pace for the remaining shares will
be guided by market conditions,
and we retain
discretion to adjust accordingly.
During the third quarter of in May 2021, we sold 47 million shares
for $404 million and
inception to date have sold
67 million shares for $584 million.
generated total proceeds of $2.5 billion. Proceeds from the disposition of CVE shares
will be
were deployed toward incremental
towards share repurchases.
In September 2021, we declared an increase
ConocoPhillips      2022 Q1 10-Q30
Management’s Discussion and Analysis
Table of Contents
Additionally in the company’s quarterly
ordinary dividend from 43 cents per share
to 46 cents per share, representing
a 7 percent increase.
The dividend is payable on December 1, 2021,
to
stockholders of record
at the close of business on October 28, 2021.
Planned distributions for 2021 amount to
a total of approximately $6 billion
between dividends
and share
repurchases combined.
Additionally in September 2021,first quarter, we demonstrated
our commitment to preserving our ‘A’
-ratedenhancing balance sheet strength by
restating our intent
to reduce executing a debt refinancing comprised of concurrent transactions including new debt issuances, a cash tender offer and debt exchange offers. Part of the company’s
grosscash consideration in the cash tender and debt exchange offers was satisfied with current cash balances. In aggregate, the transactions reduced the company's total debt by $1.2 billion. The refinancing facilitates our ability to achieve our previously announced $5 billion over five years
through natural anddebt reduction target by the end of 2026 while also reducing the company's annual cash interest expense. See Note 6.
accelerated maturities.

In conjunctionApril 2022, we provided formal notice to holders of our 4.95% Notes due 2026 with principal of $1,250 million that we would retire this debt in full per the provisions in the bond indenture, with settlement scheduled for May 2022. Retirement of this bond will be sourced from cash and further accelerates progress towards our Shell Permian Acquisition announcement
,
we also communicated an increase
to ourdebt reduction target.
planned disposition target that was
initially set in June at $2 to $3 billion by 2022.
We are now targeting
$4 to $5
billion in disposition proceeds by 2023, with the additional
$2 billion sourced primarily from the Permian
Basin as
As part of our ongoing portfolio high-grading and
optimization efforts.efforts, in the first quarter of 2022 we closed two transactions in our Asia Pacific segment, further strengthening our diverse, global asset portfolio. This included exercising our preemption right to purchase an additional 10 percent interest in Australia Pacific LNG Pty Ltd (APLNG) for approximately $1.4 billion after customary adjustments, and the sale of our interests in Indonesia for approximately
$0.7 billion after customary adjustments. In addition to these transactions, in the first quarter we entered into a divestiture agreement to sell our interest in noncore assets within our Lower 48 segment for $440 million before customary adjustments, which closed in April 2022. For more information on APLNG, see Note 4and for more information on acquisition and disposition activity, see Note 3.
To date,

In 2021, we announced a target to dispose of $4 to $5 billion in assets by year-end 2023. Through the first quarter of 2022, we have generated
$0.2disposed of $1.7 billion in
assets, generating approximately $1.0 billion in disposition proceeds.
We received $0.8 billion in proceeds in the current period primarily from the sale of our Indonesia assets. The proceeds from these transactions will be used
in accordance with the company’s
priorities, including returns of capital
to shareholders and reduction of gross
total debt.
Management’s Discussion and Analysis
35
ConocoPhillips
2021 Q3 10-Q
In September 2021, in conjunction with the announcement
of the Shell Permian Acquisition,
February 2022, we reaffirmed our
commitment to ESG leadership and
excellence by announcing an improvement
to our operational GHG emissions
intensity reduction targets
by 2030.
excellence. Our Paris-aligned climate-risk commitment
now includes:
●
•Net-zero ambition for
operational (scope(Scope 1 and 2) emissions
by 2050 with active advocacy for a price
on
carbon to address end-use (scope(Scope 3) emissions;
●
•Targeting
a reduction in gross operated
and net equity operational GHG emissions intensity
by 40 to 50
percent from 2016 levels by 2030, an2030;
improvement from•Endorsed the previously
announced target of 35 to 45
percent on only a gross operated
basis;
●
World Bank Zero routine flaring by 2030,Routine Flaring Initiative, with an
ambitionthe aim to get there by 2025;
●
•10 percent reduction target
for methane emissions intensity
by 2025 from a 2019 baseline, in addition to
the 65 percent reductions we have
made since 2015;
●
•Adding continuous methane detection devices
to our operations,
with an initial focus on the larger Lower
48 facilities;
●
Dedicated•Allocating capital to our dedicated low carbon technology
organization responsible
for identifying and prioritizing global emissions
reduction initiatives and opportunities associated
with the energy transition including carbon capture,
utilization and storage
(CCUS)CCUS and hydrogen; and
●
•ESG performance factoring into
executive and employee compensation
programs.
Operationally,
we remain focused on safely
executing the business.
Production was 1,5441,747 MBOED in the third
first quarter of 2021,2022, an increase of 477220 MBOED from the same period a year ago. After adjusting for closed acquisitions and dispositions, the conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis and 2021 Winter Storm Uri impacts, first-quarter 2022 production decreased by 36 MBOED, or 452 percent
compared with from the third quarter of 2020,same period a year ago. This decrease was primarily
due
to downtime and seasonality impacts as new production from the addition of approximately
343 MBOED in the Permian Basin from our Concho
acquisitionLower 48 and the absence of
last year’s economic curtailments
predominantly in North American operated
assets as a result of lower oil prices.
other development programs more than offset decline.
We re-invested
$1.3 $3.2 billion into the business in the form of capital
expenditures and investments during the thirdfirst quarter
with of 2022. Excluding our purchase of an additional 10 percent interest in APLNG, over
half of our investmentsthe remaining capital expenditures was focused
on flexible, short-cycle unconventional
plays in the Lower 48 segment where our
production is liquids-weighted and
has access to both domestic and export markets
.
For the full year,
we remainmarkets.
disciplined with our allocation of capital with a
planned $5.3 billion program excluding
the impacts of the recently
announced Shell Permian Acquisition which is anticipated
31ConocoPhillips      2022 Q1 10-Q
to close in the fourth quarter.
Management’s Discussion and Analysis
Table of Contents
Business Environment
Commodity prices are the most significant
factor impacting our profitability and
related reinvestment of operating
cash flows into our business.
Dynamics that could influence world energy markets
and commodity prices are
global economic health, supply or demand disruptions
or fears thereof caused by civil
unrest, global pandemics,
military conflicts, actions taken
by OPEC plus and other major oil producing countries,
environmental laws, tax
regulations, governmental policies,
and weather-related disruptions.
Our strategy is to create
value through price
cycles by delivering on the financial, operational
and ESG priorities that underpin our value proposition
.
proposition.
Our earnings and operating cash flows
generally correlate with
price levels for crude oil and natural
gas, which are
subject to factors external
to the company and over which we have
no control.
The following graph depicts the
trend in average benchmark prices
for WTI crude oil, Brent crude oil and
Henry Hub natural gas:
cop20213q10qp38i0.gif
Management’s Discussion and Analysis
ConocoPhillips
2021 Q3 10-Q
36
-
1
2
3
4
5
20
40
60
80
Q3'19
Q4'19
Q1'20
Q2'20
Q3'20
Q4'20
Q1'21
Q2'21
Q3'21
WTI/Brent
$/Bbl
WTI Crude Oil, Brent Crude Oil and Henry Hub Natural Gas Prices
Quarterly Averages
WTI - $/Bbl
Brent - $/Bbl
HH - $/MMBTU
HH
$/MMBTUcop-20220331_g2.jpg
Brent crude oil prices averaged
$73.47 $101.40 per barrel in the thirdfirst quarter of 2021,2022, an increase
of 7167 percent compared
with $43.00$60.90 per barrel in the thirdfirst quarter of 2020.
2021. WTI at Cushing crude oil prices averaged
$70.56 per barrel in
the third quarter of 2021, an increase of 72 percent
compared with $40.93 $94.29 per barrel in the third
first quarter of 2020.
2022, an increase of 63 percent compared with $57.84 per barrel in the first quarter of 2021. Oil prices increased alongsideas a result of the ongoing global economic
recovery following 2020’s
COVID impacts as well as
supply disruptions caused by Russia's invasion of Ukraine, OPEC plus supply restraint
and continued capital discipline by U.S. E&P’s
and various unplanned supply disruptions in
producing countries.&P companies.
Henry Hub natural gas prices averaged
$4.02 $4.96 per MMBTU in the thirdfirst quarter
of 2021,2022, an increase of 10383 percent
compared with $1.98$2.71 per MMBTU in the third
first quarter of 2020.
2021. Henry Hub prices have increased due to
as healthy
domestic demand accompanied byand record
levels of feedgas demand for
LNG exports to Europe and Asia.
Asia offset modest growth in production.
Our realized bitumen price averaged
$41.19 $65.86 per barrel in the thirdfirst quarter of 2021,2022, an
increase of 160114 percent
compared with $15.87$30.78 per barrel in the third
first quarter of 2020.
2021. The increase in the thirdfirst quarter of 20212022 was driven
by higher blend price for Surmont sales, largely
attributed to a strengthening
of WTI price.
We continue to
optimize bitumen price realizations
through the utilization of downstream
transportation solutions
and
implementation of alternate
blend capability which results in lower diluent
costs.
For the thirdfirst quarter of 20212022 our total
average realized
price increased to $56.92$76.99 per BOE compared
with $30.94
$45.36 per BOE in the thirdfirst quarter of 2020.2021.
ConocoPhillips      2022 Q1 10-Q32
Management’s Discussion and Analysis
37
ConocoPhillips
2021 Q3 10-Q
Management’s Discussion and Analysis
Table of Contents
Key Operating and Financial
Summary
Significant items during the thirdfirst quarter
of 20212022 and recent announcements included the following:
●•Announced an increase in expected 2022 returns of capital to shareholders to a total of $10 billion, with the incremental $2 billion to be distributed through share repurchases and VROC tiers.
Delivered strong operational
performance across•Distributed $2.3 billion to shareholders through a three-tier return of capital framework, including $0.9 billion through the company’s
asset base, including successful plannedordinary dividend and VROC and $1.4 billion through share repurchases.
maintenance turnarounds, resulting
in third quarter production of 1,507 MBOED,
excluding Libya.
●
Net•Generated cash provided by operating
activities was $4.8 billion, exceeding$5.1 billion.
•Continued to integrate and optimize the recently acquired Permian assets while efficiently and safely executing company-wide capital
expenditures and investments programs, delivering record production of 1,747 MBOED in the quarter.
•Received 20-year production license extension in the Norway Greater Ekofisk Area from 2028 to 2048.
•Accelerated progress towards the company's debt reduction target while executing debt transactions that will result in lower annual cash interest expense.
•Closed the purchase of $1.3 billion.
●
Distributed a total of $4.0 billion to
shareholders year to date,
comprised of $2.2an additional 10 percent interest in APLNG for $1.4 billion in sharecash.
•Divested $1.4 billion of noncore assets during the quarter and an additional $0.4 billion in April.
•Completed monetization of the company's CVE common shares, generating proceeds of $1.4 billion during the quarter with funds applied to share repurchases, and $1.8$2.5 billion in dividends astotal proceeds since May 2021.
part•Published Plan for the Net-Zero Energy Transition focused on meeting the company's Triple Mandate objectives: reliably and responsibly meeting energy transition pathway demand, delivering competitive returns on and of the company’s plan to return
approximately $6.0capital and achieving our net-zero operational emissions ambitions.
billion to shareholders during 2021.
●
Announced an increase to the quarterly dividend
by 7 percent to 46 cents per share.
●
•Ended the quarter with cash and cash equivalents
totaling $9.8 and restricted cash of $6.7 billion and short-term investments
of $0.7 billion.
billion, equaling $10.5 billion in ending cash, cash equivalents
and short-term investments.

●
As part of a commitment to ESG excellence,
announced an improvement to
the company’s scope
1 and 2
GHG emissions intensity reduction targets
from a 2016 baseline to 40 to 50 percent
on a net equity and
gross operated basis, from
the previous target of 35 to 45 percent
on only a gross operated basis
.
●
Announced highly accretive pending acquisition
of Shell Enterprises LLC’s complementary
Delaware Basin
position in the Permian for $9.5 billion in cash,
before customary closing adjustments.
●
Generated approximately
$0.2 billion in disposition proceeds from Lower 48 noncore
asset sales as part of
the company’s target
to generate $4 to $5 billion in proceeds
by 2023.
Production from the disposed
assets average approximately
15 MBOED in the first nine months of 2021.

Outlook
Capital,
Cost and Production
Fourth-quarter 2021Second-quarter 2022 production is
expected to be 1.531.67 to 1.57 MMBOED.1.73 MMBOED, reflecting the impact of seasonal turnarounds planned in Europe and Canada as well as weather impacts experienced during April in the Bakken. The company's full-year production is expected to be approximately 1.76 MMBOED, reflecting a net reduction of approximately 25 MBOED from acquisitions and dispositions closed as of May 5, 2022.

2022 operating capital guidance has been adjusted to $7.8 billion versus the prior guidance of $7.2 billion, reflecting higher partner-operated spend in Lower 48 and inflationary impacts. This guidance excludes Libya
and$1.4 billion of capital associated with the closed acquisition of an additional 10 percent interest in APLNG.
impacts from pending acquisitions.
Guidance regarding capital and
cost are unchanged.
This production guidance includes the impact of planned conversion
of the significant majority of previously
acquired Concho two-stream contracted
volumes to a three-stream (crude oil,
natural gas and natural
gas liquids)
reporting basis as Concho volumes are integrated
into the company’s
commercial activities.
The conversion to
three-stream reporting is neutral
to earnings.
Effective in the fourth
quarter,
this conversion is expected
to add
production of approximately
40 MBOED and increase revenue and operating
costs by roughly $70 million.
Depreciation, Depletion and Amortization
Our proved reserve estimates
are greatly impacted by commodity
price fluctuations, and generally decrease
as
prices decline and increase as prices rise.
Proved reserves estimates
were updated and increased in the current
quarter utilizing historical twelve-month
first-of-month average
prices, which decreased third quarter DD&A
expense by approximately
$240 million before-tax.
As such, the company reduced its 2021Full-year guidance for DD&A expensehas been decreased to $7.7 billion, reflecting the impact of revised production guidance.

All other guidance by $0.3 billion to $7.1 billion.items remain unchanged.
33ConocoPhillips      2022 Q1 10-Q
Results of Operations
ConocoPhillips
2021 Q3 10-Q
38
Results of Operations
Table of Contents
Results of Operations
Unless otherwise indicated, discussion of results for the three
-
and nine-month periodsthree-month period ended September 30, 2021,
March 31, 2022, is based on a comparison with the corresponding periodsperiod of 2020.2021.

Consolidated Results
A summary of the company's net income (loss) attributable
to ConocoPhillips by business segment follows:
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Alaska
$
405
(16)
935
(76)
Lower 48
1,631
(78)
3,274
(880)
Canada
155
(75)
267
(270)
Europe, Middle East and North Africa
241
92
601
318
Asia Pacific
257
25
749
945
Other International
(97)
(8)
(106)
14
Corporate and Other
(213)
(390)
(268)
(1,980)
Millions of Dollars
Three Months Ended
March 31,
20222021
Alaska$584 159 
Lower 482,790 468 
Canada291 10 
Europe, Middle East and North Africa412 153 
Asia Pacific1,136 317 
Other International— (4)
Corporate and Other546 (121)
Net income (loss)$5,759 $982 
Net income (loss) attributable to
ConocoPhillips
$
2,379
(450)
5,452
(1,929)
Net income (loss) attributable to
ConocoPhillips in the thirdfirst quarter of 20212022 increased
$2,829 $4,777 million.
Third
First quarter earnings were positively impacted
by:
●
•Higher realized commodity prices.
●
•Higher sales volumes, primarily due to our Concho
Shell Permian acquisition and absence of production curtailments in
our North American operated
assets.
the unplanned downtime associated with Winter Storm Uri. See Note 3.3.
●•Previously unrecognized $515 million tax benefit related to the closing of an IRS audit. See Note 18.
•Gain on dispositions primarily due to a $462 million after-tax gain related to the divestiture of our Indonesia assets as well as recognizing higher contingent payments related to prior dispositions in our Canada and Lower 48 segments. See Note 3.
•Higher equity in earnings of affiliates, primarily due to
higher LNG sales prices.
●
A gain•Absence of $17restructuring and transaction expenses of $243 million after-tax onrelated to our CVE common shares
in the third quarter of 2021, as compared to aConcho acquisition.
$162 million after-tax loss on those shares
in the third quarter of 2020.
Third quarter 2021 net income increases
were partly offset by:
●
Higher production and operating expenses
and taxes other than income taxes,
primarily due to higher
sales volumes.
●
Higher DD&A expenses caused by higher production
volumes, partially offset by lower rates
driven from
price-related reserve revisions
due to higher commodity prices in 2021.
Net income (loss) attributable to
ConocoPhillips in the nine-month period ended September
30, 2021, increased
$7,381 million.
●
Inclusive of the third quarter gain associated
with our CVE common shares, in the nine-month period we
recognized a gain of $743 million
after-tax on our CVE common shares,
compared with an after-tax loss of
$1,302 million in the nine-month period of 2020.
In addition to the items detailed above,
earnings in the nine-month period were positively
impacted by:
●
Lower impairments of $611 million, primarily due to a
credit recognized for a decrease
in the ARO
estimate of a previously sold asset,
in which we retained the ARO liability,
as well as the absence of
impairments recognized in the prior period
for non-core gas assets
in our Lower 48 segment.
●
An after-tax gain of $194 million recognized
for a FID bonus associated with our
Australia-West divestiture
completed in the second quarter of 2020.
●
Lower exploration expenses
due to the absence of charges associated
with the early cancellation of our
2020 winter exploration program
as well as the absence of 2020 dry hole expenses in Alaska
,
and
unproved property impairment
and dry hole expenses for the Kamunsu
East Field in Malaysia,
which is no
longer in our development plans.
Results of Operations
39
ConocoPhillips
2021 Q3 10-Q
In addition to the items detailed above,
the increases in earnings in the nine-month period ended September
30,
2021, were partly offset by:
●
•Absence of a $597 million after-tax gain
on our Australia-West
divestiture completed in May
2020.
●
Restructuring and transaction expenses
of $288 million after-tax associated
with the Concho acquisition
and mark-to-market impacts on certain
key employee compensation
programs.
●
Realizedrealized losses on hedges of $233 million after
-taxafter-tax related to derivative
positions assumed throughacquired in our
Concho acquisition.See Note 10.
•After-tax gain of $62 million associated with refinancing transactions. See Note 6.
These derivative positions
First quarter 2022 net income increases were settled
entirely within the first quarter of 2021.partly offset by:
See•Higher production and operating expenses and taxes other than income taxes, primarily due to higher prices and sales volumes.
Note 11.
●
•Absence of gains recordeda $194 million after-tax gain recognized in
2020 from foreign currency derivatives. conjunction with our Australia-West divestiture completed in 2020. See Note 9.

See the “Segment Results” section for additional information.
information.
ConocoPhillips      2022 Q1 10-Q34
Results of Operations
Table of Contents
Income Statement Analysis
Unless otherwise indicated, all results in Income Statement
Analysis are before-tax.
Sales and other operating revenues
for the three-
and nine-month periods of 2021 increased $6,940$7,936 million
and
$17,415 million, respectively,
mainly due to higher realized commodity
prices and higher sales volumes.
Equity in earnings of affiliates for
the three-
and nine-month periods of 2021 increased $204$304 million and
$154
million, respectively,
primarily due to higher earnings driven by higher LNG and
crude prices partially offset by aas well as higher sales volumes inclusive of the additional 10 percent interest in APLNG we acquired in the quarter.
higher effective tax rate
related to equity method
investments in our Europe,
Middle East, and North Africa
segment.
Gain (loss) on dispositions in the thirdfirst quarter of 2021 recognized
a loss of $1792022 increased $584 million for the sale of noncore
assets inprimarily due to our Other International segment. Offsetting
the loss were gains recognized
forIndonesia divestiture and from contingent payments
associated with previous dispositions
in our Canada and Lower 48 segmentssegments. Offsetting the increase in gains was the absence of a $200 million gain associated with our Australia-West divestiture recognized in the first quarter of 2021. See Note 3.
Purchased commodities increased $2,268 million primarily due to higher crude and gains
on sales of certain noncoregas prices and volumes.
assetsProduction and operating expenses increased $198 million, in our Lower 48 segment.line with higher production volumes.
For the nine-month period of 2021, net gains on dispositions
Selling, general and administrative expensesdecreased $257
$124 million primarily due to the absence of a $587 million gain
associated with our Australia
-West divestiture,
partially
offset by a $200 million FID bonus recognized
in the first quarter of 2021 associated with
our Australia-West
divestiture.
Other income (loss) for the three-
and nine-month periods of 2021 increased $87 million
and $1,867 million,
respectively.
During these periods in 2021, we recognized
gains of $17 million and $743 million, respectively,
on
our CVE common shares,
compared with losses of $162 million and $1,302 million for
the same periods in 2020.
Purchased commodities for the three
-
and nine-month periods of 2021 increased $2,340 million and
$6,030
million, respectively,
primarily due to higher gas and crude prices and
volumes.
Production and operating expenses
for the three-
and nine-month periods of 2021 increased $426 million
and
$968 million, respectively,
primarily in line with higher production volumes.
Selling, general and administrative
expenses increased $307 million in the nine-month
period of 2021, primarily
due to transaction and restructuring
expenses associated with our Concho acquisition
,
and higher costs associated in 2021.
with compensation and benefits, including mark-to
-market impacts of certain key
employee compensation
programs.
Exploration expensesDD&A for
the nine-monththree-month period of 20212022 decreased $204$63 million primarily
due to the absence of
charges associated with the early cancellation
of our 2020 winter exploration
program as well as the absence of
2020 dry hole expenses in Alaska and an unproved
property impairment and dry hole expenses related
to the
Kamunsu
East Field in Malaysia.
Results of Operations
ConocoPhillips
2021 Q3 10-Q
40
DD&A for the three-
and nine-month periods of 2021 increased $261 million and
$1,445 million, respectively,
mainly due to higher production volumes
partly offset by lower rates
from price-related reserve revisions
.
and impact of assets held for sale offset by higher production volumes.
Impairments decreased $91 million in the third
quarter of 2021, primarily due to a decrease in an ARO
estimate for
a previously sold asset, in which we retained
the ARO liability.
The decrease of $611 million in the nine-month
period of 2021 was also impacted by the absence
of impairments
recorded for certain non-core
gas assets in our
Lower 48 segment.
Taxes
other than income taxes for
the three-
and nine-month periods of 2021 increased $224$444 million and
$584
million, respectively,
caused by higher sales volumes primarily in Lower
48commodity prices and higher commodity prices.sales volumes.
Foreign currency transaction
(gain) loss for the nine-month periodOther expenses decreased $160 million primarily related to a gain of 2021 was
impaired by $107$127 million due to theassociated with extinguishment of debt. See Note 6.
absence of derivative gains and
other remeasurements.
See
for information regarding
our incomeIncome tax provision
(benefit) and effective tax rate.
rate.
35ConocoPhillips      2022 Q1 10-Q
Results of Operations
41
ConocoPhillips
2021 Q3 10-Q
Results of Operations
Table of Contents
Summary Operating Statistics
Three Months Ended
Three Months Ended
March 31,
20222021
Average Net Production
Crude oil (MBD)
Consolidated operations903 804 
Equity affiliates12 14 
Total crude oil915 818 
Natural gas liquids (MBD)
Consolidated operations216 105 
Equity affiliates7 8 
Total natural gas liquids223 113 
Bitumen (MBD)67 70 
Natural gas (MMCFD)
Consolidated operations2,126 2,074 
Equity affiliates1,127 1,081 
Total natural gas3,253 3,155 
Total Production (MBOED)
1,747 1,527 
Nine Months Ended

Dollars Per Unit
Average Sales Prices
Crude oil (per bbl)
Consolidated operations$94.79 57.18 
Equity affiliates97.20 59.73 
Total crude oil94.82 57.22 
Natural gas liquids (per bbl)
Consolidated operations40.95 24.36 
Equity affiliates67.04 48.89 
Total natural gas liquids41.80 26.44 
Bitumen (per bbl)65.86 30.78 
Natural gas (per MCF)
Consolidated operations8.81 4.89 
Equity affiliates8.86 3.54 
Total natural gas8.83 4.42 
September 30
Millions of Dollars
Exploration Expenses
General administrative, geological and geophysical, lease rental, and other$62 78 
Leasehold impairment6 — 
Dry holes1 6 
$69 84 
September 30
2021
2020
2021
2020
Average Net Production
Crude oil (MBD)
Consolidated operations
802
535
814
546
Equity affiliates
13
13
13
13
Total
crude oil
815
548
827
559
Natural gas liquids (MBD)
Consolidated operations
123
89
116
97
Equity affiliates
7
8
8
7
Total
natural gas liquids
130
97
124
104
Bitumen (MBD)
69
49
69
50
Natural gas (MMCFD)
Consolidated operations
2,144
1,201
2,143
1,353
Equity affiliates
1,033
1,034
1,055
1,042
Total
natural gas
3,177
2,235
3,198
2,395
Total Production
(MBOED)
1,544
1,067
1,553
1,112
Dollars Per Unit
Average Sales Prices
Crude oil (per bbl)
Consolidated operations*
$
70.39
39.49
64.62
39.04
Equity affiliates
73.44
37.56
65.71
38.22
Total
crude oil
70.43
39.45
64.63
39.02
Natural gas liquids (per bbl)
Consolidated operations
33.28
13.73
28.02
11.72
Equity affiliates
56.70
30.21
49.81
31.65
Total
natural gas liquids
34.79
15.29
29.58
13.45
Bitumen (per bbl)
41.19
15.87
36.61
2.90
Natural gas (per MCF)
Consolidated operations*
5.93
2.77
5.02
3.07
Equity affiliates
5.95
2.61
4.48
3.98
Total
natural gas
5.94
2.70
4.84
3.47
Millions of Dollars
Exploration Expenses
General administrative,
geological and geophysical,
lease rental, and other
$
65
81
199
296
Leasehold impairment
-
-
1
31
Dry holes
-
44
6
83
$
65
125
206
410
*Average sales prices, including the impact of hedges settling per initial contract terms in the first quarter of 2021 assumed in our
Concho
acquisition, were $63.95 per barrel for crude oil and $4.98 per mcf for natural gas for the nine-month
period ended September 30, 2021.
As of
March 31, 2021, we had settled all oil and gas hedging positions acquired from Concho.
ConocoPhillips      2022 Q1 10-Q36
Results of Operations
ConocoPhillips
2021 Q3 10-Q
42
Results of Operations
Table of Contents
We explore for,
produce, transport and market
crude oil, bitumen, natural gas,
LNG and NGLs on a worldwide
basis.
At September 30, 2021,March 31, 2022, our operations
were producing in the U.S., Norway,
Canada, Australia, Indonesia,
China, Malaysia, Qatar and Libya.
Total
production of 1,5441,747 MBOED increased 477220 MBOED or
45 14 percent in the thirdfirst quarter of 2021 and 4412022, primarily due to:
MBOED or 40 percent•New wells online in the nine-month period of 2021, primarily
due to:Lower 48, Norway, Malaysia and Alaska.
●
•Higher volumes in the Lower 48 due to our ConchoShell Permian acquisition.
●
New wells online•Absence of the impacts from Winter Storm Uri in the Lower 48, Canada, Norway
and Malaysia.
48.
●•Conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis.
Higher volumes•Purchase of an additional 10 percent interest in our North American operated
assets due to the absence of production curtailments.
●
Higher production in Libya due the absence of a forced
shutdown of the Es Sider export terminal and
other eastern export terminals after
a period of civil unrest.
●
Improved well performance in
Norway,
Canada, Alaska and China.APLNG.
Production increases
in the thirdfirst quarter and in the nine-month period of 20212022 were
partly offset by normal field
decline.
In addition to the normal field decline, in the nine-month period
of 2021, production also decreased due to:
●
Absence•Normal field decline.
•Our Indonesia divestiture that closed in March 2022.
After adjusting for closed acquisitions and dispositions, the conversion of productionpreviously acquired Concho contracted volumes from Australia
-West duea two-stream to our second quarter
2020 disposition.
●
Higher unplanned downtime in the Lower 48 due toa three-stream basis and 2021 Winter
Storm Uri which impactedimpacts, first-quarter 2022 production decreased by
approximately 50 36 MBOED, inor 2 percent from the first
quarter of 2021.
Production excluding Libya
for the third quarter of 2021 was
1,507 MBOED, an increase of 441 MBOED from the
same period a year ago.
After adjusting for closed acquisitions
and dispositions as well as estimated impacts from
the 2020 curtailment program,
third-quarter 2021 production increased
26 MBOED or 2 percent.
This increase
decrease was primarily due to downtime and seasonality impacts as new production from
the Lower 48 and other development programs
across the portfolio, more than offset decline.
partially offset by normal field decline.
Production from Libya averaged
37 MBOED.
Production excluding Libya
for the nine-month period of 2021 was 1,514 MBOED,
an increase of 406 MBOED from
the same period a year ago.
After adjusting for closed acquisitions
and dispositions as well as impacts from the
2020 curtailment program and
Winter Storm Uri impacts from 2021, production
increased 17 MBOED or 1 percent.
This increase was primarily due to new production
from the Lower 48 and other development
programs across the
portfolio, partially offset by
normal field decline.
Production from Libya averaged
39 MBOED.
37ConocoPhillips      2022 Q1 10-Q
Results of Operations
43
ConocoPhillips
2021 Q3 10-Q
Results of Operations
Table of Contents
Segment Results
Results
Alaska
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss) Attributable
to ConocoPhillips
($MM)
$
405
(16)
935
(76)
Average Net Production
Crude oil (MBD)
163
184
179
179
Natural gas liquids (MBD)
13
14
15
15
Natural gas (MMCFD)
11
14
10
10
Total Production
(MBOED)
178
201
196
195
Average Sales Prices
Crude oil ($ per bbl)
$
72.55
40.88
66.78
41.92
Natural gas ($ per MCF)
2.63
2.48
3.06
2.71

Three Months Ended
March 31,

20222021
Net Income ($MM)
$584 159 
Average Net Production
Crude oil (MBD)182 190 
Natural gas liquids (MBD)18 17 
Natural gas (MMCFD)35 8 
Total Production (MBOED)206 208 
Average Sales Prices
Crude oil ($ per bbl)$95.54 59.56 
Natural gas ($ per MCF)3.92 2.23 
The Alaska segment primarily explores for,
produces, transports and markets
crude oil, NGLs and natural gas.
As of
September 30, 2021, March 31, 2022, Alaska contributed
19 18 percent of our consolidated liquids production
and less than 1 percent
of our consolidated natural
gas production.
Net Income (Loss) Attributable to ConocoPhillips
Earnings from Alaska increased
$421 $425 million in the thirdfirst quarter of 2021 and $1,011 million
in the nine-month
period of 2021, respectively.
In the third quarter,
increases2022. Increases to earnings include:
●
•Higher realized crude oil prices.
●
Lower DD&A expenses primarily driven by
lower production volumes and lower rates
in the quarter from
price-related reserve revisions
.
Offsets to the earnings increase include
:include:
●•Higher taxes other than income taxes associated with higher realized crude oil prices.
Lower volumes dueProduction
Average production decreased 2 MBOED in the first quarter of 2022. Decreases to a July turnaroundproduction include:

•Normal field decline.
Offsets to the production decreases include:

•Improved performance in the Greater Prudhoe Area and Western North Slope assets.
•New wells online at our Western North Slope assets.
In additionAlpine Gas Release
On March 4, a subsurface gas release was observed at Alpine drill site CD1 well house 5. Operations to the items detailed above,
control this release were completed on March 28. The well is scheduled to be fully plugged and abandoned in the nine-month period of 2021, earnings also increased due to:second quarter to ensure full source remediation.
●
Lower exploration expenses
due to the absence of charges associated
with the early cancellation of our
2020 winter exploration program
as well as the absence of 2020 dry hole expenses.
●
Higher volumes due to the absence of production
curtailments.
In addition to the items detailed above,
in the nine-month period of 2021, earnings also decreased due to:
●
Higher DD&A expenses primarily caused by higher
rates in the first half of 2021.
Production
Average production
decreased 23 MBOED in the third quarter of 2021 and increased
1 MBOED in the nine-month
period of 2021, respectively.
In the third quarter of 2021, decreases to production
include:
●
Normal field decline.
●
A July turnaround at our Western
North Slope assets.
More than offsetting the items
detailed above, in the nine-month period of 2021, production
increased due to:
●
Absence of curtailments.
●
Improved performance in the Greater
Prudhoe Area and Western
North Slope assets.
ConocoPhillips      2022 Q1 10-Q38
Results of Operations
ConocoPhillips
2021 Q3 10-Q
44
Willow Update
In August 2021, an Alaska federal
judge vacated the U.S. government’s
approval granted
to our planned Willow
project previously approved
by the Bureau of Land Management (BLM) in October 2020.
The Department of
Justice did not appeal the decision and neither did we.
We believe the best path forward
is to work closely with
the BLM and engage directly with the relevant
agencies to address the matters
described in the decision.
In the
interim, we are continuing with FEED
work in service of a final investment decision.
Results of Operations
Table of Contents
Lower 48
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss) Attributable
to ConocoPhillips
($MM)
$
1,631
(78)
3,274
(880)
Average Net Production*
Crude oil (MBD)
457
197
442
211
Natural gas liquids (MBD)
101
68
93
74
Natural gas (MMCFD)
1,389
566
1,389
577
Total Production
(MBOED)
790
359
767
381
Average Sales Prices
Crude oil ($ per bbl)**
$
68.59
36.43
63.14
34.02
Natural gas liquids ($ per bbl)
32.87
13.51
27.48
10.96
Natural gas ($ per MCF)**
4.63
1.63
4.13
1.45
Three Months Ended
March 31,
20222021
Net Income ($MM)
$2,790 468 
Average Net Production
Crude oil (MBD)538 416 
Natural gas liquids (MBD)*191 79 
Natural gas (MMCFD)*1,426 1,319 
Total Production (MBOED)
967 715 
Average Sales Prices
Crude oil ($ per bbl)**$93.55 55.68 
Natural gas liquids ($ per bbl)40.42 23.99 
Natural gas ($ per MCF)**4.63 4.56 
*Subsequent toCurrent period includes the current period, we anticipate a change in both product mix and average net production
attributed to the planned conversion
of previously acquired Concho two-stream contracted volumescontracts to three-stream.
three-stream initiated in the fourth quarter of 2021.
**AveragePrior period average sales prices, including the impact of hedges settling per initial contract terms in the first quarter of 2021 assumed in our Concho
acquisition from 2021, were $61.90$51.58 per barrel for crude oil and $4.07$4.35 per mcf for natural gas for the nine-month
period ended September 30, 2021.
gas. As of
March 31, 2021, we had settled all oil and gas hedging positions acquired from Concho.
10.
The Lower 48 segment consists of operations
located in the U.S. Lower 48 states,
as well as producing properties in
the Gulf of Mexico.
As of September 30, 2021,March 31, 2022, the Lower 48 contributed
54 65 percent of our consolidated liquids
production and 6567 percent of our consolidated
natural gas production.
Net Income (Loss) Attributable to ConocoPhillips
Earnings from the Lower 48 increased $1,709
$2,322 million in the thirdfirst quarter of 2021 and increased
$4,154 million in
the nine-month period of 2021, respectively.
In the third quarter,
increases2022. Increases to earnings include:
●
•Higher realized crude oil, natural
gas and NGL prices.
●
•Higher sales volumes of crude oil, natural gas and natural
gas due to our Concho acquisition and the absence of
production curtailments.NGLs.
Offsets to the earnings increase include:
●
•Higher DD&A expenses, production and operating
expenses and taxes other than
income taxes primarily
due to higher production volumes.
Partially offsetting the increase
in DD&A expenses were lower rates
from price-related reserve revisions.
In addition to the items detailed above,
in the nine-month period of 2021, earnings also increased due to
:
●
The absence of $399 million in after-tax impairments
related to certain noncore
gas assets.
In addition to the items detailed above,
in the nine-month period of 2021, earnings also decreased due to:
●
Impacts resulting from our Concho Acquisition,
including higher selling, general and administrative
expenses for transaction and restructuring
charges, as well as realized losses
on derivative settlements.
and
Results of Operations
45
ConocoPhillips
2021 Q3 10-Q
Production
Average production increased
431 MBOED and 386 252 MBOED in the three-
and nine-month periodsfirst quarter of 2021,
respectively.
In the third quarter,
increases2022. Increases to production include:
●
Higher volumes due to our Concho acquisition.
●
•New wells online from our development programs
in Permian, Eagle Ford
and Bakken.
●•Higher volumes due to our Shell Permian acquisition. See Note 3.
•Conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis.
•Absence of curtailments.the impacts from Winter Storm Uri in the first quarter of 2021.
Offsets to the production increases
include:
●
•Normal field decline.
Assets Held for Sale
In additionJanuary 2022, we entered into an agreement to normal field decline,
sell our interests in the nine-month period of 2021, production also
decreased due to:
●
Higher unplanned downtime, primarily due to Winter
Storm Uri.
Asset Acquisitions and Dispositions
In September 2021, we announced the Shell Permian
Acquisition for $9.5 billion in cash before
customary
adjustments.
The transaction is anticipated to
close in the fourth quarter of 2021, subject to regulatory
approval
and other customary closing conditions.
Additionally in September 2021, we completed
divestitures
of certain noncore assets for $440 million, before customary adjustments. This transaction closed in our Lower 48 segment
,
recording proceeds of approximately
$150 million.
April 2022. Production from these assets averaged
approximately 15
10 MBOED in the nine-monthsthree-months ended September 30, 2021.
March 31, 2022. See Note 3.3.
39ConocoPhillips      2022 Q1 10-Q
Results of Operations
ConocoPhillips
2021 Q3 10-Q
46
Results of Operations
Table of Contents
Canada
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss) Attributable
to ConocoPhillips
($MM)
$
155
(75)
267
(270)
Average Net Production
Crude oil (MBD)
8
6
10
4
Natural gas liquids (MBD)
4
2
4
2
Bitumen (MBD)
69
49
69
50
Natural gas (MMCFD)
73
43
83
35
Total Production
(MBOED)
93
64
96
62
Average Sales Prices
Crude oil ($ per bbl)
$
58.99
25.16
53.81
15.39
Natural gas liquids ($ per bbl)
33.47
5.99
28.49
1.89
Bitumen ($ per bbl)
41.19
15.87
36.61
2.90
Natural gas ($ per MCF)
2.45
0.71
2.36
1.05
Three Months Ended
March 31,
20222021
Net Income ($MM)
$291 10 
Average Net Production
Crude oil (MBD)6 11 
Natural gas liquids (MBD)3 4 
Bitumen (MBD)67 70 
Natural gas (MMCFD)63 91 
Total Production (MBOED)
86 100 
Average Sales Prices
Crude oil ($ per bbl)$82.13 47.41 
Natural gas liquids ($ per bbl)41.83 25.32 
Bitumen ($ per bbl)65.86 30.78 
Natural gas ($ per MCF)3.25 2.37 
Average sales prices include unutilized transportation costs.
Our Canadian operations mainly consist
of the Surmont oil sands development in Alberta
and the liquids-rich
Montney unconventional
play in British Columbia.
As of September 30, 2021,March 31, 2022, Canada contributed 8 percent
of our
consolidated liquids production and
41 percent of our consolidated liquids production and 3 percent of our consolidated natural
gas production.
Net Income (Loss) Attributable to ConocoPhillips
Earnings from Canada increased $230$281 million
and $537 million,
respectively,
in the three-
and nine-month periods
first quarter of 2021.
2022. Increases to earnings include:
●•Higher after-tax gains on disposition related to contingent payments of $176 million associated with the sale of certain assets to CVE in 2017, compared with $20 million in the same period of 2021. See Note 3.
•Higher realized bitumen and crude oil prices.
●
Higher sales volumes in our Surmont and Montney
assets.
●
After-tax gains
on disposition related to contingent
payments of $77 million and $149 million in
the three-
and nine-month periods of 2021, respectively,
associated with the sale of certain assets
to CVE in 2017.
Offsets to the earnings increase include
:include:
●
Higher production and operating expenses
primarily due to increased Surmont and Montney
production.•Lower sales volumes.
Production
Average production
increased 29 decreased 14 MBOED in the thirdfirst quarter of 2021 and
increased 34 MBOED in the nine-month
period of 2021, respectively.
In the third quarter,
increases2022. Decreases to production include:
●•Normal field decline.
Absence•Higher royalty rates across the segment due to higher commodity prices and the exhaustion of curtailments.
well credits.
●
Absence of third quarter 2020 turnaround
activity in the Surmont.
●
New wells online in the Montney.
●
Production from our Kelt acquisition
completed in the third quarter of 2020.
Offsets to the production increases
include:
●
•Higher well failures, plant power trips
downtime and facility upsets in theat Surmont.
In addition to the items detailed above,
in the nine-month period of 2021, production also increased
due to:
●
Improved well performance in
the Surmont.
ConocoPhillips      2022 Q1 10-Q40
Results of Operations
47
ConocoPhillips
2021 Q3 10-Q
Results of Operations
Table of Contents
Europe, Middle East and North Africa
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income Attributable
to ConocoPhillips
($MM)
$
241
92
601
318
Consolidated Operations
Average Net Production
Crude oil (MBD)
117
77
118
82
Natural gas liquids (MBD)
5
5
4
5
Natural gas (MMCFD)
303
256
303
276
Total Production
(MBOED)
172
125
172
133
Average Sales Prices
Crude oil ($ per bbl)
$
72.43
41.79
65.94
43.72
Natural gas liquids ($ per bbl)
50.32
23.50
40.75
20.01
Natural gas ($ per MCF)
11.96
2.40
8.40
2.85
Three Months Ended
March 31,
20222021
Net Income ($MM)
$412 153 
Consolidated Operations
Average Net Production
Crude oil (MBD)113 116 
Natural gas liquids (MBD)4 5 
Natural gas (MMCFD)331 309 
Total Production (MBOED)
172 173 
Average Sales Prices


Crude oil ($ per bbl)$94.68 57.75 
Natural gas liquids ($ per bbl)58.67 34.70 
Natural gas ($ per MCF)29.18 5.99 
The Europe, Middle East and North Africa
segment consists of operations
principally located in the Norwegian
sector of the North Sea and the Norwegian Sea, Qatar,
Libya and commercial operations
in the U.K.
As of
September 30, 2021, March 31, 2022, our Europe, Middle East
and North Africa operations contributed
12 percent of our
consolidated liquids production and
14 10 percent of our consolidated liquids production and 16 percent of our consolidated natural
gas production.
Net Income Attributable to ConocoPhillips
Earnings from Europe, Middle East
and North Africa increased by $149 million and $283$259 million in the three
-
and
nine-month periodsfirst quarter of 2021, respectively.
2022. Increases to earnings include:
●
•Higher realized natural
gas, crude oil and NGL prices.
●
•Higher LNG sales prices, reflected in equity in earnings
of affiliates.
●
Higher sales volumes of crude oil and LNG.
Offsets to the earnings increases
include:
●
Higher taxes.
●
Higher production and operating expenses
and DD&A expenses.
Consolidated Production
Average consolidated
production increased 47 MBOED and 39decreased 1 MBOED in the three
-
and nine-month periodsfirst quarter of
2021, respectively.
Increases 2022. Decreases to production
include:
●
Higher production•Normal field decline.
•Facility capacity constraints in Libya due to the absence of a
forced shutdown of the Es Sider export
terminal and
other eastern export terminals after
a period of civil unrest.
●
Improved well performance in
Norway.
●
New production from Norway
drilling activities including our Tor
II redevelopment project with first
production in December 2020.
Offsets to the production increases
decreases include:
●•New wells online and improved performance in Norway.
Normal field decline.•Higher gas export in Norway.

41ConocoPhillips      2022 Q1 10-Q
Results of Operations
ConocoPhillips
2021 Q3 10-Q
48
Results of Operations
Table of Contents
Asia Pacific
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income Attributable
to ConocoPhillips
($MM)
$
257
25
749
945
Consolidated Operations
Average Net Production
Crude oil (MBD)
57
71
65
70
Natural gas liquids (MBD)
-
-
-
1
Natural gas (MMCFD)
368
322
358
455
Total Production
(MBOED)
119
125
125
147
Average Sales Prices
Crude oil ($ per bbl)
$
74.66
42.79
67.41
42.94
Natural gas liquids ($ per bbl)
-
-
-
33.21
Natural gas ($ per MCF)
6.66
5.33
6.30
5.42
Three Months Ended
March 31,
20222021
Net Income ($MM)
$1,136 317 
Consolidated Operations
Average Net Production
Crude oil (MBD)64 71 
Natural gas (MMCFD)271 347 
Total Production (MBOED)
109 129 
Average Sales Prices
Crude oil ($ per bbl)$104.84 60.36 
Natural gas ($ per MCF)7.01 5.88 
The Asia Pacific segment has operations
in China, Indonesia, Malaysia, Australia and Australia.
commercial operations in Singapore and Japan. As of September 30, 2021,March 31, 2022, Asia
Pacific contributed 76 percent
of our consolidated liquids production
and 1713 percent of our consolidated natural
gas
production.
Net Income Attributable to ConocoPhillips
Earnings from Asia Pacific increased
$232 $819 million in the thirdfirst quarter of 2021 and decreased $196 million
in the nine-
month period of 2021, respectively.
In the third quarter,
increases2022. Increases to earnings include:
●•Gain of $534 million associated with the divestiture of our Indonesia assets. See Note 3.
Higher crude oil and natural gas
prices.
●
•Higher LNG sales prices, reflected in equity in earnings
of affiliates.
●•Higher crude oil and natural gas prices.
Lower DD&A expenses in the third quarter
of 2021 primarily driven by lower production volumes
and
lower rates from price-related
reserve revisions.
In additionOffsets to the items detailed above,earnings increase include:
in the nine-month period•Absence of 2021, earnings also increased due to:
●
Aa $200 million gain on disposition related
to a FID bonuscontingent payment from our Australia-West
divestiture.
For additional
information related to
this FID bonus, see
divestiture in 2020.See Note 3
and
9.
●
•Lower production and operating
expenses related to the absence of Australia
-West.
Offsetting the items detailed
above, in the nine-month period of 2021, earnings decreased
due to:
●
Absence of a $597 million after-tax gain
related to our Australia
-West divestiture.
●
Absence of sales volumes associated with Australia
-West.volumes.
Consolidated Production
Average consolidated
production decreased 6 MBOED and 2220 MBOED in the three
-
and nine-month periodsfirst quarter of 2021,
respectively.
In the third quarter,
the primary decrease2022. Decreases to production wasinclude:

normal
•Divestiture of our Indonesia assets.
•Normal field decline.
Partly offsettingOffsets to the decrease
in production was:decreases include:
●
Increased production in Malaysia
associated with Malikai Phase 2 first
production and ramp-up.
●
•Bohai Bay development activity in
China.
•Increased production in Malaysia associated with development drilling at both Malikai and Siakap North-Petai.
Asset Acquisitions and Dispositions
In additionthe first quarter of 2022, we completed the acquisition of an additional 10 percent interest in APLNG for approximately $1.4 billion after customary adjustments. This increases our ownership in APLNG to normal field decline,47.5 percent. Also in the nine-month period
of 2021, production also decreased due to:
●
Thefirst quarter, we completed the divestiture of our Australia
-Westsubsidiaries that held our Indonesia assets that contributed
23and operations, and based on an effective date of January 1, 2021, we received proceeds of $731 million after customary adjustments. Production from the disposed assets averaged approximately 33 MBOED in the nine-month period of 2020.
three-months ended March 31, 2022. See Note 3.
In addition to the items detailed above,
in the nine-month period of 2021, production also increased
due to:
●
The absence of curtailments across the segment
and increased demand in Indonesia from coal supply
restrictions.
ConocoPhillips      2022 Q1 10-Q42
Results of Operations
Table of Contents
49
ConocoPhillips
2021 Q3 10-Q
Results of Operations
Table of Contents
Other International
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Income (Loss) Attributable
to ConocoPhillips
($MM)
$
(97)
(8)
(106)
14
Three Months Ended
March 31,
20222021
Net Income (Loss) ($MM)
$— (4)
The Other International segment consists
of exploration and appraisal
activities in Colombia as well as
contingencies associated with prior operations
in other countries. As a result of recent acquisitions, we refocused our exploration program and announced our intent to pursue managed exits from certain areas.
Earnings from our Other International
operations decreased $89improved $4 million and $120
million in the three-
and nine-
month periods of 2021, respectively,
due to a loss on divestiture related to
our Argentina exploration
interests in
the third quarter as well as an absence of a $29 million after
-tax benefit to earnings from the dismissal
of
arbitration related to
prior operations in Senegal recognized
in the first quarter of 2020.
2022 compared with the first quarter of 2021.
See Note 3
for additional
information
regarding the divestiture.
Corporate and Other
Millions of Dollars
Three Months Ended
Nine Months Ended
September 30
September 30
2021
2020
2021
2020
Net Loss Attributable to
ConocoPhillips
Net interest expense
$
(176)
(179)
(627)
(508)
Corporate general and administrative
expenses
(57)
(50)
(251)
(90)
Technology
(6)
(8)
31
(16)
Other income (expense)
26
(153)
579
(1,366)
$
(213)
(390)
(268)
(1,980)

Millions of Dollars

Three Months Ended
March 31,

20222021
Net Income (Loss)
Net interest expense$(218)(270)
Corporate general and administrative expenses(79)(129)
Technology58 41 
Other income785 237 

$546 (121)
Net interest expense consists
of interest and financing expense,
net of interest income and capitalized
interest.
Net interest expense increased
improved by $119$52 million in the nine-monththree-month period of 20212022 primarily due
to higher debt
balances assumed due to our Concho acquisition.
See Note 7.absence of a prior year tax adjustment.
Corporate G&A expenses include compensation
programs and staff
costs.
These expenses increaseddecreased by $7$50 million
in the three-month period of 20212022 primarily due to mark
to marketthe absence of restructuring expenses associated with our 2021 acquisition of Concho Resources Inc. This was partially offset by mark-to-market adjustments
associated with certain
key employee compensation programs.
For the nine-month period of 2021, Corporate
G&A expenses increased by $161 million
primarily due to restructuring expenses associated
with our Concho acquisition.
See Note 15.
Technology includes
our investment in new technologies
or businesses, as well as licensing revenues.
Activities are
focused on both conventional
and tight oil reservoirs, shale gas,
heavy oil, oil sands, enhanced oil recovery,
as well
as LNG.
Earnings from Technology
increased $47$17 million in the nine-monththree-month period of 2021
2022 primarily due to higher
licensing revenues.
See Note 16.
Other income (expense) or “Other” includes certain corporate
tax-related items, foreign
currency transaction gains
and losses, environmental costs
associated with sites no longer in operation,
other costs not directly associated
with an operating segment, premiums
incurred on the early retirement of debt,
holding gains or losses on equity
securities, and pension settlement expense.
For the three-
and nine-month periodsthree-month period of 2021,2022, “Other” increased
$179 $548 million and $1,945 million, respectively.
compared with the same period in 2021. During these periods in 2021,the first quarter of 2022, the IRS closed the 2017 audit of our U.S. federal income tax return. As a result, we recognized
gains a previously unrecognized $474 million federal tax benefit. Also in the first quarter, we recognized an after-tax gain of $17$62 million and
$743associated with the debt restructuring transactions. This was offset by a $101 million respectively,
tax impact associated with the disposition of our Indonesia assets. SeeNote 18for information about the tax benefit, Note 6for information regarding debt and Note 3for information on our CVE common shares, compared
with losses of $162 million and $1,302 million forIndonesia divestiture.
the same periods in 2020.
Partially offsetting the impact on
the nine-month period was the release of a $92
million deferred tax asset
associated with our Australia West
divestiture.
43ConocoPhillips      2022 Q1 10-Q
Capital Resources and Liquidity
Table of Contents
ConocoPhillips
2021 Q3 10-Q
50
Capital Resources and Liquidity
Table of Contents
Capital Resources and Liquidity
Financial Indicators
Millions of Dollars
Millions of Dollars
March 31 2022December 31 2021
Cash and cash equivalents$6,414 5,028 
Short-term investments730 446 
Total debt18,746 19,934 
Total equity49,218 45,406 
Percent of total debt to capital*28 %31 
Percent of floating-rate debt to total debt4 %4 
September 30
December 31
2021
2020
Cash and cash equivalents
$
9,833
2,991
Short-term investments
678
3,609
Total
debt
19,668
15,369
Total
equity
44,115
29,849
Percent of total debt to
capital*
31
%
34
Percent of floating-rate
debt to total debt
4
%
7
*Capital includes total debt and total equity.
To meet our
short-
and long-term liquidity requirements,
we look to a variety of funding sources,
including cash
generated from operating
activities, our commercial paper and credit
facility programs, and our ability
to sell
securities using our shelf registration
statement.
During the first nine monthsquarter of 2021,2022, the primary uses of our
available cash were $3.8
$3.2 billion to
support our ongoing capital expenditures
and investments program,
;
$2.2 $1.4 billion
to repurchase common stock,
,
$1.8 $1.1 billion net to reduce debt as part of refinancing transactions, and $0.9 billion to pay dividends, including the ordinary dividend and $1.1 billion of hedging, transaction
and
restructuring costs.
During the first nine months of 2021, our cash and cash
equivalents increased by $6.8 billion
to $9.8 billion.
a VROC.
At September 30, 2021,March 31, 2022, we had cash
and cash equivalents of $9.8$6.4 billion, short-term investments
of $0.7 billion,
and available borrowing capacity
under our credit facility of $6.0$5.5 billion, totaling
approximately $16.5 billion of
liquidity.
liquidity $12.6 billion. We believe current cash
balances and cash generated by
operating activities, together with access
to
external sources of funds as described below in the “Significant
Changes in Capital” section, will be sufficient to
meet our funding requirements in the near-
and long-term, including our capital spending prog
ram,
program, acquisitions,
dividend payments and debt obligations
.
obligations.
On September 20, 2021, we signed a definitive agreement
for the Shell Permian Acquisition for
$9.5 billion in cash
before customary adjustments
.
The effective date of the transaction
is July 1, 2021, and we expect to close in the
fourth quarter of 2021 subject to regulatory
clearance and the satisfaction
of other customary closing conditions.
The transaction will be funded from available
cash, and we expect our remaining cash
to meet our obligations and
business needs.

Significant Changes in Capital
Operating Activities
Cash provided by operating activities was
$11.1 $5.1 billion for the first ninethree months
of 2021,2022, compared with $3.1
$2.1 billion for the corresponding period of 2020.
2021. The increase in cash provided by operating
activities is primarily due
to higher realized commodity prices, and
higher sales volumes mostly due to our acquisition of Shell Permian assets, and the absence of the 2021 settlement of all oil and gas hedging positions acquired from Concho.
The
increase in cash provided by operating
activities was partly offset by the settlement
timing of all oilLibya tax and gas hedging
positions acquired from Concho,
and transaction and restructuring cost
s.
royalty payments occurring in the first quarter of 2022.
Our short-
and long-term operating cash flows
are highly dependent upon prices for crude oil, bitumen,
natural
gas, LNG and NGLs.
Prices and margins in our industry have historically
been volatile and are driven by market
conditions over which we have
no control.
Absent other mitigating factors,
as these prices and margins fluctuate,
we would expect a corresponding change
in our operating cash flows.
Capital Resources and Liquidity
51
ConocoPhillips
2021 Q3 10-Q
The level of production volumes, as well as
product and location mix, impacts our cash
flows.
Future production is
subject to numerous uncertainties, including,
among others, the volatile crude oil and natural
gas price
environment, which may impact
investment decisions; the effects
of price changes on production sharing and
variable-royalty contracts;
acquisition and disposition of fields; field production decline rates;
new technologies;
operating efficiencies; timing of startups
and major turnarounds; political instability;
impacts of a global pandemic;
weather-related disruptions; and
the addition of proved reserves through
exploratory success and their timely and
cost-effective development.
While we actively manage for these factors,
production levels can cause variability
in
cash flows, although generally this
variability has not been as significant as that caused
by commodity prices.
To maintain
or grow our production volumes, we must
continue to add to our proved
reserve base.
See the
“Capital “Capital Expenditures and Investments”
section, for information about
our capital expenditures and investments.
On January 15, 2021, we assumed financial derivative instruments
consisting of oil and natural gas
swaps in
connection with our acquisition of Concho.
At March 31, 2021, all oil and natural
gas derivative financial
instruments acquired from Concho
were contractually settled.
In the first six months of 2021, we paid $761 million
relating to these settlements.
Investing Activities
For the first nine months of 2021, we invested
$3.8 billion in capital expenditures.
Our 2021 operating plan capital
expenditures is currently expected
to be $5.3 billion compared with $4.7 billion in 2020.
See the “Capital
Expenditures and Investments”
section, for information about our capital
expenditures and investments.

For additional information on Acquisitions
ConocoPhillips      2022 Q1 10-Q44
& Dispositions discussed below,
see Note 3.
We completed our acquisition
of Concho on January 15, 2021.
The assets acquired in the transaction
included
$382 million of cash.
Capital Resources and Liquidity
Table of Contents
Investing Activities
For the first three months of 2022, we invested $3.2 billion in capital expenditures and investments; $1.4 billion of which was acquisition capital for the additional 10 percent interest in APLNG, the remainder being operating capital. Our 2022 operating plan capital expenditures are currently expected to be $7.8 billion versus the prior guidance of $7.2 billion, reflecting higher partner-operated spend in Lower 48 and inflationary impacts. This guidance excludes $1.4 billion of capital associated with the acquisition of an additional 10 percent interest in APLNG.Our 2021 capital expenditures and investments was $5.3 billion. See the “Capital Expenditures and Investments” section for information about our capital expenditures and investments.
In May 2021, we announced and began
a pacedinitiated the monetization of our investment
in CVE common shares with the
plan to direct proceeds toward
our existing share repurchase program.
We expect to fully dispose
began disposing of our CVE
shares by year-endin May 2021, and at March 31, 2022, however,
the sales pace will be guided by market conditions,
and we retain discretion to
adjust accordingly.
Since we began our monetization program,
we have sold 67 million CVE shares,
representing
32%fully divested of our holdings at December 31, 2020, receiving $569
millioninvestment for total proceeds, recognizing proceeds of cash proceeds.
$1.4 billion in the first quarter of 2022. Since inception, we have generated total proceeds of $2.5 billion. SeeSee Note 5.
Other proceeds
from dispositions include ourthe sale of certain noncore
our subsidiaries that held our Indonesia assets in our Lower 48 segmentand operations for approximately
$150
$731 million after customary adjustments and contingent payments
associated with previous divestitures.
See Note 3.
In September 2021, we signedannounced a definitive agreement
target to acquiredispose of $4 to $5 billion in assets by year-end 2023. Through the Shell Permianfirst quarter of 2022, we have disposed of $1.7 billion in assets,
for $9.5 generating approximately $1.0 billion beforein disposition proceeds. We received $0.8 billion in proceeds in the current period primarily from the sale of our Indonesia assets. The proceeds from these transactions will be used in accordance with the company’s priorities, including returns of capital to shareholders and reduction of total debt.
customary adjustments.
Under the terms of the agreement, we paid a deposit
of $475 million which is presented
within “Cash Flows from Investing
Activities - Other” on our consolidated statement
of cash flows.
See Item 1A
“Risk Factors” for further discussion of risks related
to the Shell Permian Acquisition.
We invest in short
-termshort-term investments as part of our
cash investment strategy,
the primary objective of which is to
protect principal, maintain liquidity
and provide yield and total returns;
these investments include time deposits,
commercial paper,
as well as debt securities classified as available
for sale.
Funds for short-term needs
to support
our operating plan and provide resiliency
to react to short-term price volatility
are invested in highly liquid
instruments with maturities within the year.
Funds we consider available to maintain
resiliency in longer term
price downturns and to capture opportunities
outside a given operating plan may
be invested in instruments
with
maturities greater than one year.
Investing activities in the first
nine three months of 20212022 included net salespurchases of $2,846$263 million of investments.
We sold
$2,991purchased $215 million of short-term instruments
and invested $145$48 million in long-term instruments
.
See Note 11.
Capital Resources and Liquidity
ConocoPhillips
2021 Q3 10-Q
5213.
Financing Activities
We have a revolving
credit facility totaling $6.0 billion,
expiring in May 2023.
OurIn February 2022, we refinanced our revolving credit facility
from a total aggregate principal amount of $6.0 billion to $5.5 billion with an expiration date of February 2027. The credit facility may be
used for direct bank borrowings,
the issuance of letters of credit totaling
up to $500 million, or as support for our
commercial paper program.
With no commercial paper outstanding
and no direct borrowings or letters
of credit,
we had access to $6.0$5.5 billion in available borrowing
capacity under our revolving credit
facility at September 30,March 31, 2022.
2021.

On January 15, 2021, we completed the acquisition
Our debt balance at March 31, 2022, was $18.7 billion compared with $19.9 billion at December 31, 2021. The current portion of Concho in an all-stock transaction.
debt, including payments for finance leases, is $1.2 billion. Payments will be made using current cash balances and cash generated by operations. In the acquisition,first quarter of 2022, we
assumed Concho’s publicly
traded executed a debt whichrefinancing comprised of concurrent transactions including new debt issuances, a cash tender offer and debt exchange offers. Part of the cash consideration in the cash tender and debt exchange offers was recorded
at fair value of $4.7 billion onsatisfied with current cash balances. In aggregate, the acquisition
date.
In
June 2021, we reaffirmed our commitment
to preserving our ‘A’
-rated balance sheet by restating
our intent to
reduce grosstransactions reduced the company's total debt by $1.2 billion. The refinancing facilitates our ability to achieve our previously announced $5 billion over
debt reduction target by the next five years, driving a more
resilient and efficient capital
structure.
end of 2026 while also reducing the company's annual cash interest expense.
The current credit ratings on our
long-term debt are:
●
•Fitch: “A”
with a “stable” outlook
●
•S&P:
“A- “A-” with a “stable”
outlook
●
•Moody’s: “A3”
with a “positive” outlook
See Note 3
for additional information on our Concho
acquisition and
6 for additional information on debt,
,
revolving credit facility and credit ratings.
ratings.
45ConocoPhillips      2022 Q1 10-Q
Capital Resources and Liquidity
Table of Contents
Certain of our project-related
contracts, commercial contracts
and derivative instruments contain
provisions
requiring us to post collateral.
Many of these contracts and instruments
permit us to post either cash or letters
of
credit as collateral.
At September 30, 2021March 31, 2022 and December 31, 2020,2021, we
had direct bank letters of credit
of $281
$340 million and $249$337 million, respectively,
which secured performance obligations
related to various purchase
commitments incident to the ordinary
conduct of business.
In the event of credit ratings
downgrades, we may be
required to post additional letters
of credit.
Shelf Registration
We have a universal
shelf registration statement
on file with the SEC under which we have the
ability to issue and
sell an indeterminate number of various
types of debt and equity securities.
Capital Requirements
For information about our capital
expenditures and investments,
see the “Capital Expenditures and Investments” section.
section.
In 2021, as part of our objective to maintain a strong balance sheet, we announced our intention to reduce our total debt by $5 billion by 2026. In the first quarter of 2022, we executed a debt refinancing to facilitate the achievement of our debt reduction target while also lowering our annual cash interest expense and extending the weighted average maturity of our debt portfolio. See Note 6. In April 2022, we provided formal notice to holders of our 4.95% Notes due 2026 with principal of $1,250 million that we would retire this debt in full per the provisions in the bond indenture, with settlement scheduled for May 2022. Retirement of this bond will be sourced from cash and further accelerates progress towards our debt reduction target.

In December 2021, we announced our expected 2022 return of capital program and the initiation of a three-tier return of capital framework. The framework is structured to deliver a compelling, growing ordinary dividend and through-cycle share repurchases. In addition to the ordinary dividend and share repurchases, beginning in December 2021, the framework includes the addition of a discretionary VROC tier. The VROC will provide a flexible tool for meeting our commitment of returning greater than 30 percent of cash from operating activities during periods where commodity prices are meaningfully higher than our planning price range. Our expected 2022 total capital expenditure and
investments
program, we anticipate completing
the Shell
Permian Acquisition in the fourth quarter
for $9.5return is $10 billion, before customary
adjustments.
See Note 3
.
Our debt balance at September 30, 2021, was
$19.7an increase of $2 billion compared with $15.4 billion at December 31, 2020.
from our previously announced target. The net increase is primarily due to $4.7 billion of debt assumed
in the Concho acquisition.
The current portion of
debt, including payments for finance
leases, is $920 million.
Paymentsincremental amount will be made using current
cash balancesdistributed through share repurchases and VROC tiers.

In February 2022, we declared both an ordinary dividend and cash generated by
operations.
See Note 7.
We believe in delivering va
lue to our shareholders through
a growing and sustainablesecond-quarter VROC. The ordinary dividend supplemented
by
additional returns of capital, including share
repurchases.
In 2020, we paid $1.8 billion, equating to $1.69 per
share of common stock, in dividends.
In the first nine months of 2021, we paid dividends totaling
$1.8 billion, the
equivalent of $1.29 per share.
On September 20, 2021, we announced an increase
in our quarterly dividend from
$0.43is $0.46 per share, to $0.46 per share,
representing a 7 percent increase.
The dividend is payable Decemberand was paid on March 1, 2021,
2022 to stockholders of record
at the close of business on October 28, 2021.
We anticipate returning
approximately
$2.4 billionFebruary 14, 2022. The VROC dividend was $0.30 per share, and was paid on April 14, 2022 to shareholders in dividendsof record on March 31, 2022. On
in 2021, or $1.75May 5, 2022, we declared both an ordinary dividend and a third-quarter VROC. The ordinary dividend is $0.46 per share.
share, payable June 1, 2022 to shareholders of record on May 17, 2022. The VROC is $0.70 per share, payable July 15, 2022 to shareholders of record on June 28, 2022.
Capital Resources and Liquidity
53
ConocoPhillips
2021 Q3 10-Q
In late 2016, we initiated our current
share repurchase program
which has a total program with Board of Director’s authorization
of $25
billion.
In May 2021, we began a paced monetization
billion of our CVEcommon stock. As of March 31, 2022, share repurchases since the inception of our current program totaled 263 million shares the proceeds of which, have
been applied
to share repurchases.
The pace of CVE share sales will be guided by market conditions,
and we retain the
discretion to adjust accordingly.
$15.6 billion. In the ninethree months ended September 30, 2021,March 31, 2022, we repurchased
39.3 15.7 million
shares atfor a cost of $2,224 million, $561 million of which
was funded using CVE share proceeds.
Since the inception
of the share repurchase program,
we have repurchased 228 million shares
$1.4 billion. Repurchases are made at a cost of $12.7 billion.
Our total
planned distributions for 2021, including dividends
and share repurchases, is approximately
$6.0 billion.
Our dividend and share repurchase programs
aremanagement’s discretion, at prevailing prices, subject to numerous considerations,
including market conditions
management discretion and other factors.

See “ItemPart I—Item 1A—Risk Factors
– “Our ability to declare and pay dividends
and repurchase sharesexecute our capital return program is subject to certain
considerations” in Part
I—Item 1A considerations” in our 20202021 Annual Report on Form 10-K.
10-K.
ConocoPhillips      2022 Q1 10-Q46
Capital Resources and Liquidity
Table of Contents
Capital Expenditures and Investments
Millions of Dollars
Nine Months Ended
September 30
2021
2020
Alaska
$
698
882
Lower 48
2,250
1,398
Canada
129
593
Europe, Middle East and North Africa
385
410
Asia Pacific
235
280
Other International
33
66
Corporate and Other
37
28
Capital expenditures and investments
$
3,767
3,657

Millions of Dollars

Three Months Ended
Millions of Dollars

20222021
Alaska253 235 
Lower 481,062 718 
Canada122 33 
Europe, Middle East and North Africa172 121 
Asia Pacific1,538 76 
Other International— 6 
Corporate and Other14 11 
Capital expenditures and investments3,161 1,200 
During the first ninethree months of 2021,2022, capital expenditures
and investments supported
key development programs,
operating activities and acquisitions, primarily:
●
•Development activities in the Lower 48, primarily Permian,
Eagle Ford and Bakken.
●
•Appraisal and development activities in Alaska
related to the Western
North Slope and development
activities in the Greater Kuparuk Area.
●
•Appraisal and development activities in liquids-rich plays
the Montney and optimization of oilsoil sands development in Canada.
●
Continued development•Development and appraisal activities across
assets in Norway.
●
•Continued development activities in China
Malaysia and Indonesia.Malaysia.
•Acquisition capital associated with 10 percent additional interest in APLNG.
In February 2021, we announced 2021Our 2022 operating plan
capital expenditures of $5.5 billion.
In June 2021, we
reduced capital guidanceis currently expected to be $7.8 billion compared with $5.3 billion recognizingin 2021.
synergistic savings
from our Concho acquisition.
47ConocoPhillips      2022 Q1 10-Q
Capital Resources and Liquidity
Table of Contents
ConocoPhillips
2021 Q3 10-Q
54
Capital Resources and Liquidity
Table of Contents
Guarantor Summarized Financial
Information
We have various
cross guarantees among our Obligor group;
ConocoPhillips, ConocoPhillips Company
and
Burlington Resources LLC,
with respect to publicly held debt securities.
ConocoPhillips Company is 100 percent
owned by ConocoPhillips.
Burlington Resources LLC is
100 percent owned by ConocoPhillips
Company.
ConocoPhillips and/or ConocoPhillips
Company have fully and unconditionally
guaranteed the payment obligations
of Burlington Resources LLC,
with respect to its publicly held debt securities.
Similarly, ConocoPhillips
has fully and
unconditionally guaranteed the payment
obligations of ConocoPhillips Company
with respect to its publicly held
debt securities.
In addition, ConocoPhillips Company has
fully and unconditionally guaranteed the payment
obligations of ConocoPhillips with respect
to its publicly held debt securities.
All guarantees are joint and several.
The following tables present summarized
financial information for
the Obligor Group, as defined below:
●
•The Obligor Group will reflect guarantors
and issuers of guaranteed securities consisting
of
ConocoPhillips, ConocoPhillips Company
and Burlington Resources LLC.
●
•Consolidating adjustments for elimination
of investments in and transactions
between the collective
guarantors and issuers
of guaranteed securities are reflected
in the balances of the summarized financial information.
information.
●
•Non-Obligated Subsidiaries are excluded
from the presentation.
Upon completion of the Concho acquisition on January 15, 2021, we assumed
Concho’s publicly traded
debt of
approximately $3.9 billion in aggregate
principal amount, which was recorded
at fair value of $4.7 billion on the
acquisition date.
We completed a debt exchange
offer that settled on February
8, 2021, of which 98 percent, or
approximately $3.8 billion in aggregate
principal amount of Concho’s
notes, were tendered and accepted
for new
debt issued by ConocoPhillips.
The new debt issued in the exchange is fully and
unconditionally guaranteed by
ConocoPhillips Company.
Both the guarantor and issuer of the exchange
debt is reflected within the Obligor Group
presented here.
See
Note 3
and
Note 7
for additional information relating
to the Concho transaction.
Transactions
and balances reflecting activity between the Obligors
and Non-Obligated Subsidiaries
are presented
below:
Summarized Income Statement
Data
Millions of Dollars
Nine Months Ended
September 30, 2021
Revenues and Other Income
$
20,893
Income (loss) before income taxes*
5,445
Net income (loss)
5,452
Net Income (Loss) Attributable
to ConocoPhillips
5,452

Millions of Dollars

Three Months Ended March 31, 2022
Revenues and Other Income$12,910
Income before income taxes*5,355
Net Income5,759
*Includes approximately $3.6$2.1 billion of purchased commodities expense for transactions with Non-Obligated Subsidiaries.
Summarized Balance Sheet Data
Millions of Dollars

Millions of Dollars

March 31, 2022December 31, 2021
Current assets$9,255 7,689 
Amounts due from Non-Obligated Subsidiaries, current2,510 1,927 
Noncurrent assets73,688 69,841 
Amounts due from Non-Obligated Subsidiaries, noncurrent7,600 7,281 
Current liabilities8,759 8,005 
Amounts due to Non-Obligated Subsidiaries, current4,390 3,477 
Noncurrent liabilities31,523 30,677 
Amounts due to Non-Obligated Subsidiaries, noncurrent15,033 13,007 
September 30
December 31
2021
2020
Current assets
$
12,955
8,535
Amounts due from Non-Obligated Subsidiaries, current
1,194
440
Noncurrent assets
59,997
37,180
Amounts due from Non-Obligated Subsidiaries, noncurrent
8,223
7,730
Current liabilities
7,059
3,797
Amounts due to Non-Obligated Subsidiaries,
current
2,778
1,365
Noncurrent liabilities
28,336
18,627
Amounts due to Non-Obligated Subsidiaries,
noncurrent
10,304
3,972
Capital Resources and Liquidity
55
ConocoPhillips
2021 Q3 10-Q
Contingencies
A number of lawsuits involving a variety
ofWe are subject to legal proceedings, claims, arisingand liabilities that arise in the ordinary course of business
have been filed against
ConocoPhillips.
business. We also may be required
to remove or mitigate
the effects on the environment
of the placement,
storage, disposal or release of
certain chemical, mineral and petroleum
substances at various
active and inactive
sites.
We regularly assess the needaccrue for accounting
recognition or disclosure of these contingencies.
In the case of
all known contingencies (other than those related
to income taxes), we accrue
a liabilitylosses associated with legal claims when the loss issuch losses are considered probable
and the amount is reasonably estimable.
If a range of amounts can be reasonably
estimated and no amount within estimated. SeeNote 9.
the range is a better estimate
than any other amount, then the low end of the range
is accrued.
We do not reduce
these liabilities for potential insurance
or third-party recoveries.
We accrue receivables for
insurance or other
third-party recoveries when applicable.
With respect to income tax-related
contingencies, we use a cumulative
probability-weighted loss accrual
in cases where sustaining a tax
position is less than certain.
Based on currently available information,
we believe it is remote that future
costs related to known
contingent
liability exposures will exceed
current accruals by an amount that
would have a material adverse
impact on our
consolidated financial statements.
See Note 10
ConocoPhillips      2022 Q1 10-Q48
.
Capital Resources and Liquidity
Table of Contents
Legal and Tax
Matters
We are subject to various
lawsuits and claims including but not limited to matters
involving oil and gas royalty
and
Our legal organization
applies its knowledge, experience and professional
judgment to the specific characteristics
Environmental
We are subject to the same numerous
international, federal,
state and local environmental
laws and regulations as
We occasionally receive requests
for information or notices of potential
liability from the EPA
and state
At September 30, 2021,March 31, 2022, our balance sheet included
a total environmental
accrual of $191$184 million, compared with
ConocoPhillips
2021 Q3 10-Q
56
Notwithstanding any of the foregoing,
and as with other companies engaged in similar businesses,
environmental
costs and liabilities are inherent
concerns in our operations and products,
and there can be no assurance that
material costs and liabilities will not be incurred.
However,
we currently do not expect any material
adverse effect
upon our results of operations or financial position
as a result of compliance with current environmental
laws and
regulations.
Environmental Litigation
Several Louisiana parishesSee Part I—Item 1A—Risk Factors – "We expect to continue to incur substantial capital expenditures and the State
operating costs as a result of Louisiana have filed 43 lawsuits under Louisiana’s
Stateour compliance with existing and Local
Coastal Resources Management
Act (SLCRMA) against oilfuture environmental laws and gas
companies, including ConocoPhillips, seeking
compensatory damages regulations" in our 2021 Annual Report on Form 10-K andNote 9 for contamination
and erosion of the Louisiana coastline allegedly
caused by historical oil
and gas operations.
ConocoPhillips entities are defendants
in 22 of the lawsuits and will vigorously defend
against
them.
Because Plaintiffs’ SLCRMA theories are
unprecedented, there is uncertainty
about these claims (both as to
scope and damages) and we continue to
evaluate our exposure in these
lawsuits.information on environmental litigation.
Climate Change
Continuing political and social attention
to the issue of global climate change has resulted
in a broad range of
proposed or promulgated
state, national and international
laws focusing on GHG reduction.
These proposed or
promulgated laws apply
or could apply in countries where we have
interests or may have
interests in the future.
Laws in this field continue to evolve,
and while it is not possible to accurately estimate
either a timetable for
implementation or our future compliance costs
relating to implementation, such
laws, if enacted, could have a
material impact on our results of operations
and financial condition.
For examples of legislation or precursors
for
possible regulation and factors
on which the ultimate impact on our financial performance
will depend, see the
“Climate “Climate Change” section in Management’s
Discussion and Analysis of Financial Condition and Results
of
Operations on pages 67–6961–63 of our 20202021 Annual
Report on Form 10-K.
Climate Change Litigation
BeginningSee Part 1—Item 1A—Risk Factors – "Existing and future laws, regulations and internal initiatives relating to global climate changes, such as limitations on GHG emissions may impact or limit our business plans, result in 2017, governmentalsignificant expenditures, promote alternative uses of energy or reduce demand for our products" in our 2021 Annual Report on Form 10-K and
other entities in several states
in the U.S. have filed lawsuits against
oil and
gas companies, including ConocoPhillips,
seeking compensatory damages and equitable relief
to abate alleged
Note 9for information on climate change impacts.
Additional lawsuits with similar allegations
are expected to be filed.
The amountslitigation.
claimed by plaintiffs are unspecified and
the legal and factual issues involved
in these cases are unprecedented.
ConocoPhillips believes these lawsuits are
49ConocoPhillips      2022 Q1 10-Q
factually and legally meritless and are
an inappropriate vehicle to
address the challenges associated with climate
change and will vigorously defend
against such lawsuits.
Capital Resources and Liquidity
Table of Contents
Company Response to Climate
-RelatedClimate-Related Risks
The company has responded by putting
in place a Sustainable Development Risk Management
Standard covering
the assessment and registeringregistration of significant
and high sustainable development risks
based on their consequence
and likelihood of occurrence.
We have developed a
company-wide Climate Change Action Plan
with the goal of
tracking mitigation activities for
each climate-related risk included in the corporate
Sustainable Development Risk
Register.
The risks addressed in our Climate Change Action
Plan fall into four broad
categories:
●
•GHG-related legislation and regulation.
●
•GHG emissions management.
●
•Physical climate-related
impacts.
●
•Climate-related disclosure
and reporting.
Emissions are categorized
into three different
scopes.
Gross operated scope
and net equity Scope 1 and scopeScope 2 GHG emissions help us
understand our climate transition
risk.
●
•Scope 1 emissions are direct GHG emissions from
sources that we owncontrol or control.in which we have ownership interest.
●
•Scope 2 emissions are indirect GHG emissions from the generation
of purchased electricity or steam that
we consume.
consume.
•Scope 3 emissions are indirect emissions from
sources that we neither own nor control.
Capital Resources and Liquidity
57
ConocoPhillips
2021 Q3 10-Q
We announced in October 2020 the adoption
of a Paris-aligned climate risk framework
with the objective of
implementing a coherent set of choices designed
to facilitate the success
of our existing exploration
and
production business through the energy transition.
Given the uncertainties remaining about
how the energy
transition
will evolve, the strategy aims to
be robust across a range of potential
future outcomes.
The strategy is comprised
In 2022, we published our Plan for the Net-Zero Energy Transition (the ‘Plan’) focusing on meeting energy transition pathway demand, delivering competitive returns on and of four
pillars:capital and achieving our net-zero operational emissions ambitions.
●
Targets
:
Our target frameworkPlan describes how we will:
consists•Build a resilient asset portfolio: Focus on low cost of supply and low greenhouse gas (GHG) intensity resources.
•Commit to near, medium, and long-term targets: Reducing operational (Scope 1 and 2) emissions over which we have ownership and control with an ambition to become a hierarchy
ofnet-zero company for Scope 1 and 2 emissions by 2050.These targets from a long-term ambition
that sets theinclude:
direction and aim of the strategy,
to a medium-term performance target
for•Strengthening our previously announced operational GHG emissions intensity
reduction target to
shorter-term targets for
flaring 40-50% by 2030 and methane intensity reductions.
These performance targets are
supported by lower-level internal
business unit goals to enable the company to
achieve the company-
wide targets.
In September 2021, we increased our interim
operational target and
have setexpanding it to reduce
ourapply to both a gross operated and net
equity (scopebasis.
•Meeting a further 10% reduction target for methane emissions intensity by 2025 from our 2019 baseline.
•Aiming to achieve zero routine flaring by 2025.
•Address end-use emissions: Advocate for a well-designed, economy-wide price on carbon that would help shift consumer demand from high-carbon to low-carbon energy sources.
•Pursue transition opportunities: Evaluate potential investments in emerging energy transition and low-carbon technologies.
•In 2021, we established a multi-disciplinary Low-Carbon Technologies organization to identify and evaluate business opportunities that address end-use emissions and early-stage low-carbon technology opportunities that would leverage our existing expertise and adjacencies.
•In the 2022 capital budget, we allocated $200 million to advance energy transition activities, the majority of which will address Scope 1 and 2)2 emissions intensity byreduction projects across our global operations, with the rest allocated for early-stage low-carbon technology opportunities.
40•Track the energy transition: Utilize a comprehensive scenario planning process to 50 percent from 2016calibrate and understand alternative energy transition pathways.
levels by 2030, an improvement from
the previously announced target
of 35 to 45 percent on only•Maintain capital discipline: Use scenario analyses and a gross
operated basis,
with an ambition to achieve net-zero
operated emissions by 2050.
We have joined the
World Bank Flaring Initiative to
work towards zero
routine flaring of associated gas
by 2030, with an
ambition to meet that goal by 2025.
●
Technology choices:
We expanded our Marginal
Abatement Cost Curve process
to provide a broader
range of opportunities for emission
reduction technology.
●
Portfolio choices: Our corporate
authorization process requires
all qualifying projects to include a GHG
price in their project approval economics.
Different GHG prices are used
depending on the region or
jurisdiction.
Projects in jurisdictions with existing GHG pricing regimes
incorporate the existing
GHG price
and forecast into
their economics.
Projects where no existing GHG pricing regime
exists utilize a scenario
forecast from our internally
consistent World
Energy Model.
In this way,
both existing and emerging
regulatory requirements are
considered in our decision-making.
The company does not use an estimated
marketfully-burdened cost of GHG emissions when assessing
reserves in jurisdictions without existing GHG regulations.supply, including an appropriate cost of carbon, as the primary basis for capital allocation.
●
External engagement:
Our external engagement aims to
differentiate ConocoPhillips
within the oil and
ConocoPhillips      2022 Q1 10-Q50
gas sector with our approach to managing
climate-related risk.
We are a Founding Member of the
Climate Leadership Council (CLC), an international
policy institute founded in collaboration
with business
and environmental interests
to develop a carbon dividend plan.
Participation in the CLC provides
another
opportunity for ongoing dialogue about carbon
pricing and framing the issues in alignment with our public
policy principles.
We also belong to and fund Americans For
Carbon Dividends, the education and
advocacy branch of the CLC.
Table of Contents
Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the
Private Securities Litigation Reform Act
of 1995
This report includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
All statements other than
statements of historical
fact
included or incorporated by
reference in this report, including, without
limitation, statements
regarding our future
financial position, business strategy,
budgets, projected revenues,
projected costs and plans, objectives
of
management for future operations
the anticipated benefits of the transaction
between us and Concho Resources
Inc. (Concho), including the expected amount and
the timing of synergies from such transaction,
the anticipated
closing of the acquisition of assets from Shell Enterprises
LLC (Shell), and the anticipated impact of the Concho
and
Shell transactionsEnterprise LLC (Shell) transaction on the combined company’s
business and future financial and operating results
are forward-
lookingforward-looking statements.
Examples of forward-looking statements
contained in this report include our expected
production growth and outlook on the business
environment generally,
our expected capital budget
and capital
expenditures, and discussions concerning future
dividends.
You can often
identify our forward-looking statements
by the words “anticipate,”
“believe, “believe,” “budget,”
“continue, “continue,”
“could, “could,”
“effort, “effort,”
“estimate, “estimate,”
“expect, “expect,”
“forecast, “forecast,”
“intend, “intend,”
“goal, “goal,”
“guidance, “guidance,”
“may, “may,”
“objective, “objective,”
“outlook, “outlook,”
“plan, “plan,” “potential,”
“predict, “predict,” “projection,”
“seek, “seek,”
“should, “should,”
“target, “target,”
“will, “will,” “would” and similar
expressions.
ConocoPhillips
2021 Q3 10-Q
58
We based the forward-looking
statements on our current
expectations, estimates and
projections about ourselves
and the industries in which we operate in
general.
We caution you these
statements are not guarantees
of future
performance as they involve
assumptions that, while made in good faith, may
prove to be incorrect, and involve
risks and uncertainties we cannot predict.
In addition, we based many of these forward
-lookingforward-looking statements on
assumptions about future events
that may prove to be inaccurate.
Accordingly,
our actual outcomes and results
may differ materially from
what we have expressed
or forecast in the forward
-lookingforward-looking statements.
Any differences
could result from a variety of factors
and uncertainties, including, but not limited to,
the following:
●
•The impact of public health crises, including pandemics (such as COVID
-19)COVID-19) and epidemics and any related
company or government policies
or actions.
●
•Global and regional changes in the demand, supply,
prices, differentials or other market
conditions
affecting oil and gas, including changes
resulting as a result of any ongoing military conflict, including the conflict between Russia and Ukraine, and the global response to such conflict, or from a public health crisis or from the imposition
or
lifting of crude oil production quotas or other actions
that might be imposed by OPEC and other producing
countries and the resulting company
or third-party actions in response to such changes.
●
•Fluctuations in crude oil, bitumen, natural gas,
LNG and NGLs prices, including a prolonged decline in
these prices relative to historical
or future expected levels.
●
•The impact of significant declines in prices for crude oil,
bitumen, natural gas, LNG and NGLs, which may
result in recognition of impairment charges
on our long-lived assets, leaseholds and nonconsolidated
equity investments.
●•The potential for insufficient liquidity or other factors, such as those described herein, that could impact our ability to repurchase shares and declare and pay dividends, whether fixed or variable.
•Potential failures or delays
in achieving expected reserve or production
levels from existing and future
oil
and gas developments, including due to
operating hazards, drilling risks
and the inherent uncertainties in
predicting reserves and reservoir performance.
●
•Reductions in reserves replacement rates,
whether as a result of the significant declines in
commodity
prices or otherwise.
●
•Unsuccessful exploratory drilling
activities or the inability to obtain access to exploratory
acreage.
●
•Unexpected changes in costs, inflationary pressures or technical
requirements for constructing,
modifying or operating E&P facilities.
facilities.
●
•Legislative and regulatory initiatives
addressing environmental concerns,
including initiatives addressing
the impact of global climate change or further regulating
hydraulic fracturing, methane
emissions, flaring
or water disposal.
●
•Lack of, or disruptions
in, adequate and reliable transportation
for our crude oil, bitumen, natural gas,
LNG and NGLs.
●
•Inability to timely obtain or maintain
permits, including those necessary for construction, drilling
and/or
development, or inability to make
capital expenditures required
to maintain compliance with any
necessary permits or applicable laws or regulations.
●
•Failure to complete definitive
agreements and feasibility studies
for,
and to complete construction of,
announced and future E&P and LNG development in a timely
manner (if at all) or on budget.
●
51ConocoPhillips      2022 Q1 10-Q
Table of Contents
•Potential disruption or interruption
of our operations due to accidents, extraordinary
weather events, supply chain disruptions, civil
unrest, political events,
war, terrorism,
cyber attacks, and information
technology failures, constraints
or disruptions.
disruptions.
●
•Changes in international monetary
conditions and foreign currency exchange
rate fluctuations.
●
•Changes in international trade relationships,
including the imposition of trade restrictions or
tariffs
relating to crude oil, bitumen, natural
gas, LNG, NGLs and any materials or products
(such (such as aluminum
and steel) used in the operation of our business.business, including any sanctions imposed as a result of any ongoing military conflict, including the conflict between Russia and Ukraine.
●
•Substantial investment
in and development use of, competing
or alternative energy sources, including
as
a result of existing or future environmental
rules and regulations.
●
•Liability for remedial actions, including removal
and reclamation obligations,
under existing and future
environmental regulations
and litigation.
●
•Significant operational or investment
changes imposed by existing or future
environmental statutes
and
regulations, including international
agreements and national or regional legislation
and regulatory
measures to limit or reduce GHG emissions.
59
ConocoPhillips
2021 Q3 10-Q
●
•Liability resulting from litigation,
including litigation directly or indirectly related to
the transaction with Concho Resources Inc., or our failure
to comply with applicable laws and regulations.
●
•General domestic and international
economic and political developments, including armed
hostilities;
expropriation of assets; changes in governmental
policies relating to crude oil, bitumen, natural
gas, LNG
and NGLs pricing; regulation or taxation;
and other political, economic or diplomatic developments.developments, including as a result of any ongoing military conflict, including the conflict between Russia and Ukraine.
●
•Volatility in the commodity futures
markets.
●
•Changes in tax and other laws, regulations
(including (including alternative energy mandates),
or royalty rules
applicable to our business.
●
•Competition and consolidation in the oil and gas
E&P industry.
●
•Any limitations on our access to capital
or increase in our cost of capital, including
as a result of illiquidity
or uncertainty in domestic or international
financial markets or investment
sentiment.
●
•Our inability to execute, or delays
in the completion of, any asset dispositions or acquisitions
we elect to pursue.
pursue.
●
•Potential failure to obtain,
or delays in obtaining, any necessary
regulatory approvals
for pending or
future asset dispositions or acquisitions, or that such
approvals may require modification
to the terms of
the transactions or the operation
of our remaining business.
●
•Potential disruption of our operations
as a result of pending or future asset dispositions or acquisitions,
including the diversion of management time and
attention.
●
•Our inability to deploy the net proceeds from any
asset dispositions that are pending or that we elect
to
undertake in the future in the manner and
timeframe we currently anticipate,
if at all.
●
Our inability to liquidate the common stock
issued to us by Cenovus Energy as part of our sale of certain
assets in western Canada at prices we deem acceptable,
or at all.
●
•The operation and financing of our joint ve
ntures.ventures.
●
•The ability of our customers and other contractual
counterparties to satisfy their obligations
to us,
including our ability to collect payments
when due from the government of Venezuela
or PDVSA.
●
•Our inability to realize anticipated
cost savings and capital expenditure
reductions.
●
•The inadequacy of storage capacity
for our products, and ensuing curtailments,
whether voluntary or
involuntary,
required to mitigate this physical
constraint.
●
Our ability to successfully integrate
Concho’s business and
fully achieve the expected benefits and cost
reductions associated with the transaction
with Concho in a timely manner or at all.
●
•The risk that we will be unable to retain
and hire key personnel.
●
Unanticipated difficulties or expenditures
relating to integration with Concho.
●
The risk that the conditions to close the acquisition
of assets from Shell are not satisfied on
a timely basis
or at all, or the failure of the transaction
to close for any reason.
●
The risk that any regulatory
approval, consent or authorization
that may be required for
the proposed
acquisition of assets from Shell is not obtained
or is obtained subject to conditions that are not
anticipated.
●
•Unanticipated integration
issues relating to the proposed acquisition
of assets from Shell, such as
potential disruptions of our ongoing business and
higher than anticipated integration
costs.
●
•Uncertainty as to the long-term value of our
common stock.
●
•The diversion of management time on integration
-relatedintegration-related matters.
●
•The factors generally described
in Part I—Item 1A in our 20202021 Annual Report
on Form 10-K and any
additional risks described in our other filings with the SEC.
ConocoPhillips      2022 Q1 10-Q52
Table of Contents
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Information about market
risks for the ninethree months ended September
30, 2021,March 31, 2022 does not differ materially from
that discussed under Item 7A in our 20202021 Annual Report
on Form 10-K.
ConocoPhillips
2021 Q3 10-Q
60
Item 4.
Controls and Procedures
We maintain disclosure
controls and procedures
designed to ensure information required
to be disclosed in
reports we file or submit under the Securities Exchange
Act of 1934, as amended (the Act), is recorded, processed,
summarized and reported within the
time periods specified in SEC rules and forms, and
that such information is
accumulated and communicated
to management, including our principal executive
and principal financial officers,
as appropriate, to allow timely decisions
regarding required disclosure.
At September 30, 2021,March 31, 2022, with the
participation of our management, our Chairman and
Chief Executive Officer (principal executive
officer) and our
Executive Vice President and Chief
Financial Officer (principal financial officer) carried
out an evaluation, pursuant
to Rule 13a-15(b) of the Act, of ConocoPhillips’ disclosure
controls and procedures
(as (as defined in Rule 13a-15(e) of
the Act).
Based upon that evaluation, our Chairman
and Chief Executive Officer and our Executive
Vice President
and Chief Financial Officer concluded our disclosure
controls and procedures were
operating effectively
at
September 30, 2021. March 31, 2022.
There have been no changes in our internal
control over financial reporting, as defined in
Rule 13a-15(f) of the Act,
in the period covered by this report that
have materially affected,
or are reasonably likely to
materially affect, our
internal control over financial
reporting.

PART
II.
Other Information
Item 1.
Legal Proceedings
The interim-period financial information
presented in the financial statements
included in this report is unaudited.
There are no new material legal
proceedings or material developments
with respect to matters
previously
disclosed in Item 3 of our 20202021 Annual Report on Form 10-K.
10-K.
Item 1A.
Risk Factors
Other than the risk factors set forth
below, there
There have been no material changes
to from the risk factors disclosed
in Item 1A of our
2021 Annual Report on Form 10-K for the
fiscal year ended December 31, 2020.
10-K.
Risks Related to the Proposed Shell Permian
Acquisition
Our ability to complete the Shell Permian
Acquisition is subject to various closing conditions,
including regulatory
clearance, which may impose conditions that could adversely
affect us or cause the acquisition not to be
completed.
The Shell Permian Acquisition is subject to a number of conditions
to closing as specified in the definitive
agreement signed on September 20, 2021 (Purchase
Agreement), including but not limited to
the expiration or
termination of the waiting period under the Hart-Scott
-Rodino Antitrust Improvements
Act of 1976, as
amended. No assurance can be given that
the required regulatory clearance
will be obtained or that the other
required conditions to closing will be satisfied,
and, if the regulatory clearance is obtained
and the required
conditions are satisfied, no assurance
can be given as to the terms, conditions and
timing of such clearance,
including whether any required conditions
will materially adversely affect
ConocoPhillips following the Shell
Permian Acquisition.
Any delay in closing the Shell Permian
Acquisition could cause ConocoPhillips not to
realize,
or to be delayed in realizing, some or all of the benefits that
we expect to achieve if the Shell Permian
Acquisition
is successfully closed within its expected time frame.
53ConocoPhillips      2022 Q1 10-Q
Table of Contents
61
ConocoPhillips
2021 Q3 10-Q
The termination of the Purchase Agreement could negatively
impact our business and in some circumstances, we
could forfeit a portion of the purchase price.
If the Shell Permian Acquisition is not completed
for any reason, including if the above
closing conditions are not
satisfied, our ongoing business may be adversely
affected and, without realizing
any of the expected benefits of
having completed the Shell Permian
Acquisition, we would be subject to a number
of risks, including the following:
●
We may experience negative
reactions from the financial markets,
including negative impacts on the
trading price of our common stock; and
●
We will be required to pay
our costs relating to the Shell Permian Acquisition,
such as legal and
accounting costs and associated
fees and expenses, whether or not the Shell Permian
Acquisition is
completed.
Additionally, upon
entry into the Purchase Agreement, 5%
(the Deposit) of the $9.5 billion (Base Purchase Price)
was paid to Shell.
If the Purchase Agreement is terminated
solely as a result of the material breach or failure
of
any of our representations,
warranties or covenants
included in the Purchase Agreement, the Deposit will not
be
refunded.
Integrating the assets acquired in the Shell Permian Acquisition
may be more difficult, costly or time-consuming
than expected and we may fail to realize
the full anticipated benefits of the transaction, which may adversely
affect our business results and negatively affect the value of our common stock.
We may encounter difficulties
integrating the assets acquired
from Shell into our business and realizing the
anticipated benefits of the transaction
or such benefits may take longer
to realize than expected.
The Shell
Permian Acquisition is expected to
add approximately 225,000 net acres,
thereby increasing our unconventional
position in Permian by nearly 30 percent.
There are a large number of processes,
policies, procedures, operations
and technologies and systems
that must be integrated
in connection with the Shell Permian Acquisition and the
integration of Shell’s
assets.
It is possible that the integration process
could result in the disruption of our ongoing
business; inconsistencies in standards,
controls, procedures and
policies; unexpected integration
issues; higher
than expected integration
costs and an overall post
-completion integration process
that takes longer than
originally anticipated.
We will be required to devote
management attention
and resources to integrating
the
business practices and operations,
and prior to closing the transaction, management attention
and resources will
be required to plan for such integration.
An inability to realize the full extent
of the anticipated benefits of the
Shell Permian Acquisition, as well as any delays
encountered in the integration
process, could have an adverse
effect on our revenues or
on our level of expenses and operating
results, which may adversely affect
the value of
our common stock.
In addition, the actual integration may
result in additional and unforeseen expenses.
Although
we expect that the strategic
benefits, and additional income, as well as the realization
of other efficiencies related
to the integration of the Shell assets,
may offset incremental
transaction-related costs
over time, if we are not able
to adequately address integration
challenges, we may be unable to successfully
integrate operations
or realize the
anticipated benefits of the integration
of the Shell assets.
ConocoPhillips
2021 Q3 10-Q
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Millions of Dollars
Period
Total
Number of
Shares
Purchased
*
Average Price Paid
per Share
Total
Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares That
May Yet Be Purchased
Under the Plans or
Programs
July 1-31, 2021
7,118,526
$
58.18
7,118,526
$
13,088
August 1-31, 2021
7,530,282
55.61
7,530,282
12,669
September 1-30, 2021
6,990,322
58.70
6,990,322
12,259
21,639,130
21,639,130




Millions of Dollars
Period
Total Number of
 Shares
Purchased*
Average Price Paid
 per Share
Total Number of
 Shares Purchased as
Part of Publicly
Announced Plans or
 Programs
Approximate Dollar
Value of Shares That
May Yet Be Purchased
Under the Plans or
 Programs
January 1-31, 20225,203,865 $81.71 5,203,865 $10,435 
February 1-28, 20224,946,863 90.57 4,946,863 9,987 
March 1-31, 20225,575,384 98.91 5,575,384 9,435 
15,726,112 15,726,112 
*There were no repurchases of common stock from company employees in connection with the company's broad-based
employee incentive plans.

In late 2016, we initiated our current
share repurchase program,
which has a total program authorization
of $25
billion of our common stock.
At September 30, 2021, As of March 31, 2022, we had repurchased
$12.7 $15.6 billion of shares, with $12.3
billion remaining under our current authorization.
shares. Repurchases are made at management’s
discretion, at
prevailing prices, subject to market
conditions and other factors.
Except as limited by applicable legal
requirements, repurchases
may be increased, decreased or discontinued
at any time without prior notice.
Shares
of stock repurchased under the plan are
held as treasury shares.
See the “OurPart I—Item 1A—Risk Factors – “Our ability to declare and pay
dividends
and repurchase sharesexecute our capital return program is subject to certain
considerations” section considerations” in Risk Factors
on page 31 of our 20202021 Annual
Report on Form 10-K.
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ConocoPhillips
2021 Q3 10-Q
Table of Contents
Item 6.
Exhibits
10.1*
* Filed herewith.
55ConocoPhillips      2022 Q1 10-Q
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2021 Q3 10-Q
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Table of Contents
Signature
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant
has duly caused this report to
be signed on its behalf by the undersigned thereunto
duly authorized.
CONOCOPHILLIPS
/s/ Kontessa S. Haynes-Welsh
Kontessa S. Haynes-Welsh
CONOCOPHILLIPS
/s/ Kontessa S. Haynes-Welsh
Kontessa S. Haynes-Welsh
Chief Accounting Officer
May 5, 2022
November 4, 2021
ConocoPhillips      2022 Q1 10-Q56