UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission file number: 001-32395

ConocoPhillips

(Exact name of registrant as specified in its charter)

Delaware	01-0562944
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

925 N. Eldridge Parkway, Houston, TX 77079

(Address of principal executive offices) (Zip Code)

281-293-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbols	Name of each exchange on which registered
Common Stock, $.01 Par Value	COP	New York Stock Exchange
7% Debentures due 2029	CUSIP—718507BK1	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒        Accelerated filer ☐        Non-accelerated filer ☐        Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 1,246,071,066 shares of common stock, $.01 par value, outstanding at September 30, 2022.

Table of Contents

	Page
Commonly Used Abbreviations	1
Part I—Financial Information
Item 1. Financial Statements
Consolidated Income Statement	2
Consolidated Statement of Comprehensive Income	3
Consolidated Balance Sheet	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	54
Item 4. Controls and Procedures	54
Part II—Other Information
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 6. Exhibits	56
Signature	57

Commonly Used Abbreviations Table of Contents

Commonly Used Abbreviations

The following industry-specific, accounting and other terms, and abbreviations may be commonly used in this report.

Currencies		Accounting
$ or USD	U.S. dollar	ARO	asset retirement obligation
CAD	Canadian dollar	ASC	accounting standards codification
EUR	Euro	ASU	accounting standards update
GBP	British pound	DD&A	depreciation, depletion and amortization
Units of Measurement		FASB	Financial Accounting Standards Board
BBL	barrel
BCF	billion cubic feet	FIFO	first-in, first-out
BOE	barrels of oil equivalent	G&A	general and administrative
MBD	thousands of barrels per day	GAAP	generally accepted accounting principles
MCF	thousand cubic feet
MBOD	thousand barrels of oil per day	LIFO	last-in, first-out
MM	million	NPNS	normal purchase normal sale
MMBOE	million barrels of oil equivalent	PP&E	properties, plants and equipment
MMBOD	million barrels of oil per day	VIE	variable interest entity
MBOED	thousands of barrels of oil equivalent per day
MMBOED	millions of barrels of oil equivalent per day	Miscellaneous
MMBTU	million British thermal units	DE&I	diversity, equity and inclusion
MMCFD	million cubic feet per day	EPA	Environmental Protection Agency
		ESG	Environmental, Social and Corporate Governance
Industry		EU	European Union
BLM	Bureau of Land Management	FERC	Federal Energy Regulatory Commission
CBM	coalbed methane
CCUS	carbon capture utilization and	GHG	greenhouse gas
	storage	HSE	health, safety and environment
E&P	exploration and production	ICC	International Chamber of Commerce
FEED	front-end engineering and design	ICSID	World Bank’s International
FPS	floating production system		Centre for Settlement of
FPSO	floating production, storage and		Investment Disputes
	offloading	IRS	Internal Revenue Service
G&G	geological and geophysical	OTC	over-the-counter
JOA	joint operating agreement	NYSE	New York Stock Exchange
LNG	liquefied natural gas	SEC	U.S. Securities and Exchange
NGLs	natural gas liquids		Commission
OPEC	Organization of Petroleum	TSR	total shareholder return
	Exporting Countries	U.K.	United Kingdom
PSC	production sharing contract	U.S.	United States of America
PUDs	proved undeveloped reserves	VROC	variable return of cash
SAGD	steam-assisted gravity drainage
WCS	Western Canada Select
WTI	West Texas Intermediate

1 ConocoPhillips      2022 Q3 10-Q

Financial Statements Table of Contents

PART I. Financial Information

Item 1.    Financial Statements

Consolidated Income Statement ConocoPhillips

	Millions of Dollars
	Three Months Ended September 30			Nine Months Ended September 30
	2022		2021	2022	2021
Revenues and Other Income
Sales and other operating revenues	$	21,013	11,326	59,936	30,708
Equity in earnings of affiliates	561		239	1,511	500
Gain (loss) on dispositions	(40)		2	1,039	294
Other income	80		49	408	884
Total Revenues and Other Income	21,614		11,616	62,894	32,386
Costs and Expenses
Purchased commodities	9,251		4,179	25,236	11,660
Production and operating expenses	1,799		1,389	5,121	4,151
Selling, general and administrative expenses	148		128	431	556
Exploration expenses	89		65	301	206
Depreciation, depletion and amortization	1,872		1,672	5,505	5,425
Impairments	2		(89)	6	(90)
Taxes other than income taxes	843		403	2,677	1,154
Accretion on discounted liabilities	60		61	182	186
Interest and debt expense	199		219	627	665
Foreign currency transaction (gain) loss	(93)		(10)	(139)	19
Other expenses	4		17	(46)	78
Total Costs and Expenses	14,174		8,034	39,901	24,010
Income before income taxes	7,440		3,582	22,993	8,376
Income tax provision	2,913		1,203	7,562	2,924
Net Income	$	4,527	2,379	15,431	5,452
Net Income Per Share of Common Stock (dollars)
Basic	$	3.56	1.78	11.96	4.10
Diluted	3.55		1.78	11.93	4.09
Average Common Shares Outstanding (in thousands)
Basic	1,265,893		1,332,286	1,285,739	1,327,216
Diluted	1,269,321		1,336,379	1,289,953	1,330,652

See Notes to Consolidated Financial Statements.

ConocoPhillips      2022 Q3 10-Q 2

Financial Statements Table of Contents

Consolidated Statement of Comprehensive Income ConocoPhillips

	Millions of Dollars
	Three Months Ended September 30			Nine Months Ended September 30
	2022		2021	2022	2021
Net Income	$	4,527	2,379	15,431	5,452
Other comprehensive income
Defined benefit plans
Reclassification adjustment for amortization of prior service credit included in net income	(10)		(9)	(30)	(28)
Net change	(10)		(9)	(30)	(28)
Net actuarial gain (loss) arising during the period	(23)		8	(105)	113
Reclassification adjustment for amortization of net actuarial losses included in net income	17		45	58	133
Net change	(6)		53	(47)	246
Income taxes on defined benefit plans	4		(9)	16	(49)
Defined benefit plans, net of tax	(12)		35	(61)	169
Unrealized holding loss on securities	(7)		—	(16)	(1)
Reclassification adjustment for loss included in net income	(1)		—	(1)	—
Income taxes on unrealized holding loss on securities	2		—	4	—
Unrealized holding loss on securities, net of tax	(6)		—	(13)	(1)
Foreign currency translation adjustments	(534)		(237)	(841)	(72)
Income taxes on foreign currency translation adjustments	—		(1)	—	(1)
Foreign currency translation adjustments, net of tax	(534)		(238)	(841)	(73)
Other Comprehensive Income (Loss), Net of Tax	(552)		(203)	(915)	95
Comprehensive Income	$	3,975	2,176	14,516	5,547

See Notes to Consolidated Financial Statements.

3 ConocoPhillips      2022 Q3 10-Q

Financial Statements Table of Contents

Consolidated Balance Sheet ConocoPhillips

	Millions of Dollars
	September 30 2022		December 31 2021
Assets
Cash and cash equivalents	$	8,010	5,028
Short-term investments	2,412		446
Accounts and notes receivable (net of allowance of $2 and $2, respectively)	7,338		6,543
Accounts and notes receivable—related parties	16		127
Investment in Cenovus Energy	—		1,117
Inventories	1,226		1,208
Prepaid expenses and other current assets	1,451		1,581
Total Current Assets	20,453		16,050
Investments and long-term receivables	8,204		7,113
Net properties, plants and equipment (net of accumulated DD&A of $64,874 and $64,735, respectively)	63,673		64,911
Other assets	2,507		2,587
Total Assets	$	94,837	90,661
Liabilities
Accounts payable	$	6,242	5,002
Accounts payable—related parties	26		23
Short-term debt	664		1,200
Accrued income and other taxes	3,187		2,862
Employee benefit obligations	628		755
Other accruals	3,250		2,179
Total Current Liabilities	13,997		12,021
Long-term debt	16,297		18,734
Asset retirement obligations and accrued environmental costs	5,729		5,754
Deferred income taxes	7,218		6,179
Employee benefit obligations	1,087		1,153
Other liabilities and deferred credits	1,430		1,414
Total Liabilities	45,758		45,255
Equity
Common stock (2,500,000,000 shares authorized at $0.01 par value)
Issued (2022—2,100,379,079 shares; 2021—2,091,562,747 shares)
Par value	21		21
Capital in excess of par	61,089		60,581
Treasury stock (at cost: 2022—854,308,013 shares; 2021—789,319,875 shares)	(57,444)		(50,920)
Accumulated other comprehensive loss	(5,865)		(4,950)
Retained earnings	51,278		40,674
Total Equity	49,079		45,406
Total Liabilities and Equity	$	94,837	90,661

See Notes to Consolidated Financial Statements.

ConocoPhillips      2022 Q3 10-Q 4

Financial Statements Table of Contents

Consolidated Statement of Cash Flows ConocoPhillips

	Millions of Dollars
	Nine Months Ended September 30
	2022		2021
Cash Flows From Operating Activities
Net income	$	15,431	5,452
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization	5,505		5,425
Impairments	6		(90)
Dry hole costs and leasehold impairments	136		7
Accretion on discounted liabilities	182		186
Deferred taxes	1,594		895
Undistributed equity earnings	569		258
Gain on dispositions	(1,039)		(294)
Gain on investment in Cenovus Energy	(251)		(743)
Other	(38)		(866)
Working capital adjustments
Increase in accounts and notes receivable	(1,317)		(1,619)
Increase in inventories	(64)		(13)
Increase in prepaid expenses and other current assets	(469)		(800)
Increase in accounts payable	1,098		682
Increase in taxes and other accruals	379		2,648
Net Cash Provided by Operating Activities	21,722		11,128
Cash Flows From Investing Activities
Capital expenditures and investments	(7,626)		(3,767)
Working capital changes associated with investing activities	542		79
Acquisition of businesses, net of cash acquired	37		382
Proceeds from asset dispositions	3,354		792
Net (purchase) sale of investments	(2,235)		2,846
Collection of advances/loans—related parties	114		105
Other	7		(386)
Net Cash (Used in) Provided by Investing Activities	(5,807)		51
Cash Flows From Financing Activities
Issuance of debt	2,897		—
Repayment of debt	(5,874)		(363)
Issuance of company common stock	345		27
Repurchase of company common stock	(6,524)		(2,224)
Dividends paid	(3,336)		(1,750)
Other	(53)		6
Net Cash Used in Financing Activities	(12,545)		(4,304)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(452)		(3)
Net Change in Cash, Cash Equivalents and Restricted Cash	2,918		6,872
Cash, cash equivalents and restricted cash at beginning of period	5,398		3,315
Cash, Cash Equivalents and Restricted Cash at End of Period	$	8,316	10,187

Restricted cash of $306 million is included in the "Other assets" line of our Consolidated Balance Sheet as of September 30, 2022.

Restricted cash of $152 million and $218 million are included in the "Prepaid expenses and other current assets" and "Other assets" lines, respectively, of our Consolidated Balance Sheet as of December 31, 2021.

See Notes to Consolidated Financial Statements.

5 ConocoPhillips      2022 Q3 10-Q

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements

Note 1—Basis of Presentation

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

Note 2—Inventories

	Millions of Dollars
	September 30 2022		December 31 2021
Crude oil and natural gas	$	650	647
Materials and supplies	576		561
Total Inventories	$	1,226	1,208
Inventories valued on the LIFO basis	$	389	395

Note 3—Acquisitions and Dispositions

Acquisition of Shell Enterprise LLC's (Shell) Permian Assets

In December 2021, we completed our acquisition of Shell's assets in the Permian based Delaware Basin in an all-cash transaction for $8.6 billion after customary adjustments. Assets acquired include approximately 225,000 net acres and producing properties located entirely in Texas. The acquisition was accounted for as a business combination under FASB Topic ASC 805 using the acquisition method, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date as we identify new information about facts and circumstances that existed as of the acquisition date to consider.

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

ConocoPhillips      2022 Q3 10-Q 6

Notes to Consolidated Financial Statements Table of Contents

Assets Acquired	Millions of Dollars
Accounts receivable, net	$	337
Inventories	20
Net properties, plants and equipment	8,582
Other assets	50
Total assets acquired	$	8,989
Liabilities Assumed
Accounts payable	$	206
Accrued income and other taxes	6
Other accruals	20
Asset retirement obligations and accrued environmental costs	86
Other liabilities and deferred credits	36
Total liabilities assumed	$	354
Net assets acquired	$	8,635

With the completion of the Shell Permian transaction, we acquired proved and unproved properties of approximately $4.2 billion and $4.3 billion, respectively.

Supplemental Pro Forma (unaudited)

The following table summarizes the unaudited supplemental pro forma financial information for the

three- and nine-month periods ended September 30, 2021, as if we had completed the acquisition of Shell's Permian assets on January 1, 2020:

	Millions of Dollars
	Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
Supplemental Pro Forma (unaudited)	As Reported		Pro forma Shell	Pro forma Combined	As Reported	Pro forma Shell	Pro forma Combined
Total Revenues and Other Income	11,616		882	12,498	32,386	2,277	34,663
Income before income taxes	3,582		364	3,946	8,376	780	9,156
Net Income	2,379		279	2,658	5,452	597	6,049
Earnings per share ($ per share):
Basic net income	$	1.78		1.99	4.10		4.55
Diluted net income	1.78			1.98	4.09		4.54

The unaudited supplemental pro forma financial information is presented for illustration and comparative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been completed on January 1, 2020, nor is it necessarily indicative of future operating results of the combined entity. The unaudited pro forma financial information for the three- and nine-month periods ended September 30, 2021, is a result of combining the consolidated income statement of ConocoPhillips with the results of the assets acquired from Shell. The pro forma results do not include transaction-related costs, nor any cost savings anticipated as a result of the transaction. The pro forma results include adjustments made primarily to DD&A, which is based on the unit-of-production method, resulting from the purchase price allocated to properties, plants and equipment. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected.

7 ConocoPhillips      2022 Q3 10-Q

Notes to Consolidated Financial Statements Table of Contents

Acquisition of Concho Resources Inc. (Concho)

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

Acquisition of Additional Shareholding Interest in Australia Pacific LNG Pty Ltd (APLNG)

In February 2022, we completed the acquisition of an additional 10 percent interest in APLNG from Origin Energy for approximately $1.4 billion, after customary adjustments, in an all-cash transaction resulting from the exercise of our preemption right. This increased our ownership in APLNG to 47.5 percent, with Origin Energy and Sinopec owning

27.5 percent and 25 percent, respectively. APLNG is reported as an equity investment in our Asia Pacific segment.

Asset Acquisition

In September 2022, we completed the acquisition of additional working interest in certain Eagle Ford acreage in the Lower 48 segment for cash consideration of $236 million after customary adjustments. This agreement was accounted for as an asset acquisition resulting in the recognition of $254 million of PP&E, $10 million of ARO and an $8 million net reduction in working capital.

Assets Sold

In September 2022, we sold our interest in certain noncore assets in the Anadarko basin of our Lower 48 segment for net proceeds of $210 million and recognized a $76 million before-tax and $58 million after-tax loss. At the time of disposition, our interest in these assets had a net carrying value of $286 million, consisting of $310 million of assets, primarily related to $303 million of PP&E, and $24 million of liabilities, primarily related to AROs.

In April 2022, we sold our interests in certain noncore assets in the Permian basin of our Lower 48 segment for net proceeds of $370 million and recognized an $80 million before-tax and $63 million after-tax gain. At the time of disposition, our interests in these assets had a net carrying value of $290 million, consisting primarily of $401 million of PP&E and $111 million of liabilities, primarily related to AROs.

In March 2022, we completed the divestiture of our subsidiaries that held our Indonesia assets and operations, and based on an effective date of January 1, 2021, we received net proceeds of $731 million after customary adjustments and recognized a $534 million before-tax and $462 million after-tax gain related to this transaction. Together, the subsidiaries sold indirectly held our 54 percent interest in the Indonesia Corridor Block Production Sharing Contract (PSC) and

35 percent shareholding in the Transasia Pipeline Company. At the time of the disposition, the net carrying value was approximately $0.2 billion, excluding $0.2 billion of cash and restricted cash. The net book value consisted primarily of $0.3 billion of PP&E and $0.1 billion of ARO. The before-tax earnings associated with the subsidiaries sold, excluding the gain on disposition noted above, were $138 million and $423 million for the nine-month period ended September 30, 2022 and 2021, respectively. Results of operations for the Indonesia interests sold were reported in our Asia Pacific segment.

For the three- and nine-months ended September 30, 2022, we recorded contingent payments of $6 million and $430 million, respectively, relating to the previous dispositions of our interest in the Foster Creek Christina Lake Partnership and western Canada gas assets as well as our San Juan assets. The contingent payments are recorded as gain on dispositions in our consolidated income statement and are reflected within our Canada and Lower 48 segments. The term of contingent payments in our Canada segment ended in the second quarter of 2022. For the three- and nine-months ended September 30, 2021, we recorded contingent payments of $121 million and $222 million, respectively, relating to these dispositions.

ConocoPhillips      2022 Q3 10-Q 8

Notes to Consolidated Financial Statements Table of Contents

Note 4—Investments, Loans and Long-Term Receivables

APLNG

APLNG executed an $8.5 billion project finance facility in 2012 which became non-recourse following financial completion in 2017. Following refinancing efforts, the facility is currently composed of a financing agreement with the Export-Import Bank of the United States, a commercial bank facility and two United States Private Placement note facilities. APLNG principal and interest payments commenced in March 2017 and are scheduled to occur bi-annually until September 2030. At September 30, 2022, a balance of $5.2 billion was outstanding on these facilities.

See Note 8.

In February 2022, we completed the acquisition of an additional 10 percent interest in APLNG from Origin Energy for approximately $1.4 billion resulting from the exercise of our preemption right. This increased our ownership in APLNG to 47.5 percent, with Origin Energy and Sinopec owning 27.5 percent and 25 percent, respectively.

At September 30, 2022, the carrying value of our equity method investment in APLNG was $6.4 billion. The balance is included in the “Investments and long-term receivables” line on our consolidated balance sheet.

Loans

As part of our normal ongoing business operations, we enter into numerous agreements with other parties to pursue business opportunities. Included in such activity are loans made to certain affiliated and non-affiliated companies. At September 30, 2022, there were no outstanding loans to affiliated companies as the final loan payment related to Qatar Liquefied Gas Company Limited (3) project financing was received in the third quarter of 2022.

Note 5—Investment in Cenovus Energy

At December 31, 2021, we held 91 million common shares of Cenovus Energy (CVE), which approximated 4.5% of their issued and outstanding common shares. Those shares were carried on our balance sheet at fair value of $1.1 billion based on NYSE closing price of $12.28 per share on the last day of trading for the period. During the first quarter of 2022, we sold our remaining 91 million shares, recognizing proceeds of $1.4 billion.

All gains and losses were recognized within "Other income” on our consolidated income statement. Proceeds related to the sale of our CVE shares were included within “Cash Flows from Investing Activities” on our consolidated statement of cash flows. See Note 11.

	Millions of Dollars
	Three Months Ended September 30			Nine Months Ended September 30
	2022		2021	2022		2021
Total Net gain on equity securities	$	—	17	251		743
Less: Net gain (loss) on equity securities sold during the period	—		(50)	251		177
Unrealized gain on equity securities still held at the reporting date	$	—	67	$	—	566

9 ConocoPhillips      2022 Q3 10-Q

Notes to Consolidated Financial Statements Table of Contents

Note 6—Debt

	Millions of Dollars
	September 30 2022		December 31 2021
2.4% Notes due 2022	$	329	329
7.65% Debentures due 2023	78		78
3.35% Notes due 2024	426		426
2.125% Notes due 2024	900		—
8.2% Notes due 2025	134		134
3.35% Debentures due 2025	199		199
2.4% Notes due 2025	900		—
6.875% Debentures due 2026	67		67
4.95% Notes due 2026	—		1,250
7.8% Debentures due 2027	203		203
3.75% Notes due 2027	196		1,000
4.3% Notes due 2028	223		1,000
7.375% Debentures due 2029	92		92
7% Debentures due 2029	112		200
6.95% Notes due 2029	1,195		1,549
8.125% Notes due 2030	390		390
7.4% Notes due 2031	382		500
7.25% Notes due 2031	400		500
7.2% Notes due 2031	447		575
2.4% Notes due 2031	227		500
5.9% Notes due 2032	505		505
4.15% Notes due 2034	246		246
5.95% Notes due 2036	326		500
5.951% Notes due 2037	645		645
5.9% Notes due 2038	350		600
6.5% Notes due 2039	1,588		2,750
3.758% Notes due 2042	785		—
4.3% Notes due 2044	750		750
5.95% Notes due 2046	329		500
7.9% Debentures due 2047	60		60
4.875% Notes due 2047	319		800
4.85% Notes due 2048	219		600
3.8% Notes due 2052	1,100		—
4.025% Notes due 2062	1,770		—
Floating rate notes due 2022 at 1.06% – 1.41% during 2022 and 1.02% –1.12% during 2021	—		500
Marine Terminal Revenue Refunding Bonds due 2031 at 0.07% – 2.55% during 2022 and 0.04% – 0.15% during 2021	265		265
Industrial Development Bonds due 2035 at 0.07% – 2.55% during 2022 and 0.04% – 0.12% during 2021	18		18
Other	31		35
Debt at face value	16,206		17,766
Finance leases	1,282		1,261
Net unamortized premiums, discounts and debt issuance costs	(527)		907
Total debt	16,961		19,934
Short-term debt	(664)		(1,200)
Long-term debt	$	16,297	18,734

ConocoPhillips      2022 Q3 10-Q 10

Notes to Consolidated Financial Statements Table of Contents

In May 2022, we redeemed $1,250 million principal amount of our 4.95 percent Notes due 2026. We paid premiums above face value of $79 million to redeem the debt and recognized a loss on debt extinguishment of $83 million which is included in the "Other expenses" line on our consolidated income statement. We also paid $500 million to retire the outstanding principal amount of the floating rate notes due 2022 at maturity.

In the first quarter of 2022, we completed a debt refinancing consisting of three concurrent transactions: a tender offer to repurchase existing debt for cash; exchange offers to retire certain debt in exchange for new debt and cash; and a new debt issuance to partially fund the cash paid in the tender and exchange offers.

Tender Offer

In March 2022, we repurchased a total of $2,716 million aggregate principal amount of debt as listed below. We paid premiums above face value of $333 million to repurchase these debt instruments and recognized a gain on debt extinguishment of $155 million which is included in the "Other expenses" line on our consolidated income statement.

•3.75% Notes due 2027 with principal of $1,000 million (partial repurchase of $804 million)

•4.3% Notes due 2028 with principal of $1,000 million (partial repurchase of $777 million)

•2.4% Notes due 2031 with principal of $500 million (partial repurchase of $273 million)

•4.875% Notes due 2047 with principal of $800 million (partial repurchase of $481 million)

•4.85% Notes due 2048 with principal of $600 million (partial repurchase of $381 million)

Exchange Offers

Also in March 2022, we completed two concurrent debt exchange offers through which $2,544 million of aggregate principal of existing notes was tendered and accepted in exchange for a combination of new notes and cash. The debt exchange offers were treated as debt modifications for accounting purposes resulting in a portion of the unamortized debt discount, premiums and debt issuance costs of the existing notes being allocated to the new notes on the settlement dates of the exchange offers. We paid premiums above face value of $883 million, comprised of $872 million of cash as well as new notes, which were capitalized as additional debt discount. We incurred expenses of $28 million in the exchanges which are included in the "Other expenses" line on our consolidated income statement.

The notes tendered and accepted in the exchange offers were:

•7% Debentures due 2029 with principal amount of $200 million (partial exchange of $88 million)

•6.95% Notes due 2029 with principal amount of $1,549 million (partial exchange of $354 million)

•7.4% Notes due 2031 with principal amount of $500 million (partial exchange of $118 million)

•7.25% Notes due 2031 with principal amount of $500 million (partial exchange of $100 million)

•7.2% Notes due 2031 with principal amount of $575 million (partial exchange of $128 million)

•5.95% Notes due 2036 with principal amount of $500 million (partial exchange of $174 million)

•5.9% Notes due 2038 with principal amount of $600 million (partial exchange of $250 million)

•6.5% Notes due 2039 with principal amount of $2,750 million (partial exchange of $1,162 million)

•5.95% Notes due 2046 with principal amount of $500 million (partial exchange of $171 million)

The notes tendered and accepted were exchanged for the following new notes:

•3.758% Notes due 2042 with principal amount of $785 million

•4.025% Notes due 2062 with principal amount of $1,770 million

New Debt Issuance

On March 8, 2022, we issued the following new notes consisting of:

•2.125% Notes due 2024 with principal of $900 million

•2.4% Notes due 2025 with principal of $900 million

•3.8% Notes due 2052 with principal of $1,100 million

In February 2022, we refinanced our revolving credit facility from a total borrowing capacity of $6.0 billion to $5.5 billion with an expiration date of February 2027. 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. The revolving credit facility is broadly syndicated among financial institutions and does not contain any material adverse change provisions or any covenants requiring maintenance of specified financial ratios or credit ratings. The facility agreement contains a cross-default provision relating to the failure to pay principal or interest on other debt obligations of

$200 million or more by ConocoPhillips, or any of its consolidated subsidiaries. The amount of the facility is not subject to redetermination prior to its expiration date.

11 ConocoPhillips      2022 Q3 10-Q

Notes to Consolidated Financial Statements Table of Contents

Credit facility borrowings may bear interest at a margin above rates offered by certain designated banks in the London interbank market or at a margin above the overnight federal funds rate or prime rates offered by certain designated banks in the U.S. The facility agreement calls for commitment fees on available, but unused, amounts. The facility agreement also contains early termination rights if our current directors or their approved successors cease to be a majority of the Board of Directors.

The revolving credit facility supports our ability to issue up to $5.5 billion of commercial paper. Commercial paper is generally limited to maturities of 90 days and is included in short-term debt on our consolidated balance sheet. With no commercial paper outstanding and no direct borrowings or letters of credit, we had access to $5.5 billion in available borrowing capacity under our revolving credit facility at September 30, 2022. At December 31, 2021, we had no commercial paper outstanding and no direct borrowings or letters of credit issued.

In September 2022, Moody's upgraded our long-term credit rating to "A2" with a stable outlook from the previous "A3" with a positive outlook and upgraded our commercial paper rating to "Prime-1" from "Prime-2".

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: "A2" with a "stable" outlook

We do not have any ratings triggers on any of our corporate debt that would cause an automatic default, and thereby impact our access to liquidity upon downgrade of our credit ratings. If our credit ratings are downgraded from their current levels, it could increase the cost of corporate debt available to us and restrict our access to the commercial paper markets. If our credit ratings were to deteriorate to a level prohibiting us from accessing the commercial paper market, we would still be able to access funds under our revolving credit facility.

At September 30, 2022, we had $283 million of certain variable rate demand bonds (VRDBs) outstanding with maturities ranging through 2035. The VRDBs are redeemable at the option of the bondholders on any business day. If they are ever redeemed, we have the ability and intent to refinance on a long-term basis, therefore, the VRDBs are included in the “Long-term debt” line on our consolidated balance sheet.

ConocoPhillips      2022 Q3 10-Q 12

Notes to Consolidated Financial Statements Table of Contents

Note 7—Changes in Equity

	Millions of Dollars
	Common Stock
	Par Value		Capital in Excess of Par	Treasury Stock	Accum. Other Comprehensive Income (Loss)	Retained Earnings	Total
For the three months ended September 30, 2022
Balances at June 30, 2022	$	21	61,045	(54,644)	(5,313)	49,093	50,202
Net income						4,527	4,527
Other comprehensive loss					(552)		(552)
Dividends declared
Ordinary ($0.46 per common share)						(588)	(588)
Variable return of cash ($1.40 per common share)						(1,754)	(1,754)
Repurchase of company common stock				(2,799)			(2,799)
Distributed under benefit plans