CONOCOPHILLIPS ConocoPhillips 2021 Q3 10-Q 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," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "objective," "outlook," "plan," "potential," "predict," "projection," "seek," "should," "target," "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 STATEMENT
FOR THE PURPOSES OF THE 'SAFE HARBOR' PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995," beginning on page 57. The terms "earnings" and "loss" as used in Management's Discussion and Analysis refer to net income (loss) attributable toConocoPhillips . Business Environment and Executive OverviewConocoPhillips is the world's
largest independent E&P company
with operations and activities in 14 countries.
Our
diverse, low cost of supply portfolio
includes resource-rich unconventional
plays inNorth America ; conventional assets inNorth America ,Europe , andAsia ; LNG
developments; oil sands in
of global conventional and unconventional
exploration prospects.
Headquartered in
atSeptember 30, 2021 , we employed approximately
9,900 people worldwide and had total assets
of
Completed and Announced Acquisitions OnJanuary 15, 2021 , we completed our acquisition
of Concho Resources Inc. (Concho), an independent
oil and gas exploration and production
company with operations across
The addition of complementary acreage in theDelaware
and Midland Basins resulted in a significant
Permian presence to augment our leading unconventional positions
in the Eagle Ford, Bakken and
See Note 3. InSeptember 2021 , we signed a definitive agreement
to acquire
's assets in
theDelaware Basin (Shell Permian Acquisition) in an all-cash transaction
for
adjustments.
Assets
to be acquired include approximately
225,000 net acres and producing properties
located entirely in
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.
See Note 3.
See Item 1A "Risk
Factors" for further discussion of the risks related to the Shell Permian Acquisition. Overview While commodity prices in the third quarter of 2021 improve d
to pre-pandemic levels,
we expect that they will continue to be cyclical and volatile.
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 continually monitor market
fundamentals
including
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
the demand for our products globally.
Management's Discussion and Analysis
Table of ContentsConocoPhillips 2021 Q3 10-Q 34 The energy macro-environment ,
including energy transition, continues
to evolve.
We believeConocoPhillips can play a valued role in the energy
transition.
We have adopted a triple mandate
that simultaneously calls for meeting energy pathway demand,
delivering competitive returns of and on
capital, and achieving our net-zero ambition on operational (scope 1 and 2) emissions.
Our triple mandate is supported by financial principles
and capital allocation priorities that
should allow us to deliver superior returns through the price cycles .
Our financial principles consist of maintaining
balance sheet strength, providing peer-leading
distributions, making disciplined investment
s, and delivering ESG excellence,
all of which are in service to delivering competitive financial
returns.
Our completed and announced acquisitions
this
year further reinforce our value
proposition. In the third quarter, total company production was 1,544 MBOED resulting in cash provided by operating
activities of
In the nine-month period endedSeptember 30, 2021 , we generated$11.1 billion in
cash provided by operating activities,
returning$1.8 billion to shareholders through dividends and$2.2 billion through share
repurchases.
We ended the quarter with cash,
cash equivalents and short-term investments totaling$10.5 billion . In February
2021, we resumed our share repurchase
program at an annualized
level of$1.5 billion , which we increased in the second quarter to an annualized level of$2.5 billion for 2021. Additionally, in
program related to the
208 million shares of Cenovus Energy (CVE) common shares
owned at that time.
We plan to fully dispose of our CVE 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 2021, we sold 47 million shares
for$404 million and inception to date have sold
67 million shares for
Proceeds from the disposition of CVE shares
will be deployed toward incremental share repurchases. See Note 5. InSeptember 2021 , we declared an increase
in the company's quarterly
ordinary dividend from43 cents per share to46 cents per share, representing
a 7 percent increase.
The dividend is payable on
to
stockholders of record
at the close of business on
Planned distributions for 2021 amount to
a total of approximately
between dividends and share repurchases combined.
Additionally in
our commitment to preserving our 'A'
-rated balance sheet by restating our intent to reduce the company's
gross debt by
through natural and accelerated maturities.
In conjunction with our Shell Permian Acquisition announcement
,
we also communicated an increase
to our planned disposition target that was
initially set in June at
We are now targeting
$4 to$5 billion in disposition proceeds by 2023, with the additional
Basin as part of our ongoing portfolio high-grading and optimization efforts. To date, we have generated$0.2 billion in disposition proceeds.
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
debt.
Management's Discussion and Analysis
Table of Contents 35ConocoPhillips 2021 Q3 10-Q InSeptember 2021 , in conjunction with the announcement
of the Shell Permian Acquisition,
we reaffirmed our commitment to ESG leadership and
excellence by announcing an improvement
to our operational GHG emissions intensity reduction targets
by 2030.
Our
now includes: ? Net-zero ambition for
operational (scope 1 and 2) emissions
by 2050 with active advocacy for a price
on
carbon to address end-use (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, an
improvement from the previously
announced target of 35 to 45 percent on only a gross operated
basis;
?
Zero routine flaring by 2030, with an
ambition 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 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) and hydrogen; and ? ESG performance factoring into
executive and employee compensation
programs. Operationally, we remain focused on safely executing the business. Production was 1,544 MBOED in the third quarter of 2021, an increase of 477 MBOED or 45 percent,
compared with the third quarter of 2020, primarily
due
to the addition of approximately
343 MBOED in the
acquisition and the absence of last year's economic curtailments
predominantly in North American operated
assets as a result of lower oil prices.
We re-invested
expenditures during the third quarter,
with over half of our investments 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 remain disciplined with our allocation of capital with a
planned
the impacts of the recently announced Shell Permian Acquisition which is anticipated
to close in the fourth quarter.
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
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
.
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:
[[Image Removed: cop20213q10qp38i0.gif]]
Management's Discussion and Analysis
Table of ContentsConocoPhillips 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 $/MMBTU Brent crude oil prices averaged
of 71 percent compared with$43.00 per barrel in the third quarter of 2020.
WTI at
$70.56 per barrel in the third quarter of 2021, an increase of 72 percent
compared with
quarter of 2020.
Oil prices increased alongside the ongoing global economic
recovery following 2020's
COVID impacts as well asOPEC plus supply restraint,
continued capital discipline by
and various unplanned supply disruptions in producing countries.Henry Hub natural gas prices averaged
of 2021, an increase of 103 percent compared with$1.98 per MMBTU in the third
quarter of 2020.
healthy
domestic demand accompanied by record
levels of feedgas demand for
LNG exports to
Our realized bitumen price averaged
increase of 160 percent compared with$15.87 per barrel in the third
quarter of 2020.
The increase in the third quarter of 2021 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 third quarter of 2021 our total
average realized
price increased to
with$30.94 per BOE in the third quarter of 2020.
Management's Discussion and Analysis
Table of Contents 37ConocoPhillips 2021 Q3 10-Q Key Operating and Financial Summary
Significant items during the third quarter
of 2021 and recent announcements included the following:
?
Delivered strong operational
performance across the company's
asset base, including successful planned maintenance turnarounds, resulting
in third quarter production of 1,507 MBOED,
excluding
?
Net cash provided by operating
activities was
expenditures and investments of$1.3 billion . ?
Distributed a total of
shareholders year to date,
comprised of$2.2 billion in share repurchases and$1.8 billion in dividends as
part of the company's plan to return
approximately$6.0 billion to shareholders during 2021. ? Announced an increase to the quarterly dividend by 7 percent to46 cents per share. ? Ended the quarter with cash and cash equivalents
totaling
of$0.7 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
Delaware Basin position in the Permian for$9.5 billion in cash, before customary closing adjustments. ? Generated approximately
asset sales as part of the company's target
to generate
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 2021 production is
expected to be 1.53 to 1.57 MMBOED.
This guidance excludes
and
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
As such, the company reduced its 2021 DD&A expense
guidance by
Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 38 Results of Operations Unless otherwise indicated, discussion of results for the three - and nine-month periods endedSeptember 30, 2021 , is based on a comparison with the corresponding periods of 2020. Consolidated Results A summary of the company's net income (loss) attributable toConocoPhillips by business segment follows: Millions ofDollars Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020Alaska $ 405 (16) 935 (76) Lower 48 1,631 (78) 3,274 (880)Canada 155 (75) 267 (270)Europe ,Middle East andNorth Africa 241 92 601 318Asia Pacific 257 25 749 945 Other International (97) (8) (106) 14 Corporate and Other (213) (390) (268) (1,980) Net income (loss) attributable toConocoPhillips $ 2,379 (450) 5,452 (1,929)
Net income (loss) attributable to
Third
quarter earnings were positively impacted
by:
? Higher realized commodity prices. ? Higher sales volumes, primarily due to our Concho
acquisition and absence of production curtailments in our North American operated
assets. See Note 3. ? Higher equity in earnings of affiliates, primarily due to higher LNG sales prices. ? A gain of$17 million after-tax on our CVE common shares in the third quarter of 2021, as compared to a$162 million after-tax loss on those shares
in the third quarter of 2020.
See Note 5.
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
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
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. See Note 6. ? 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. See Note 3. ? 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
,
and
unproved property impairment
and dry hole expenses for the Kamunsu
East Field in
which is no longer in our development plans. Results of Operations Table of Contents 39ConocoPhillips 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
with the Concho acquisition and mark-to-market impacts on certain
key employee compensation
programs.
?
Realized losses on hedges of
-tax related to derivative positions assumed through our Concho acquisition.
These derivative positions were settled
entirely within the first quarter of 2021.
See Note 11. ? Absence of gains recorded in 2020 from foreign currency derivatives. See the "Segment Results" section for additional
information.
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
and
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
million, respectively,
primarily due to higher earnings driven by higher LNG and
crude prices, partially offset by a higher effective tax rate related to equity method investments in ourEurope ,Middle East , andNorth Africa segment.
Gain (loss) on dispositions in the third quarter of 2021 recognized
a loss of$179 million for the sale of noncore assets in our Other International segment. Offsetting
the loss were gains recognized
for contingent payments associated with previous dispositions
in our
on sales of certain noncore assets in our Lower 48 segment.
For the nine-month period of 2021, net gains on dispositions
decreased$257 million primarily due to the absence of a$587 million gain associated with ourAustralia -West divestiture, partially
offset by a
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
and$1,867 million , respectively.
During these periods in 2021, we recognized
gains of
on
our CVE common shares,
compared with losses of
the same periods in 2020.
Purchased commodities for the three
-
and nine-month periods of 2021 increased
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
and
primarily in line with higher production volumes.
Selling, general and administrative
expenses increased
period of 2021, primarily due to transaction and restructuring
expenses associated with our Concho acquisition
, and higher costs associated with compensation and benefits, including mark-to
-market impacts of certain key
employee compensation programs. Exploration expenses for
the nine-month period of 2021 decreased
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 inAlaska and an unproved
property impairment and dry hole expenses related
to the Kamunsu East Field inMalaysia . Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 40 DD&A for the three-
and nine-month periods of 2021 increased
$1,445 million , respectively, mainly due to higher production volumes
partly offset by lower rates
from price-related reserve revisions
.
Impairments decreased
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
million, respectively,
caused by higher sales volumes primarily in Lower
48 and higher commodity prices. Foreign currency transaction
(gain) loss for the nine-month period of 2021 was
impaired by$107 million due to the absence of derivative gains and other remeasurements. See Note 19-Income Taxes for information regarding our income tax provision (benefit) and effective tax rate. Results of Operations Table of Contents 41ConocoPhillips 2021 Q3 10-Q Summary Operating Statistics Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Average Net Production Crude oil (MBD) Consolidated operations 802 535 814 546 Equity affiliates 13 13 13 13 Total crude oil 815 548 827 559 Natural gas liquids (MBD) Consolidated operations 123 89 116 97 Equity affiliates 7 8 8 7 Total natural gas liquids 130 97 124 104 Bitumen (MBD) 69 49 69 50 Natural gas (MMCFD) Consolidated operations 2,144 1,201 2,143 1,353 Equity affiliates 1,033 1,034 1,055 1,042 Total natural gas 3,177 2,235 3,198 2,395 Total Production (MBOED) 1,544 1,067 1,5531,112 Dollars Per Unit Average Sales Prices Crude oil (per bbl) Consolidated operations*$ 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
period ended
As ofMarch 31, 2021 , we had settled all oil and gas hedging positions acquired from Concho. See Note 11. Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 42 We explore for,
produce, transport and market
crude oil, bitumen, natural gas,
LNG and NGLs on a worldwide basis.
At
were producing in the
Canada ,Australia ,Indonesia ,China ,Malaysia ,Qatar andLibya . Total
production of 1,544 MBOED increased 477 MBOED or
45 percent in the third quarter of 2021 and 441 MBOED or 40 percent in the nine-month period of 2021, primarily due to: ? Higher volumes in the Lower 48 due to our Concho acquisition. ? New wells online in the Lower 48,Canada ,Norway
and
?
Higher volumes in our North American operated
assets due to the absence of production curtailments.
?
Higher production in
shutdown of the Es Sider export terminal and other eastern export terminals after a period of civil unrest. ? Improved well performance inNorway ,Canada ,Alaska andChina . Production increases
in the third quarter and in the nine-month period of 2021 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 of production fromAustralia
-West due to our second quarter
2020 disposition.
?
Higher unplanned downtime in the Lower 48 due to Winter
Storm Uri, which impacted production by approximately 50 MBOED in the first quarter of 2021. Production excludingLibya
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 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
37 MBOED.
Production excluding
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
39 MBOED. Results of Operations Table of Contents 43ConocoPhillips 2021 Q3 10-Q Segment ResultsAlaska Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income (Loss) Attributable toConocoPhillips ($MM)$ 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 TheAlaska segment primarily explores for,
produces, transports and markets
crude oil, NGLs and natural gas.
As ofSeptember 30, 2021 ,Alaska contributed
19 percent of our consolidated liquids production
and less than 1 percent of our consolidated natural gas production. Net Income (Loss) Attributable toConocoPhillips Earnings from Alaska increased
in the nine-month period of 2021, respectively.
In the third quarter,
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
: ?
Lower volumes due to a July turnaround
at our
In addition to the items detailed above,
in the nine-month period of 2021, earnings also increased due to: ? 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 ourWestern 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 andWestern North Slope assets. Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 44 Willow Update InAugust 2021 , anAlaska federal
judge vacated the
approval granted to our planned Willow project previously approved
by the
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. Lower 48 Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income (Loss) Attributable toConocoPhillips ($MM)$ 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 *Subsequent to the current period, we anticipate a change in both product mix and average net production attributed to the planned conversion of previously acquired two-stream contracted volumes to three-stream.
**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
period ended
As of
See Note 11.
The Lower 48 segment consists of operations
located in the
as well as producing properties in theGulf of Mexico .
As of
54 percent of our consolidated liquids production and 65 percent of our consolidated natural gas production. Net Income (Loss) Attributable toConocoPhillips Earnings from the Lower 48 increased$1,709
million in the third quarter of 2021 and increased
$4,154 million in the nine-month period of 2021, respectively.
In the third quarter,
increases to earnings include: ? Higher realized crude oil, natural
gas and NGL prices.
?
Higher sales volumes of crude oil and natural
gas due to our Concho acquisition and the absence of production curtailments. 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
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. See Note 3 and Note 11. Results of Operations Table of Contents 45ConocoPhillips 2021 Q3 10-Q Production Average production increased
431 MBOED and 386 MBOED in the three-
and nine-month periods of 2021, respectively.
In the third quarter,
increases to production include: ? Higher volumes due to our Concho acquisition. ? New wells online from our development programs in Permian,Eagle Ford and Bakken. ? Absence of curtailments. Offsets to the production increases
include:
? Normal field decline. In addition to normal field decline,
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 InSeptember 2021 , we announced the Shell Permian
Acquisition for
customary
adjustments.
The transaction is anticipated to
close in the fourth quarter of 2021, subject to regulatory
approval
and other customary closing conditions.
See Note 3.
See Item 1A "Risk Factors" for further discussion of risks
related to the Shell Permian Acquisition. Additionally inSeptember 2021 , we completed
divestitures
of certain noncore assets in our Lower 48 segment
,
recording proceeds of approximately
Production from these assets averaged
approximately 15 MBOED in the nine-months endedSeptember 30, 2021 . See Note 3. Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 46Canada Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income (Loss) Attributable toConocoPhillips ($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 Average sales prices include unutilized transportation costs. Our Canadian operations mainly consist
of the Surmont oil sands development in
and the liquids-richMontney unconventional play inBritish Columbia .
As of
of our consolidated liquids production and
4 percent of our consolidated natural
gas production. Net Income (Loss) Attributable toConocoPhillips Earnings from Canada increased$230 million and$537 million , respectively, in the three- and nine-month periods of 2021. Increases to earnings include: ? Higher realized bitumen and crude oil prices. ?
Higher sales volumes in our Surmont and
assets. ? After-tax gains
on disposition related to contingent
payments of
the three- and nine-month periods of 2021, respectively,
associated with the sale of certain assets
to CVE in 2017.
See Note 3. Offsets to the earnings increase include : ?
Higher production and operating expenses
primarily due to increased Surmont and
production.
Production
Average production
increased 29 MBOED in the third quarter of 2021 and
increased 34 MBOED in the nine-month period of 2021, respectively.
In the third quarter,
increases to production include: ? Absence of curtailments. ?
Absence of third quarter 2020 turnaround
activity in the Surmont. ? New wells online in theMontney . ? Production from our Kelt acquisition
completed in the third quarter of 2020.
Offsets to the production increases
include:
?
Higher well failures, plant power trips
and facility upsets in the Surmont. In addition to the items detailed above,
in the nine-month period of 2021, production also increased
due to: ? Improved well performance in the Surmont. Results of Operations Table of Contents 47ConocoPhillips 2021 Q3 10-QEurope ,Middle East andNorth Africa Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income Attributable toConocoPhillips ($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 TheEurope ,Middle East andNorth Africa
segment consists of operations
principally located in the Norwegian sector of theNorth Sea and theNorwegian Sea ,Qatar ,
in the
As ofSeptember 30, 2021 , ourEurope ,Middle East
and
12 percent of our consolidated liquids production and
14 percent of our consolidated natural
gas production. Net Income Attributable toConocoPhillips Earnings from Europe,Middle East
and
-
and
nine-month periods of 2021, respectively.
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 39 MBOED in the three
- and nine-month periods of 2021, respectively. Increases to production include: ?
Higher production in
forced shutdown of the Es Sider export
terminal and other eastern export terminals after a period of civil unrest. ? Improved well performance in
?
New production from
drilling activities including our Tor
II redevelopment project with first production inDecember 2020 .
Offsets to the production increases
include: ? Normal field decline. Results of Operations Table of ContentsConocoPhillips 2021 Q3 10-Q 48Asia Pacific Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income Attributable toConocoPhillips ($MM)$ 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 TheAsia Pacific segment has operations
in
As ofSeptember 30, 2021 ,Asia Pacific contributed 7 percent
of our consolidated liquids production
and 17 percent of our consolidated natural
gas
production.
Net Income Attributable toConocoPhillips Earnings fromAsia Pacific increased
in the nine- month period of 2021, respectively.
In the third quarter,
increases to earnings include: ? Higher crude oil and natural gas
prices.
?
Higher LNG sales prices, reflected in equity in earnings
of affiliates. ? 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 addition to the items detailed above,
in the nine-month period of 2021, earnings also increased due to:
?
A
to a FID bonus from our Australia-West
divestiture. For additional information related to this FID bonus, see Note 3 and Note 10 . ?
Lower production and operating
expenses related to the absence of
-West.
Offsetting the items detailed
above, in the nine-month period of 2021, earnings decreased
due to:
?
Absence of a
related to ourAustralia -West divestiture. ?
Absence of sales volumes associated with
-West.
Consolidated Production Average consolidated
production decreased 6 MBOED and 22 MBOED in the three
- and nine-month periods of 2021, respectively.
In the third quarter,
the primary decrease to production was
normal field decline.
Partly offsetting the decrease
in production was: ? Increased production inMalaysia
associated with Malikai Phase 2 first
production and ramp-up. ?Bohai Bay development activity in
In addition to normal field decline, in the nine-month period
of 2021, production also decreased due to: ? The divestiture of ourAustralia
-West assets that contributed
23 MBOED in the nine-month period of 2020.
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 inIndonesia from coal supply restrictions. Results of Operations Table of Contents 49ConocoPhillips 2021 Q3 10-Q Other International Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Income (Loss) Attributable toConocoPhillips ($MM)$ (97) (8) (106) 14The Other International segment consists
of exploration and appraisal
activities inColombia as well as contingencies associated with prior operations in other countries. Earnings from our Other International
operations decreased
million in the three-
and nine- month periods of 2021, respectively,
due to a loss on divestiture related to
our
interests in the third quarter as well as an absence of a$29 million after
-tax benefit to earnings from the dismissal
of
arbitration related to
prior operations in
in the first quarter of 2020. See Note 3 for additional information regarding the divestiture. Corporate and Other Millions ofDollars Three Months Ended Nine Months EndedSeptember 30 September 30 2021 2020 2021 2020 Net Loss Attributable toConocoPhillips Net interest expense$ (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) Net interest expense consists
of interest and financing expense,
net of interest income and capitalized
interest.
Net interest expense increased
by
to higher debt balances assumed due to our Concho acquisition. See Note 7. Corporate G&A expenses include compensation
programs and staff
costs.
These expenses increased by$7 million in the three-month period of 2021 primarily due to mark to market adjustments associated with certain 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
primarily due to higher licensing revenues.
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 periods of 2021, "Other" increased$179 million and$1,945 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
Partially offsetting the impact on
the nine-month period was the release of a$92 million deferred tax asset
associated with our Australia West
divestiture.
Capital Resources and Liquidity
Table of ContentsConocoPhillips 2021 Q3 10-Q 50 Capital Resources and Liquidity Financial Indicators Millions of DollarsSeptember 30 December 31 2021 2020 Cash and cash equivalents$ 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 months of 2021, the primary uses of our
available cash were
support our ongoing capital expenditures
and investments program ;$2.2 billion to repurchase common stock ,
and
restructuring costs.
During the first nine months of 2021, our cash and cash
equivalents increased by$6.8 billion to$9.8 billion .
At
and cash equivalents of
of$0.7 billion , and available borrowing capacity
under our credit facility of
approximately$16.5 billion of liquidity.
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,
acquisitions,
dividend payments and debt obligations
.
On
for the Shell Permian Acquisition for
$9.5 billion in cash before customary adjustments .
The effective date of the transaction
isJuly 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
of 2021, compared with$3.1 billion for the corresponding period of 2020.
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 Concho.
The
increase in cash provided by operating
activities was partly offset by the settlement
of all oil and gas hedging positions acquired from Concho,
and transaction and restructuring cost
s.
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
Table of Contents 51ConocoPhillips 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 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 Expenditures and Investments"
section, for information about
our capital expenditures and investments.
On
consisting of oil and natural gas
swaps in connection with our acquisition of Concho.
At
gas derivative financial instruments acquired from Concho
were contractually settled.
In the first six months of 2021, we paid
See Note 11. Investing Activities For the first nine months of 2021, we invested
Our 2021 operating plan capital expenditures is currently expected
to be
See the "Capital Expenditures and Investments"
section, for information about our capital
expenditures and investments.
For additional information on Acquisitions
& Dispositions discussed below,
see Note 3. We completed our acquisition
of Concho on
The assets acquired in the transaction
included
In
a paced 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
of our CVE shares by year-end 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
representing
32% of our holdings at
million of cash proceeds.
See Note 5.
Other proceeds from dispositions include our sale of certain noncore
assets in our Lower 48 segment for approximately
million and contingent payments
associated with previous divestitures.
In
to acquire the Shell Permian assets
for$9.5 billion , before 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
-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 months of 2021 included net sales of
We sold$2,991 million of short-term instruments
and invested
See Note 11.
Capital Resources and Liquidity
Table of ContentsConocoPhillips 2021 Q3 10-Q 52 Financing Activities We have a revolving
credit facility totaling
expiring in
Our revolving 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 billion in available borrowing
capacity under our revolving credit
facility atSeptember 30, 2021 .
On
of Concho in an all-stock transaction.
In the acquisition, we assumed Concho's publicly
traded debt, which was recorded
at fair value of
date.
In
to preserving our 'A'
-rated balance sheet by restating
our intent to reduce gross debt by$5 billion over
the next five years, driving a more
resilient and efficient capital
structure.
The current credit ratings on our
long-term debt are: ? Fitch: "A" with a "stable" outlook ? S&P: "A-" with a "stable" outlook ? Moody's: "A3" with a "positive" outlook See Note 3
for additional information on our Concho
acquisition and
Note 7
for additional information on debt
,
revolving credit facility and credit
ratings.
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
had direct bank letters of credit
of$281 million and$249 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
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.
In addition to our capital expenditure and
investments
program, we anticipate completing
the Shell Permian Acquisition in the fourth quarter
for
adjustments. See Note 3 .
Our debt balance at
The net increase is primarily due to
in the Concho acquisition.
The current portion of debt, including payments for finance
leases, is
Payments will be made using current
cash balances and cash generated by operations. See Note 7. We believe in delivering va
lue to our shareholders through
a growing and sustainable dividend supplemented
by
additional returns of capital, including share
repurchases.
In 2020, we paid
In the first nine months of 2021, we paid dividends totaling
$1.8 billion , the equivalent of$1.29 per share.
On
in our quarterly dividend from$0.43 per share to$0.46 per share,
representing a 7 percent increase.
The dividend is payableDecember 1, 2021 , to stockholders of record
at the close of business on
We anticipate returning
approximately
in 2021, or$1.75 per share.
Capital Resources and Liquidity
Table of Contents 53ConocoPhillips 2021 Q3 10-Q In late 2016, we initiated our current
share repurchase program,
which has a total program authorization
of$25 billion .
In
of our CVE 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.
In the nine months ended
39.3 million shares at 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
at a cost of
Our total planned distributions for 2021, including dividends
and share repurchases, is approximately
Our dividend and share repurchase programs
are subject to numerous considerations,
including market conditions, management discretion and other factors.
See "Item 1A-Risk Factors
- Our ability to declare and pay dividends and repurchase shares is subject to certain
considerations" in Part
I-Item 1A in our 2020 Annual Report on Form 10-K. Capital Expenditures and Investments Millions ofDollars Nine Months EndedSeptember 30 2021 2020Alaska $ 698 882 Lower 48 2,250 1,398Canada 129 593Europe ,Middle East andNorth Africa 385 410Asia Pacific 235 280 Other International 33 66 Corporate and Other 37 28 Capital expenditures and investments$ 3,767 3,657 During the first nine months of 2021, capital expenditures and investments supported key development programs, primarily: ? Development activities in the Lower 48, primarily Permian,Eagle Ford and Bakken. ? Appraisal and development activities inAlaska
related to the Western
North Slope and development activities in the Greater Kuparuk Area. ? Appraisal activities in liquids-rich plays
and optimization of oils sands development in
assets inNorway . ? Continued development activities inChina ,
In
capital expenditures of
InJune 2021 , we reduced capital guidance to$5.3 billion , recognizing synergistic savings from our Concho acquisition.
Capital Resources and Liquidity
Table of ContentsConocoPhillips 2021 Q3 10-Q 54
Guarantor Summarized Financial
Information
We have various
cross guarantees among our Obligor group;
and
with respect to publicly held debt securities.
ConocoPhillips Company is 100 percent owned byConocoPhillips .
100 percent owned by
Company.
Company have fully and unconditionally
guaranteed the payment obligations ofBurlington Resources LLC ,
with respect to its publicly held debt securities.
Similarly,
has fully and unconditionally guaranteed the payment
obligations of
with respect to its publicly held debt securities.
In addition,
fully and unconditionally guaranteed the payment obligations ofConocoPhillips with respect
to its publicly held debt securities.
All guarantees are joint and several. The following tables present summarized
financial information for
theObligor Group , as defined below: ?The Obligor Group will reflect guarantors
and issuers of guaranteed securities consisting
of
andBurlington 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. ? Non-Obligated Subsidiaries are excluded from the presentation. Upon completion of the Concho acquisition onJanuary 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$3.8 billion in aggregate
principal amount of Concho's
notes, were tendered and accepted
for new debt issued byConocoPhillips .
The new debt issued in the exchange is fully and
unconditionally guaranteed byConocoPhillips Company .
Both the guarantor and issuer of the exchange
debt is reflected within theObligor Group presented here. See Note 3 and Note 7 for additional information relating to the Concho transaction. Transactions
and balances reflecting activity between the Obligors
and Non-Obligated Subsidiaries
are presented below: Summarized Income Statement Data Millions ofDollars Nine Months EndedSeptember 30, 2021 Revenues and Other Income$ 20,893 Income (loss) before income taxes* 5,445 Net income (loss) 5,452 Net Income (Loss) Attributable toConocoPhillips 5,452 *Includes approximately$3.6 billion of purchased commodities expense for transactions with Non-Obligated Subsidiaries. Summarized Balance Sheet Data Millions of DollarsSeptember 30 December 31 2021 2020 Current assets$ 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
Table of Contents 55ConocoPhillips 2021 Q3 10-Q Contingencies A number of lawsuits involving a variety
of claims arising in the ordinary course of business
have been filed againstConocoPhillips . 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. See Note 10 . Legal and Tax Matters 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
from historic operations,
and other contract disputes.
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.
Environmental
We are subject to the same numerous
international, federal, state and local environmental laws and regulations as other companies in our industry.
For a discussion of the most significant of these environmental
laws and regulations, including those with associated
remediation obligations, see the "Environmental"
section in Management's Discussion and Analysis
of Financial Condition and Results of Operations on pages
64-66 of our 2020 Annual Report on Form 10-K. We occasionally receive requests
for information or notices of potential
liability from the
and state environmental agencies alleging
that we are a potentially responsible
party under the Federal Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) or an equivalent
state statute.
On occasion, we also have been made a party to cost
recovery litigation by those agencies
or by private parties.
These requests, notices and lawsuits assert potential liability for
remediation costs at various
sites that typically are not owned by us, but allegedly contain waste
attributable to our past operations.
As ofSeptember 30, 2021 , there were 15 sites around theU.S. in which we were
identified as a potentially responsible
party under CERCLA and comparable state laws. AtSeptember 30, 2021 , our balance sheet included
a total environmental
accrual of$191 million , compared with$180 million atDecember 31, 2020 , for remediation
activities in the
We expect to incur a substantial amount of these expe
nditures within the next 30 years.
Capital Resources and Liquidity
Table of ContentsConocoPhillips 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 SeveralLouisiana parishes and the State
of
State and Local Coastal Resources Management
Act (SLCRMA) against oil and gas
companies, includingConocoPhillips , seeking compensatory damages for contamination
and erosion of the
caused by historical oil and gas operations.
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.
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 Change" section in Management's
Discussion and Analysis of Financial Condition and Results
of
Operations on pages 67-69 of our 2020 Annual
Report on Form 10-K. Climate Change Litigation Beginning in 2017, governmental and
other entities in several states
in the
oil and gas companies, includingConocoPhillips ,
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.
factually and legally meritless and are
an inappropriate vehicle to address the challenges associated with climate
change and will vigorously defend
against such lawsuits. Company Response to Climate -Related Risks The company has responded by putting
in place a Sustainable Development Risk Management
Standard covering the assessment and registering 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 1 and scope 2 GHG emissions help us understand our climate transition
risk.
?
Scope 1 emissions are direct GHG emissions from
sources that we own or control. ? Scope 2 emissions are GHG emissions from the generation
of purchased electricity or steam that
we
consume.
Scope 3 emissions are indirect emissions from
sources that we neither own nor control.
Capital Resources and Liquidity
Table of Contents 57ConocoPhillips 2021 Q3 10-Q We announced inOctober 2020 the adoption
of a
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 of four
pillars: ? Targets : Our target framework consists of a hierarchy
of targets, from a long-term ambition
that sets the direction and aim of the strategy,
to a medium-term performance target
for GHG emissions intensity,
to
shorter-term targets for
flaring 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
operational target and have set it to reduce our gross operated and net
equity (scope 1 and 2) emissions intensity by
40 to 50 percent from 2016 levels by 2030, an improvement from
the previously announced target
of 35 to 45 percent on only 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 market cost of GHG emissions when assessing
reserves in jurisdictions without existing GHG regulations. ? External engagement:
Our external engagement aims to
differentiate
within the oil and gas sector with our approach to managing
climate-related risk.
We are a Founding Member of theClimate 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. 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 fromShell Enterprises
LLC (Shell), and the anticipated impact of the Concho
and
Shell transactions on the combined company's
business and future financial and operating results
are forward- 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," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "intend," "goal," "guidance," "may," "objective," "outlook," "plan," "potential," "predict," "projection," "seek," "should," "target,"
"will," "would" and similar
expressions. Table of ContentsConocoPhillips 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
-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 -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) 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 from a public health crisis or from the imposition
or
lifting of crude oil production quotas or other actions
that might be imposed byOPEC 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. ? 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 or technical
requirements for constructing,
modifying or operating E&P 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. ? Potential disruption or interruption
of our operations due to accidents, extraordinary
weather events, civil unrest, political events, war, terrorism,
cyber attacks, and information
technology failures, constraints
or
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 as aluminum and steel) used in the operation of our business. ? 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. Table of Contents 59ConocoPhillips 2021 Q3 10-Q ? Liability resulting from litigation,
including litigation related to
the transaction with Concho, 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. ? Volatility in the commodity futures
markets.
?
Changes in tax and other laws, regulations
(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. ? 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
or at all. ? The operation and financing of our joint ve
ntures.
?
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
or
?
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 -related matters. ? The factors generally described
in Part I-Item 1A in our 2020 Annual Report
on Form 10-K and any
additional risks described in our other filings with the
Quantitative and Qualitative Disclosures about Market Risk Information about market
risks for the nine months ended September
30, 2021, does not differ materially from that discussed under Item 7A in our 2020 Annual Report on Form 10-K. Table of ContentsConocoPhillips 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
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.
AtSeptember 30, 2021 , 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, ofConocoPhillips' disclosure
controls and procedures
(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 . 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 2020 Annual Report on Form
10-K.
Item 1A.
Risk Factors Other than the risk factors set forth
below, there
have been no material changes
to the risk factors disclosed
in our Annual Report on Form 10-K for the
fiscal year ended
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 onSeptember 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
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.
Table of Contents 61ConocoPhillips 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
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. Table of ContentsConocoPhillips 2021 Q3 10-Q 62 Item 2. Unregistered Sales ofEquity Securities and Use of Proceeds Issuer Purchases ofEquity 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 ProgramsJuly 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 12,669September 1-30, 2021 6,990,322 58.70 6,990,322 12,259 21,639,130 21,639,130 *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
$12.7 billion of shares, with$12.3 billion remaining under our current authorization.
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 "Our ability to declare and pay
dividends
and repurchase shares is subject to certain
considerations" section in Risk Factors
on page 31 of our 2020 Annual Report on Form 10-K. Table of Contents 63ConocoPhillips 2021 Q3 10-Q Item 6. Exhibits 10.1*
Purchase and Sale Agreement, dated as of
LLC and
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act
of 1934.
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act
of 1934.
32*
Certifications pursuant to 18 U.S.C. Section 1350. 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Schema Document. 101.CAL* Inline XBRL Calculation Linkbase Document. 101.LAB* Inline XBRL Labels Linkbase Document. 101.PRE* Inline XBRL Presentation Linkbase Document. 101.DEF* Inline XBRL Definition Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. Table of ContentsConocoPhillips 2021 Q3 10-Q 64 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 Chief Accounting OfficerNovember 4, 2021
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