ConocoPhillips (COP) 10-Q 4 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	3 Months Ended Mar. 31, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	CONOCOPHILLIPS
Entity Central Index Key	0001163165
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		62.3
Entity Common Stock, Shares Outstanding	1,488,318,070

Consolidated Income Statement

Consolidated Income Statement (USD $)
In Millions, except Share data in Thousands	3 Months Ended Mar. 31, 2010		3 Months Ended Mar. 31, 2009
Revenues and Other Income
Sales and other operating revenues	$44,821	[1]	$30,741	[1]
Equity in earnings of affiliates	868		373	[2]
Other income	73		124
Total Revenues and Other Income	45,762		31,238	[2]
Costs and Expenses
Purchased crude oil, natural gas and products	31,521		19,759
Production and operating expenses	2,527		2,545
Selling, general and administrative expenses	444		475
Exploration expenses	383		225
Depreciation, depletion and amortization	2,318		2,230
Impairments	91		3
Taxes other than income taxes	4,037	[1]	3,464	[1]
Accretion on discounted liabilities	114		104
Interest and debt expense	301		310
Foreign currency transaction (gains) losses	36		131
Total Costs and Expenses	41,772		29,246
Income before income taxes	3,990		1,992	[2]
Provision for income taxes	1,878		1,176	[2]
Net income	2,112		816	[2]
Less: net income attributable to noncontrolling interests	(14)		(16)
Net Income Attributable to ConocoPhillips	$2,098		$800	[2]
Net Income Attributable to ConocoPhillips Per Share of Common Stock (dollars)
Basic	1.41		0.54	[2]
Diluted	1.4		0.54	[2]
Dividends Paid Per Share of Common Stock (dollars)	0.5	[3]	0.47	[3]
Average Common Shares Outstanding (in thousands)
Basic	1,492,861		1,485,890
Diluted	1,503,565		1,495,247
[1]Includes excise taxes on petroleum products sales of $3,220 million for the three months ended March 31, 2010 and $3,060 million for the three months ended March 31, 2009.
[2]Recast to reflect a change in accounting principle. See Note 2 - Changes in Accounting Principles, for more information.
[3]A quarterly dividend of 55 cents per share was declared on March 24, 2010, payable on June 1, 2010, to stockholders of record at the close of business on May 24, 2010.

Consolidated Balance Sheet

Consolidated Balance Sheet (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Assets
Cash and cash equivalents	$855	$542
Accounts and notes receivable (net of allowance of $69 million in 2010 and $76 million in 2009)	10,968	11,861
Accounts and notes receivable-related parties	1,662	1,354
Inventories	7,300	4,940
Prepaid expenses and other current assets	2,808	2,470
Total Current Assets	23,593	21,167
Investments and long-term receivables	36,764	35,742	[1]
Loans and advances-related parties	2,560	2,352
Net properties, plants and equipment	86,623	87,708
Goodwill	3,635	3,638
Intangibles	815	823
Other assets	820	708
Total Assets	154,810	152,138	[1]
Liabilities
Accounts payable	14,392	14,168
Accounts payable-related parties	1,545	1,317
Short-term debt	2,763	1,728
Accrued income and other taxes	4,105	3,402
Employee benefit obligations	540	846
Other accruals	3,260	2,234
Total Current Liabilities	26,605	23,695
Long-term debt	26,225	26,925
Asset retirement obligations and accrued environmental costs	8,661	8,713
Joint venture acquisition obligation-related party	4,839	5,009
Deferred income taxes	17,891	17,956	[1]
Employee benefit obligations	4,138	4,130
Other liabilities and deferred credits	3,034	3,097
Total Liabilities	91,393	89,525	[1]
Equity
Common stock (2,500,000,000 shares authorized at $.01 par value) Issued (2010 - 1,735,391,399 shares; 2009 - 1,733,345,558 shares) Par value	17	17
Capital in excess of par	43,742	43,681
Grantor trusts (at cost: 2010 - 38,726,514 shares; 2009 - 38,742,261 shares)	(666)	(667)
Treasury stock (at cost: 2010 - 208,346,815 shares; 2009 - 208,346,815 shares)	(16,211)	(16,211)
Accumulated other comprehensive income	3,275	3,065
Unearned employee compensation	(69)	(76)
Retained earnings	32,749	32,214	[1]
Total Common Stockholders' Equity	62,837	62,023	[1]
Noncontrolling interests	580	590
Total Equity	63,417	62,613	[1]
Total Liabilities and Equity	$154,810	$152,138	[1]
[1]Recast to reflect a change in accounting principle. See Note 2 - Changes in Accounting Principles, for more information.

Consolidated Balance Sheet (Par

Consolidated Balance Sheet (Parenthetical) (USD $)
In Millions, except Share data	Mar. 31, 2010	Dec. 31, 2009
Assets
Allowance for doubtful accounts	$69	$76
Equity
Common stock, par value	0.01	0.01
Common stock, shares authorized	2,500,000,000	2,500,000,000
Common stock, shares issued	1,735,391,399	1,733,345,558
Grantor trusts, shares	38,726,514	38,742,261
Treasury stock, shares	208,346,815	208,346,815

Consolidated Statement of Cash

Consolidated Statement of Cash Flows (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash Flows From Operating Activities
Net income	$2,112	$816	[1]
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization	2,318	2,230
Impairments	91	3
Dry hole costs and leasehold impairments	133	123
Accretion on discounted liabilities	114	104
Deferred taxes	(35)	(221)	[1]
Undistributed equity earnings	(503)	(280)	[1]
Gain on asset dispositions	(24)	(39)
Other	(187)	(2)
Working capital adjustments
Decrease (increase) in accounts and notes receivable	677	1,860
Decrease (increase) in inventories	(2,439)	(1,454)
Decrease (increase) in prepaid expenses and other current assets	(398)	(201)
Increase (decrease) in accounts payable	396	(529)
Increase (decrease) in taxes and other accruals	785	(525)
Net Cash Provided by Operating Activities	3,040	1,885
Cash Flows From Investing Activities
Capital expenditures and investments	(2,071)	(2,906)
Proceeds from asset dispositions	132	86
Long-term advances/loans-related parties	(248)	(88)
Collection of advances/loans-related parties	27	11
Other	3	(29)
Net Cash Used in Investing Activities	(2,157)	(2,926)
Cash Flows From Financing Activities
Issuance of debt	362	6,033
Repayment of debt	(15)	(4,102)
Issuance of company common stock	9	(21)
Dividends paid on company common stock	(744)	(696)
Other	(186)	(203)
Net Cash Provided by (Used in) Financing Activities	(574)	1,011
Effect of Exchange Rate Changes on Cash and Cash Equivalents	4	77
Net Change in Cash and Cash Equivalents	313	47
Cash and cash equivalents at beginning of period	542	755
Cash and Cash Equivalents at End of Period	$855	$802
[1]Recast to reflect a change in accounting principle. See Note 2 - Changes in Accounting Principles, for more information.

Interim Financial Information

Interim Financial Information
	3 Months Ended Mar. 31, 2010
Interim Financial Information [Abstract]
Note 1 - Interim Financial Information	Note 1Interim Financial Information The interim-period financial information presented in the financial statements included in this report is unaudited and includes all known accruals and adjustments, in the opinion of management, necessary for a fair presentation of the consolidated financial position of ConocoPhillips and its results of operations and cash flows for such periods. All such adjustments are of a normal and recurring nature. To enhance your understanding of these interim financial statements, see the consolidated financial statements and notes included in our 2009 Annual Report on Form 10-K.

Changes in Accounting Principle

Changes in Accounting Principles
	3 Months Ended Mar. 31, 2010
Changes in Accounting Principles [Abstract]
Note 2 - Changes in Accounting Principles	Note 2Changes in Accounting Principles LUKOIL Accounting Effective January1, 2010, we changed the method used to determine our equity-method share of LUKOILs earnings. Prior to 2010, we estimated our LUKOIL equity earnings for the current quarter based on current market indicators, publicly available LUKOIL information and other objective data. This earnings estimation process was necessary because, historically, LUKOILs accounting cycle close and preparation of U.S. generally accepted accounting principles (GAAP) financial statements occurred subsequent to our reporting deadline, and for certain periods this timing gap exceeded 93days. Although Financial Accounting Standards Board (FASB)Accounting Standards Codification (ASC)Topic 323, InvestmentsEquity Method and Joint Ventures, provides that when financial statements of an investee are not sufficiently timely, then the investor should record its share of earnings or loss based on the most recently available financial statements, SEC guidance indicates this timing gap should not exceed 93days. Recently, the timing gap has been reduced to less than 93days for all reporting periods. Accordingly, we believe it is now preferable to implement a change in accounting principle to record our equity-method share of LUKOILs earnings on a one-quarter lag basis, rather than using an earnings estimate for the current quarter. We believe the new method is preferable as it improves reporting reliability, while maintaining an acceptable level of relevance. This change in accounting principle to a one-quarter lag under ASC Topic 323 has been applied retrospectively, by recasting prior period financial information. The following table summarizes the line items affected on the consolidated income statement: Millions of Dollars Three Months Ended March 31 2010 2009 Computed As Effect As Effect with Reported of Originally As of Estimate with Lag Change Reported Adjusted Change Equity in earnings of affiliates $ 751 868 117 415 373 (42 ) Provision for income taxes 1,877 1,878 1 1,178 1,176 (2 ) Net Income 1,996 2,112 116 856 816 (40 ) Net Income Attributable to ConocoPhillips 1,982 2,098 116 840 800 (40 ) Net Income Attributable to ConocoPhillips Per Share of Common Stock (dollars) Basic $ 1.33 1.41 0.08 0.57 0.54 (0.03 ) Diluted 1.32 1.40 0.08 0.56 0.54 (0.02 ) The following table summarizes the line items affected on the consolidated balance sheet: Millions of Dollars March 31, 2010 December 31, 2009 Computed As Effect As Effect with Reported of Originally As of Estimate with Lag Change Reported Adjusted

Variable Interest Entities

Variable Interest Entities (VIEs)
	3 Months Ended Mar. 31, 2010
Variable Interest Entities (VIEs) [Abstract]
Note 3 - Variable Interest Entities (VIEs)	Note 3Variable Interest Entities (VIEs) We hold significant variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. Information on these VIEs follows: We have a 30percent ownership interest with a 50percent governance interest in the OOO Naryanmarneftegaz (NMNG)joint venture to develop resources in the Timan-Pechora province of Russia. The NMNG joint venture is a VIE because we and a related party, OAO LUKOIL, have disproportionate interests. When related parties are involved in a VIE and neither party has the power to direct the activities of the VIE without the consent of the other party, reasonable judgment should take into account the relevant facts and circumstances for the determination of the primary beneficiary. The activities of NMNG are more closely aligned with LUKOIL because they share Russia as a home country, and LUKOIL conducts extensive exploration and production activities in the same province. Additionally, there are no financial guarantees given by LUKOIL or us, and LUKOIL owns 70percent, versus our 30percent direct interest. As a result, we have determined we are not the primary beneficiary of NMNG, and we use the equity method of accounting for this investment. The funding of NMNG has been provided with equity contributions, primarily for the development of the Yuzhno Khylchuyu (YK)Field. At March31, 2010, the book value of our investment in the venture was $1,587million. Production from the NMNG joint venture fields is transported via pipeline to LUKOILs terminal at Varandey Bay on the Barents Sea and then shipped via tanker to international markets. LUKOIL completed an expansion of the terminals gross oil-throughput capacity from 30,000 barrels per day to 240,000 barrels per day, and we participated in the design and financing of the expansion. The terminal entity, Varandey Terminal Company, is a VIE because we and LUKOIL have disproportionate interests. We had an obligation to fund, through loans, 30percent of the terminals expansion costs, but have no governance or direct ownership interest in the terminal. We determined we are not the primary beneficiary for Varandey because LUKOIL has the power to direct the activities that most influence Varandeys economic performance. We account for our loan to Varandey as a financial asset. Principal repayments began in April2009. The loan balance outstanding as of March31, 2010, at current exchange rates, was $275million. We have an agreement with Freeport LNG Development, L.P. (Freeport LNG) to participate in a liquefied natural gas (LNG)receiving terminal in Quintana, Texas. We have no ownership in Freeport LNG; however, we own a 50percent interest in Freeport LNG GP, Inc. (Freeport GP), which serves as the general partner managing the venture. We entered into a credit agreement with Freeport LNG, whereby we agreed to provide loan financing for the construction of the terminal. We also entered into a long-term agreement with Freeport LNG to use 0.9billion cubic feet per day of regasification capacity. The terminal became operational in June2008, and we began making payments under the terminal use agreem

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories [Abstract]
Note 4 - Inventories	Note 4Inventories Inventories consisted of the following: Millions of Dollars March 31 December 31 2010 2009 Crude oil and petroleum products $ 6,305 3,955 Materials, supplies and other 995 985 $ 7,300 4,940 Inventories valued on the last-in, first-out (LIFO)basis totaled $6,110million and $3,747million at March31, 2010, and December31, 2009, respectively. The excess of current replacement cost over LIFO cost of inventories amounted to $5,752million and $5,627million at March31, 2010, and December31, 2009, respectively.

Assets Held for Sale

Assets Held for Sale
	3 Months Ended Mar. 31, 2010
Assets Held for Sale [Abstract]
Note 5 - Assets Held for Sale	Note 5Assets Held for Sale At March31, 2010, we classified $333million of noncurrent assets, primarily investments in equity affiliates, as held for sale and most of this amount is included in Prepaid expenses and other current assets. We also classified $75million of noncurrent deferred tax liabilities as current, based on their held for sale status. In April2010, we entered into definitive agreements with subsidiaries of Sinopec International Petroleum Exploration and Production Company to sell our 9.03percent interest in the Syncrude Canada Ltd. joint venture (Syncrude) for approximately $4.65billion. The transaction is anticipated to close in the third quarter of 2010, subject to Canadian and Chinese government approvals. Syncrude met the held-for-sale criteria during the second quarter, and we expect it to be reflected as held for sale in our June30, 2010, balance sheet. The carrying value of our Syncrude net assets at March31, 2010, was $1,793million. In addition, there is an associated net deferred tax liability of $414million.

Investments, Loans and Long-Ter

Investments, Loans and Long-Term Receivables
	3 Months Ended Mar. 31, 2010
Investments, Loans and Long-Term Receivables [Abstract]
Note 6 - Investments, Loans and Long-Term Receivables	Note 6Investments, Loans and Long-Term Receivables LUKOIL Our ownership interest in LUKOIL was 20percent at March31, 2010, based on 851million shares authorized and issued. For financial reporting under U.S. GAAP, treasury shares held by LUKOIL are not considered outstanding for determining our equity method ownership interest in LUKOIL. Our ownership interest, based on estimated shares outstanding, was 20.09percent at March31, 2010. At March31, 2010, the book value of our ordinary share investment in LUKOIL was $6,809million. Our 20percent share of the net assets of LUKOIL was estimated to be $11,262million. A majority of this negative basis difference of $4,453million is being amortized on a straight-line basis over a 22-year useful life as an increase to equity earnings. On March31, 2010, the closing price of LUKOIL shares on the London Stock Exchange was $56.70 per share, making the total market value of our LUKOIL investment $9,645million. For additional information about accounting for our LUKOIL investment, see Note 2Changes in Accounting Principles. Loans to Related Parties As part of our normal ongoing business operations and consistent with industry practice, we invest and enter into numerous agreements with other parties to pursue business opportunities, which share costs and apportion risks among the parties as governed by the agreements. Included in such activity are loans made to certain affiliated companies. Significant loans to affiliated companies at March31, 2010, included the following: $691million in loan financing to Freeport LNG Development, L.P. $275million in loan financing at March2010 exchange rates to Varandey Terminal Company. $1,051million in project financing and an additional $91million of accrued interest to Qatargas 3. $550million in loan financing to WRB Refining LLC. The long-term portion of these loans are included in the Loans and advancesrelated parties line on the consolidated balance sheet, while the short-term portion is in Accounts and notes receivablerelated parties. Other Investments We have investments remeasured at fair value on a recurring basis to support certain nonqualified deferred compensation plans. The fair value of these assets at March31, 2010, was $329million, and substantially the entire value is categorized in Level 1 of the fair value hierarchy. These investments are measured at fair value using a market approach based on quotations from national securities exchanges. Merey Sweeny, L.P. (MSLP)is a limited partnership that owns a 70,000 barrel-per-day delayed coker and related facilities at the Sweeny Refinery used to produce fuel-grade petroleum coke. Prior to August28, 2009, MSLP was owned 50/50 by us and Petrleos de Venezuela S.A. (PDVSA). Under the agreements that govern the relationships between the partners, certain defaults by PDVSA with respect to supply of crude oil to the Sweeny Refinery gave us the right to acquire PDVSAs 50 percent ownership interest in MSLP. On August28, 2009, we exercised that right. PDVSA recently initiated arbitration in the International Chamber of Commerce challenging our actions. We continue t

Properties, Plants and Equipmen

Properties, Plants and Equipment
	3 Months Ended Mar. 31, 2010
Properties, Plants and Equipment [Abstract]
Note 7 - Properties, Plants and Equipment	Note 7Properties, Plants and Equipment Our investment in properties, plants and equipment (PPE), with the associated accumulated depreciation, depletion and amortization (Accum. DDA), was: Millions of Dollars March 31, 2010 December 31, 2009 Gross Accum. Net Gross Accum. Net PPE DDA PPE PPE DDA PPE EP $ 115,611 46,641 68,970 115,224 45,577 69,647 Midstream 124 76 48 123 74 49 RM 22,835 6,838 15,997 23,047 6,714 16,333 LUKOIL Investment - - - - - - Chemicals - - - - - - Emerging Businesses 1,139 301 838 1,198 300 898 Corporate and Other 1,657 887 770 1,650 869 781 $ 141,366 54,743 86,623 141,242 53,534 87,708 Suspended Wells Our capitalized cost of suspended wells at March31, 2010, was $976million, an increase of $68million from $908million at year-end 2009. For the category of exploratory well costs capitalized for a period greater than one year as of December31, 2009, none was charged to dry hole expense during the first three months of 2010.

Impairments

Impairments
	3 Months Ended Mar. 31, 2010
Impairments [Abstract]
Note 8 - Impairments	Note 8Impairments As a result of our decision to end our participation in the new refinery project in Yanbu Industrial City, Saudi Arabia, we recorded a before-tax property impairment of $88million in international RM to write-off capitalized project costs.

Debt

Debt
	3 Months Ended Mar. 31, 2010
Debt [Abstract]
Note 9 - Debt	Note 9Debt We have two commercial paper programs supported by our $7.85billion revolving credit facilities: the ConocoPhillips $6.35billion program, primarily a funding source for short-term working capital needs, and the ConocoPhillips Qatar Funding Ltd. $1.5billion commercial paper program, which is used to fund commitments relating to the Qatargas 3 Project. Commercial paper maturities are generally limited to 90days. At both March31, 2010 and December31, 2009, we had no direct outstanding borrowings under our revolving credit facilities, but $40million in letters of credit had been issued. In addition, under the two commercial paper programs, there was $1,662million of commercial paper outstanding at March31, 2010, compared with $1,300million at December31, 2009. Since we had $1,662million of commercial paper outstanding and had issued $40million of letters of credit, we had access to $6.1billion in borrowing capacity under our revolving credit facilities at March31, 2010. At March31, 2010, we classified $1,113million of short-term debt as long-term debt, based on our ability and intent to refinance the obligation on a long-term basis under our revolving credit facilities.

Joint Venture Acquisition Oblig

Joint Venture Acquisition Obligation
	3 Months Ended Mar. 31, 2010
Joint Venture Acquisition Obligation [Abstract]
Note 10 - Joint Venture Acquisition Obligation	Note 10Joint Venture Acquisition Obligation We are obligated to contribute $7.5billion, plus interest, over a 10-year period that began in 2007, to FCCL Partnership. Quarterly principal and interest payments of $237million began in the second quarter of 2007 and will continue until the balance is paid. Of the principal obligation amount, approximately $668million was short-term and was included in the Accounts payablerelated parties line on our March31, 2010, consolidated balance sheet. The principal portion of these payments, which totaled $162million in the first three months of 2010, are included in the Other line in the financing activities section of our consolidated statement of cash flows. Interest accrues at a fixed annual rate of 5.3percent on the unpaid principal balance. Fifty percent of the quarterly interest payment is reflected as a capital contribution and is included in the Capital expenditures and investments line on our consolidated statement of cash flows.

Noncontrolling Interests

Noncontrolling Interests
	3 Months Ended Mar. 31, 2010
Noncontrolling Interest [Abstract]
Note 11 - Noncontrolling Interests	Note 11Noncontrolling Interests Activity for the equity attributable to noncontrolling interests for the first three months of 2010 and 2009 was as follows: Millions of Dollars 2010 2009* Common Non- Common Non- Stockholders Controlling Total Stockholders Controlling Total Equity Interest Equity Equity Interest Equity Balance at January 1 $ 62,023 590 62,613 55,165 1,100 56,265 Net income 2,098 14 2,112 800 16 816 Dividends (1,563 ) - (1,563 ) (696 ) - (696 ) Distributions to noncontrolling interests - (24 ) (24 ) - (17 ) (17 ) Other changes, net** 279 - 279 (214 ) (1 ) (215 ) Balance at March 31 $ 62,837 580 63,417 55,055 1,098 56,153 * Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information. ** Includes components of other comprehensive income, which are disclosed separately in Note 15Comprehensive Income.

Guarantees

Guarantees
	3 Months Ended Mar. 31, 2010
Guarantees [Abstract]
Note 12 - Guarantees	Note 12Guarantees At March31, 2010, 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 either because the guarantees were issued prior to December31, 2002, or 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. Construction Completion Guarantees In December2005, we issued a construction completion guarantee for 30percent of the $4billion in loan facilities of Qatargas 3, which are being used to finance the construction of an LNG train in Qatar. Of the $4billion in loan facilities, we committed to provide $1.2billion. The maximum potential amount of future payments to third-party lenders under the guarantee is estimated to be $850million, which could become payable if the full debt financing is utilized and completion of the Qatargas 3 Project is not achieved. The project financing will be nonrecourse to ConocoPhillips upon certified completion, which is expected in 2011. At March31, 2010, the carrying value of the guarantee to third-party lenders was $11million. Guarantees of Joint Venture Debt In June2006, we issued a guarantee for our ownership percentage of $2billion in credit facilities of Rockies Express Pipeline LLC, operated by Kinder Morgan Energy Partners, L.P. At March31, 2010, the total carrying value of this guarantee was $11million, and Rockies Express had no amount outstanding under the credit facilities. In April2010, the credit facilities were reduced to $200million and our guarantee was released. At March31, 2010, we had guarantees outstanding for our portion of joint venture debt obligations, which have terms of up to 16years. The maximum potential amount of future payments under the guarantees is approximately $80million. Payment would be required if a joint venture defaults on its debt obligations. Other Guarantees In conjunction with our purchase of a 50percent ownership interest in Australia Pacific LNG (APLNG)from Origin Energy in October2008, we agreed to participate, if and when requested, in any parent company guarantees that were outstanding at the time we purchased our interest in APLNG. These parent company guarantees cover the obligation of APLNG to deliver natural gas under several sales agreements with remaining terms of 7 to 22years. Our maximum potential amount of future payments, or cost of volume delivery, under these guarantees is estimated to be $1,475million ($3,185million in the event of intentional or reckless breach) at March2010 exchange rates based on our 50percent share of the remaining contracted volumes, which could become payable if APLNG fails to meet its obligations under these agreements and the obligations cannot otherwise be mitigated. Futur

Contingencies and Commitments

Contingencies and Commitments
	3 Months Ended Mar. 31, 2010
Contingencies and Commitments [Abstract]
Note 13 - Contingencies and Commitments	Note 13Contingencies and Commitments 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 minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of 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 federal, state and local environmental laws and regulations. These may result in obligations 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 sites. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on managements best estimates, using all information that is available at the time. We measure estimates and base liabilities 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. Environmental Protection Agency (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 state 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 clean

Financial Instruments and Deriv

Financial Instruments and Derivative Contracts
	3 Months Ended Mar. 31, 2010
Financial Instruments and Derivative Contracts [Abstract]
Note 14 - Financial Instruments and Derivative Contracts	Note 14Financial Instruments and Derivative Contracts Derivative Instruments We use financial and commodity-based derivative contracts to manage exposures to fluctuations in foreign currency exchange rates, commodity prices, and interest rates, or to capture market opportunities. Since we are not currently using hedge accounting, all gains and losses, realized or unrealized, from derivative contracts have been recognized in the consolidated income statement. Gains and losses from derivative contracts held for trading not directly related to our physical business, whether realized or unrealized, have been reported net in other income. Purchase and sales contracts for commodities that are readily convertible to cash (e.g., crude oil, natural gas and gasoline) are recorded on the balance sheet as derivatives unless the contracts are for quantities we expect to use or sell over a reasonable period in the normal course of business (i.e., contracts eligible for the normal purchases and normal sales exception). We record most of our contracts to buy or sell natural gas and the majority of our contracts to sell power as derivatives, but we do apply the normal purchases and normal sales exception to certain long-term contracts to sell our natural gas production. We generally apply this normal purchases and normal sales exception to eligible crude oil and refined product commodity purchase and sales contracts; however, we may elect not to apply this exception (e.g., when another derivative instrument will be used to mitigate the risk of the purchase or sale contract but hedge accounting will not be applied, in which case both the purchase or sales contract and the derivative contract mitigating the resulting risk will be recorded on the balance sheet at fair value). We value our exchange-cleared derivatives using closing prices provided by the exchange as of the balance sheet date, and these are classified as Level 1 in the fair value hierarchy. Over-the-counter (OTC)financial swaps and physical commodity forward purchase and sale contracts are generally valued using quotations provided by brokers and price index developers such as Platts and Oil Price Information Service. These quotes are corroborated with market data and are classified as Level 2. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, OTC swaps and physical commodity purchase and sale contracts are valued using internally developed methodologies that consider historical relationships among various commodities that result in managements best estimate of fair value. These contracts are classified as Level 3. A contract that is initially classified as Level 3 due to absence or insufficient corroboration of broker quotes over a material portion of the contract will transfer to Level 2 when the portion of the trade having no quotes or insufficient corroboration becomes an insignificant portion of the contract. A contract would also transfer to Level 2 if we began using a corroborated broker quote that has become available. Conversely, if a corroborated broker quote ceases to be available or us

Comprehensive Income

Comprehensive Income
	3 Months Ended Mar. 31, 2010
Comprehensive Income [Abstract]
Note 15 - Comprehensive Income	Note 15Comprehensive Income ConocoPhillips comprehensive income was as follows: Millions of Dollars Three Months Ended March 31 2010 2009 Net income $ 2,112 816 After-tax changes in: Defined benefit plans Net prior service cost 2 3 Net actuarial gain 35 34 Nonsponsored plans 2 (1 ) Foreign currency translation adjustments 171 (278 ) Hedging activities - (1 ) Comprehensive income 2,322 573 Less: comprehensive income attributable to noncontrolling interests (14 ) (16 ) Comprehensive income attributable to ConocoPhillips $ 2,308 557 Accumulated other comprehensive income in the equity section of the balance sheet included: Millions of Dollars March 31 December 31 2010 2009 Defined benefit plans $ (1,465 ) (1,504 ) Foreign currency translation adjustments 4,747 4,576 Deferred net hedging loss (7 ) (7 ) Accumulated other comprehensive income $ 3,275 3,065 None of the items within accumulated other comprehensive income relate to noncontrolling interests.

Cash Flow Information

Cash Flow Information
	3 Months Ended Mar. 31, 2010
Cash Flow Information [Abstract]
Note 16 - Cash Flow Information	Note 16Cash Flow Information Millions of Dollars Three Months Ended March 31 2010 2009 Cash Payments Interest $ 322 95 Income taxes 1,596 1,346 On March 24, 2010, we declared a quarterly dividend of 55 cents per share, payable June 1, 2010, to stockholders of record at the close of business on May 24, 2010. This noncash financing activity increased dividends payable and decreased retained earnings $819 million.

Employee Benefit Plans

Employee Benefit Plans
	3 Months Ended Mar. 31, 2010
Employee Benefit Plans [Abstract]
Note 17 - Employee Benefit Plans	Note 17Employee Benefit Plans Pension and Postretirement Plans Millions of Dollars Pension Benefits Other Benefits Three Months Ended March 31 March 31 2010 2009 2010 2009 U.S. Intl. U.S. Intl. Components of Net Periodic Benefit Cost Service cost $ 57 23 48 20 3 2 Interest cost 65 43 69 33 11 12 Expected return on plan assets (56 ) (38 ) (46 ) (29 ) - - Amortization of prior service cost 2 - 3 - 1 2 Recognized net actuarial loss (gain) 42 14 47 8 (2 ) (4 ) Net periodic benefit cost $ 110 42 121 32 13 12 During the first three months of 2010, we contributed $16million to our domestic benefit plans and $53million to our international benefit plans.

Related Party Transactions

Related Party Transactions
	3 Months Ended Mar. 31, 2010
Related Party Transactions [Abstract]
Note 18 - Related Party Transactions	Note 18Related Party Transactions Significant transactions with related parties were: Millions of Dollars Three Months Ended March 31 2010 2009 Operating revenues (a) $ 1,934 1,473 Purchases (b) 3,439 2,482 Operating expenses and selling, general and administrative expenses (c) 81 85 Net interest expense (d) 19 19 (a) We sold natural gas to DCP Midstream, LLC and crude oil to the Malaysian Refining Company Sdn. Bhd. (MRC), among others, for processing and marketing. Natural gas liquids, solvents and petrochemical feedstocks were sold to Chevron Phillips Chemical Company LLC (CPChem), gas oil and hydrogen feedstocks were sold to Excel Paralubes and refined products were sold primarily to CFJ Properties and LUKOIL. Natural gas, crude oil, blendstock and other intermediate products were sold to WRB Refining LLC. In addition, we charged several of our affiliates, including CPChem and MSLP, for the use of common facilities, such as steam generators, waste and water treaters, and warehouse facilities. (b) We purchased refined products from WRB. We purchased natural gas and natural gas liquids from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased crude oil from LUKOIL and refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products and natural gas, as well as a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel Paralubes for use in our refinery and specialty businesses. (c) We paid processing fees to various affiliates. Additionally, we paid transportation fees to pipeline equity companies. (d) We paid and/or received interest to/from various affiliates, including FCCL Partnership. See Note 6Investments, Loans and Long-Term Receivables, for additional information on loans to affiliated companies.

Segment Disclosures and Related

Segment Disclosures and Related Information
	3 Months Ended Mar. 31, 2010
Segment Disclosures and Related Information [Abstract]
Note 19 - Segment Disclosures and Related Information	Note 19Segment Disclosures and Related Information We have organized our reporting structure based on the grouping of similar products and services, resulting in six operating segments: 1) EPThis segment primarily explores for, produces, transports and markets crude oil, bitumen, natural gas and natural gas liquids on a worldwide basis. 2) MidstreamThis segment gathers, processes and markets natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids, predominantly in the United States and Trinidad. The Midstream segment primarily consists of our 50 percent equity investment in DCP Midstream, LLC. 3) RMThis segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia. 4) LUKOIL InvestmentThis segment represents our investment in the ordinary shares of OAO LUKOIL, an international, integrated oil and gas company headquartered in Russia. At March 31, 2010, our ownership interest was 20percent based on issued shares, and 20.09percent based on estimated shares outstanding. 5) ChemicalsThis segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our 50percent equity investment in Chevron Phillips Chemical Company LLC. 6) Emerging BusinessesThis segment represents our investment in new technologies or businesses outside our normal scope of operations. Corporate and Other includes general corporate overhead, most interest expense and various other corporate activities. Corporate assets include all cash and cash equivalents. We evaluate performance and allocate resources based on net income attributable to ConocoPhillips. Intersegment sales are at prices that approximate market. Analysis of Results by Operating Segment Millions of Dollars Three Months Ended March 31 2010 2009 Sales and Other Operating Revenues EP United States $ 8,192 6,096 International 7,460 6,651 Intersegment eliminationsU.S. (1,375 ) (859 ) Intersegment eliminationsinternational (1,896 ) (1,388 ) EP 12,381 10,500 Midstream Total sales 2,078 922 Intersegment eliminations (116 ) (48 ) Midstream 1,962 874 RM United States 21,713 13,000 International 8,913 6,464 Intersegment eliminationsU.S. (198 ) (117 ) Intersegment eliminationsinternational (13 ) (8 ) RM 30,415 19,339 LUKOIL Investment - - Chemicals 3 3 Emerging Businesses Total sales 215 154 Intersegment eliminations (159 ) (137 ) Emerging Businesses 56 17 Corporate and Other 4 8 Consolidated sales and other operating revenues $ 44,821 30,741 Net Income (Loss) Attributable to ConocoPhillips EP United States $ 757 173 International 1,07

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes [Abstract]
Note 20 - Income Taxes	Note 20Income Taxes Our effective tax rates for the first quarters of 2010 and 2009 were 47percent and 59percent, respectively. The change in the effective tax rate for the first quarter of 2010, versus the same period of 2009, was primarily due to a higher proportion of income in higher tax rate jurisdictions in 2009. The effective tax rate in excess of the domestic federal statutory rate of 35percent was primarily due to foreign taxes.

Supplementary Information - Con

Supplementary Information - Condensed Consolidating Financial Information
	3 Months Ended Mar. 31, 2010
Supplementary Information - Condensed Consolidating Financial Information [Abstract]
Supplementary Information - Condensed Consolidating Financial Information	Schedule Of Condensed Financial Statements Supplementary InformationCondensed Consolidating Financial Information We have various cross guarantees among ConocoPhillips, ConocoPhillips Company, ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II, with respect to publicly held debt securities. ConocoPhillips Company is wholly owned by ConocoPhillips. ConocoPhillips Australia Funding Company is an indirect, wholly owned subsidiary of ConocoPhillips Company. ConocoPhillips Canada Funding Company I and ConocoPhillips Canada Funding Company II are indirect, wholly owned subsidiaries of ConocoPhillips. ConocoPhillips and ConocoPhillips Company have fully and unconditionally guaranteed the payment obligations of ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II, with respect to their 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 condensed consolidating financial information presents the results of operations, financial position and cash flows for: ConocoPhillips, ConocoPhillips Company, ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting). All other nonguarantor subsidiaries of ConocoPhillips. The consolidating adjustments necessary to present ConocoPhillips results on a consolidated basis. This condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes. To facilitate the restructuring of certain legal entities within the Canada operating unit, ConocoPhillips Canada Funding Company I (CFC I) entered into a transaction with another wholly owned subsidiary of ConocoPhillips (included in the All Other Subsidiaries column) whereby it acquired an investment in certain preferred shares of a Canadian legal entity within the ConocoPhillips group, in exchange for a non-interest-bearing demand note payable. The value ascribed to the preferred shares and note payable represented the redemption price for both. This noncash transaction was effective December31, 2009. As a result, the balance sheet of CFC I reflects a short-term investment of $2,973million and a corresponding amount in short-term debt. In January2010, the preferred shares acquired under the above transaction were resold to the original holder at the same value as the original purchase price, as satisfaction of the obligation under the demand note payable. As these transactions were completed between wholly owned subsidiaries of ConocoPhillips, there is no impact on the consolidated resu