2022
Annual
Report
Letter to Shareholders
Dear Fellow Shareholders,
Energy supply and security were top priorities
achieving our net-zero operational emissions
across the globe in 2022, as geopolitical and
ambition. They also reflect the high performance
economic turmoil contributed to one of the most
and ingenuity of our workforce.
eventful years for our industry and the world in
decades. Against this backdrop, ConocoPhillips
A Decade of Transformation
demonstrated robust operational and financial
Since our 2012 spinoff, ConocoPhillips has
results, generating a 27% return on capital
strategically developed a deep and diverse
employed and returning $15 billion of capital
portfolio that continues to generate impressive
to our shareholders. We also announced new
cash flows. With the completion of our
low greenhouse gas (GHG)-intensity production
acquisitions in the U.S. Permian Basin and our
projects to enhance our global portfolio
for decades to come, while expanding our
commitment to reduce emissions.
These achievements align with our Triple
Mandate of responsibly and reliably meeting
energy transition pathway demand, delivering
competitive returns on and of capital, and
expanding opportunities in liquefied natural
gas (LNG), we have established ourselves as a
premier exploration and production company
with a large, low cost of supply, low GHG-
intensity resource base. Our strong balance sheet
positions us to thrive through the price cycles of
the evolving energy transition.
CONOCOPHILLIPS PORTFOLIO TRANSFORMATION
27%
RETURN
ON CAPITAL
EMPLOYED
IN 2022,
HIGHEST
SINCE OUR
2012 SPINOFF
2012
$94.16/BBL WTI
2022
$94.23/BBL WTI
Production
1.6 MMBOED
1.7 MMBOED
Cash from operations (CFO)
$15.2B
Net debt
$17.4B
$28.5B
$7.2B
A decade of focus on execution excellence, balance sheet strength and returns.
In 2022, we safely and efficiently produced
more than 1.7 million barrels of oil equivalent
per day globally, with record production in
our Lower 48 operations. We achieved first
production at Gumusut Phase 3 in Malaysia,
Fiord West Kuparuk in Alaska and Montney’s
Pad 4 in Canada, while continuing to progress
the Tommeliten A and Eldfisk North projects
in Norway. As a major producer in the prolific
Permian Basin, we continued to innovate with
strategic acreage swaps that allowed us to
significantly increase our long-lateral inventory
and lower our cost of supply. Our global reserve
replacement ratio was 176%, highlighting the
breadth and depth of our portfolio.
“Our strong balance
sheet positions us to
thrive through the price
cycles of the evolving
energy transition.”
We expect LNG to play a valuable role through
the energy transition and beyond, as it is
lower in GHG-emissions intensity than other
alternatives, particularly coal. Building on
our 60 years of LNG expertise, we made
Energy security has reemerged as a top global
commitments to grow our global LNG business
concern, and ConocoPhillips is well positioned
in Australia, Germany, Qatar and the United
to supply natural gas where it is needed most.
States. In 2022, we increased our ownership
in Australia Pacific LNG, which supplies the
CFO-based returns framework differentiates us
growing Australian and Asia Pacific markets.
relative to peers and is a competitive advantage.
We signed agreements with QatarEnergy to
participate in the North Field East and the North
Field South LNG projects and to jointly supply
long-term LNG to Germany, Europe’s largest
gas market. In the U.S., we are working with
Sempra Infrastructure to develop large-scale
LNG and potential carbon capture projects
along the Gulf Coast.
Fulfilling Our Triple Mandate
We achieved a 27% return on capital employed,
our highest since becoming an independent
company, and returned a record 53% of cash
from operations (CFO) — $15 billion return of
capital — to our shareholders through dividends,
variable return of cash (VROC) distributions
and share repurchases in 2022. While this was
our first year to offer VROC payments, our total
shareholder return over the past five years has
represented ~45% of CFO. We believe that our
Advancing our Paris-aligned climate risk
strategy, we joined the Oil and Gas Methane
Partnership 2.0 and further strengthened
our methane reduction ambition with a more
aggressive near-zero 2030 methane emissions
intensity target. We also published our Plan for
the Net-Zero Energy Transition with a progress
update expected in spring 2023.
Our emissions reduction efforts and operational
net-zero ambition are supported by our
multidisciplinary Low Carbon Technologies
organization. In 2022, this team began
developing and implementing region-specific
plans focused on technology to accelerate
emissions reduction. These opportunities
include electrification studies, equipment
design, enhanced monitoring and detection of
methane emissions, reductions in flaring and
methane venting volumes, as well as carbon
capture and storage.
CONOCOPHILLIPS AT A GLANCE
2022 Highlights
Generated earnings*
Produced 1.7 million
of $18.7 billion.
Returned $15 billion
of capital to
shareholders.
barrels of oil equivalent
per day.
Achieved record
production in our
Lower 48 assets.
*Earnings refers to net income.
Expanded our LNG
business in Australia,
Germany, Qatar and along
the U.S. Gulf Coast.
Introduced Plan for
the Net-Zero Energy
Transition.
Collectively, our 2022 actions will help
Our Next Decade
reduce the average GHG-emissions intensity
of our 20-billion-barrel low cost of supply
resource base, reflecting our commitment to
responsibly and reliably meet energy transition
pathway demand.
World-Class Talent
Our collaborative and innovative workforce
drives our success, and we recognize the
importance of creating a workplace where
our people feel valued. In 2022, we continued
our efforts to foster a workplace that attracts,
retains and develops the best talent. We
established a new diversity, equity and inclusion
organization and welcomed our first chief
diversity officer. We also continued to focus
on programs and processes to ensure we have
an engaged workforce with the skills to meet
The energy business will always be volatile, but
we’ve built ConocoPhillips to deliver competitive
results throughout price cycles. Aligned with
our Triple Mandate, our deep and diversified
portfolio will provide the energy to meet
demand, deliver compelling returns and fulfill
our commitments to shareholders, while we
continue to execute on our net-zero operational
emissions ambition. As we enter our next
decade, ConocoPhillips looks forward to playing
a key role in the energy transition by providing
secure, dependable, low GHG-intensity energy
solutions that help power civilization while
enhancing global energy supply and security.
our business needs. As always, safety was our
Ryan M. Lance
top priority. A safe company is a successful
Chairman and Chief Executive Officer
company, so I’m pleased to report that in 2022
Feb. 16, 2023
we had our second-best safety performance
since we became an independent company.
Who We Are
~9,500
EMPLOYEES
BALANCED,
DIVERSIFIED
GLOBAL
PORTFOLIO
13
COUNTRIES WITH
OPERATIONS
AND ACTIVITIES
AMONG
LEADING
PRODUCERS
FROM NORTH
AMERICAN
SHALE
$94B
IN TOTAL
ASSETS
As of Dec. 31, 2022
ONE OF THE WORLD’S LARGEST INDEPENDENT E&P COMPANIES SPOTLIGHT
Australia Pacific LNG export
facility loading its cargo.
LNG: A Fuel
for the Energy
Transition
and selling gas to the Australian, Asian and
European markets. Our LNG business offers
competitive returns, and we are taking steps to
expand our long-term opportunities.
In February 2022, we increased our ownership
in Australia Pacific LNG by 10% to 47.5%. Later
Our liquefied natural gas (LNG) business
in the year, we were awarded a 25% interest in
reinforces our Triple Mandate of responsibly
two new joint ventures with our longtime partner
and reliably meeting energy transition pathway
QatarEnergy that will participate in its North
demand, delivering competitive returns on
Field East and North Field South LNG projects.
and of capital, and achieving our net-zero
Also with QatarEnergy, we jointly announced
operational emissions ambition.
agreements to deliver LNG to Germany, Europe’s
With the energy transition underway, the
demand for LNG, a low greenhouse gas
(GHG)-intensity fuel, is growing as the world
seeks to reduce emissions and identify
alternatives to higher GHG-intensity fuels,
particularly coal. ConocoPhillips has 60 years
largest gas market, starting in 2026 via the
German LNG Terminal at Brunsbüttel. In the
U.S., we entered into an agreement with Sempra
Infrastructure for opportunities to participate
in large-scale LNG projects, including the Port
Arthur LNG facility along the Gulf Coast.
of LNG experience and is uniquely positioned
Our LNG business enhances our deep and
to advance this fuel globally. We are one of the
diversified global portfolio, while contributing
top natural gas marketers in North America
to worldwide efforts to reduce emissions and
and have decades of experience procuring
advance an orderly energy transition.
2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 001-32395
ConocoPhillips
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
01-0562944
(I.R.S. Employer identification No.)
925 N. Eldridge Parkway, Houston, TX 77079
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 281-293-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.01 Par Value
7% Debentures due 2029
Trading symbols
COP
CUSIP—718507BK1
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
The aggregate market value of common stock held by non-affiliates of the registrant on June 30, 2022, the last business day of the registrant’s most
recently completed second fiscal quarter, based on the closing price on that date of $89.81, was $114.2 billion.
The registrant had 1,218,776,494 shares of common stock outstanding at January 31, 2023.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 16, 2023 (Part III)
Documents incorporated by reference:
(cid:100)(cid:346)(cid:349)(cid:400)(cid:3)(cid:87)(cid:258)(cid:336)(cid:286)(cid:3)(cid:47)(cid:374)(cid:410)(cid:286)(cid:374)(cid:415)(cid:381)(cid:374)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:62)(cid:286)(cid:332)(cid:3)(cid:17)(cid:367)(cid:258)(cid:374)(cid:364)(cid:856)
F1156conD2R2.indd 2
3/9/23 11:10 PM
Table of Contents
Commonly Used Abbreviations
Item
1 and 2. Business and Properties
Part I
Corporate Structure
Segment and Geographic Information
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Other
Delivery Commitments
Competition
Human Capital Management
General
1A. Risk Factors
1B. Unresolved Staff Comments
3. Legal Proceedings
4. Mine Safety Disclosures
Information About our Executive Officers
Part II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
6. [Reserved]
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8. Financial Statements and Supplementary Data
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
10. Directors, Executive Officers and Corporate Governance
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
13. Certain Relationships and Related Transactions, and Director Independence
14. Principal Accounting Fees and Services
15. Exhibits, Financial Statement Schedules
Signatures
Part IV
Page
2
2
2
2
4
6
7
8
11
13
14
15
15
16
19
20
28
28
28
28
30
32
65
68
160
160
160
160
161
161
161
161
161
162
168
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.
Accounting
ARO
ASC
ASU
DD&A
FASB
FIFO
G&A
GAAP
LIFO
NPNS
PP&E
VIE
Miscellaneous
DEI
EPA
ESG
EU
FERC
GHG
HSE
ICC
ICSID
IRS
OTC
NYSE
SEC
TSR
U.K.
U.S.
VROC
asset retirement obligation
accounting standards codification
accounting standards update
depreciation, depletion and
amortization
Financial Accounting Standards
Board
first-in, first-out
general and administrative
generally accepted accounting
principles
last-in, first-out
normal purchase normal sale
properties, plants and equipment
variable interest entity
diversity, equity and inclusion
Environmental Protection Agency
environmental, social and governance
European Union
Federal Energy Regulatory
Commission
greenhouse gas
health, safety and environment
International Chamber of Commerce
World Bank’s International
Centre for Settlement of
Investment Disputes
Internal Revenue Service
over-the-counter
New York Stock Exchange
U.S. Securities and Exchange
Commission
total shareholder return
United Kingdom
United States of America
variable return of cash
Currencies
$ or USD
CAD
EUR
GBP
U.S. dollar
Canadian dollar
Euro
British pound
Units of Measurement
BBL
barrel
BCF
BOE
MBD
MCF
MBOD
MM
MMBOE
MMBOD
MBOED
billion cubic feet
barrels of oil equivalent
thousands of barrels per day
thousand cubic feet
thousand barrels of oil per day
million
million barrels of oil equivalent
million barrels of oil per day
thousands of barrels of oil
equivalent per day
MMBOED
millions of barrels of oil
MMBTU
MMCFD
Industry
BLM
CBM
E&P
CCS
FEED
FPS
FPSO
G&G
JOA
LNG
NGLs
OPEC
PSC
PUDs
SAGD
WCS
WTI
equivalent per day
million British thermal units
million cubic feet per day
Bureau of Land Management
coalbed methane
exploration and production
carbon capture and storage
front-end engineering and design
floating production system
floating production, storage and
offloading
geological and geophysical
joint operating agreement
liquefied natural gas
natural gas liquids
Organization of Petroleum
Exporting Countries
production sharing contract
proved undeveloped reserves
steam-assisted gravity drainage
Western Canadian Select
West Texas Intermediate
1
ConocoPhillips 2022 10-K
Business and Properties
Table of Contents
Part I
Unless otherwise indicated, “the company,” “we,” “our,” “us” and “ConocoPhillips” are used in this report to refer to the
businesses of ConocoPhillips and its consolidated subsidiaries. Items 1 and 2—Business and Properties, contain forward-
looking statements including, without limitation, statements relating to our 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 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 headings “Risk Factors” beginning on page 20 and “CAUTIONARY STATEMENT FOR THE PURPOSES
OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,” beginning on page
63.
Items 1 and 2. Business and Properties
Corporate Structure
ConocoPhillips is an independent E&P company headquartered in Houston, Texas with operations and activities in 13
countries. Our diverse, low cost of supply portfolio includes resource-rich unconventional plays in North America;
conventional assets in North America, Europe, Africa and Asia; LNG developments; oil sands assets in Canada; and an
inventory of global exploration prospects. On December 31, 2022, we employed approximately 9,500 people worldwide
and had total assets of about $94 billion. Total company production for the year was 1,738 MBOED.
ConocoPhillips was incorporated in the state of Delaware in 2001, in connection with, and in anticipation of, the merger
between Conoco Inc. and Phillips Petroleum Company. The merger between Conoco and Phillips was consummated on
August 30, 2002. In April 2012, ConocoPhillips completed the separation of the downstream business into an
independent, publicly traded energy company, Phillips 66.
Segment and Geographic Information
We manage our operations through six operating segments, defined by geographic region: Alaska; Lower 48; Canada;
Europe, Middle East and North Africa; Asia Pacific; and Other International. For operating segment and geographic
information, see Note 24.
ConocoPhillips 2022 10-K
2
Business and Properties
Table of Contents
We explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and NGLs on a worldwide basis. At
December 31, 2022, our operations were producing in the U.S., Norway, Canada, Australia, Malaysia, Libya, China and
Qatar.
The information listed below appears in the “Supplementary Data - Oil and Gas Operations” disclosures following the
Notes to Consolidated Financial Statements and is incorporated herein by reference:
Proved worldwide crude oil, NGLs, natural gas and bitumen reserves.
Net production of crude oil, NGLs, natural gas and bitumen.
Average sales prices of crude oil, NGLs, natural gas and bitumen.
Average production costs per BOE.
Net wells completed, wells in progress and productive wells.
Developed and undeveloped acreage.
•
•
•
•
•
•
The following table is a summary of the proved reserves information included in the “Supplementary Data - Oil and Gas
Operations” disclosures following the Notes to Consolidated Financial Statements. Approximately 84 percent of our
proved reserves are in countries that belong to the Organization for Economic Cooperation and Development. Natural gas
reserves are converted to BOE based on a 6:1 ratio: six MCF of natural gas converts to one BOE. See Management’s
Discussion and Analysis of Financial Condition and Results of Operations for a discussion of factors that will enhance the
understanding of the following summary reserves table.
Millions of Barrels of Oil Equivalent
2022
2021
2020
2,975
93
3,068
2,964
63
3,027
845
50
895
1,461
959
2,420
216
216
5,497
1,102
6,599
644
33
677
1,523
617
2,140
257
257
5,388
713
6,101
2,051
68
2,119
340
36
376
1,011
621
1,632
332
332
3,734
725
4,459
Net Proved Reserves at December 31
Crude oil
Consolidated operations
Equity affiliates
Total Crude Oil
Natural gas liquids
Consolidated operations
Equity affiliates
Total Natural Gas Liquids
Natural gas
Consolidated operations
Equity affiliates
Total Natural Gas
Bitumen
Consolidated operations
Total Bitumen
Total consolidated operations
Total equity affiliates
Total company
3
ConocoPhillips 2022 10-K
Business and Properties
Alaska
Table of Contents
The Alaska segment primarily explores for, produces,
transports and markets crude oil, natural gas and NGLs.
We are the largest crude oil producer in Alaska and have
major ownership interests in two of North America’s
largest oil fields located on Alaska’s North Slope:
Prudhoe Bay and Kuparuk. We operate Kuparuk in
addition to several fields on the Western North Slope, in
which we have 100 percent interest. Additionally, we
are one of Alaska’s largest owners of state, federal and
fee exploration leases, with approximately 1.2 million
net undeveloped acres at year-end 2022. Alaska
operations contributed 16 percent of our consolidated
liquids production and two percent of our consolidated
natural gas production.
Average Daily Net
Production
Greater Prudhoe Area
Greater Kuparuk Area
Western North Slope
Total Alaska
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
36.1 %
89.2-94.7
100.0
Hilcorp
ConocoPhillips
ConocoPhillips
67
66
44
177
17
—
—
17
32
1
1
34
90
66
44
200
Greater Prudhoe Area
The Greater Prudhoe Area includes the Prudhoe Bay Unit, which consists of the Prudhoe Bay Field and five satellite fields,
as well as the Greater Point McIntyre Area fields. Prudhoe Bay, the largest conventional oil field in North America, is the
site of a large waterflood and enhanced oil recovery operation, supported by a large gas and water processing operation.
Prudhoe Bay’s western satellite fields are Aurora, Borealis, Polaris, Midnight Sun and Orion, while the Point McIntyre,
Niakuk, Raven, Lisburne and North Prudhoe Bay State fields are part of the Greater Point McIntyre Area. Field
installations include seven production facilities, two gas plants, two seawater plants and a central power station. Activity
in 2022 consisted of rotary and coil tubing drilling throughout the year.
Greater Kuparuk Area
We operate the Greater Kuparuk Area, which includes the Kuparuk River Unit, consisting of the Kuparuk Field and four
satellite fields: Tarn, Tabasco, Meltwater and West Sak. Kuparuk is located 40 miles west of the Prudhoe Bay Field. Field
installations include three central production facilities which separate oil, natural gas and water as well as a seawater
treatment plant. Development drilling at Kuparuk consists of rotary-drilled wells and horizontal multi-laterals from
existing wellbores utilizing coiled-tubing drilling.
ConocoPhillips 2022 10-K
4
Business and Properties
Table of Contents
Western North Slope
On the Western North Slope, we operate the Colville River Unit and the Greater Mooses Tooth Unit.
The Colville River Unit includes the Alpine Field and three satellite fields: Nanuq, Fiord and Qannik, which are located
approximately 34 miles west of the Kuparuk Field. Field installations include one central production facility which
separates oil, natural gas and water. In May 2022, Fiord West Kuparuk achieved first production.
The Greater Mooses Tooth Unit is the first unit established entirely within the National Petroleum Reserve Alaska (NPR-
A). In 2017, we began construction in the unit with two phases: Greater Mooses Tooth #1 (GMT1) and Greater Mooses
Tooth #2 (GMT2). GMT1 achieved first oil in 2018 and completed drilling in 2019. First oil for GMT2 was achieved in late
2021.
2022 activity on the Western North Slope consisted of rotary and extended reach drilling throughout the year.
Exploration
Appraisal activities of the Willow Discovery in the Bear Tooth Unit in the NPR-A concluded in 2020. A Final Supplemental
Environmental Impact Statement was released on February 1, 2023 and published in the Federal Register on February 3,
2023, with a record of decision to follow no sooner than 30 days afterwards.
We continued evaluating the Narwhal trend throughout 2022, purchasing additional seismic data and drilling a second
injector well to allow a fully supported production test. We are planning future Narwhal development from the existing
Alpine CD4 infrastructure to help inform the design and optimization of the future CD8 pad.
We plan to drill the Bear-1 exploration well at a location 30 miles south of the Kuparuk River Unit and east of the Colville
River on state lands in early 2023. The well will test the Brookian topset play.
In late 2021, the Coyote Brookian topset exploration prospect in the Kuparuk River Unit was tested with a near vertical
sidetrack from an existing wellbore. The well was fracture stimulated and tested in early 2022. We are planning further
appraisal drilling in 2023.
Transportation
We transport the petroleum liquids produced on the North Slope to Valdez, Alaska through an 800-mile pipeline that is
part of Trans-Alaska Pipeline System (TAPS). We have a 29.5 percent ownership interest in TAPS, and we also have
ownership interests in and operate the Alpine, Kuparuk and Oliktok pipelines on the North Slope.
Our wholly owned subsidiary, Polar Tankers, Inc., manages the marine transportation of our North Slope production,
using five company-owned, double-hulled tankers, and charters third-party vessels, as necessary. The tankers deliver oil
from Valdez, Alaska, primarily to refineries on the west coast of the U.S.
5
ConocoPhillips 2022 10-K
Business and Properties
Lower 48
Average Daily Net Production
Delaware Basin
Eagle Ford
Midland Basin
Bakken
Other*
Total Lower 48
*Other also includes select noncore assets that were divested in 2022.
Table of Contents
The Lower 48 segment consists of operations located in
the 48 contiguous U.S. states and the Gulf of Mexico,
with a portfolio mainly consisting of low cost of supply,
short cycle time, resource-rich unconventional plays and
commercial operations. Based on 2022 production
volumes, the Lower 48 is the company’s largest
segment and contributed 64 percent of our
consolidated liquids production and 72 percent of our
consolidated natural gas production.
2022
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
258
117
91
59
9
534
114
58
31
15
3
221
752
271
196
127
56
1,402
498
220
155
95
21
989
At December 31, 2022, we held 10.3 million net acres of onshore unconventional and conventional acreage in the Lower
48, the majority of which is either held by production or owned by the company. Our significant unconventional holdings
are in the following areas:
•
•
•
•
659,000 net acres in the Delaware Basin, located in West Texas and southeastern New Mexico.
199,000 net acres in the Eagle Ford, located in South Texas.
251,000 net acres in the Midland Basin, located in West Texas.
560,000 net acres in the Bakken, located in North Dakota and eastern Montana.
The majority of our 2022 production activities were centered on continued development of onshore assets, with an
emphasis on areas with low cost of supply, particularly in growing unconventional plays. Our major focus in 2022 included
the following areas:
•
•
Delaware Basin—We operated ten rigs and three frac crews on average during 2022, resulting in 186 operated
wells drilled and 153 operated wells brought online. We also participated in partner operated wells. Production
increased in 2022 compared with 2021 primarily related to our Shell Permian acquisition, averaging 498 MBOED
and 286 MBOED, respectively.
Eagle Ford—We operated six rigs and three frac crews on average during 2022, resulting in 125 operated wells
drilled and 153 operated wells brought online. Production increased in 2022 compared with 2021, averaging 220
MBOED and 211 MBOED, respectively.
• Midland Basin—We operated five rigs and two frac crews on average during 2022, resulting in 99 operated wells
drilled and 111 operated wells brought online. Production increased in 2022 compared with 2021, averaging 155
MBOED and 136 MBOED, respectively.
Bakken—We operated two rigs and one frac crew on average during 2022, resulting in 33 operated wells drilled
and 43 operated wells brought online. We also participated in partner operated wells. Production increased in
2022 compared with 2021, averaging 95 MBOED and 94 MBOED, respectively.
•
Acquisitions and Dispositions
Throughout 2022, we completed sales of certain noncore assets, executed multiple acreage swaps and completed an
acquisition that cored up acreage in Eagle Ford. See Note 3.
Facilities
We operate and own, with varying interests, centralized condensate processing facilities in Texas and New Mexico in
support of our Eagle Ford, Delaware and Midland assets.
ConocoPhillips 2022 10-K
6
Business and Properties
Canada
Table of Contents
Our Canadian operations consist of the Surmont oil
sands development in Alberta and the liquids-rich
Montney unconventional play in British Columbia and
commercial operations. In 2022, operations in Canada
contributed six percent of our consolidated liquids
production and three percent of our consolidated
natural gas production.
Interest
Operator
Crude Oil
MBD
2022
Natural Gas
MMCFD
NGL
MBD
Bitumen
MBD
Total
MBOED
50.0 % ConocoPhillips
ConocoPhillips
100.0
—
6
6
—
3
3
—
61
61
66
—
66
66
19
85
Average Daily Net
Production
Surmont
Montney
Total Canada
Surmont
Our bitumen resources in Canada are produced via an enhanced thermal oil recovery method called SAGD, whereby
steam is injected into the reservoir, effectively liquefying the heavy bitumen, which is recovered and pumped to the
surface for further processing. Operations include two central processing facilities for treatment and blending of bitumen.
At December 31, 2022, we held approximately 600,000 net acres of land in the Athabasca Region of northeastern Alberta.
The Surmont oil sands leases are located approximately 35 miles south of Fort McMurray, Alberta. Surmont is a 50/50
joint venture with Total Energies SE that offers long-lived, sustained production. We are focused on keeping facilities full,
structurally lowering costs, reducing GHG intensity and optimizing asset performance.
In 2022, we began construction on the asset's next pad (Pad 267), which included the drilling of 24 well pairs. First
production on Pad 267 is expected in early 2024.
In 2021, we began processing a portion of Surmont’s blended bitumen at the Diluent Recovery Unit constructed in
Alberta, unlocking additional value for the asset by providing additional market access to our heavy crude oil. In 2019,
Surmont implemented the use of condensate for bitumen blending through the central processing facility 2; enabling the
asset to lower blend ratio and diluent supply costs, gain protection from synthetic crude oil supply disruptions and gain
optionality on sales products. The alternative blend project was completed in 2021 at central processing facility 1. Full
Surmont Heavy Dilbit (condensate bitumen blend) was first produced across both facilities in the fourth quarter of 2021.
Montney
The Montney is an unconventional resource play located in northeastern British Columbia. At December 31, 2022, we
held approximately 300,000 acres of land with 100 percent working interest in the liquids-rich section of the Montney.
In 2022, development activity consisted of drilling 17 horizontal wells and bringing 12 wells online. In addition, we are
progressing development of additional pads along with construction on the second phase of our processing facility with
start-up scheduled for the third quarter of 2023.
Exploration
Our primary exploration focus is assessing our Montney acreage. In 2023, appraisal drilling and completions activity
within the Montney will continue to explore the area’s resource potential.
7
ConocoPhillips 2022 10-K
Business and Properties
Table of Contents
Europe, Middle East and North Africa
The Europe, Middle East and North Africa segment
consists of operations principally located in the
Norwegian sector of the North Sea; the Norwegian Sea;
Qatar; Libya; and commercial and terminalling
operations in the U.K. In 2022, operations in Europe,
Middle East and North Africa contributed nine percent
of our consolidated liquids production and 17 percent of
our consolidated natural gas production.
Norway
Average Daily Net
Production
Greater Ekofisk Area
Heidrun
Aasta Hansteen
Troll
Visund
Alvheim
Other
Total Norway
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
30.7-35.1% ConocoPhillips
Equinor
Equinor
Equinor
Equinor
Aker BP
Equinor
24.0
10.0
1.6
9.1
20.0
Various
43
11
—
1
2
8
6
71
2
—
—
—
1
—
—
3
37
42
84
62
50
14
17
306
51
19
14
12
11
10
8
125
The Greater Ekofisk Area is located approximately 200 miles offshore Stavanger, Norway, in the North Sea, and comprises
four producing fields: Ekofisk, Eldfisk, Embla and Tor. Crude oil is exported to our operated terminal located at Teesside,
England, and the natural gas is exported to Emden, Germany. The Ekofisk and Eldfisk fields consist of several production
platforms and facilities, with development drilling continuing over the coming years. Currently there are two
development projects, Tommeliten A and Eldfisk North within the Greater Ekofisk Area. These subsea developments will
be tied back to Ekofisk and Eldfisk respectively, with first production expected in 2024. Additionally in 2022, we received a
20-year extension on our production licenses in the Greater Ekofisk Area until 2048.
The Heidrun Field is located in the Norwegian Sea. Produced crude oil is stored in a floating storage unit and exported via
shuttle tankers. Most of the gas is transported to Europe via gas processing terminals in Norway with some reinjected for
pressure support if required. A portion of the gas is also transported for use as feedstock in a methanol plant in Norway,
in which we have an 18 percent interest.
Aasta Hansteen is a gas and condensate field located in the Norwegian Sea. Produced condensate is loaded onto shuttle
tankers and transported to market. Gas is transported through the Polarled gas pipeline to the onshore Nyhamna
processing plant for final processing prior to export to market.
The Troll Field lies in the northern part of the North Sea and consists of the Troll A, B and C platforms. The natural gas
from Troll A is transported to Kollsnes, Norway. Crude oil from floating platforms Troll B and Troll C is transported to
Mongstad, Norway, for storage and export.
ConocoPhillips 2022 10-K
8
Business and Properties
Table of Contents
Visund is an oil and gas field located in the North Sea and consists of a floating drilling, production and processing unit,
and subsea installations. Crude oil is transported by pipeline to a nearby third-party field for storage and export via
tankers. The natural gas is transported to a gas processing plant at Kollsnes, Norway, through the Gassled transportation
system.
The Alvheim Field is located in the northern part of the North Sea near the border with the U.K. sector, and consists of a
FPSO vessel and subsea installations. Produced crude oil is exported via shuttle tankers, and natural gas is transported to
the Scottish Area Gas Evacuation (SAGE) Terminal at St. Fergus, Scotland, through the SAGE Pipeline. The Kobra East
Gekko (KEG) project, a new subsea tieback to the Alvheim FPSO, is currently being developed, with first production
expected in 2024.
We also have varying ownership interests in two other producing fields in the Norway sector of the North Sea.
Exploration
In 2022, we executed a four-well exploration and appraisal campaign which included the Slagugle appraisal well and
exploration of the Peder, Bounty and Lamba prospects. Additionally in 2022, we participated in the Othello partner
operated exploration well. None of the exploration wells resulted in commercial discovery of hydrocarbons, and all were
permanently plugged and abandoned. Slagugle is a discovery that we are continuing to evaluate. In 2022, we were
awarded three new exploration licenses, PL1146, PL1163, and PL1166, and executed a trade to enter license PL1099.
Transportation
We have a 35.1 percent interest in the Norpipe Oil Pipeline System, a 220-mile pipeline which carries crude oil from
Ekofisk to a crude oil stabilization and NGLs processing facility in Teesside, England.
Facilities
We operate and have a 40.25 percent ownership interest in a crude oil stabilization and NGLs processing facility at
Teesside, England to support our Norway operations.
9
ConocoPhillips 2022 10-K
Business and Properties
Qatar
Average Daily Net
Production
QG3
Table of Contents
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
30.0 %
Qatargas Operating
Company Limited
13
8
374
83
QG3 is an integrated development jointly owned by QatarEnergy (68.5 percent), ConocoPhillips (30 percent) and Mitsui &
Co., Ltd. (1.5 percent). QG3 consists of upstream natural gas production facilities, which produce approximately 1.4 billion
gross cubic feet per day of natural gas from Qatar’s North Field over a 25-year life, in addition to a 7.8 million gross
tonnes per year LNG facility. LNG is shipped in leased LNG carriers destined for sale globally.
QG3 executed the development of the onshore and offshore assets as a single integrated development with Qatargas 4
(QG4), a joint venture between QatarEnergy and Shell plc. This included the joint development of offshore facilities
situated in a common offshore block in the North Field, as well as the construction of two identical LNG process trains
and associated gas treating facilities for both the QG3 and QG4 joint ventures. Production from the LNG trains and
associated facilities is combined and shared.
During 2022 we were awarded a 25 percent interest in each of two new joint ventures with QatarEnergy that will
participate in the North Field East (NFE) and North Field South (NFS) LNG projects. Formation of the NFE joint venture
(QG8) closed in December 2022 and we anticipate that the formation of the NFS joint venture (QG12) will close in early
2023. See Note 3 and Note 4.
Libya
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
Average Daily Net Production
Waha Concession
20.4 % Waha Oil Co.
36
—
22
40
The Waha Concession consists of multiple concessions for exploration and production activity and encompasses nearly 13
million gross acres onshore in the Sirte Basin. In 2022, we had 26 crude liftings from Es Sider terminal.
In November 2022, ConocoPhillips and TotalEnergies completed the joint acquisition of Hess Libya Waha Ltd., which
increased our interest in the Waha Concession by 4.1 percent to 20.4 percent.
ConocoPhillips 2022 10-K
10
Business and Properties
Asia Pacific
Table of Contents
The Asia Pacific segment has exploration and
production operations in China, Malaysia, Australia and
commercial operations in China, Singapore and Japan.
In 2022, operations in the Asia Pacific segment
contributed five percent of our consolidated liquids
production and six percent of our consolidated natural
gas production.
Australia
Average Daily Net
Production
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
Australia Pacific LNG
47.5 %
Origin Energy
—
—
817
136
ConocoPhillips/
Australia Pacific LNG Pty Ltd. (APLNG), our joint venture with Origin Energy Limited and China Petrochemical Corporation
(Sinopec), is focused on producing CBM from the Bowen and Surat basins in Queensland, Australia, to supply the
domestic gas market and convert the CBM into LNG for export. Origin operates APLNG’s upstream production and
pipeline system, and we operate the downstream LNG facility, located on Curtis Island near Gladstone, Queensland, as
well as the LNG export sales business.
We operate two fully subscribed 4.5 million metric tonnes per year LNG trains. Approximately 3,500 net wells are
ultimately expected to supply both the LNG sales contracts and domestic gas market. The wells are supported by
gathering systems, central gas processing and compression stations, water treatment facilities and an export pipeline
connecting the gas fields to the LNG facilities. The LNG is being sold to Sinopec under 20-year sales agreements for 7.6
million metric tonnes of LNG per year, and Japan-based Kansai Electric Power Co., Inc. under a 20-year sales agreement
for approximately 1 million metric tonnes of LNG per year.
In February 2022, we completed the acquisition of an additional 10 percent interest in APLNG from Origin Energy,
increasing our ownership to 47.5 percent, with Origin and Sinopec retaining 27.5 percent and 25 percent interests,
respectively.
For additional information, see Note 4 and Note 10.
Exploration
In 2019, we entered into an agreement with 3D Oil to acquire a 75 percent interest in and operatorship of an offshore
Exploration Permit (T/49P) located in the Otway Basin, Australia. We obtained an additional five percent interest,
increasing our interest to 80 percent, in June 2020. A 3D seismic survey acquisition was completed in October 2021, and
this data is being evaluated for future exploration drilling opportunities.
In October 2022, we entered into a Joint Operating Agreement with 3D Oil for an 80 percent interest in Exploration
Permit (VIC/P79) in the Otway Basin, Australia. The transaction is pending final regulatory approvals which are expected
in the first half of 2023. Existing seismic data is currently being reprocessed and will be evaluated for future exploration
drilling opportunities.
11
ConocoPhillips 2022 10-K
Business and Properties
Indonesia
Average Daily Net
Production
South Sumatra
Table of Contents
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
54.0 % ConocoPhillips
—
—
48
8
In March 2022, we completed the sale of our subsidiary that indirectly held the company’s 54 percent interest in the
Indonesia Corridor Block PSC and a 35 percent shareholding interest in the Transasia Pipeline Company. See Note 3.
China
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
Average Daily Net Production
Penglai
49.0 %
CNOOC
30
—
—
30
Penglai
In 2022, Chinese National Offshore Oil Corporation (CNOOC) and ConocoPhillips approved adjustments to our Bohai PSC
production licenses, aligning all three Penglai Field licenses to expire in 2039.
The Penglai 19-3, 19-9 and 25-6 fields are located in the Bohai Bay Block 11/05 and are being developed in stages.
Phase 3 consists of three new wellhead platforms and a central processing platform. First production from Phase 3 was
achieved in 2018. This project could include up to 186 wells, 157 of which have been completed and brought online as of
December 2022.
Phase 4A consists of one new wellhead platform and achieved first production in 2020. This project could include up to 62
new wells, 33 of which have been completed and brought online as of December 2022.
Phase 4B is currently under construction and consists of two new wellhead platforms. This project could include up to
160 new wells.
Malaysia
Average Daily Net Production
Gumusut
Malikai
Kebabangan (KBB)
Siakap North-Petai
Total Malaysia
Interest
Operator
Crude Oil
MBD
NGL
MBD
Natural Gas
MMCFD
Total
MBOED
2022
29.5 %
35.0
30.0
21.0
Shell
Shell
KPOC
PTTEP
14
13
1
3
31
—
—
—
—
—
—
—
65
1
66
14
13
12
3
42
We have varying stages of exploration, development and production activities across approximately 2.7 million net acres
in Malaysia, with working interests in six PSCs. Four of these PSCs are located in waters off the eastern Malaysian state of
Sabah: Block G, Block J, the Kebabangan Cluster (KBBC), which we do not operate, and Block SB405, an operated
exploration block acquired in 2021. We also operate another two exploration blocks, Block WL4-00 and Block SK304, in
waters off the eastern Malaysian state of Sarawak.
ConocoPhillips 2022 10-K
12
Business and Properties
Table of Contents
Block J
Gumusut
We currently have a 29.5 percent working interest in the unitized Gumusut Field. Gumusut Phase 3 first oil was achieved
in 2022. Development drilling associated with Gumusut Phase 4, a four-well program targeting the Brunei acreage of the
unitized Gumusut Field that straddles Malaysia and Brunei waters, is planned to commence in early 2024 with first oil
anticipated in late 2024.
KBBC
The KBBC PSC grants us a 30 percent working interest in the KBB, Kamunsu East and Kamunsu East Upthrown Canyon gas
and condensate fields.
KBB
During 2019, KBB tied-in to a nearby third-party floating LNG vessel which provided increased gas offtake capacity.
Production from the field has been reduced since January 2020, due to the rupture of a third-party pipeline which carries
gas production from KBB to one of its markets. The third-party operator continues to progress the pipeline repair.
Block G
Malikai
We hold a 35 percent working interest in Malikai. Malikai Phase 2 development first oil was achieved in February 2021.
Siakap North-Petai
We hold a 21 percent working interest in the unitized Siakap North-Petai (SNP) oil field. First oil from SNP Phase 2 was
achieved in November 2021.
Exploration
In 2017, we were awarded operatorship and a 50 percent working interest in Block WL4-00, which included the existing
Salam-1 oil discovery and encompassed 0.6 million gross acres. In 2018 and 2019, we drilled exploration and appraisal
wells, resulting in oil discoveries under evaluation at Salam and Benum Fields. In 2022, we drilled two additional appraisal
wells and one exploration well to evaluate the oil discoveries. The Gagau-1 exploration well made a sub-commercial gas
discovery and was expensed as a dry hole. The information from the well results will help optimize future development
plans.
In 2018, we were awarded a 50 percent working interest and operatorship of Block SK304 encompassing 2.1 million gross
acres off the coast of Sarawak, offshore Malaysia. We acquired 3D seismic over the acreage and completed processing of
this data in 2019. The Mersing-1 exploration well was drilled in 2022, did not encounter any significant hydrocarbons and
was expensed as a dry hole. SK304 is a block that we are continuing to evaluate.
In 2021, we were awarded operatorship and an 85 percent working interest in Block SB405 encompassing 1.4 million
gross acres off the coast of Sabah, offshore Malaysia. A 3D seismic survey was acquired in 2022, and processing and
evaluation of this data will be ongoing through 2023.
Other International
The Other International segment includes interests in Colombia as well as contingencies associated with prior operations
in other countries.
Colombia
We have an 80 percent operated interest in the Middle Magdalena Basin Block VMM-3 extending over approximately
67,000 net acres. In addition, we have an 80 percent working interest in the VMM-2 Block which extends over
approximately 58,000 net acres and is contiguous to the VMM-3 Block. The blocks are currently in Force Majeure due to
the lack of a defined Environmental Licensing process.
Venezuela
For discussion of our contingencies in Venezuela, see Note 11.
13
ConocoPhillips 2022 10-K
Business and Properties
Other
Table of Contents
Marketing Activities
Our Commercial organization manages our worldwide commodity portfolio, which mainly includes natural gas, crude oil,
bitumen, NGLs and LNG. Marketing activities are performed through offices in the U.S., Canada, Europe and Asia. In
marketing our production, we attempt to minimize flow disruptions, maximize realized prices and manage credit-risk
exposure. Commodity sales are generally made at prevailing market prices at the time of sale. We also purchase and sell
third-party commodity volumes to better position the company to satisfy customer demand while fully utilizing
transportation and storage capacity.
Natural Gas
Our natural gas production, along with third-party purchased gas, is primarily marketed in the U.S., Canada and Europe.
Our natural gas is sold to a diverse client portfolio which includes local distribution companies; gas and power utilities;
large industrials; independent, integrated or state-owned oil and gas companies; as well as marketing companies. To
reduce our market exposure and credit risk, we also transport natural gas via firm and interruptible transportation
agreements to major market hubs.
Crude Oil, Bitumen and Natural Gas Liquids
Our crude oil, bitumen and NGL revenues are derived from production in the U.S., Canada, Asia, Africa and Europe. These
commodities are primarily sold under contracts with prices based on market indices, adjusted for location, quality and
transportation.
LNG
LNG marketing efforts are focused on equity LNG production facilities located in Australia and Qatar. LNG is primarily sold
under long-term contracts with prices based on market indices. In 2022, we entered into several agreements with Sempra
entities in connection with the Port Arthur LNG (PALNG) facility, including a 20-year sale and purchase agreement for 5
million tonnes per annum (MTPA) of LNG offtake at the start-up of Phase 1 of the PALNG facility. In addition, we will
acquire 30 percent of the equity in Phase 1 of PALNG. Development of PALNG is subject to completing required
commercial agreements and resolving a number of risks and uncertainties, obtaining financing and reaching a final
investment decision, among other factors. In addition, we secured regasification capacity at the German LNG terminal in
Brunsbuttel that will provide access to the German natural gas market.
Energy Partnerships
Marine Well Containment Company (MWCC)
We are a founding member of the MWCC, a non-profit organization formed in 2010, which provides well containment
equipment and technology in the deepwater U.S. Gulf of Mexico. MWCC’s containment system meets the U.S. Bureau of
Safety and Environmental Enforcement requirements for a subsea well containment system that can respond to a
deepwater well control incident in the U.S. Gulf of Mexico.
Oil Spill Response Limited (OSRL) - Subsea Well Intervention Service (SWIS)
OSRL-SWIS is a non-profit organization in the U.K. that is an industry funded joint initiative providing the capability to
respond to subsea well-control incidents. Through our SWIS subscription, ConocoPhillips has access to equipment that is
maintained and stored in a response ready state. This provides well capping and containment capability outside the U.S.
Oil Spill Response Removal Organizations (OSROs)
We maintain memberships in several OSROs across the globe as a key element of our preparedness program in addition
to internal response resources. Many of the OSROs are not-for-profit cooperatives owned by the member companies
wherein we may actively participate as a member of the board of directors, steering committee, work group or other
supporting role. In North America, our primary OSROs include the Marine Spill Response Corporation for the continental
U.S. and Alaska Clean Seas and Ship Escort/Response Vessel System for the Alaska North Slope and Prince William Sound,
respectively. Internationally, we maintain memberships in various OSROs including Oil Spill Response Limited, the
Norwegian Clean Seas Association for Operating Companies, Australian Marine Oil Spill Center and Petroleum Industry of
Malaysia Mutual Aid Group.
ConocoPhillips 2022 10-K
14
Business and Properties
Table of Contents
Technology
We have several technology programs that improve our ability to develop unconventional reservoirs, increase recoveries
from our legacy fields, improve the efficiency of our exploration program, produce heavy oil economically with lower
emissions and implement sustainability measures.
LNG Liquefaction
We are the second-largest LNG liquefaction technology provider globally. Our Optimized Cascade® LNG liquefaction
technology has been licensed for use in 28 LNG trains around the world, with feasibility studies ongoing for additional
trains.
Low-Carbon Technologies
In 2021, we established a multi-disciplinary Low-Carbon Technologies organization, with the remit to support our net-
zero ambition, understand the alternative energy landscape and prioritize opportunities for future competitive
investment.
Throughout 2022, we continued our focus on implementing emissions reduction projects across our global portfolio,
including production efficiency measures and methane and flaring reductions. In September 2021, we strengthened our
2030 GHG emissions intensity reduction target to 40-50 percent from a 2016 baseline and expanded the target to apply
on both a gross operated and net equity basis. To help achieve this goal, the Low-Carbon Technologies organization
worked with the company's business units to begin developing and implementing region-specific net-zero scenarios
identifying potential technology solutions for hard-to-abate emissions, and piloting new methods to reduce and
accelerate Scope 1 and Scope 2 emissions reduction. Potential projects evaluated included CCS and electrification studies,
zero/low emission equipment design enhancements, installations to continuously monitor and detect methane
emissions, and operational changes to reduce flaring and methane venting volumes.
Within the low-carbon opportunities landscape, the company has prioritized opportunities in CCS and hydrogen. In 2022,
we evaluated carbon dioxide storage sites along the U.S. Gulf Coast, progressed land acquisition efforts and business
development work, initiated permitting activities for a potential appraisal well for carbon sequestration and advanced
engineering studies for multiple opportunities. In Europe, we continued evaluation of a carbon capture solution to reduce
emissions at the operated Teesside Oil Terminal with engineering studies and a due diligence phase with the United
Kingdom's Department for Business, Energy and Industrial Strategy.
Delivery Commitments
We sell crude oil and natural gas from our producing operations under a variety of contractual arrangements, some of
which specify the delivery of a fixed and determinable quantity. Our commercial organization also enters into natural gas
sales contracts where the source of the natural gas used to fulfill the contract can be the spot market or a combination of
our reserves and the spot market. Worldwide, we are contractually committed to deliver approximately 578 billion cubic
feet of natural gas, 345 million barrels of crude oil and 12.9 million megawatt hours of electricity in the future. These
contracts have various expiration dates through the year 2030. We expect to fulfill these delivery commitments with
third-party purchases, as supported by our gas management and power supply agreements; proved developed reserves;
and PUDs. See the disclosure on “Proved Undeveloped Reserves” in the “Supplementary Data - Oil and Gas Operations”
section following the Notes to Consolidated Financial Statements, for information on the development of PUDs.
Competition
ConocoPhillips is one of the world’s leading E&P companies based on both production and reserves, with a globally
diversified asset portfolio. We compete with private, public and state-owned companies in all facets of the E&P business.
Some of our competitors are larger and have greater resources. Each of our segments is highly competitive, with no single
competitor, or small group of competitors, dominating.
We compete with numerous other companies in the industry, including state-owned companies, to locate and obtain
new sources of supply and to produce oil, bitumen, NGLs and natural gas in an efficient, cost-effective manner. We
deliver our production into the worldwide commodity markets. Principal methods of competing include geological,
geophysical and engineering research and technology; experience and expertise; equipment and personnel; economic
analysis in connection with portfolio management; and safely operating oil and gas producing properties.
15
ConocoPhillips 2022 10-K
Business and Properties
Human Capital Management
Table of Contents
Values, Principles and Governance
At ConocoPhillips, our human capital management (HCM) approach starts with a foundation in our core SPIRIT Values –
Safety, People, Integrity, Responsibility, Innovation, and Teamwork. These SPIRIT Values set the tone for how we interact
with all of our internal and external stakeholders. We believe a safe organization is a successful organization, and
therefore, we prioritize personal and process safety across the company. Our SPIRIT Values are a source of pride. Our
day-to-day work is guided by the principles of accountability and performance, which means the way we do our work is as
important as the results we deliver. We believe these core values and principles set us apart, align our workforce and
provide a foundation for our culture.
Our Executive Leadership Team (ELT) and our Board of Directors play a key role in setting our HCM strategy and driving
accountability for meaningful progress. The ELT and Board of Directors engage often on workforce-related topics. Our
HCM programs are overseen and administered by our human resources function with support from business leaders
across the company.
We depend on our workforce to successfully execute our company’s strategy and we recognize the importance of
creating a workplace where our people feel valued. Our HCM programs are built around three pillars that we believe are
necessary for success: a compelling culture, a world-class workforce and strong external engagement. Each of these
pillars is described in more detail below.
A Compelling Culture
How we do our work is what sets us apart and drives our performance. We’re experts in what we do and continuously
find ways to do our jobs better. We value diversity and create an inclusive culture of belonging. Together, we deliver
strong performance, but not at all costs. We embrace our core cultural attributes that are shared by everyone,
everywhere.
Health, Safety and Environment
Our HSE organization sets expectations and provides tools and assurance to our workforce to promote and achieve HSE
excellence. We manage and assure ConocoPhillips HSE policies, standards and practices, to help ensure business activities
are consistently safe, healthy and conducted in an environmentally and socially responsible manner across the globe.
Each business unit manages its local operational risks with particular attention to process safety, occupational safety and
environmental and emergency preparedness risk. Objectives, targets and deadlines are set and tracked annually to drive
strong HSE performance. Progress is tracked and reported to our ELT and the Board of Directors. HSE audits are
conducted on business units and staff groups to ensure conformance with ConocoPhillips HSE policies, standards and
practices where improvement actions are identified and tracked to completion.
We continuously look for ways to operate more safely, efficiently and responsibly. We focus on reducing human error by
emphasizing interaction among people, equipment and work processes. By being curious about how work is done,
recognizing error-likely situations and applying safeguards, we can reduce the likelihood and severity of unexpected
incidents. We conduct thorough investigations of all serious incidents to understand the root cause and share lessons
learned globally to improve our procedures, training, maintenance programs and designs. As we integrate various assets
through acquisitions, it is important that we drive this culture of continuous learning and improvement, refine our
existing HSE processes and tools and enhance our commitment to safe, efficient and responsible operations.
COVID-19 Response
In 2022, the number of COVID-19 cases across the company was significantly less than the prior two years. With less risk
to our operations, the Crisis Management Support Team that had been in place since the beginning of the pandemic, was
disbanded in August; however, our Health Services organization continues to monitor the situation and support business
units and functions as needed to minimize any potential for business interruption.
Diversity, Equity and Inclusion
At ConocoPhillips, we believe our unique differences power the future of energy. Our DEI vision is to foster an inclusive
culture that values the rich mixture of backgrounds, identities and workstyles of our people, built on equitable practices
that support all employees in unlocking their full potential. Our commitment to DEI is foundational to our SPIRIT Values
and to achieving our business objectives. All employees play a part in creating and sustaining an inclusive work
environment because everyone benefits from DEI.
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The ELT has ultimate accountability for advancing our DEI commitments through a governance structure that includes a
Chief Diversity Officer (CDO), a dedicated DEI organization and a global DEI Council consisting of senior leaders from
across the company. The company sets goals and measures progress based on a transparent DEI strategy with four pillars
that guide our focus and approach: people, programs and processes, culture and our external brand and reputation. All
company leaders are accountable for setting personal DEI goals and advancing DEI through local efforts. Our DEI efforts
and progress are regularly reviewed with the Board of Directors.
In 2022, we welcomed our new CDO. Over the course of the year, the CDO established the DEI organization and
embarked on a global listening tour to understand the impact of current efforts, areas for improvement and the overall
employee experience. Based on the insights and perspectives from employees, the company’s DEI strategy was refreshed.
Highlights from our 2022 DEI accomplishments include:
•
•
•
•
Reviewing the results of the 2022 Perspectives survey and continuing to integrate the insights into our DEI
efforts;
Staffing the newly established DEI organization;
Launching our DEI Dashboards 2.0 internally, which feature expanded global and U.S. workforce metrics and
industry benchmark data; and
Hosting our inaugural Black Leadership Symposium to support future leadership diversity in the company.
We continue to actively monitor diversity metrics on a global basis. We are committed to being transparent as we build a
more diverse, equitable and inclusive workplace. Tables of 2022 employee demographics by gender and ethnicity, and by
country, are shown below:
2022 Employees by Gender and Race/Ethnicity
All Employees
All Leadership
Top Leadership
Junior Leadership
*"POC" refers to People of Color or racial and ethnic minorities self-reported in the U.S.
Global
Male
73 %
74
75
74
Female
27 %
26
25
26
U.S.
White
70 %
77
82
75
POC*
30 %
23
18
25
2022 Employees by Country
U.S.
Norway
Canada
Australia
U.K.
China
Other Global Locations
Percent of Total
66 %
17
9
3
3
1
1
100 %
A World-Class Workforce
Our HCM approach addresses programs and processes necessary for ensuring we have an engaged workforce with the
skills to meet our business needs. We take a holistic view of HCM that addresses each of the critical components of
workforce planning. These are described in more detail below.
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Table of Contents
Recruitment
Our continued success requires a strong global workforce that can contribute the right skills, in the right places, to
achieve our strategic objectives. We offer university internships across multiple disciplines to attract the best early-career
talent. We partner with top diversity organizations and universities, including Hispanic-serving organizations and
Historically Black Colleges and Universities. We also recruit extensively for external experienced hires to supplement our
university and internal pipeline. These individuals bring critical skills and help us to maintain a broad range of expertise
and experience. We have taken significant steps to embed inclusion into each step of our recruiting practices, including
adapting the way we construct job descriptions to using intentionally diverse interview panels. We conduct routine talent
assessments with leaders to ensure we have the organizational capacity and capabilities to execute our business plans.
We closely monitor recruitment metrics through our internal university and experienced hire dashboards and track
voluntary turnover metrics to guide our retention activities.
2022 Hiring & Attrition Metrics
U.S. University hire acceptance
U.S. Interns acceptance
Diversity hiring - Women
Diversity hiring - U.S. POC
Total voluntary attrition
Percent of Total
70 %
68
29
41
6
Employee Engagement and Development
We focus on the engagement and development of our workforce and encourage our employees to build diverse and
fulfilling careers with ConocoPhillips. We develop our workforce through a combination of on-the-job learning, formal
training, regular feedback, coaching and mentoring. Skills-based Talent Management Teams (TMTs) guide targeted
employee development and career progression by skills, discipline and location. The TMTs help identify our workforce
planning needs and assess the availability of critical skill sets within the company. We use a performance management
program focused on objectivity, credibility and transparency. The program includes broad stakeholder feedback, real-
time monetary and non-monetary recognition and a formal “how” rating to assess behaviors to ensure they align with
our SPIRIT Values.
We empower our employees to grow their careers through personal and professional development opportunities,
including individual development plans, annual career development conversations with supervisors, a voluntary 360-
feedback tool and training on a broad range of technical and professional skills. Succession planning is a top priority for
management and the Board of Directors. This work ensures we have the talent available for future leadership roles and
serves to inspire employees to reach their ultimate potential and limit business interruption.
Taking steps to measure and assess employee satisfaction and engagement is at the heart of long-term business success
and creating a great place to work for our global workforce. Since 2019, the ConocoPhillips Perspectives Survey has
become our primary listening platform for gathering feedback on employee sentiment and promoting our “Who We Are”
culture. Our leadership reviews the survey feedback to guide priorities and goals. Our employee feedback strategy is
delivered through this annual engagement survey and as needed; shorter ad hoc pulse surveys are leveraged to unlock
targeted insights in support of our human capital priorities.
Compensation, Benefits and Well-Being
We offer competitive, performance-based compensation packages and have global equitable pay practices. Our
compensation programs are generally comprised of a base pay, the annual Variable Cash Incentive Program (VCIP) and,
for eligible employees, the Restricted Stock Unit (RSU) program. From the CEO to the frontline worker, every employee
participates in VCIP, our annual incentive program, which aligns employee compensation with ConocoPhillips’ success on
critical performance metrics and also recognizes individual performance. Our RSU program is designed to attract and
retain employees, reward performance and align employee interest with stockholders by encouraging stock ownership.
Our retirement and savings plans are intended to support the financial futures of our employees and are competitive
within local markets.
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We routinely benchmark our global compensation and benefits programs to ensure they are competitive, inclusive,
aligned with company culture and allow our employees to meet their individual needs and the needs of their families. We
provide flexible work schedules and competitive time off, including parental leave policies in many locations. We also
offer employees flexibility through the Hybrid Office Work (HOW) program in all of our global locations, which provides
eligible employees a combination of work from both office and home. We also provide coverage for families requiring
disability support, elder care and childcare, including onsite childcare, where access locally is a challenge.
Our global wellness programs include biometric screenings and fitness challenges designed to educate and promote a
healthy lifestyle. All employees have access to our employee assistance program, and many of our locations offer custom
programs to support mental well-being.
Compensation Risk Mitigation
We have considered the risks associated with each of our executive and broad-based compensation programs and
policies. As part of the analysis, we considered the performance measures we use as well as the different types of
compensation, varied performance measurement periods and extended vesting schedules that we utilize under each
incentive compensation program. As a result of this review, management concluded that the risks arising from our
compensation policies and practices are not reasonably likely to have a material adverse effect on the company. As part
of the Board of Directors’ oversight of our risk management programs, the Human Resources Compensation Committee
(HRCC) conducts a similar review with the assistance of its independent compensation consultant. The HRCC agrees with
management’s conclusion that the risks arising from our compensation policies and practices are not reasonably likely to
have a material adverse effect on the company.
External Engagement
We care about our neighbors in the communities in which we operate. We actively support and participate in leadership
conferences, trade associations and minority nonprofit organizations.
Our employees make our communities stronger. We are proud to support their generous involvement in local charitable
activities through employee volunteerism and giving programs that include United Way campaigns, matching gift
contributions and volunteer grants.
While we have been recognized for our ESG and DEI efforts, we know that it takes ongoing commitment to make
sustainable progress.
General
At the end of 2022, we held a total of 1,249 active patents in 49 countries worldwide, including 472 active U.S. patents.
During 2022, we received 46 patents in the U.S. and 124 foreign patents. Our products and processes generated licensing
revenues of $86 million related to activity in 2022. The overall profitability of any business segment is not dependent on
any single patent, trademark, license, franchise or concession.
The environmental information contained in Management’s Discussion and Analysis of Financial Condition and Results of
Operations on pages 54 through 56 under the captions “Environmental” and “Climate Change” is incorporated herein by
reference. It includes information on expensed and capitalized environmental costs for 2022 and those expected for 2023
and 2024.
Website Access to SEC Reports
Our internet website address is www.conocophillips.com. Information contained on our internet website is not part of
this report on Form 10-K.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments
to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available
on our website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the
SEC. Alternatively, you may access these reports at the SEC’s website at www.sec.gov.
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Risk Factors
Item 1A. Risk Factors
Table of Contents
You should carefully consider the following risk factors in addition to the other information included in this Annual Report
on Form 10-K. These risk factors are not the only risks we face. Our business could also be affected by additional risks and
uncertainties not currently known to us or that we currently consider to be immaterial. If any of these risks or other risks
that are yet unknown or currently considered immaterial were to occur, our business, operating results and financial
condition, as well as the value of an investment in our common stock, could be materially and adversely affected.
Risks Related to Our Industry
Our operating results, our ability to execute on our strategy and the carrying value of our assets are exposed to the
effects of changing commodity prices.
Among the most significant factors impacting the Company’s revenues, operating results and future rate of growth are
the sales prices for crude oil, bitumen, LNG, natural gas and NGL. These prices can fluctuate widely, and many of the
factors influencing the prices are beyond our control. Between January 2020 and December 2022, WTI crude oil prices
ranged from a low of a negative $38 per barrel in April 2020 to a high of $124 per barrel in March 2022. Given the
volatility in commodity price drivers and the worldwide political and economic environment, including potential
economic slowdowns or recessions, as well as increased uncertainty generated by recent (and potential future) armed
hostilities in various oil-producing regions around the globe, prices for crude oil, bitumen, LNG, natural gas and NGLs may
continue to be volatile.
Low commodity prices could have a material adverse effect on our revenues, operating income, cash flows and liquidity,
and may also affect the amount of dividends we elect to declare and pay on our common stock and the amount of shares
we elect to acquire as part of the share repurchase program and the timing of such acquisitions. Lower prices may also
limit the amount of reserves we can produce economically, thus adversely affecting our proved reserves and reserve
replacement ratio and accelerating the reduction in our existing reserve levels as we continue production from upstream
fields. Prolonged depressed prices may affect strategic decisions related to our operations, including decisions to reduce
capital investments or curtail operated production.
Significant reductions in crude oil, bitumen, LNG, natural gas and NGL prices could also require us to reduce our capital
expenditures, impair the carrying value of our assets or discontinue the classification of certain assets as proved reserves.
Although it is not reasonably practicable to quantify the impact of any future impairments or estimated change to our
unit-of-production rates at this time, our results of operations could be adversely affected as a result.
Unless we successfully develop resources, the scope of our business will decline, resulting in an adverse impact to our
business.
As we produce crude oil, bitumen, natural gas and NGLs from our existing portfolio, the amount of our remaining
reserves declines. If we are not successful in replacing the resources we produce with good prospects for future organic
development or through acquisitions, our business will decline. In addition, our ability to successfully develop our
reserves is dependent on a number of factors, including our ability to successfully navigate political and regulatory
challenges to obtain and renew rights to develop and produce hydrocarbons; our success at reservoir optimization; our
ability to bring long-lead time, capital intensive projects to completion on budget and on schedule; and our ability to
efficiently and profitably operate mature properties. If we are not successful in developing the resources in our portfolio,
our financial condition and results of operations may be adversely affected.
The exploration and production of oil and gas is a highly competitive industry.
The exploration and production of crude oil, bitumen, natural gas and NGLs is a highly competitive business. We compete
with private, public and state-owned companies in all facets of the exploration and production business, including to
locate and obtain new sources of supply and to produce crude oil, bitumen, natural gas and NGLs in an efficient, cost-
effective manner. In addition, as the energy transition progresses, we anticipate the oil and gas industry will face
additional competition from alternative fuels. We must compete for the materials, equipment, services, employees and
other personnel (including geologists, geophysicists, engineers and other specialists) necessary to conduct our business. If
we are not successful in our competition, our financial condition and results of operations may be adversely affected.
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Risk Factors
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Our ability to successfully execute on our energy transition plans is subject to a number of risks and uncertainties and
may be costly to achieve.
In 2020, we announced our Paris-aligned climate risk framework, including an ambition to achieve net-zero emissions on
operational emissions by 2050. In 2022, we published our Plan for the Net-Zero Energy Transition (the “Plan”) and
continued to set increasingly ambitious targets around emissions and flaring. Our ability to achieve stated targets, goals
and ambitions is subject to a number of risks and uncertainties out of our control, including the pace of development of
currently undeveloped technologies, policies and markets, as well as potential regulations that may impair our ability to
execute on current or future plans. Furthermore, we are still in the planning stages, and execution could be costly and
have unforeseen obstacles. We may be required to purchase emission credits, and there may be insufficient offsets to
achieve our goals. As advanced technologies are developed to accurately measure emissions, we may be required to
revise our emissions estimates and reduction goals. We may be adversely affected and potentially need to reduce
economic end-of-field life of certain assets and impair associated net book value due to the emissions intensity of some
of our assets. Even if we meet our goals, our efforts may be characterized as insufficient.
In 2021, we established our Low-Carbon Technologies organization to identify and evaluate business opportunities that
address end-use emissions and early-stage low-carbon technology opportunities that would leverage our existing
expertise and adjacencies. While we perform a thorough analysis on these investments, the related technologies and
markets are at early stages of development and we do not yet know what rate of return we will achieve. The success of
our low-carbon strategy will in part be dependent upon the cooperation of agencies, the support of stakeholders, the
success of our investments, and our ability to apply our existing strengths and expertise.
Any material change in the factors and assumptions underlying our estimates of crude oil, bitumen, natural gas and
NGL reserves could impair the quantity and value of those reserves.
Our proved reserve information included in this annual report represents management’s best estimates based on
assumptions, as of a specified date, of the volumes to be recovered from underground accumulations of crude oil,
bitumen, natural gas and NGLs. Such volumes cannot be directly measured and the estimates and underlying
assumptions used by management are subject to substantial risk and uncertainty. Any material changes in the factors and
assumptions underlying our estimates of these items could result in a material negative impact to the volume of reserves
reported or could cause us to incur impairment expenses on property associated with the production of those reserves.
Future reserve revisions could also result from changes in, among other things, governmental regulation and commodity
prices.
Our business may be adversely affected by price controls, government-imposed limitations on production or exports of
crude oil, bitumen, LNG, natural gas and NGLs, or the unavailability of adequate gathering, processing, compression,
transportation, and pipeline facilities and equipment for our production of crude oil, bitumen, natural gas and NGLs.
As discussed herein, our operations are subject to extensive governmental regulations. From time to time, regulatory
agencies have imposed price controls and limitations on production by restricting the rate of flow of crude oil, bitumen,
natural gas and NGL wells below actual production capacity. Similarly, in response to increased domestic energy costs,
circumstances determined to be in the economic interest of the country, or a declared national emergency, governments
could restrict the export or import of our products which would adversely impact our business. Because legal
requirements are frequently changed and subject to interpretation, we cannot predict whether future restrictions on our
business may be enacted or become applicable to us.
Our ability to sell and deliver the crude oil, bitumen, LNG, natural gas and NGLs that we produce also depends on the
availability, proximity, and capacity of gathering, processing, compression, transportation and pipeline facilities and
equipment, as well as any necessary diluents to prepare our crude oil, bitumen, LNG, natural gas and NGLs for transport.
Furthermore, we rely on there being sufficient facilities and takeaway capacity to support our commitment to reduce
routine flaring. The facilities, equipment and diluents we rely on may be temporarily unavailable to us due to market
conditions, extreme weather events, regulatory reasons, mechanical reasons or other factors or conditions, many of
which are beyond our control. In addition, in certain newer plays, the capacity of necessary facilities, equipment and
diluents may not be sufficient to accommodate production from existing and new wells, and construction and permitting
delays, permitting costs and regulatory or other constraints could limit or delay the construction, manufacture or other
acquisition of new facilities and equipment. If any facilities, equipment or diluents, or any of the transportation methods
and channels that we rely on become unavailable for any period of time, we may incur increased costs to transport our
crude oil, bitumen, LNG, natural gas and NGLs for sale, or we may be forced to curtail our production of crude oil,
bitumen, natural gas or NGLs.
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Our ability to manage risk or influence outcomes in joint ventures may be constrained.
We conduct many of our operations through joint ventures in which another joint venture partner is operator or we may
not have majority control. In these cases, the economic, business, or legal interests or goals of the operator or the voting
majority may be inconsistent with ours, and we may not be able to influence the decision making or outcomes to align
with our interests or goals. Failure by an operator or a majority, with whom we have a joint venture interest, to
adequately manage the risks associated with any operations could have an adverse effect on the financial condition or
results of operations of our joint ventures and, in turn, our business and operations.
Our operations present hazards and risks that require significant and continuous oversight.
The scope and nature of our operations present a variety of significant hazards and risks, including operational hazards
and risks such as explosions, fires, product spills, severe weather, geological events, global health crises, such as
epidemics and pandemics, labor disputes, geopolitical tensions, armed hostilities, terrorist or piracy attacks, sabotage,
civil unrest or cyberattacks. Our operations are subject to the additional hazards of pollution, toxic substances and other
environmental hazards and risks. Offshore activities may pose incrementally greater risks because of complex subsurface
conditions such as higher reservoir pressures, water depths and metocean conditions. All such hazards could result in loss
of human life, significant property and equipment damage, environmental pollution, impairment of operations,
substantial losses to us and damage to our reputation. Our business and operations may be disrupted if we do not
respond, or are perceived not to respond, in an appropriate manner to any of these hazards and risks or any other major
crisis or if we are unable to efficiently restore or replace affected operational components and capacity. Further, our
insurance may not be adequate to compensate us for all resulting losses, and the cost to obtain adequate coverage may
increase for us in the future or may not be available.
In addition, although we design and operate our business operations to accommodate expected climatic conditions, to
the extent there are significant changes in the earth's climate, such as more severe or frequent weather conditions in the
markets where we operate or the areas where our assets reside, we could incur increased expenses, our operations and
supply chain could be adversely impacted and demand for our products could fall.
Our business has been, and may continue to be, adversely affected by the coronavirus (COVID-19) pandemic.
The COVID-19 pandemic and the measures put in place to address it negatively impacted the global economy, disrupted
global supply chains, reduced global demand for oil and gas and created significant volatility and disruption of financial
and commodity markets.
Our business was adversely impacted by the COVID-19 pandemic and may be impacted again in the future depending on
the scope and severity of current or future outbreaks. Potential impacts to our business could include, but are not limited
to, reduced demand for our products, disruptions to our supply chain, disruptions in our contractual arrangements with
our service providers, suppliers and other counterparties, failures by our suppliers, contract manufacturers, contractors,
joint venture partners and external business partners, to meet their obligations to us, reduced workforce productivity,
and voluntary or involuntary curtailments to support oil prices or alleviate storage shortages for our products.
Any of these factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could
materially increase our costs, negatively impact our revenues and damage our financial condition, results of operations,
cash flows and liquidity position. The full extent and duration of any such impacts cannot be predicted at this time
because of the lack of certainty surrounding the pandemic.
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Risk Factors
Legal and Regulatory Risks
Table of Contents
We expect to continue to incur substantial capital expenditures and operating costs as a result of our compliance with
existing and future environmental laws and regulations.
Our business is subject to numerous laws and regulations relating to the protection of the environment, which are
expected to continue to have an increasing impact on our operations. For a description of the most significant of these
environmental laws and regulations, see the “Contingencies—Environmental” and “Contingencies—Climate Change”
sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations. These laws and
regulations continue to increase in both number and complexity and affect our operations with respect to, among other
things:
•
•
•
•
•
•
•
Permits required in connection with exploration, drilling, production and other activities, including those issued
by national, subnational, and local authorities;
The discharge of pollutants into the environment;
Emissions into the atmosphere, such as nitrogen oxides, sulfur dioxide, mercury and GHG emissions, including
methane;
Carbon taxes;
The handling, use, storage, transportation, disposal and cleanup of hazardous materials and hazardous and
nonhazardous wastes;
The dismantlement, abandonment and restoration of historic properties and facilities at the end of their useful
lives; and
Exploration and production activities in certain areas, such as offshore environments, arctic fields, oil sands
reservoirs and unconventional plays.
We have incurred and will continue to incur substantial capital, operating and maintenance, and remediation
expenditures as a result of these laws and regulations. In addition, to the extent these expenditures are assumed by a
buyer as a result of a disposition, it may result in our incurring substantial costs if the buyer is unable to satisfy these
obligations. Any failure by us to comply with existing or future laws, regulations and other requirements could result in
administrative or civil penalties, criminal fines, other enforcement actions or third-party litigation against us. To the
extent these expenditures, as with all costs, are not ultimately reflected in the prices of our products, our business,
financial condition, results of operations and cash flows in future periods could be adversely affected.
Existing and future laws, regulations and internal initiatives relating to global climate change, such as limitations on
GHG emissions, may impact or limit our business plans, result in significant expenditures, promote alternative uses of
energy or reduce demand for our products.
Continuing political and societal attention to the issue of global climate change has resulted in both existing and pending
international agreements and national, regional or local legislation and regulatory measures to limit GHG emissions, such
as cap and trade regimes, specific emission standards, carbon taxes, restrictive permitting, increased fuel efficiency
standards, and incentives or mandates for renewable and alternative energy. Although we may support the intent of
legislative and regulatory measures aimed at addressing climate-related risks, the specifics of how and when they are
enacted could result in a material adverse effect to our business, financial condition, results of operations and cash flows
in future periods.
For example, in November 2021, the U.S. Environmental Protection Agency published a Proposed Rule (revised and
republished as a Supplemental Proposal in November 2022) that would revise the regulations governing the emission of
GHG and volatile organic compounds from new oil and gas production facilities, and emission guidelines for states to use
when revising Clean Air Act implementation plans to limit GHG emissions from existing oil and gas facilities. While the
form and substance of the regulation is not yet final, the new regulation could result in additional capital expenditures
and compliance, operating and maintenance costs, any of which may have an adverse effect on our business and results
of operations.
Additionally, in 2022, the U.S. joined the international community at the 27th Conference of the Parties (COP27). At the
conclusion of COP27, the U.S. and nearly 200 other countries, including most of the other countries in which we operate,
renewed solidarity to deliver on the outstanding elements of the Paris Agreement and the Glasgow Climate Pact agreed
to at the 26th Conference of the Parties in 2021. The implementation of current agreements and regulatory measures, as
well as any future agreements or measures addressing climate change and GHG emissions, may adversely increase our
capital and operating expenses, impact the demand for our products, impose taxes on our products or operations, or
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Risk Factors
Table of Contents
require us to purchase emission credits or reduce emissions of GHGs from our operations. For example, in August 2022,
the U.S. enacted the Inflation Reduction Act of 2022, which includes a charge on methane emissions from selected
facilities in the oil and gas industry, including many of the facilities operated by ConocoPhillips. As a result, we may
experience declines in commodity prices or incur substantial capital expenditures and compliance, operating,
maintenance and remediation costs, any of which may have an adverse effect on our business and results of operations.
For more information on legislation or precursors for possible regulation relating to global climate change that affect or
could affect our operations and a description of the company's response, see the "Contingencies—Climate Change”
sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Broader investor and societal attention to and efforts to address global climate change may limit who can do business
with us or our access to capital and could subject us to litigation.
Increasing attention to global climate change has also resulted in pressure from and upon stockholders, financial
institutions and other market participants to modify their relationships with oil and gas companies and to limit or
discontinue investments, insurance and funding to such companies. For example, a significant number of financial
institutions are now members of the Glasgow Financial Alliance for Net Zero (GFANZ), thereby pledging to the goal of net
zero by 2050 on scope 1, 2 and 3 emissions, as well as setting interim targets for 2030 or earlier. While GFANZ members
are not prohibited from having relationships with oil and gas companies, they are facing intense scrutiny for providing any
sort of financial support to such companies, which may lead to greater restrictions on GFANZ members in the future.
Conversely, we also face pressure from some in the investment community and certain public interest groups to limit the
focus on ESG in our decision-making. As public pressure continues to mount, our access to capital on terms we find
favorable (if it is available at all) may be limited, and our costs may increase, our reputation could be damaged, and our
business and results of operations may be otherwise adversely affected.
Furthermore, increasing attention to global climate change has resulted in an increased likelihood of governmental
investigations and private litigation, which could increase our costs or otherwise adversely affect our business. Beginning
in 2017, cities, counties, governments and other entities in several states/territories in the U.S. have filed lawsuits against
oil and gas companies, including ConocoPhillips, seeking compensatory damages and equitable relief to abate alleged
climate change impacts. Additional lawsuits with similar allegations are expected to be filed. The amounts claimed by
plaintiffs are unspecified and the legal and factual issues involved in these cases are unprecedented. ConocoPhillips
believes these lawsuits are factually and legally meritless, and are an inappropriate vehicle to address the challenges
associated with climate change and will vigorously defend against such lawsuits. The ultimate outcome and impact to us
cannot be predicted with certainty, and we could incur substantial legal costs associated with defending these and similar
lawsuits in the future. We could also receive lawsuits alleging a failure or lack of diligence to meet our publicly stated ESG
goals, or alleging misrepresentation related to our ESG activity.
Political and economic developments could damage our operations and materially reduce our profitability and cash
flows.
Actions of the U.S., state, local and foreign governments, through sanctions, tax and other legislation, executive orders
and commercial restrictions, could reduce our operating profitability both in the U.S. and abroad. In certain locations,
restrictions on our operations; leasing restrictions; special taxes or tax assessments; and payment transparency
regulations that could require us to disclose competitively sensitive information or might cause us to violate non-
disclosure laws of other countries have been imposed or proposed by governments or certain interest groups. In addition,
we may face regulatory changes in the U.S. including, but not limited to, the enactment of tax law changes that adversely
affect the fossil fuel industry, new methane emissions standards, restrictive flaring requirements, and more stringent
environmental impact studies and reviews. We also cannot rule out the possibility of similar regulatory shifts and
attendant cost and market access implications in other international jurisdictions.
One area subject to significant political and regulatory activity is the use of hydraulic fracturing, an essential completion
technique that facilitates production of oil and natural gas otherwise trapped in lower permeability rock formations. A
range of local, state, federal and national laws and regulations currently govern or, in some hydraulic fracturing
operations, prohibit hydraulic fracturing in some jurisdictions. Although hydraulic fracturing has been conducted safely
for many decades, a number of new laws, regulations and permitting requirements are under consideration which could
result in increased costs, operating restrictions, operational delays or could limit the ability to develop oil and natural gas
resources. Certain jurisdictions in which we operate have adopted or are considering regulations that could impose new
or more stringent permitting, disclosure or other regulatory requirements on hydraulic fracturing or other oil and natural
gas operations, including subsurface water disposal.
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In addition, certain interest groups have also proposed ballot initiatives and constitutional amendments designed to
restrict oil and natural gas development generally and hydraulic fracturing in particular. In the event that ballot initiatives,
local, state, or national restrictions or prohibitions are adopted and result in more stringent limitations on the production
and development of oil and natural gas in areas where we conduct operations, we may incur significant costs to comply
with such requirements or may experience delays or curtailment in the permitting or pursuit of exploration, development
or production activities. Such compliance costs and delays, curtailments, limitations or prohibitions could have a material
adverse effect on our business, prospects, results of operations, financial condition and liquidity.
Local political and economic factors in international markets could have a material adverse effect on us.
Approximately 32 percent of our hydrocarbon production was derived from production outside the U.S. in 2022, and 32
percent of our proved reserves, as of December 31, 2022, were located outside the U.S. We are subject to risks
associated with our operations in foreign jurisdictions and international markets, including changes in foreign
governmental policies relating to crude oil, bitumen, LNG, natural gas or NGL pricing and taxation, other political,
economic or diplomatic developments (including the macro effects of international trade policies and disputes),
potentially disruptive geopolitical conditions, and international monetary and currency rate fluctuations. For example, in
response to higher energy prices resulting from the conflict between Russia and Ukraine, in December 2022, Australia’s
Parliament passed legislation setting a one-year price cap on natural gas. Restrictions on production of oil and gas could
increase to the extent governments view such measures as a viable approach for pursuing national and global energy and
climate policies. In addition, some countries where we operate lack a fully independent judiciary system. This, coupled
with changes in foreign law or policy, results in a lack of legal certainty that exposes our operations to increased risks,
including increased difficulty in enforcing our agreements in those jurisdictions and increased risks of adverse actions by
local government authorities, such as expropriations. Actions by host governments, such as the expropriation of our oil
assets by the Venezuelan government, have affected operations significantly in the past and may continue to do so in the
future.
In addition, the U.S. government has the authority to prevent or restrict us from doing business in foreign jurisdictions or
with certain parties. These restrictions and similar restrictions imposed by foreign governments have in the past limited
our ability to operate in, or gain access to, opportunities in various jurisdictions. Changes in domestic and international
policies and regulations may also restrict our ability to obtain or maintain licenses or permits necessary to operate in
foreign jurisdictions, including those necessary for drilling and development of wells. Similarly, the declaration of a
“climate emergency” could result in actions to limit exports of our products and other restrictions.
Any of these actions could adversely affect our business or operating results.
Other Risk Factors Facing our Business or Operations
We may need additional capital in the future, and it may not be available on acceptable terms or at all.
We have historically relied primarily upon cash generated by our business to fund our operations and strategy; however,
we have also relied from time to time on access to the capital markets for funding. There can be no assurance that
additional financing will be available in the future on acceptable terms or at all. In addition, although we anticipate we
will be able to repay our existing indebtedness when it matures or in accordance with our stated plans, there can be no
assurance we will be able to do so. Our ability to obtain additional financing or refinance our existing indebtedness when
it matures or in accordance with our plans, will be subject to a number of factors, including market conditions, our
operating performance, investor sentiment and financial institution policies regarding the oil and gas industry. If we are
unable to generate sufficient funds from operations or raise additional capital for any reason, our business could be
adversely affected.
In addition, we are regularly evaluated by the major rating agencies based on a number of factors, including our financial
strength and conditions affecting the oil and gas industry generally. We and other industry companies have had our
ratings reduced in the past due to negative commodity price outlooks. Any downgrade in our credit rating or
announcement that our credit rating is under review for possible downgrade could increase the cost associated with any
additional indebtedness we incur.
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ConocoPhillips 2022 10-K
Risk Factors
Table of Contents
Our business may be adversely affected by deterioration in the credit quality of, or defaults under our contracts with,
third-parties with whom we do business.
The operation of our business requires us to engage in transactions with numerous counterparties operating in a variety
of industries, including other companies operating in the oil and gas industry. These counterparties may default on their
obligations to us as a result of operational failures or a lack of liquidity, or for other reasons, including bankruptcy. Market
speculation about the credit quality of these counterparties, or their ability to continue performing on their existing
obligations, may also exacerbate any operational difficulties or liquidity issues they are experiencing. Any default by any
of our counterparties may result in our inability to perform our obligations under agreements we have made with third-
parties or may otherwise adversely affect our business or results of operations. In addition, our rights against any of our
counterparties as a result of a default may not be adequate to compensate us for the resulting harm caused or may not
be enforceable at all in some circumstances. We may also be forced to incur additional costs as we attempt to enforce
any rights we have against a defaulting counterparty, which could further adversely impact our results of operations.
Our ability to execute our capital return program is subject to certain considerations.
In December 2021, we initiated a three-tier capital return program that consists of our ordinary dividend, share
repurchases and a variable return of cash (VROC).
Ordinary dividends are authorized and determined by our Board of Directors in its sole discretion and depend upon a
number of factors, including:
Cash available for distribution;
•
• Our results of operations and anticipated future results of operations;
• Our financial condition, especially in relation to the anticipated future capital needs of our properties;
•
• Our operating expenses; and
• Other factors our Board of Directors deems relevant.
The level of distributions paid by comparable companies;
VROC distributions are also authorized and determined by our Board of Directors in its sole discretion and depend upon a
number of factors, including:
The anticipated level of distributions required to meet our capital returns commitment;
Forward prices;
The amount of cash we hold;
Total yield; and
•
•
•
•
• Other factors our Board of Directors deems relevant.
We expect to continue to pay a quarterly ordinary dividend to our stockholders. In addition, based on the current
environment, we anticipate also paying a quarterly VROC to our shareholders staggered from the ordinary dividend
payment, resulting in up to eight cash distributions to shareholders throughout the year; however, the amount of
dividends and VROC is variable and will depend upon the above factors, and our Board of Directors may determine not to
pay a dividend or VROC in a quarter or may cease declaring a dividend or VROC at any time. For example, in October
2022, we paid a VROC of $1.40 per share, and in January 2023, we paid a VROC of $0.70 per share.
Additionally, as of December 31, 2022, $21.6 billion of repurchase authority remained of the $45 billion share repurchase
program our Board of Directors had authorized. Our share repurchase program does not obligate us to acquire a specific
number of shares during any period, and our decision to commence, discontinue or resume repurchases in any period will
depend on the same factors that our Board of Directors may consider when declaring dividends, among other factors. In
the past we have suspended our share repurchase program in response to market downturns, including as a result of the
oil market downturn that began in early 2020, and we may do so again in the future.
Any downward revision in the amount of our ordinary dividend or VROC or the volume of shares we purchase under our
share repurchase program could have an adverse effect on the market price of our common stock.
ConocoPhillips 2022 10-K
26
Risk Factors
Table of Contents
There are substantial risks with any acquisitions or divestitures we have completed or that we may choose to
undertake.
We regularly review our portfolio and pursue growth through acquisitions and seek to divest noncore assets or
businesses. We may not be able to complete these transactions on favorable terms, on a timely basis, or at all. Even if we
do complete such transactions, our cash flow from operations may be adversely impacted or otherwise the transactions
may not result in the benefits anticipated due to various risks, including, but not limited to (i) the failure of the acquired
assets or businesses to meet or exceed expected returns, including risk of impairment; (ii) the inability to dispose of
noncore assets and businesses on satisfactory terms and conditions; and (iii) the discovery of unknown and unforeseen
liabilities or other issues related to any acquisition for which contractual protections are inadequate or we lack insurance
or indemnities, including environmental liabilities, or with regard to divested assets or businesses, claims by purchasers to
whom we have provided contractual indemnification. In addition, we may face difficulties in integrating the operations,
technologies, products and personnel of any acquired assets or businesses.
Our technologies, systems and networks may be subject to cybersecurity threats.
Our business, like others within the oil and gas industry, is faced with growing cybersecurity threats as we increasingly
rely on digital technologies across our business, some of which are managed by third-party service providers on whom we
rely to help us collect, host or process information. As a result, we face various cybersecurity threats, both internal and
external, such as attempts to gain unauthorized access to, or control of, sensitive information about our operations and
our employees, attempts to render our data or systems (or those of third-parties with whom we do business, including
third-party cloud and IT service providers) corrupted or unusable, threats to the security of our facilities and
infrastructure as well as those of third-parties with whom we do business, including third-party cloud and IT service
providers, and attempted cyber terrorism.
Cybersecurity threats could affect the security of our data and proprietary information housed internally and on third-
party IT systems, including the cloud. A successful attack may result in gaining unauthorized access to, or control of, and
disclosure of sensitive information about our operations and our employees and/or partners; attempts to corrupt,
sabotage, or render our data or systems (or those of third parties with whom we do business, including third-party cloud
and IT service providers) unusable; theft or manipulation of our proprietary business information, whether from insiders
or external threat actors; and cyberextortion for the return of data. The impact to our data could subject our company to
potential reputational damage, legal liability, regulatory fines and penalties, and increased compliance costs.
In addition, cybersecurity threats could also disrupt our oil and gas operations both domestically and abroad given that
computers aid to control production, our equipment and monitor our distribution systems globally and are necessary to
deliver our production to market. A disruption, failure, or a cyberattack of these operating systems, or of the networks,
software and infrastructure on which they rely, many of which are not owned or operated by us, could damage
production, distribution or storage assets, delay or prevent delivery to markets, make it difficult or impossible to
accurately account for production and settle transactions, or negatively impact public health or safety, economic security,
or national security.
Although we have experienced occasional cybersecurity threats, none have currently had a material effect on our
business, operations or reputation. We will comply with government-imposed security requirements to implement
specific mitigation measures to protect against cybersecurity threats to our information and operational technology. In
addition, we must continually expend additional resources to continue to modify or enhance our protective measures or
to investigate and remediate any vulnerabilities detected. We maintain an extensive network of technical security
procedures and controls, training, and policy enforcement mechanisms to monitor and mitigate security threats and to
increase security for our information, facilities and infrastructure. Despite our ongoing investments in security resources,
talent and business practices, we are unable to assure that any security measures, or measures implemented by third
parties, will be completely effective.
If our systems and infrastructure were to be breached, damaged or disrupted, we could be subject to serious negative
consequences, including disruption of our operations, damage to our reputation, a loss of employee and/or third party
trust, reimbursement or other costs, increased compliance costs, litigation exposure and legal liability or regulatory fines,
penalties or intervention. In addition, we have exposure to cybersecurity incidents and the negative impacts of such
incidents related to our data and proprietary information housed on third-party IT systems, including the cloud. Any of
these could materially and adversely affect our business, results of operations or financial condition, and any of the
foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident
notwithstanding reasonable security procedures and controls. The prevalence of remote work has introduced additional
27
ConocoPhillips 2022 10-K
Risk Factors
Table of Contents
cybersecurity risk. Although we have business continuity plans in place, our operations may be adversely affected by
significant and widespread disruption to our systems and infrastructure that support our business. While we continue to
evolve and modify our business continuity plans, there can be no assurance that they will be completely effective in
avoiding disruption and business impacts. Further, our insurance may not be adequate to compensate us for all resulting
losses, and the cost to obtain adequate coverage may increase for us in the future.
Item 1B. Unresolved Staff Comments
None.
Item 3. Legal Proceedings
We are a defendant in a number of legal and administrative proceedings arising in the ordinary course of business,
including those involving governmental authorities under federal, state and local laws regulating the discharge of
materials into the environment. While it is not possible to accurately predict the final outcome of these pending
proceedings, if any one or more of such proceedings were to be decided adversely to ConocoPhillips, we expect there
would not be a material effect to our consolidated financial position.
ConocoPhillips has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or
local environmental laws when a governmental authority is a party. ConocoPhillips believes proceedings under this
threshold are not material to ConocoPhillips' business and financial condition. Applying this threshold, there are no such
proceedings to disclose for the year ended December 31, 2022. See Note 11 for information regarding other legal and
administrative proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
Information about our Executive Officers
Name
William L. Bullock, Jr.
Christopher P. Delk
Ryan M. Lance
Andrew D. Lundquist
Dominic E. Macklon
Andrew M. O'Brien
Nicholas G. Olds
Kelly B. Rose
Heather G. Sirdashney
_____________________
*On February 16, 2023.
Position Held
Executive Vice President and Chief Financial Officer
Vice President, Controller and General Tax Counsel
Chairman of the Board of Directors and Chief Executive Officer
Senior Vice President, Government Affairs
Executive Vice President, Strategy, Sustainability and Technology
Senior Vice President, Global Operations
Executive Vice President, Lower 48
Senior Vice President, Legal, General Counsel
Senior Vice President, Human Resources and Real Estate and Facilities Services
Age*
58
53
60
62
53
48
53
56
50
There are no family relationships among any of the officers named above. Each officer of the company is elected by the
Board of Directors at its first meeting after the Annual Meeting of Stockholders and thereafter as appropriate. Each
officer of the company holds office from the date of election until the first meeting of the directors held after the next
Annual Meeting of Stockholders or until a successor is elected. The date of the next annual meeting is May 16, 2023. Set
forth below is information about the executive officers.
William L. Bullock, Jr. was appointed Executive Vice President and Chief Financial Officer as of September 2020, having
previously served as President, Asia Pacific & Middle East since April 2015. Prior to that, he was Vice President, Corporate
Planning & Development since May 2012.
ConocoPhillips 2022 10-K
28
Table of Contents
Christopher P. Delk was appointed Vice President, Controller and General Tax Counsel in November 2022, having
previously served as Vice President and General Tax Counsel since July 2015.
Ryan M. Lance was appointed Chairman of the Board of Directors and Chief Executive Officer in May 2012, having
previously served as Senior Vice President, Exploration and Production—International since May 2009.
Andrew D. Lundquist was appointed Senior Vice President, Government Affairs in February 2013. Prior to that, he served
as managing partner of BlueWater Strategies LLC, since 2002.
Dominic E. Macklon was appointed Executive Vice President, Strategy, Sustainability and Technology in September 2021,
having previously served as Senior Vice President, Strategy, Exploration and Technology since August 2020. Prior to that,
he served as President, Lower 48 from June 2018 to August 2020, Vice President, Corporate Planning & Development
from January 2017 to June 2018, and President, U.K. from September 2015 to January 2017. Mr. Macklon previously
served as Senior Vice President, Oil Sands in Canada from July 2012 to September 2015.
Andrew M. O'Brien was appointed Senior Vice President, Global Operations in November 2022, having previously served
as Vice President and Treasurer since May 2021. Prior to that, he served as Vice President of Corporate Planning and
Development from August 2020 to May 2021, Lower 48 Finance Manager from August 2018 to August 2020, and
Manager of Investor Relations from November 2016 to August 2018.
Nicholas G. Olds was appointed Executive Vice President, Lower 48 in November 2022, having previously served as
Executive Vice President, Global Operations since September 2021. Prior to that, he served as Senior Vice President,
Global Operations from August 2020 to September 2021, Vice President, Corporate Planning & Development from June
2018 to August 2020, Vice President, Mid-Continent Business Unit, Lower 48 from September 2016 to June 2018, and
Vice President, North Slope Operations and Development in Alaska from August 2012 to September 2016.
Kelly B. Rose was appointed Senior Vice President, Legal, General Counsel in September 2018. Prior to that, she was a
senior partner in the Houston office of an international law firm, Baker Botts L.L.P., where she counseled clients on
corporate and securities matters. She began her career at the firm in 1991.
Heather G. Sirdashney was appointed Senior Vice President, Human Resources and Real Estate and Facilities Services in
March 2022, having previously served as Vice President, Human Resources from January 2019. Prior to that, she served as
Human Resources General Manager from October 2015 to January 2019.
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ConocoPhillips 2022 10-K
Table of Contents
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
ConocoPhillips’ common stock is traded on the New York Stock Exchange, under the symbol “COP.”
Cash Dividends Per Share
First
Second
Third
Fourth
Number of Stockholders of Record at January 31, 2023*
2022
2021
Ordinary
VROC
$
0.46
0.46
0.46
0.51
0.30
0.70
1.40
0.70
Ordinary
0.43
0.43
0.43
0.46
VROC
0.20
36,132
Dividends shown above reflect the quarter in which the dividend was declared.
*In determining the number of stockholders, we consider clearing agencies and security position listings as one stockholder for each agency listing.
In December 2021, we announced the addition of a VROC tier to our return of capital program. The declaration of
ordinary dividends and VROC are subject to the discretion and approval of our Board of Directors. The Board has adopted
a dividend declaration policy providing that the declaration of any dividends will be determined quarterly. For more
information on factors considered when determining the level of these distributions see “Item 1A —Risk Factors – Our
ability to execute our capital return program is subject to certain considerations.”
Issuer Purchases of Equity Securities
Period
October 1-31, 2022
November 1-30, 2022
December 1-31, 2022
Total Number of
Shares Purchased*
6,800,856 $
7,285,173
8,635,020
22,721,049
Average
Price Paid
Per Share
117.62
129.56
115.98
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Millions of Dollars
Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under the
Plans or Programs
6,800,856 $
7,285,173
8,635,020
22,721,049
23,536
22,592
21,591
* 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. In October 2022, our Board of Directors approved an
increase to our authorization from $25 billion to $45 billion of common stock to support our plan for future share
repurchases. As of December 31, 2022, we had repurchased $23.4 billion of shares. Repurchases are made at
management’s discretion, at prevailing prices, subject to market conditions and other factors. Except as limited by
applicable legal requirements, repurchases may be increased, decreased or discontinued at any time without prior notice.
Shares of stock repurchased under the plan are held as treasury shares. For more information see “Item 1A—Risk Factors
– Our ability to execute our capital return program is subject to certain considerations.”
ConocoPhillips 2022 10-K
30
Table of Contents
Stock Performance Graph
The following graph shows the cumulative TSR for ConocoPhillips’ common stock in each of the five years from December
31, 2017 to December 31, 2022. The graph also compares the cumulative total returns for the same five-year period with
the S&P 500 Index and our performance peer group consisting of Chevron, ExxonMobil, Apache, Marathon Oil
Corporation, Devon, Occidental, Hess, and EOG weighted according to the respective peer’s stock market capitalization at
the beginning of each annual period.
The comparison assumes $100 was invested on December 31, 2017, in ConocoPhillips stock, the S&P 500 Index and
ConocoPhillips’ peer group and assumes that all dividends were reinvested. The cumulative total returns of the peer
group companies' common stock do not include the cumulative total return of ConocoPhillips’ common stock. The stock
price performance included in this graph is not necessarily indicative of future stock price performance.
31
ConocoPhillips 2022 10-K
Five-Year Cumulative Total Shareholder ReturnsConocoPhillipsPeer GroupS&P 500Initial20182019202020212022$50$100$150$200$250 Management’s Discussion and Analysis
Table of Contents
Item 7. 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, and
supplemental oil and gas disclosures included elsewhere in this report. 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 63.
The terms “earnings” and “loss” as used in Management’s Discussion and Analysis refer to net income (loss) attributable
to ConocoPhillips.
Business Environment and Executive Overview
ConocoPhillips is one of the world’s leading E&P companies based on both production and reserves with operations and
activities in 13 countries. Our diverse, low cost of supply portfolio includes resource-rich unconventional plays in North
America; conventional assets in North America, Europe, Africa and Asia; LNG developments; oil sands assets in Canada;
and an inventory of global conventional and unconventional exploration prospects. Headquartered in Houston, Texas, at
December 31, 2022, we employed approximately 9,500 people worldwide and had total assets of $94 billion.
Overview
In 2022, the energy landscape continued to improve with commodity prices ultimately reaching a 10-year high before
decreasing in the second half of the year due to macroeconomic concerns. We expect prices 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 the impacts associated
with the conflict in Ukraine, OPEC Plus supply updates, global demand for our products, oil and gas inventory levels,
governmental policies, inflation, supply chain disruptions and the fluctuating global COVID-19 impacts.
The macro-environment, including the energy transition, continues to evolve. We believe ConocoPhillips will continue to
play an essential role by executing on three objectives: responsibly meeting energy transition pathway demand,
delivering competitive returns on and of capital and achieving our net-zero operational emissions ambition. We call this
our Triple Mandate, and it represents our commitment to create long-term value for our stakeholders.
Our value proposition to deliver competitive returns to stockholders through price cycles is guided by foundational
principles that support our Triple Mandate. Our foundational principles consist of maintaining balance sheet strength,
providing peer-leading distributions, making disciplined investments, and demonstrating responsible and reliable ESG
performance.
Our actions throughout 2022 reinforced our differential value proposition. Demonstrating our commitment to
maintaining and enhancing balance sheet strength, in 2022, we executed several activities focused on debt reduction,
including early retiring and refinancing some of our debt. In aggregate, these transactions along with naturally maturing
debt reduced the company's total debt by $3.3 billion. These activities facilitate our ability to achieve our previously
announced $5 billion debt reduction target by the end of 2026, while also reducing the company's annual cash interest
expense. See Note 9.
ConocoPhillips 2022 10-K
32
Management’s Discussion and Analysis
Table of Contents
Total company production in 2022 was 1,738 MBOED, yielding cash provided by operating activities of $28.3 billion. We
invested $10.2 billion into the business in the form of capital expenditures and investments and provided returns of
capital to shareholders of approximately $15.0 billion through our ordinary dividend, share repurchases and our VROC.
For 2022, we returned $2.4 billion from our ordinary dividend, which included an increase from 46 cents per share to 51
cents per share, effective in December. We also returned $3.3 billion to shareholders from the VROC in 2022. In the first
quarter of 2022, we completed the paced monetization program of our Cenovus Energy (CVE) common shares and used
the proceeds for a portion of our share repurchase program. See Note 5. In total for 2022, we returned $9.3 billion to
shareholders through share repurchases. In October 2022, our Board of Directors approved an increase to our share
repurchase authorization, increasing it from $25 billion to $45 billion to support our plan for future share repurchases. As
of December 31, 2022, we have repurchased $23.4 billion of the $45 billion authorized share repurchase program.
In February 2023, we announced our 2023 planned return of capital to shareholders of $11 billion through our three-tier
return of capital framework. We also declared a first quarter ordinary dividend of $0.51 cents per share and a VROC of
$0.60 cents per share.
In 2022, we took several steps to expand our global LNG business. In the first quarter, we increased our equity share in
Australia Pacific LNG (APLNG) by 10 percent to 47.5 percent. See Note 3. We were also awarded a 25 percent interest in
each of two new joint ventures with QatarEnergy that will participate in the North Field East (NFE) and North Field South
(NFS) LNG projects. Formation of the NFE joint venture (QG8) closed in December 2022 and we anticipate that the
formation of the NFS joint venture (QG12) will close in early 2023. Also, in 2022, we executed a 15-year regasification
agreement at the recently announced German LNG Terminal at Brunsbuttel.
Domestically, in November 2022, we entered into several agreements with Sempra entities in connection with the Port
Arthur LNG (PALNG) facility, including a Sales and Purchase Agreement for 5 MTPA of LNG offtake at the start-up of Phase
1 of the PALNG facility, and an Equity Sale and Purchase Agreement, whereby we will acquire 30 percent of the equity in
Phase 1 of Port Arthur LNG. Development of the PALNG facility is subject to completing required commercial agreements
and resolving a number of risks and uncertainties, obtaining financing and reaching a final investment decision, among
other factors.
As part of our ongoing portfolio high-grading and optimization efforts, in the first quarter of 2022, we completed two
transactions in our Asia Pacific segment, including the above-mentioned acquisition of additional interest in APLNG as
well as the sale of our interests in Indonesia. In addition to those transactions, throughout 2022, we completed the sale
of certain noncore assets in our Lower 48 segment. For more information on APLNG, see Note 4 and for more information
on dispositions, see Note 3.
In 2022, we reaffirmed and improved upon our commitment to demonstrate responsible and reliable ESG performance
by publishing our Plan for the Net-Zero Energy Transition (the 'Plan'), which is built upon our Triple Mandate. In addition,
we continue to expand upon our Paris-aligned climate risk framework that we adopted in 2020. In July 2022, we joined
the Oil and Gas Methane Partnership (OGMP) 2.0 initiative. In October 2022, we demonstrated further evidence of our
commitment by setting a new 2030 methane emissions intensity target of approximately 0.15 percent of gas produced,
consistent with our commitment to OGMP 2.0. For more information on our commitment to ESG and the Plan, see
"Contingencies—Company Response to Climate-Related Risks" section of Management's Discussion and Analysis of
Financial Condition and Results of Operation.
Operationally, we remain focused on safely executing the business. Production increased 171 MBOED or 11 percent in
2022, compared to 2021. Production for 2022 was 1,738 MBOED. After adjusting for closed acquisitions and dispositions,
the conversion of previously acquired Concho-contracted volumes from a two-stream to a three-stream basis and 2021
Winter Storm Uri impacts, production decreased by 16 MBOED or 1 percent. Organic growth from Lower 48 and other
development programs more than offset decline; however, production was lower overall, primarily due to fourth quarter
weather impacts and downtime in Lower 48.
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ConocoPhillips 2022 10-K
Management’s Discussion and Analysis
Table of Contents
Key Operating and Financial Summary
Significant items during 2022 and recent announcements included the following:
•
•
•
•
•
•
•
•
•
•
Generated cash provided by operating activities of $28.3 billion; ended the year with cash and cash equivalents
and restricted cash of $6.7 billion and short-term investments of $2.8 billion;
Distributed $15 billion to shareholders through three-tier framework including $5.7 billion in cash through the
ordinary dividend and VROC and $9.3 billion through share repurchases, representing 53 percent of cash
provided by operating activities;
Expanded global LNG business through participation in QatarEnergy's NFE and NFS projects; executed 15-year
regasification agreement at German LNG Terminal; acquired additional 10 percent interest in APLNG; signed 20-
year agreement for 5 MTPA of LNG offtake and executed agreement to purchase 30 percent equity stake in
Phase 1 of Port Arthur LNG;
Delivered full-year production of 1,738 MBOED and record Lower 48 production;
Fully integrated acquired Permian assets and executed multiple acreage swaps, coring up approximately 25,000
acres since acquisition to provide over a year's worth of additional two mile-plus long-lateral drilling inventory;
Received license extension for Norway's Greater Ekofisk area to 2048 and license adjustments for China's Bohai
Penglai Fields to 2039;
Generated $3.5 billion in disposition proceeds through monetization of the company's CVE shares and noncore
asset sales;
Retired $3.3 billion in debt toward the company's $5 billion debt reduction target;
Joined OGMP 2.0; published a Plan for the Net-Zero Energy Transition and set a new 2030 methane emissions
intensity target, enhancing our commitment to ESG;
Recorded 2022 year-end proved reserves of 6.6 billion BOE, with a total reserve replacement ratio of 176
percent including closed acquisitions and dispositions.
Business Environment
WTI crude oil prices averaged $94 per barrel in 2022, compared with $68 per barrel in 2021. The energy industry has
periodically experienced this type of volatility due to fluctuating supply-and-demand conditions and such volatility may
persist in the future. Commodity prices are the most significant factor impacting our profitability, reinvestment of
operating cash flows into our business and distributions to shareholders. We are guided by our Triple Mandate and our
foundational principles to deliver on our differential value proposition to create value through price cycles. Our
foundational principles include maintaining balance sheet strength, peer leading distributions, disciplined investments
and demonstrating responsible and reliable ESG performance, all of which support strong financial returns.
•
•
•
Balance sheet strength. A strong balance sheet is a strategic asset that provides flexibility through price cycles.
We strive to maintain our ‘A’-rating, and in 2021 committed to reducing gross debt by $5 billion by the end of
2026. In 2022 we executed several activities focused on debt reduction and, combined with naturally maturing
debt, reduced the company's total debt by $3.3 billion. This will reduce interest expense and provide resilience in
periods of volatility. We ended the year with cash and cash equivalents and restricted cash of $6.7 billion and
short-term investments of $2.8 billion, maintaining balance sheet strength.
Peer leading distributions. We believe in delivering value to our shareholders via our three-tiered return of
capital framework, which consists of a growing, sustainable ordinary dividend, share repurchases and our VROC.
This framework is how we plan to return greater than 30 percent of our net cash provided by operating activities
to shareholders. In 2022, we returned $5.7 billion to shareholders through our ordinary dividend and VROC and
$9.3 billion through share repurchases partially sourced from monetization of our CVE common shares. See Note
5. Our combined dividends and share repurchases of $15 billion represented over 50 percent of our net cash
provided by operating activities. In October 2022, our Board of Directors approved an increase to our share
repurchase authorization from $25 billion to $45 billion to support our plan for future share repurchases. In
February 2023, we announced our 2023 planned return of capital to shareholders of $11 billion through our
three-tier return of capital framework. See “Item 1A—Risk Factors Our ability to execute our capital return
program is subject to certain considerations.”
Disciplined investments. Our goal is to achieve strong free cash flow by exercising capital discipline, controlling
our costs, and safely and reliably delivering production. We expect to make capital investments sufficient to
sustain production throughout the price cycles. Free cash flow provides funds that are available to return to
shareholders, strengthen the balance sheet or reinvest back into the business for future cash flow expansion.
ConocoPhillips 2022 10-K
34
Management’s Discussion and Analysis
Table of Contents
◦
◦
◦
◦
Exercise capital discipline. We participate in a commodity price-driven and capital-intensive industry,
with varying lead times from when an investment decision is made to when an asset is operational and
generates cash flow. As a result, we must invest significant capital dollars to develop newly discovered
fields, maintain existing fields, and construct pipelines and LNG facilities. We allocate capital across a
geographically diverse, low cost of supply resource base, which combined with legacy assets results in
low overall production decline. Cost of supply is the WTI equivalent price that generates a 10 percent
after-tax return on a point-forward and fully burdened basis. Fully burdened includes capital
infrastructure, foreign exchange, cost of carbon, price-related inflation and G&A. In setting our capital
plans, we exercise a rigorous approach that evaluates projects using these cost of supply criteria, which
we believe will lead to value maximization and cash flow expansion using an optimized investment
pace, not production growth for growth’s sake. Our cash allocation priorities call for the investment of
sufficient capital to sustain production and provide returns of capital to shareholders.
Control our costs. Controlling operating and overhead costs, without compromising safety or
environmental stewardship, is a high priority. Using various methodologies, we monitor these costs
monthly, on an absolute-dollar basis and a per-unit basis and report to management. Managing
operating and overhead costs is critical to maintaining a competitive position in our industry,
particularly in a low commodity price environment. The ability to control our operating and overhead
costs positively impacts our ability to deliver strong cash from operations.
Optimize our portfolio. In 2022, we expanded upon our global LNG business by increasing our
ownership in APLNG by 10 percent to 47.5 percent. In addition, we were also awarded interests in the
NFE and NFS LNG projects in Qatar, signed agreements to purchase an interest in Port Arthur LNG in the
U.S., and signed a 15-year regasification agreement with the German LNG Terminal at Brunsbuttel. See
Note 4.
We continue to evaluate our assets to determine whether they compete for capital within our portfolio
and optimize as necessary, directing capital towards the most competitive investments and disposing of
assets that do not compete. As such, in 2022 we completed the sale of Indonesia and certain noncore
assets in the Lower 48 segment. See Note 3.
Add to our proved reserve base. We primarily add to our proved reserve base in three ways:
▪
▪
▪
Acquire interest in existing or new fields.
Apply new technologies and processes to improve recovery from existing fields.
Successfully explore, develop and exploit new and existing fields.
As required by current authoritative guidelines, the estimated future date when an asset will reach the
end of its economic life is based on historical 12-month first-of-month average prices and current costs.
This date estimates when production will end and affects the amount of estimated reserves. Therefore,
as prices and cost levels change from year to year, the estimate of proved reserves also changes.
Generally, our proved reserves decrease as prices decline and increase as prices rise.
Reserve replacement represents the net change in proved reserves, net of production, divided by our
current year production, as shown in our supplemental reserve table disclosures. Our reserve
replacement was 176 percent in 2022, reflecting a net increase from development drilling activity as
well as higher prices. Our organic reserve replacement, which excludes a net decrease of 6 MMBOE
from sales and purchases, was 177 percent in 2022.
In the three years ended December 31, 2022, our reserve replacement was 180 percent. Our organic
reserve replacement during the three years ended December 31, 2022, which excludes a net increase of
1,103 MMBOE related to sales and purchases, was 114 percent. See "Supplementary Data - Oil and Gas
Operations" for more information.
Access to additional resources may become increasingly difficult as lower commodity price cycles can
make projects uneconomic or unattractive. In addition, prohibition of direct investment in some
nations, national fiscal terms, political instability, competition from national oil companies, and lack of
access to high-potential areas due to environmental or other regulation may negatively impact our
ability to increase our reserve base. As such, the timing and level at which we add to our reserve base
may, or may not, allow us to fully replace our production over subsequent years.
35
ConocoPhillips 2022 10-K
Management’s Discussion and Analysis
Table of Contents
•
Environmental Social and Governance. ConocoPhillips seeks to fulfill our mission of delivering energy to the
world through an integrated management system approach that assesses sustainability-related business risks
and opportunities as part of our decision-making process. Recognizing the importance of ESG performance to
our stakeholders and company success, we have a governance structure that extends from the board of
directors through to executive leadership and business unit managers.
In October 2020, we became the first U.S.-based oil and natural gas company to adopt a Paris-aligned climate
risk framework that includes an ambition to achieve net-zero Scope 1 and 2 emissions on a gross operated and
net equity basis by 2050. We believe that this framework, combined with our success in meeting the business
objectives set by our Triple Mandate, represents the most effective way for us to sustainably contribute to
society’s transition to a low-carbon economy. In early 2022, we reaffirmed and improved our commitment to
demonstrate responsible and reliable ESG performance and address climate-related risks by publishing our Plan
for the Net Zero Energy Transition, which outlines our approach and progress to address risks specific to the
energy transition.
ConocoPhillips believes that natural gas and oil will remain essential to the energy mix throughout the energy
transition, and we also recognize the need for continuous reduction in the greenhouse gas intensity of
production operations. The energy transition will likely be complex, evolving over multiple decades with many
possible pathways and uncertainties. By following our Triple Mandate, we intend to meet this challenge in an
economically viable, accountable and actionable way that creates long-term value for our stakeholders. For
more information on our commitment to responsible and reliable ESG performance through the energy
transition, see "Contingencies—Company Response to Climate-Related Risks" section of Management's
Discussion and Analysis of Financial Condition and Results of Operation.
Commodity Prices
Our earnings and operating cash flows generally correlate with crude oil and natural gas commodity prices. Commodity
price levels are subject to factors external to the company and over which we have no control, including but not limited
to global economic health, supply disruptions or fears thereof caused by civil unrest or military conflicts, actions taken by
OPEC Plus and other producing countries, environmental laws, tax regulations, governmental policies, global health crises
and weather-related disruptions. The following graph depicts the average benchmark prices for WTI crude oil, Brent
crude oil and U.S. Henry Hub natural gas over the past three years:
Brent crude oil prices averaged $101.19 per barrel in 2022, an increase of 43 percent compared with $70.73 per barrel in
2021. Similarly, average WTI crude oil prices increased 39 percent from $67.92 per barrel in 2021 to $94.23 per barrel in
2022. Prices were higher through 2022 due to ongoing global economic recovery following 2020's COVID impacts, supply
disruptions caused by Russia's invasion of Ukraine and resulting sanctions, OPEC supply restraint and supply chain
bottlenecks limiting U.S. production growth.
ConocoPhillips 2022 10-K
36
WTI/Brent$/BblHH$/MMBTUWTI Crude Oil, Brent Crude Oil and Henry Hub Natural Gas Prices Quarterly AveragesWTI-$/BblBrent-$/BblHH-$/MMBTUQ1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21Q1'22Q2'22Q3'22Q4'22Jan'232030405060708090100110120 Management’s Discussion and Analysis
Table of Contents
Henry Hub natural gas prices increased 73 percent from an average of $3.85 per MMBTU in 2021 to $6.65 per MMBTU in
2022. Natural gas prices increased due to modest growth in domestic production, healthy domestic demand and strong
levels of feedgas demand for LNG exports to Europe and Asia.
Our realized bitumen price increased 48 percent from an average of $37.52 per barrel in 2021 to $55.56 per barrel in
2022. The increase was largely driven by strength in WTI, reflective of increasing global demand and sanctions on Russian
exports. The weakness of WCS to WTI differential at Hardisty was primarily caused by U.S. strategic petroleum reserve
release, discounted Russian crude oil and weak heavy fuel pricing. We continue to optimize bitumen price realizations
through optimizing diluent recover unit operation, blending and transportation strategies.
Our worldwide annual average realized price increased 46 percent from $54.63 per BOE in 2021 to $79.82 per BOE in
2022 primarily due to higher commodity prices.
Outlook
Production and Capital
2023 operating plan capital expenditure guidance is $10.7 to $11.3 billion, which includes $1.6 to $2.0 billion for
anticipated major project spending at NFE, NFS, PALNG and Willow and $9.1 to $9.3 billion for ongoing development
drilling programs; exploration and appraisal activities; base maintenance; and projects to reduce the company's Scope 1
and 2 emissions intensity and fund investments in several early-stage low-carbon opportunities that address end-use
emissions.
Production guidance is 1.76 to 1.80 MMBOED in 2023. First quarter 2023 production is expected to be 1.72 MMBOED to
1.76 MMBOED, which includes 35 MBOED of turnaround and stabilizer expansion in Eagle Ford.
Operating Segments
We manage our operations through six operating segments, which are primarily defined by geographic region: Alaska;
Lower 48; Canada; Europe, Middle East and North Africa; Asia Pacific; and Other International.
Corporate and Other represents income and costs not directly associated with an operating segment, such as most
interest expense, premiums incurred on the early retirement of debt, corporate overhead, certain technology activities,
as well as licensing revenues.
Our key performance indicators, shown in the statistical tables provided at the beginning of the operating segment
sections that follow, reflect results from our operations, including commodity prices and production.
37
ConocoPhillips 2022 10-K
Results of Operations
Results of Operations
Table of Contents
This section of the Form 10-K discusses year-to-year comparisons between 2022 and 2021. For discussion of year-to-year
comparisons between 2021 and 2020, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 of our 2021 10-K.
Consolidated Results
A summary of the company’s net income (loss) attributable to ConocoPhillips by business segment follows:
Years Ended December 31
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Net income (loss) attributable to ConocoPhillips
Millions of Dollars
2022
2021
2020
$
$
2,352
11,015
714
2,244
2,736
(51)
(330)
18,680
1,386
4,932
458
1,167
453
(107)
(210)
8,079
(719)
(1,122)
(326)
448
962
(64)
(1,880)
(2,701)
Net Income (loss) attributable to ConocoPhillips increased $10,601 million in 2022. Earnings were positively impacted by:
•
•
•
•
•
•
•
•
•
Higher realized commodity prices.
Higher sales volumes primarily due to our Shell Permian acquisition, partly offset by assets divested. See Note 3.
Higher equity in earnings of affiliates, primarily due to higher LNG sales prices and volumes as well as the
additional 10 percent interest in APLNG we acquired in the first quarter of 2022. See Note 3.
Absence of a $682 million after-tax impairment of our APLNG investment included within our Asia Pacific
segment. See Note 7.
Recognition of a $515 million tax benefit related to the closing of an IRS audit. See Note 17.
Gain on dispositions primarily due to a $462 million after-tax gain related to the divestiture of our Indonesia
assets, higher contingent payments related to prior dispositions in our Canada and Lower 48 segments and the
absence of a $137 million after-tax loss related to the divestiture of noncore assets in our Other International
segment from 2021. See Note 3.
Absence of restructuring and transaction expenses of $341 million after-tax related to our Concho and Shell
Permian acquisitions.
Absence of realized losses on hedges of $233 million after-tax related to derivative positions acquired in our
Concho acquisition. See Note 12.
Lower other expenses primarily related to an after-tax gain of $62 million associated with the extinguishment of
debt from the first quarter of 2022. See Note 9.
These increases in net income (loss) were partly offset by:
•
•
•
•
•
Higher income tax provision.
Higher taxes other than income taxes, production and operating expenses and DD&A expenses due to higher
prices, production volumes, primarily from our Shell Permian acquisition, and inflation. Partially offsetting the
increase in DD&A expenses were lower rates from reserve revisions.
A gain of $251 million after-tax on our Cenovus Energy (CVE) common shares in 2022, as compared to a $1,040
million after-tax gain on those shares in 2021. See Note 5.
Absence of an after-tax gain of $194 million recognized for a final investment decision (FID) bonus associated
with our Australia-West divestiture in 2020. See Note 11.
Higher exploration expenses primarily related to the impairment of certain aged, suspended wells in our Canada
segment and increased dry hole expenses in our Europe, Middle East and North Africa segment. See Note 6.
ConocoPhillips 2022 10-K
38
Results of Operations
Income Statement Analysis
Table of Contents
Unless otherwise indicated, all results in Income Statement Analysis are before-tax.
Sales and other operating revenues increased $32,666 million in 2022, mainly due to higher realized commodity prices
and higher sales volumes, primarily due to our Shell Permian acquisition, partially offset by assets divested. See Note 3.
Equity in earnings of affiliates increased $1,249 million in 2022, primarily due to higher earnings driven by higher LNG and
crude prices as well as the additional 10 percent interest in APLNG which was acquired in the first quarter of 2022. See
Note 3.
Gain on dispositions increased $591 million in 2022, primarily due to the recognition of a gain of $534 million from our
Indonesia divestiture, the absence of a $179 million loss associated with the sale of noncore assets in our Other
International segment and higher contingent payments in our Canada and Lower 48 segments than in 2021. These
increases were partially offset by the absence of a $200 million gain for a FID bonus associated with our Australia-West
divestiture recognized in the first quarter of 2021. See Note 3.
Other income (loss) decreased $699 million in 2022, primarily due to the absence of mark-to-market gains associated
with our CVE common shares which were fully divested in the first quarter of 2022. See Note 5. The decrease was partially
offset by higher interest income earned due to rising rates and investments.
Purchased commodities increased $15,813 million in 2022, primarily in line with higher gas and crude prices and volumes.
Production and operating expenses increased $1,312 million in 2022, due to higher volumes, primarily due to our Shell
Permian acquisition, inflation and commodity price impacts.
Selling, general and administrative expenses decreased $96 million in 2022, primarily due to the absence of transaction
and restructuring expenses associated with our Concho and Shell Permian acquisitions, partially offset by higher
compensation and benefits costs, including mark-to-market impacts of certain key employee compensation programs.
Exploration expenses increased $220 million in 2022, primarily due to the impairment of certain aged, suspended wells in
our Canada segment as well as increased dry hole expenses related to our 2022 exploration and appraisal campaign in
Norway.
DD&A increased $296 million in 2022 mainly due to higher overall production volumes primarily due to our Shell Permian
acquisition, partially offset by lower rates from reserve additions from development drilling and higher prices and the
absence of DD&A from divested assets.
Impairments decreased $686 million in 2022, primarily due to the absence of an impairment of our APLNG investment
included within our Asia Pacific segment in 2021. For additional information, see Note 7 and Note 13.
Taxes other than income taxes increased $1,730 million in 2022, caused primarily by higher commodity prices and higher
sales volumes.
Other Expenses decreased $149 million primarily related to a gain of $127 million associated with the extinguishment of
debt from the first quarter of 2022. See Note 9.
See Note 17—Income Taxes for information regarding our income tax provision and effective tax rate.
39
ConocoPhillips 2022 10-K
Results of Operations
Summary Operating Statistics
Average Net Production
Crude oil (MBD)
Consolidated Operations
Equity affiliates
Total crude oil
Natural gas liquids (MBD)
Consolidated Operations
Equity affiliates
Total natural gas liquids
Bitumen (MBD)
Natural gas (MMCFD)
Consolidated Operations
Equity affiliates
Total natural gas
Total Production (MBOED)
Average Sales Prices
Crude oil (per bbl)
Consolidated Operations
Equity affiliates
Total crude oil
Natural gas liquids (per bbl)
Consolidated Operations
Equity affiliates
Total natural gas liquids
Bitumen (per bbl)
Natural gas (per mcf)
Consolidated Operations
Equity affiliates
Total natural gas
Worldwide Exploration Expenses
General and administrative; geological and geophysical, lease rental, and
other
Leasehold impairment
Dry holes
Total Exploration Expenses
Table of Contents
2022
2021
2020
885
13
898
244
8
252
66
816
13
829
134
8
142
69
555
13
568
97
8
105
55
1,939
1,191
3,130
2,109
1,053
3,162
1,339
1,055
2,394
1,738
1,567
1,127
Dollars Per Unit
$
97.23
97.31
97.23
35.67
61.22
36.50
67.61
69.45
67.64
31.04
54.16
32.45
39.56
39.02
39.54
12.90
32.69
14.61
55.56
37.52
8.02
10.56
10.67
10.60
6.00
5.31
5.77
3.17
3.71
3.41
Millions of Dollars
$
$
224
89
251
564
300
10
34
344
374
868
215
1,457
ConocoPhillips 2022 10-K
40
Results of Operations
Table of Contents
We explore for, produce, transport and market crude oil, bitumen, LNG, natural gas and NGLs on a worldwide basis. At
December 31, 2022, our operations were producing in the U.S., Norway, Canada, Australia, China, Malaysia, Qatar and
Libya.
Total production of 1,738 MBOED increased 171 MBOED or 11 percent in 2022 compared with 2021, primarily due to:
•
•
•
New wells online in the Lower 48, Alaska, Australia, China, Malaysia and Canada.
Acquisitions including Shell Permian in the Lower 48 and additional working interest at APLNG in our Asia Pacific
segment. See Note 3.
Conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis.
The increase in production during 2022 was partly offset by:
•
•
Normal field decline.
Divestiture of our Indonesia assets and noncore assets in the Lower 48 segment. See Note 3.
Production for 2022 was 1,738 MBOED. After adjusting for closed acquisitions and dispositions, the conversion of
previously acquired Concho-contracted volumes from a two-stream to a three-stream basis and 2021 Winter Storm Uri
impacts, production decreased by 16 MBOED or 1 percent. Organic growth from Lower 48 and other development
programs more than offset decline; however, production was lower overall, primarily due to fourth quarter weather
impacts and downtime in Lower 48.
41
ConocoPhillips 2022 10-K
Results of Operations
Segment Results
Unless otherwise indicated, discussion of Segment Results is after-tax.
Alaska
Table of Contents
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
2,352
$
2021
1,386
2020
(719)
Average Net Production
Crude oil (MBD)
Natural gas liquids (MBD)
Natural gas (MMCFD)
Total Production (MBOED)
Average Sales Prices
Crude oil ($ per bbl)
Natural gas ($ per mcf)
177
17
34
200
178
16
16
197
181
16
10
198
$
101.72
3.64
69.87
2.81
42.12
2.91
The Alaska segment primarily explores for, produces, transports and markets crude oil, NGLs and natural gas. In 2022,
Alaska contributed 16 percent of our consolidated liquids production and two percent of our consolidated natural gas
production.
Net Income (Loss) Attributable to ConocoPhillips
Alaska reported earnings of $2,352 million in 2022, compared with earnings of $1,386 million in 2021. Earnings were
positively impacted by higher realized commodity prices.
Earnings were negatively impacted by:
•
•
Higher taxes other than income taxes associated with higher realized commodity prices and higher production
volumes.
Higher production and operating expenses driven primarily by response costs associated with a first quarter
subsurface gas release at Alpine drill site CD1 and higher activity comprised of well workovers and gas injections.
Production
Average production increased 3 MBOED in 2022 compared with 2021, primarily due to:
•
•
•
New wells online at our Western North Slope assets.
Increased development activity at Greater Prudhoe Area and Greater Kuparuk Area assets.
Higher produced gas volumes in our Greater Prudhoe Area.
The production increase was partly offset by normal field decline.
ConocoPhillips 2022 10-K
42
Results of Operations
Lower 48
Table of Contents
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
11,015
$
2021
4,932
2020
(1,122)
Average Net Production
Crude oil (MBD)
Natural gas liquids (MBD)*
Natural gas (MMCFD)*
Total Production (MBOED)
Average Sales Prices
Crude oil ($ per bbl)
Natural gas liquids ($ per bbl)
Natural gas ($ per mcf)
534
221
1,402
989
94.46
35.36
5.92
447
110
1,340
780
66.12
30.63
4.38
213
74
585
385
35.17
12.13
1.65
$
*Includes conversion of previously acquired Concho two-stream contracts to three-stream initiated in the fourth quarter of 2021.
The Lower 48 segment consists of operations located in the contiguous U.S. and the Gulf of Mexico and commercial
operations. During 2022, the Lower 48 contributed 64 percent of our consolidated liquids production and 72 percent of
our consolidated natural gas production.
Net Income (Loss) Attributable to ConocoPhillips
Lower 48 reported earnings of $11,015 million in 2022, compared with earnings of $4,932 million in 2021. Earnings were
positively impacted by:
•
•
•
Higher realized prices.
Higher sales volumes primarily related to our Shell Permian Acquisition. See Note 3.
Absence of one-time impacts from our Concho and Shell Permian acquisitions including realized losses on
hedges related to derivative positions acquired in our Concho acquisition and higher selling, general and
administrative expenses for transaction and restructuring charges. See Note 12.
Earnings were negatively impacted by:
•
Higher production and operating expenses, DD&A expenses and taxes other than income taxes primarily due to
higher production volumes, primarily from our Shell Permian acquisition, realized commodity prices and
inflation. Partially offsetting the increase in DD&A expenses were lower rates from reserve additions, primarily
from additional development drilling in our unconventional plays and certain technical revisions.
Production
Total average production increased 209 MBOED in 2022 compared with 2021, primarily due to:
•
•
•
New wells online from our development programs in Delaware Basin, Eagle Ford, Midland Basin and Bakken.
Higher volumes due to our Shell Permian acquisition, partially offset by assets divested. See Note 3.
Conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis.
These production increases were partly offset by normal field decline.
Asset Acquisitions and Dispositions
We completed multiple divestitures of noncore oil and gas assets during 2022 totaling approximately $680 million in
proceeds after customary adjustments. These divested assets averaged approximately 18 MBOED. We also cored up
strategic positions through acquisitions of approximately $250 million after customary adjustments. See Note 3.
43
ConocoPhillips 2022 10-K
Results of Operations
Canada
Table of Contents
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
714
$
2021
458
2020
(326)
Average Net Production
Crude oil (MBD)
Natural gas liquids (MBD)
Bitumen (MBD)
Natural gas (MMCFD)
Total Production (MBOED)
Average Sales Prices
Crude oil ($ per bbl)
Natural gas liquids ($ per bbl)
Bitumen ($ per bbl)
Natural gas ($ per mcf)
6
3
66
61
85
8
4
69
80
94
6
2
55
40
70
$
79.94
37.70
55.56
3.62
56.38
31.18
37.52
2.54
23.57
5.41
8.02
1.21
Average sales prices include unutilized transportation costs.
Our Canadian operations consist of the Surmont oil sands development in Alberta and the liquids-rich Montney
unconventional play in British Columbia and commercial operations. In 2022, Canada contributed six percent of our
consolidated liquids production and three percent of our consolidated natural gas production.
Net Income (Loss) Attributable to ConocoPhillips
Canada operations reported earnings of $714 million in 2022 compared with earnings of $458 million in 2021. Earnings
were positively impacted by:
•
•
Higher realized prices.
Contingent payments of $282 million in 2022 associated with the sale of certain assets to CVE in 2017 compared
with $246 million in 2021.
Earnings were negatively impacted by:
•
•
•
Higher exploration expenses primarily related to the impairment of certain aged, suspended wells. See Note 6.
Lower sales volumes.
Higher production and operating expenses primarily due to higher fuel gas and electricity prices at Surmont.
Production
Total average production decreased 9 MBOED in 2022 compared with 2021. The production decrease was primarily due
to:
•
•
•
Normal field decline.
Higher royalty rates across the segment due to higher commodity prices.
Planned turnarounds in our Montney assets and at the Surmont Central Processing Facility 1.
These production decreases were partly offset by new wells online in our Montney asset.
ConocoPhillips 2022 10-K
44
Results of Operations
Table of Contents
Europe, Middle East and North Africa
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
2,244
$
2021
1,167
2020
448
Consolidated Operations
Average Net Production
Crude oil (MBD)
Natural gas liquids (MBD)
Natural gas (MMCFD)
Total Production (MBOED)
Average Sales Prices
Crude oil ($ per bbl)
Natural gas liquids ($ per bbl)
Natural gas ($ per mcf)
107
3
328
165
118
4
313
175
86
4
275
136
$
99.20
54.52
33.39
68.97
43.97
13.27
43.30
23.27
3.23
The Europe, Middle East and North Africa segment consists of operations principally located in the Norwegian sector of
the North Sea; the Norwegian Sea; Qatar; Libya; and commercial and terminalling operations in the U.K. In 2022, our
Europe, Middle East and North Africa operations contributed nine percent of our consolidated liquids production and 17
percent of our consolidated natural gas production.
Net Income (Loss) Attributable to ConocoPhillips
The Europe, Middle East and North Africa segment reported earnings of $2,244 million in 2022 compared with earnings
of $1,167 million in 2021. Earnings were positively impacted by:
•
•
•
Higher realized prices.
Higher equity in earnings of affiliates primarily due to higher LNG sale prices.
Foreign exchange gains as the USD strengthened against the Norwegian Kroner.
Earnings were negatively impacted by:
Lower sales volumes.
•
Consolidated Production
Average consolidated production decreased 10 MBOED in 2022, compared with 2021. The consolidated production
decrease was primarily due to:
Normal field decline.
Field-wide turnarounds in the Greater Ekofisk Area of Norway.
Unplanned downtime across our Norway assets.
•
•
•
These production decreases were partly offset by:
•
New wells online, improved performance and higher gas exports in Norway.
Qatar Interest
During 2022, we were awarded a 25 percent interest in a new joint venture with QatarEnergy that will participate in the
NFE LNG project. Formation of the NFE joint venture (QG8) closed in December 2022. Once complete, the NFE project will
have the capacity to produce 32 MTPA. See Note 3 and Note 4.
Libya Acquisition
In November 2022, we, along with TotalEnergies completed the joint acquisition of Hess Libya Waha Ltd, which increased
our interest in the Waha Concession by 4.1 percent to 20.4 percent.
Exploration Activity
In 2022, we drilled four operated wells and participated in one partner operated well, all of which were determined to be
dry holes, including the Slagugle appraisal well which effectively delineated the 2020 discovery. Slagugle is a discovery
that we are continuing to evaluate.
45
ConocoPhillips 2022 10-K
Results of Operations
Asia Pacific
Table of Contents
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
2,736
$
2021
453
2020
962
Consolidated Operations
Average Net Production
Crude oil (MBD)
Natural gas liquids (MBD)
Natural gas (MMCFD)
Total Production (MBOED)
Average Sales Prices
Crude oil ($ per bbl)
Natural gas liquids ($ per bbl)
Natural gas ($ per mcf)
61
—
114
80
65
—
360
125
69
1
429
141
$
105.52
—
5.84
70.36
—
6.56
42.84
33.21
5.39
At December 31, 2022, the Asia Pacific segment had operations in China, Malaysia, and Australia, and commercial
operations in China, Singapore and Japan. During 2022, Asia Pacific contributed five percent of our consolidated liquids
production and six percent of our consolidated natural gas production.
Net Income (Loss) Attributable to ConocoPhillips
Asia Pacific reported earnings of $2,736 million in 2022, compared with $453 million in 2021. The increase in earnings was
mainly due to:
•
•
•
•
•
•
Higher equity in earnings of affiliates reflecting higher LNG sales prices as well as our increased interest in
APLNG.
Absence of a $688 million after-tax impairment on our APLNG investment. See Note 4 and Note 13.
Higher realized crude prices.
After-tax gain of $534 million associated with the divestiture of our Indonesian assets. See Note 3.
Lower DD&A expenses driven by the divestiture of our Indonesia assets.
Lower production and operating expenses primarily associated with the divestiture of our Indonesia assets and
lower production costs in China.
Earnings were negatively impacted by:
•
•
•
Absence of an after-tax gain of $200 million recognized in the first quarter of 2021 related to a contingent
payment from our Australia-West divestiture in 2020. See Note 3 and Note 11.
Lower sales volumes primarily due to the divestiture of our Indonesia assets.
Higher taxes other than income taxes primarily due to higher realized crude oil prices.
Consolidated Production
Average consolidated production decreased 45 MBOED in 2022, compared with 2021. The decrease was primarily due to:
•
•
The divestiture of our Indonesia assets in the first quarter of 2022.
Normal field decline.
These production decreases were partly offset by development activity at Bohai Bay in China and new wells online in
Malaysia.
Asset Acquisitions and Dispositions
In the first quarter of 2022, we completed the acquisition of an additional 10 percent interest in APLNG increasing our
ownership to 47.5 percent. Also in the first quarter, we completed the divestiture of our subsidiaries that held our
Indonesia assets and operations. Production from the disposed assets averaged approximately 33 MBOED in the three-
months ended March 31, 2022. See Note 3.
ConocoPhillips 2022 10-K
46
Results of Operations
Other International
Table of Contents
Net Income (Loss) Attributable to ConocoPhillips ($MM)
2022
(51)
$
2021
(107)
2020
(64)
The Other International segment includes interests in Colombia as well as contingencies associated with prior operations
in other countries.
Earnings from our Other International operations improved $56 million in 2022, compared with 2021, primarily due to
the absence of a $137 million after-tax loss on divestiture related to our Argentina exploration interests, partially offset
by higher taxes related to legal settlements in 2022.
Corporate and Other
Net Income (Loss) Attributable to ConocoPhillips
Net interest expense
Corporate general and administrative expenses
Technology
Other income (expense)
Millions of Dollars
2022
2021
2020
$
$
(600)
(244)
32
482
(330)
(801)
(317)
25
883
(210)
(662)
(200)
(26)
(992)
(1,880)
Net interest consists of interest and financing expense, net of interest income and capitalized interest. Net interest
expense improved $201 million in 2022, compared with 2021, primarily due to higher interest income as well as lower
interest expenses as a result of our debt reduction transactions. See Note 9.
Corporate G&A expenses include compensation programs and staff costs. These expenses decreased by $73 million in
2022 compared with 2021, primarily due to the absence of restructuring expenses associated with our Concho
acquisition, partially offset by mark-to-market adjustments associated with certain compensation programs. See Note 16.
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.
Other income (expense) ("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, gains or losses on early retirement of debt, holding gains or losses on equity securities and pension
settlement expense. Earnings in “Other” decreased by $401 million in 2022 compared with 2021. This was primarily due
to a gain of $251 million on our CVE common shares in 2022, compared with a $1,040 million gain in 2021. Earnings in
"Other" also decreased due to a $101 million tax impact associated with the disposition of our Indonesia assets and
higher legal accruals of $81 million. Offsetting the decreases to earnings in "Other" include a $474 million federal tax
benefit associated with the closing of the 2017 audit of our U.S. federal income tax return, the absence of a release of a
$92 million deferred tax asset associated with prior dispositions and recognizing an after-tax gain of $62 million
associated with the debt restructuring transactions.
47
ConocoPhillips 2022 10-K
Capital Resources and Liquidity
Table of Contents
Capital Resources and Liquidity
Financial Indicators
Net cash provided by operating activities
Cash and cash equivalents
Short-term investments
Short-term debt
Total debt
Total equity
Percent of total debt to capital*
Percent of floating-rate debt to total debt
*Capital includes total debt and total equity.
Millions of Dollars
Except as Indicated
2022
2021
2020
$
28,314
6,458
2,785
417
16,643
48,003
26 %
2 %
16,996
5,028
446
1,200
19,934
45,406
31
4
4,802
2,991
3,609
619
15,369
29,849
34
7
To meet our short- and long-term liquidity requirements, we look to a variety of funding sources, including cash
generated from operating activities, proceeds from asset sales, our commercial paper and credit facility programs and our
ability to sell securities using our shelf registration statement. In 2022, the primary uses of our available cash were $10.2
billion to support our ongoing capital expenditures and investments program, $9.3 billion to repurchase common stock,
$5.7 billion to pay the ordinary dividend and VROC, $3.4 billion to reduce debt through refinancing transactions and
retirements and $2.6 billion net purchases of investments. In 2022, cash and cash equivalents increased by over $1.4
billion to $6.5 billion.
At December 31, 2022, we had cash and cash equivalents of $6.5 billion, short-term investments of $2.8 billion, and
available borrowing capacity under our credit facility of $5.5 billion, totaling approximately $14.8 billion of liquidity. We
believe current cash balances and cash generated by operations, 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 program, dividend payments and required debt payments.
Significant Changes in Capital
Operating Activities
Cash provided by operating activities continued to increase in 2022 totaling $28.3 billion, compared with $17.0 billion for
2021, and $4.8 billion for 2020. The increase in cash provided by operating activities from 2021 is primarily due to higher
realized commodity prices, higher sales volumes mostly due to our acquisition of Shell Permian assets and the absence of
the 2021 settlement of oil and gas hedging positions acquired from Concho. The increase in cash provided by operating
activities was partly offset by foreign tax and royalty payments in Libya and foreign tax payments in Norway in addition to
U.S. tax payments.
The increase in cash from 2021 compared to 2020 is primarily due to higher realized commodity prices and higher sales
volumes, mostly resulting from our acquisition of Concho. The increase was partly offset by the $0.8 billion in settlement
of oil and gas hedging positions acquired from Concho and approximately $0.4 billion of transaction and restructuring
costs.
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.
ConocoPhillips 2022 10-K
48
Capital Resources and Liquidity
Table of Contents
The level of absolute production volumes, as well as product and location mix, impacts our cash flows. Full-year
production averaged 1,738 MBOED in 2022, an increase of 171 MBOED or 11 percent compared to 2021. First quarter
2023 production is expected to be 1.72 MMBOED to 1.76 MMBOED. 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; 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 on an ongoing basis, we must continue to add to our proved reserve base.
Our proved reserves generally increase as prices rise and decrease as prices decline. Reserve replacement represents the
net change in proved reserves, net of production, divided by our current year production. For information on proved
reserves, including both developed and undeveloped reserves, see the reserve table disclosures contained in
“Supplementary Data – Oil and Gas Operations.” See “Item 1A—Risk Factors – Unless we successfully develop resources,
the scope of our business will decline, resulting in an adverse impact to our business.”
As discussed in the “Critical Accounting Estimates” section, engineering estimates of proved reserves are imprecise;
therefore, reserves may be revised upward or downward each year due to the impact of changes in commodity prices or
as more technical data becomes available on reservoirs. It is not possible to reliably predict how revisions will impact
future reserve quantities.
Investing Activities
In 2022, we invested $10.2 billion in capital expenditures and investments; $2.1 billion of which was acquisition capital for
the additional 10 percent interest in APLNG, certain Lower 48 assets and the payments toward our investment in QG8.
The remaining $8.1 billion funded our operating capital program inclusive of growth in the Lower 48 segment through the
integration of Concho and Shell Permian assets. Capital expenditures invested in 2021 and 2020 were $5.3 billion and
$4.7 billion, respectively. See the “Capital Expenditures and Investments” section.
In 2022, we completed the monetization of our investment in CVE common shares that we began in May 2021. By the
end of the first quarter of 2022, we fully divested of our investment, recognizing proceeds of $1.4 billion and directing
proceeds toward our existing share repurchase program. Since inception, we generated total proceeds of $2.5 billion. See
Note 5. Other proceeds from dispositions received in the current year include our divestitures in Asia Pacific and Lower 48
segments for approximately $1.5 billion after customary adjustments and $500 million in contingent payments associated
with prior divestitures. See Note 3.
In December 2021, we completed our acquisition of Shell’s assets in the Delaware Basin for cash consideration of
approximately $8.7 billion after customary adjustments. We funded this transaction with cash on hand. We completed
our acquisition of Concho on January 15, 2021 in an all-stock transaction. The assets acquired in the transaction included
$382 million of cash. The net impact of these items is recognized within “Acquisition of businesses, net of cash acquired”
on our consolidated statement of cash flows. See Note 3.
In 2021, total proceeds from asset dispositions were $1.7 billion. We received cash proceeds of $250 million from the sale
of noncore assets in our Lower 48 segment and $1.1 billion from sales of our investment in CVE common shares and $244
million of contingent payments related to dispositions completed before 2021. See Note 3 and Note 5.
In 2020, proceeds from asset sales were $1.3 billion. We received cash proceeds of $765 million for the divestiture of our
Australia-West assets and operations. We also received proceeds of $359 million and $184 million from the sale of our
Niobrara interests and Waddell Ranch interests in the Lower 48, respectively. See Note 3.
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. See
Note 12 and Note 19.
49
ConocoPhillips 2022 10-K
Capital Resources and Liquidity
Table of Contents
Financing Activities
In February 2022, we refinanced our revolving credit facility from a total aggregate principal amount of $6.0 billion to
$5.5 billion with an expiration date of February 2027. 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 the redetermination prior to its expiration date.
Credit facility borrowings may bear interest at a margin above the Secured Overnight Financing Rate (SOFR). The
agreement calls for commitment fees on available, but unused, amounts. The 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 ConocoPhillips Company’s ability to issue up to $5.5 billion of commercial paper,
which is primarily a funding source for short-term working capital needs. Commercial paper maturities are generally
limited to 90 days. 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 December 31, 2022.
Our debt balance at December 31, 2022 was $16.6 billion compared with $19.9 billion at December 31, 2021. The current
portion of debt, including payments for finance leases, is $0.4 billion. In 2022, we repurchased notes, retired floating rate
debt, and executed a debt refinancing comprised of concurrent transactions including new debt issuances, a cash tender
offer and debt exchange offers. In aggregate, these transactions along with naturally maturing debt, reduced the
company's total debt by $3.3 billion. The refinancing facilitates our ability to achieve our previously announced $5 billion
debt reduction target by the end of 2026 while also reducing the company's annual cash interest expense.
The current credit ratings on our long-term debt are:
•
Fitch: “A” with a “stable” outlook
S&P: “A-” with a “stable” outlook
•
• Moody's: "A2" with a "stable" outlook
See Note 9 for additional information on debt, revolving credit facility and credit ratings.
We do not have any ratings triggers on any of our corporate debt that would cause an automatic default, and thereby
impact our access to liquidity, upon downgrade of our credit ratings. If our credit ratings are downgraded from their
current levels, it could increase the cost of corporate debt available to us and restrict our access to the commercial paper
markets. If our credit rating were to deteriorate to a level prohibiting us from accessing the commercial paper market, we
would still be able to access funds under our revolving credit facility.
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 December 31, 2022 and December 31, 2021, we had direct bank letters of credit of $368 million and $337 million,
respectively, which secured performance obligations related to various purchase commitments incident to the ordinary
conduct of business. In the event of a credit rating downgrade, we may be required to post additional letters of credit.
Shelf Registration
We have a universal shelf registration statement on file with the SEC under which we have the ability to issue and sell an
indeterminate amount of various types of debt and equity securities.
ConocoPhillips 2022 10-K
50
Capital Resources and Liquidity
Table of Contents
Capital Requirements
For information about our capital expenditures and investments, see the “Capital Expenditures and Investments” section.
Our debt balance at December 31, 2022, was $16.6 billion, a decrease of $3.3 billion from the balance at December 31,
2021 of $19.9 billion. As part of our objective to maintain a strong balance sheet, we announced in 2021 our intention to
reduce our total debt by $5 billion by the end of 2026. In 2022, we executed concurrent debt refinancing transactions,
repurchased existing notes and retired floating rate notes upon natural maturity, that in aggregate reduced the
company's total debt by $3.3 billion and progressed the achievement of our debt reduction target while also lowering our
annual cash interest expense and extending the weighted average maturity of our debt portfolio. See Note 9.
In February 2023, we announced our 2023 planned return of capital to shareholders of $11 billion through our three-tier
return of capital framework. We plan to deliver a compelling, growing ordinary dividend, through-cycle share repurchases
and a VROC payment. The VROC provides a flexible tool for meeting our commitment of returning greater than 30
percent of cash from operating activities during periods where commodity prices are meaningfully higher than our
planning price range. Our 2022 total capital returned was $15 billion.
Consistent with our commitment to deliver value to shareholders, in 2022, we paid ordinary dividends of $1.89 per
common share and VROC payments of $2.60 per common share. This was an increase over 2021 and 2020, when we paid
only ordinary dividends of $1.75 and $1.69 per common share, respectively. In February 2023, we declared a first quarter
ordinary dividend of $0.51 cents per share and a VROC of $0.60 cents per share. The ordinary dividend of $0.51 cents per
share is payable March 1, 2023, to shareholders of record on February 14, 2023. The VROC of $0.60 cents per share is
payable April 14, 2023, to shareholders of record on March 29, 2023.
The ordinary dividend and VROC are subject to numerous considerations and will be determined and approved each
quarter by the Board of Directors. If approved, we expect to announce the VROC when we announce our ordinary
dividend, but the quarterly payouts will be staggered from the ordinary dividend and paid in the subsequent quarter,
resulting in up to eight cash distributions throughout the year.
In late 2016, we initiated our current share repurchase program. In October 2022, our Board of Directors approved an
increase to our authorization from $25 billion to $45 billion of our common stock to support our plan for future share
repurchases. Share repurchases were $9.3 billion, $3.6 billion, and $0.9 billion in 2022, 2021, and 2020, respectively. As of
December 31, 2022, share repurchases since the inception of our current program totaled 334.8 million shares and
$23.4 billion. Repurchases are made at management’s discretion, at prevailing prices, subject to market conditions and
other factors.
For more information on factors considered when determining the levels of returns of capital see “Item 1A—Risk Factors
– Our ability to execute our capital return program is subject to certain considerations.”
As of December 31, 2022, in addition to the priorities described above, we have contractual obligations to purchase
goods and services of approximately $19.2 billion. We expect to fulfill $8.8 billion of these obligations in 2023. These
figures exclude purchase commitments for jointly owned fields and facilities where we are not the operator. Purchase
obligations of $5.0 billion are related to agreements to access and utilize the capacity of third-party equipment and
facilities, including pipelines and LNG product terminals, to transport, process, treat and store commodities. Purchase
obligations of $12.7 billion are related to market-based contracts for commodity product purchases with third parties.
The remainder is primarily our net share of purchase commitments for materials and services for jointly owned fields and
facilities where we are the operator.
51
ConocoPhillips 2022 10-K
Capital Resources and Liquidity
Table of Contents
Capital Expenditures and Investments
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Capital Program*
Millions of Dollars
2022
1,091
5,630
530
998
1,880
—
30
10,159
2021
982
3,129
203
534
390
33
53
5,324
2020
1,038
1,881
651
600
384
121
40
4,715
* Excludes capital related to acquisitions of businesses, net of capital acquired.
Our capital expenditures and investments for the three-year period ended December 31, 2022, totaled $20.2 billion. The
2022 capital expenditures and investments supported key operating activities and acquisitions, primarily:
•
•
•
•
•
•
Development activities in the Lower 48, primarily in the Delaware Basin, Eagle Ford, Midland Basin and Bakken.
Appraisal and development activities in Alaska related to the Western North Slope and development activities in
the Greater Kuparuk Area.
Appraisal and development activities at Montney as well as optimization and development of oil sands in
Canada.
Development, exploration and appraisal activities across assets in Norway.
Continued development and exploration activities in Malaysia and China.
Acquisition capital associated with additional interest in APLNG and certain Lower 48 assets as well as the
payment for our investment in QG8.
2023 Capital Budget
In February 2023, we announced our 2023 operating plan capital is expected to be between $10.7 to $11.3 billion. The
plan includes funding for ongoing development drilling programs, major projects, exploration and appraisal activities and
base maintenance.
ConocoPhillips 2022 10-K
52
Capital Resources and Liquidity
Table of Contents
Guarantor Summarized Financial Information
We have various cross guarantees among ConocoPhillips, ConocoPhillips Company, and Burlington Resources LLC with
respect to publicly held debt securities. ConocoPhillips Company is 100 percent owned by ConocoPhillips. Burlington
Resources LLC is 100 percent owned by ConocoPhillips Company. ConocoPhillips and/or ConocoPhillips Company have
fully and unconditionally guaranteed the payment obligations of Burlington Resources LLC with respect to its publicly held
debt securities. Similarly, ConocoPhillips has fully and unconditionally guaranteed the payment obligations of
ConocoPhillips Company with respect to its publicly held debt securities. In addition, ConocoPhillips Company has fully
and unconditionally guaranteed the payment obligations of ConocoPhillips with respect to its publicly held debt
securities. All guarantees are joint and several.
The following tables present summarized financial information for the Obligor Group, as defined below:
•
•
•
The Obligor Group will reflect guarantors and issuers of guaranteed securities consisting of ConocoPhillips,
ConocoPhillips Company and Burlington Resources LLC.
Consolidating adjustments for elimination of investments in and transactions between the collective guarantors
and issuers of guaranteed securities are reflected in the balances of the summarized financial information.
Non-Obligated Subsidiaries are excluded from this presentation.
Transactions and balances reflecting activity between the Obligors and Non-Obligated Subsidiaries are presented
separately below:
Summarized Income Statement Data
Revenues and Other Income
Income (loss) before income taxes*
Net income (loss)
Net Income (Loss) Attributable to ConocoPhillips
*Includes approximately $9.0 billion of purchased commodities expense for transactions with Non-Obligated Subsidiaries.
Summarized Balance Sheet Data
Current assets
Amounts due from Non-Obligated Subsidiaries, current
Noncurrent assets
Amounts due from Non-Obligated Subsidiaries, noncurrent
Current liabilities
Amounts due to Non-Obligated Subsidiaries, current
Noncurrent liabilities
Amounts due to Non-Obligated Subsidiaries, noncurrent
$
Millions of
Dollars
2022
$
55,630
18,438
18,680
18,680
Millions of Dollars
December 31, 2022
10,766
1,892
79,269
6,552
8,201
3,248
40,389
24,594
53
ConocoPhillips 2022 10-K
Capital Resources and Liquidity
Table of Contents
Contingencies
We are subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for
losses associated with legal claims when such losses are considered probable and the amounts can be reasonably
estimated. See “Critical Accounting Estimates” and Note 11 for information on contingencies.
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
and damages from historic operations, and climate change. We will continue to defend ourselves vigorously in these
matters.
Our legal organization applies its knowledge, experience, and professional judgment to the specific characteristics of our
cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process
facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us
to track those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience
in using these litigation management tools and available information about current developments in all our cases, our
legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals,
or establishment of new accruals, is required. See Note 17.
Environmental
We are subject to the same numerous international, federal, state, and local environmental laws and regulations as other
companies in our industry. The most significant of these environmental laws and regulations include, among others, the:
•
•
•
•
•
•
•
•
•
•
U.S. Federal Clean Air Act, which governs air emissions.
U.S. Federal Clean Water Act, which governs discharges to water bodies.
European Union Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (REACH).
U.S. Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund),
which imposes liability on generators, transporters and arrangers of hazardous substances at sites where
hazardous substance releases have occurred or are threatening to occur.
U.S. Federal Resource Conservation and Recovery Act (RCRA), which governs the treatment, storage, and
disposal of solid waste.
U.S. Federal Oil Pollution Act of 1990 (OPA90), under which owners and operators of onshore facilities and
pipelines, lessees or permittees of an area in which an offshore facility is located, and owners and operators of
vessels are liable for removal costs and damages that result from a discharge of oil into navigable waters of the
U.S.
U.S. Federal Emergency Planning and Community Right-to-Know Act (EPCRA), which requires facilities to report
toxic chemical inventories with local emergency planning committees and response departments.
U.S. Federal Safe Drinking Water Act, which governs the disposal of wastewater in underground injection wells.
U.S. Department of the Interior regulations, which relate to offshore oil and gas operations in U.S. waters and
impose liability for the cost of pollution cleanup resulting from operations, as well as potential liability for
pollution damages.
European Union Trading Directive resulting in European Emissions Trading Scheme.
These laws and their implementing regulations set limits on emissions and, in the case of discharges to water, establish
water quality limits. They also establish standards and impose obligations for the remediation of releases of hazardous
substances and hazardous wastes. In most cases, these regulations require permits in association with new or modified
operations. These permits can require an applicant to collect substantial information in connection with the application
process, which can be expensive and time-consuming. In addition, there can be delays associated with notice and
comment periods and the agency’s processing of the application. Many of the delays associated with the permitting
process are beyond the control of the applicant.
Many states and foreign countries where we operate also have or are developing, similar environmental laws and
regulations governing these same types of activities. While similar, in some cases these regulations may impose
additional, or more stringent, requirements that can add to the cost and difficulty of marketing or transporting products
across state and international borders.
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54
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The ultimate financial impact arising from environmental laws and regulations is neither clearly known nor easily
determinable as new standards, such as air emission standards and water quality standards, continue to evolve. However,
environmental laws and regulations, including those that may arise to address concerns about global climate change, are
expected to continue to have an increasing impact on our operations in the U.S. and in other countries in which we
operate. Notable areas of potential impacts include air emission compliance and remediation obligations in the U.S. and
Canada.
An example is the use of hydraulic fracturing, an essential completion technique that facilitates production of oil and
natural gas otherwise trapped in lower permeability rock formations. A range of local, state, federal, or national laws and
regulations currently govern hydraulic fracturing operations, with hydraulic fracturing currently prohibited in some
jurisdictions. Although hydraulic fracturing has been conducted for many decades, potential new laws, regulations and
permitting requirements from various state environmental agencies, and others could result in increased costs, operating
restrictions, operational delays and/or limit the ability to develop oil and natural gas resources. Governmental restrictions
on hydraulic fracturing could impact the overall profitability or viability of certain of our oil and natural gas investments.
We have adopted operating principles that incorporate established industry standards designed to meet or exceed
government requirements. Our practices continually evolve as technology improves and regulations change.
We also are subject to certain laws and regulations relating to environmental remediation obligations associated with
current and past operations. Such laws and regulations include CERCLA and RCRA and their state equivalents. Longer-
term expenditures are subject to considerable uncertainty and may fluctuate significantly.
We occasionally receive requests for information or notices of potential liability from the EPA and state environmental
agencies alleging that we are a potentially responsible party under 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 of December 31, 2022, there were 15 sites around the U.S.
in which we were identified as a potentially responsible party under CERCLA and comparable state laws.
For most Superfund sites, our potential liability will be significantly less than the total site remediation costs because the
percentage of waste attributable to us, versus that attributable to all other potentially responsible parties, is relatively
low. Although liability of those potentially responsible is generally joint and several for federal sites and frequently so for
state sites, other potentially responsible parties at sites where we are a party typically have had the financial strength to
meet their obligations, and where they have not, or where potentially responsible parties could not be located, our share
of liability has not increased materially. Many of the sites at which we are potentially responsible are still under
investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally
assess site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may
have no liability or attain a settlement of liability. Actual cleanup costs generally occur after the parties obtain EPA or
equivalent state agency approval. There are relatively few sites where we are a major participant, and given the timing
and amounts of anticipated expenditures, neither the cost of remediation at those sites nor such costs at all CERCLA sites,
in the aggregate, is expected to have a material adverse effect on our competitive or financial condition.
Expensed environmental costs were $705 million in 2022 and are expected to be approximately $669 million and
$727 million in 2023 and 2024, respectively. Capitalized environmental costs were $239 million in 2022 and are expected
to be about $276 million and $314 million in 2023 and 2024, respectively.
Accrued liabilities for remediation activities are not reduced for potential recoveries from insurers or other third parties
and are not discounted (except those assumed in a purchase business combination, which we do record on a discounted
basis).
Many of these liabilities result from CERCLA, RCRA, and similar state or international laws that require us to undertake
certain investigative and remedial activities at sites where we conduct or once conducted operations or at sites where
ConocoPhillips-generated waste was disposed. The accrual also includes a number of sites we identified that may require
environmental remediation but which are not currently the subject of CERCLA, RCRA, or other agency enforcement
activities. The laws that require or address environmental remediation may apply retroactively and regardless of fault,
the legality of the original activities or the current ownership or control of sites. If applicable, we accrue receivables for
probable insurance or other third-party recoveries. In the future, we may incur significant costs under both CERCLA and
RCRA.
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Remediation activities vary substantially in duration and cost from site to site, depending on the mix of unique site
characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, and the
presence or absence of potentially liable third parties. Therefore, it is difficult to develop reasonable estimates of future
site remediation costs.
At December 31, 2022, our balance sheet included total accrued environmental costs of $182 million, compared with
$187 million at December 31, 2021, for remediation activities in the U.S. and Canada. We expect to incur a substantial
amount of these expenditures within the next 30 years.
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.
See Item 1A—Risk Factors – We expect to continue to incur substantial capital expenditures and operating costs as a
result of our compliance with existing and future environmental laws and regulations and Note 11 for information on
environmental litigation.
Climate Change
Continuing political and social attention to the issue of global climate change has resulted in a broad range of proposed or
promulgated state, national and international laws focusing on GHG emissions 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. Examples of legislation and precursors for possible regulation that do or could
affect our operations include:
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European Emissions Trading Scheme (ETS), the program through which many of the EU member states are
implementing the Kyoto Protocol. Our cost of compliance with the EU ETS in 2022 was approximately $22 million
(net share before-tax).
U.K. Emissions Trading Scheme, the program with which the U.K. has replaced the ETS. Our cost of compliance
with the U.K. ETS in 2022 was approximately $0.6 million (net share before-tax).
The Alberta Technology Innovation and Emissions Reduction (TIER) regulation requires any existing facility with
emissions equal to or greater than 100,000 metric tonnes of carbon dioxide, or equivalent, per year to meet a
facility benchmark intensity. We did not incur costs related to this regulation in 2022.
The U.S. Supreme Court decision in Massachusetts v. EPA, 549 U.S. 497, 127 S.Ct. 1438 (2007), confirmed that
the EPA has the authority to regulate carbon dioxide as an “air pollutant” under the Federal Clean Air Act.
The U.S. EPA’s announcement on March 29, 2010 (published as “Interpretation of Regulations that Determine
Pollutants Covered by Clean Air Act Permitting Programs,” 75 Fed. Reg. 17004 (April 2, 2010)), and the EPA’s and
U.S. Department of Transportation’s joint promulgation of a Final Rule on April 1, 2010, that triggers regulation
of GHGs under the Clean Air Act, may trigger more climate-based claims for damages, and may result in longer
agency review time for development projects.
The U.S. EPA’s announcement on January 14, 2015, outlining a series of steps it plans to take to address
methane and smog-forming volatile organic compound emissions from the oil and gas industry.
The U.S. government has announced on September 17, 2021 the Global Methane Pledge, a global initiative to
reduce global methane emissions by at least 30 percent from 2020 levels by 2030.
Carbon taxes in certain jurisdictions. Our cost of compliance with Norwegian carbon legislation in 2022 were fees
of approximately $36 million (net share before-tax). We also incur a carbon tax for emissions from fossil fuel
combustion in our British Columbia and Alberta operations in Canada, totaling approximately $6 million (net
share before-tax).
The agreement reached in Paris in December 2015 at the 21st Conference of the Parties to the United Nations
Framework Convention on Climate Change, setting out a process for achieving global emissions reductions. The
new administration has recommitted the United States to the Paris Agreement, and a significant number of U.S.
state and local governments and major corporations headquartered in the U.S. have also announced related
commitments. Accordingly, the U.S. administration set a new target on April 22, 2021 of a 50 to 52 percent
reduction in GHG emissions from 2005 levels in 2030.
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In the U.S., the Council on Environmental Quality's April 19, 2022 revised regulations and January 9, 2023 National
Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions and Climate Change for implementing
the National Environmental Policy Act (NEPA) require federal agencies to evaluate, among other things, the direct,
indirect, and cumulative effects of proposed projects subject to federal authorization, including a project's GHG emissions
and potential climate change impact. The new NEPA regulations may result in longer agency review time or difficulty
obtaining federal approval for development projects in our industry. Furthermore, additional regulations are forthcoming
at the federal and state levels with respect to GHG emissions, including EPA’s November 2022 supplemental proposal to
strengthen methane emissions standards for new oil and gas facilities and establishing first-time presumptive standards
for existing oil and gas facilities, as well as BLM’s November 2022 proposed regulations to reduce the waste of natural gas
from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases. Such regulations,
when finalized, may result in the creation of additional costs in the form of taxes, royalty payments, the restriction of
output, investments of capital to maintain compliance with laws and regulations, or required acquisition or trading of
emission allowances. We are working to continuously improve operational and energy efficiency through resource and
energy conservation throughout our operations.
Compliance with changes in laws and regulations that create a GHG tax, emission trading scheme or GHG reduction
policies could significantly increase our costs, reduce demand for fossil energy derived products, impact the cost and
availability of capital and increase our exposure to litigation. Such laws and regulations could also increase demand for
less carbon intensive energy sources, including natural gas. The ultimate impact on our financial performance, either
positive or negative, will depend on a number of factors, including but not limited to:
• Whether and to what extent legislation or regulation is enacted.
The timing of the introduction of such legislation or regulation.
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The nature of the legislation (such as a cap and trade system or a tax on emissions) or regulation.
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The price placed on GHG emissions (either by the market or through a tax).
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The GHG reductions required.
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The price and availability of offsets.
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The amount and allocation of allowances.
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Technological and scientific developments leading to new products or services.
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Any potential significant physical effects of climate change (such as increased severe weather events, changes in
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sea levels and changes in temperature).
• Whether, and the extent to which, increased compliance costs are ultimately reflected in the prices of our
products and services.
See Item 1A—Risk Factors – Existing and future laws, regulations and internal initiatives relating to global climate
changes, such as limitations on GHG emissions may impact or limit our business plans, result in significant expenditures,
promote alternative uses of energy or reduce demand for our products and Note 11 for information on climate change
litigation.
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Company Response to Climate-Related Risks
Our current Climate Risk Strategy and actions for our oil and gas operations are aligned with the aims of the Paris
Agreement while being responsive to shareholder interests for long-term value and competitive returns and is also
aligned with our Triple Mandate to responsibly meet energy transition pathway demand, deliver competitive returns on
and of capital and achieve our net-zero operational emissions ambition.
In 2020 we became the first U.S.-based oil and gas company to adopt a Paris-aligned climate-risk strategy with an
ambition to become a net-zero company for operational (Scope 1 and 2) emissions by 2050. The objective of our Climate
Risk Strategy is to manage climate-related risk, optimize opportunities and equip the company to respond to changes in
key uncertainties, including government policies around the world, technologies for emissions reduction, alternative
energy technologies and changes in consumer trends. The strategy sets out our choices around portfolio composition,
emissions reductions, targets and incentives, emissions-related technology development, and our climate-related policy
and finance sector engagement.
In early 2022, we published our plan for the Net-Zero Energy Transition (the 'Plan'), to outline how we intend to apply our
strategic capabilities and resources to meet the challenges posed by climate change in an economically viable,
accountable and actionable way that balances the interests of our stakeholders.
Key elements of our plan include:
• Maintaining a resilient asset portfolio focused on resources with the low cost of supply and low greenhouse gas
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intensity needed to remain viable in any scenario.
Setting emissions-reduction targets over the near, medium and long terms for Scope 1 and 2 operational
emissions, methane emissions intensity and flaring.
Expanding policy advocacy beyond carbon pricing to include demand-side policy and regulatory action such as
direct federal regulation of methane, advocating for alternative transportation and power generation, and
national policy recommendations on natural gas across the value chain.
Leveraging our assets and capabilities to develop low-carbon technologies and identify emerging business
opportunities.
Tracking and responding to the transition through use of scenario planning to understand alternative pathways
and test the resilience of our strategy.
Continuing capital discipline by incorporating scenario planning and a cost of carbon into our capital allocation
decisions.
Our Plan also recognizes the importance of reducing society’s end-use emissions to meet global climate goals. As an
upstream producer, we do not control how the commodities we sell into global markets are converted into different
energy products or selected for use by consumers. This is why we have consistently taken a prominent role in advocating
for a well-designed, economy wide price on carbon and engaged in development of other policies or legislation that could
address end-use emissions from high-carbon intensity energy use. We have also expanded policy advocacy beyond
carbon pricing to include regulatory action, such as support for the direct regulation of methane.
In support of addressing our Scope 1 and 2 emissions, in 2022, we made progress in several key areas. We continued to
refine our Paris-aligned climate risk strategy, joined the Oil and Gas Methane Partnership (OGMP) 2.0 Initiative and set a
new near-zero 2030 methane emissions intensity target of approximately 0.15 percent of gas produced. Our emissions
reduction efforts and net-zero ambition are supported by our multi-disciplinary Low-Carbon Technologies organization.
See Item 1A—Risk Factors – Our ability to successfully execute on our energy transition plans is subject to a number of
risks and uncertainties and may be costly to achieve.
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Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to select appropriate accounting
policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses. See Note 1 for descriptions of our major accounting policies. Certain of these accounting policies involve
judgments and uncertainties to such an extent there is a reasonable likelihood materially different amounts would have
been reported under different conditions, or if different assumptions had been used. These critical accounting estimates
are discussed with the Audit and Finance Committee of the Board of Directors at least annually. We believe the following
discussions of critical accounting estimates address all important accounting areas where the nature of accounting
estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly
uncertain matters or the susceptibility of such matters to change.
Oil and Gas Accounting
Accounting for oil and gas activity is subject to special accounting rules unique to the oil and gas industry. The acquisition
of G&G seismic information, prior to the discovery of proved reserves, is expensed as incurred, similar to accounting for
research and development costs. However, leasehold acquisition costs and exploratory well costs are capitalized on the
balance sheet pending determination of whether proved oil and gas reserves have been recognized.
Property Acquisition Costs
For individually significant leaseholds, management periodically assesses for impairment based on exploration and drilling
efforts to date. For insignificant individual leasehold acquisition costs, management exercises judgment and determines a
percentage probability that the prospect ultimately will fail to find proved oil and gas reserves, including estimates of
future expirations, and pools that leasehold information with others in similar geographic areas. For prospects in areas
with limited, or no, previous exploratory drilling, the percentage probability of ultimate failure is normally judged to be
quite high. This judgmental percentage is multiplied by the leasehold acquisition cost, and that product is divided by the
contractual period of the leasehold to determine a periodic leasehold impairment charge that is reported in exploration
expense. This judgmental probability percentage is reassessed and adjusted throughout the contractual period of the
leasehold based on favorable or unfavorable exploratory activity on the leasehold or on adjacent leaseholds, and
leasehold impairment amortization expense is adjusted prospectively.
At year-end 2022, we held $6.5 billion of net capitalized unproved property costs which consisted primarily of individually
significant and pooled leaseholds, mineral rights held in perpetuity by title ownership, exploratory wells currently being
drilled, suspended exploratory wells and capitalized interest. Of this amount, approximately $4.7 billion is concentrated in
the Delaware and Midland Basins, where we have an ongoing significant and active development program. Outside of the
Delaware and Midland Basins, the remaining $1.8 billion is primarily concentrated in Canada and Alaska. Management
periodically assesses our unproved property for impairment based on the results of exploration and drilling efforts and
the outlook for commercialization.
Exploratory Costs
For exploratory wells, drilling costs are temporarily capitalized, or “suspended,” on the balance sheet, pending a
determination of whether potentially economic oil and gas reserves have been discovered by the drilling effort to justify
development.
If exploratory wells encounter potentially economic quantities of oil and gas, the well costs remain capitalized on the
balance sheet as long as sufficient progress assessing the reserves and the economic and operating viability of the project
is being made. The accounting notion of “sufficient progress” is a judgmental area, but the accounting rules do prohibit
continued capitalization of suspended well costs on the expectation future market conditions will improve or new
technologies will be found that would make the development economically profitable. Often, the ability to move into the
development phase and record proved reserves is dependent on obtaining permits and government or co-venturer
approvals, the timing of which is ultimately beyond our control. Exploratory well costs remain suspended as long as we
are actively pursuing such approvals and permits, and believe they will be obtained. Once all required approvals and
permits have been obtained, the projects are moved into the development phase, and the oil and gas reserves are
designated as proved reserves.
At year-end 2022, total suspended well costs were $527 million, compared with $660 million at year-end 2021. For
additional information on suspended wells, including an aging analysis, see Note 6.
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Proved Reserves
Engineering estimates of the quantities of proved reserves are inherently imprecise and represent only approximate
amounts because of the judgments involved in developing such information. Reserve estimates are based on geological
and engineering assessments of in-place hydrocarbon volumes, the production plan, historical extraction recovery and
processing yield factors, installed plant operating capacity and approved operating limits. The reliability of these
estimates at any point in time depends on both the quality and quantity of the technical and economic data and the
efficiency of extracting and processing the hydrocarbons.
Despite the inherent imprecision in these engineering estimates, accounting rules require disclosure of “proved” reserve
estimates due to the importance of these estimates to better understand the perceived value and future cash flows of a
company’s operations. There are several authoritative guidelines regarding the engineering criteria that must be met
before estimated reserves can be designated as “proved.” Our geosciences and reservoir engineering organization has
policies and procedures in place consistent with these authoritative guidelines. We have trained and experienced internal
engineering personnel who estimate our proved reserves held by consolidated companies, as well as our share of equity
affiliates. See “Supplementary Data - Oil and Gas Operations” for additional information.
Proved reserve estimates are adjusted annually in the fourth quarter and during the year if significant changes occur and
take into account recent production and subsurface information about each field. Also, as required by current
authoritative guidelines, the estimated future date when an asset will reach the end of its economic life is based on 12-
month average prices and current costs. This date estimates when production will end and affects the amount of
estimated reserves. Therefore, as prices and cost levels change from year to year, the estimate of proved reserves also
changes. Generally, our proved reserves decrease as prices decline and increase as prices rise.
Our proved reserves include estimated quantities related to PSCs, reported under the “economic interest” method, as
well as variable-royalty regimes, and are subject to fluctuations in commodity prices, recoverable operating expenses and
capital costs. If costs remain stable, reserve quantities attributable to recovery of costs will change inversely to changes in
commodity prices. We would expect reserves from these contracts to decrease when product prices rise and increase
when prices decline.
The estimation of proved reserves is also important to the income statement because the proved reserve estimate for a
field serves as the denominator in the unit-of-production calculation of the DD&A of the capitalized costs for that asset.
At year-end 2022, the net book value of productive PP&E subject to a unit-of-production calculation was approximately
$55 billion and the DD&A recorded on these assets in 2022 was approximately $7.3 billion. The estimated proved
developed reserves for our consolidated operations were 4.0 billion BOE at the end of 2021 and 3.8 billion BOE at the end
of 2022. If the estimates of proved reserves used in the unit-of-production calculations had been lower by 10 percent
across all calculations, before-tax DD&A in 2022 would have increased by an estimated $808 million.
Business Combination—Valuation of Oil and Gas Properties
For business combinations, management applies the principles of acquisition accounting under FASB ASC Topic 805 –
“Business Combinations” and allocates the purchase price to assets acquired and liabilities assumed, based on their
estimated fair values as of the acquisition date. Estimating the fair values involves making various assumptions, of which
the most significant assumptions relate to the fair values assigned to proved and unproved oil and gas properties. For
significant business combinations, management generally utilizes a discounted cash flow approach, based on market
participant assumptions, and engages third party valuation experts in preparing fair value estimates.
Significant inputs incorporated within the valuation include future commodity price assumptions and production profiles
of reserve estimates, the pace of drilling plans, future operating and development costs, inflation rates, and discount
rates using a market-based weighted average cost of capital determined at the time of the acquisition. When estimating
the fair value of unproved properties, additional risk-weighting adjustments are applied to probable and possible
reserves.
The assumptions and inputs incorporated within the fair value estimates are subject to considerable management
judgement and are based on industry, market, and economic conditions prevalent at the time of the acquisition.
Although we based these estimates on assumptions believed to be reasonable, these estimates are inherently
unpredictable and uncertain and actual results could differ. See Note 3.
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Impairments
Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate a
possible significant deterioration in the future cash flows expected to be generated by an asset group. If there is an
indication the carrying amount of an asset may not be recovered, a recoverability test is performed using management’s
assumptions for prices, volumes and future development plans. If the sum of the undiscounted cash flows before income-
taxes is less than the carrying value of the asset group, the carrying value is written down to estimated fair value and
reported as an impairment in the periods in which the determination is made. Individual assets are grouped for
impairment purposes at the lowest level for which there are identifiable cash flows that are largely independent of the
cash flows of other groups of assets—generally on a field-by-field basis for E&P assets. Because there usually is a lack of
quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present
values of expected future cash flows using discount rates and prices believed to be consistent with those used by
principal market participants, or based on a multiple of operating cash flow validated with historical market transactions
of similar assets where possible.
The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated
future production volumes, commodity prices, operating costs and capital decisions, considering all available evidence at
the date of review. Differing assumptions could affect the timing and the amount of an impairment in any period. See
Note 6 and Note 7.
Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment whenever
changes in the facts and circumstances indicate a loss in value has occurred. Such evidence of a loss in value might
include our inability to recover the carrying amount, the lack of sustained earnings capacity which would justify the
current investment amount, or a current fair value less than the investment’s carrying amount. When such a condition is
judgmentally determined to be other than temporary, an impairment charge is recognized for the difference between the
investment’s carrying value and its estimated fair value. When determining whether a decline in value is other than
temporary, management considers factors such as the length of time and extent of the decline, the investee’s financial
condition and near-term prospects, and our ability and intention to retain our investment for a period that will be
sufficient to allow for any anticipated recovery in the market value of the investment. Since quoted market prices are
usually not available, the fair value is typically based on the present value of expected future cash flows using discount
rates and prices believed to be consistent with those used by principal market participants, plus market analysis of
comparable assets owned by the investee, if appropriate. Differing assumptions could affect the timing and the amount
of an impairment of an investment in any period. See the “APLNG” section of Note 4.
Asset Retirement Obligations and Environmental Costs
Under various contracts, permits and regulations, we have material legal obligations to remove tangible equipment and
restore the land or seabed at the end of operations at operational sites. Our largest asset removal obligations involve
plugging and abandonment of wells, removal and disposal of offshore oil and gas platforms around the world, as well as
oil and gas production facilities and pipelines in Alaska. Fair value is estimated using a present value approach,
incorporating assumptions about estimated amounts and timing of settlements and impacts of the use of technologies.
Estimating future asset removal costs requires significant judgement. Most of these removal obligations are many years,
or decades, in the future and the contracts and regulations often have vague descriptions of what removal practices and
criteria must be met when the removal event actually occurs. The carrying value of our asset retirement obligation
estimate is sensitive to inputs such as asset removal technologies and costs, regulatory and other compliance
considerations, expenditure timing, and other inputs into valuation of the obligation, including discount and inflation
rates, which are all subject to change between the time of initial recognition of the liability and future settlement of our
obligation.
Normally, changes in asset removal obligations are reflected in the income statement as increases or decreases to DD&A
over the remaining life of the assets. However, for assets at or nearing the end of their operations, as well as previously
sold assets for which we retained the asset removal obligation, an increase in the asset removal obligation can result in
an immediate charge to earnings, because any increase in PP&E due to the increased obligation would immediately be
subject to impairment, due to the low fair value of these properties.
In addition to asset removal obligations, under the above or similar contracts, permits and regulations, we have certain
environmental-related projects. These are primarily related to remediation activities required by Canada and various
states within the U.S. at exploration and production sites. Future environmental remediation costs are difficult to
estimate because they are subject to change due to such factors as the uncertain magnitude of cleanup costs, the
unknown time and extent of such remedial actions that may be required, and the determination of our liability in
proportion to that of other responsible parties. See Note 8.
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Projected Benefit Obligations
The actuarial determination of projected benefit obligations and company contribution requirements involves judgment
about uncertain future events, including estimated retirement dates, salary levels at retirement, mortality rates, lump-
sum election rates, rates of return on plan assets, future health care cost-trend rates, and rates of utilization of health
care services by retirees. Due to the specialized nature of these calculations, we engage outside actuarial firms to assist in
the determination of these projected benefit obligations and company contribution requirements. Ultimately, we will be
required to fund all vested benefits under pension and postretirement benefit plans not funded by plan assets or
investment returns, but the judgmental assumptions used in the actuarial calculations significantly affect periodic
financial statements and funding patterns over time. Projected benefit obligations are particularly sensitive to the
discount rate assumption. A 100 basis-point decrease in the discount rate assumption would increase projected benefit
obligations by $600 million. Benefit expense is sensitive to the discount rate and return on plan assets assumptions. A
100 basis-point decrease in the discount rate assumption would increase annual benefit expense by $50 million, while a
100 basis-point decrease in the return on plan assets assumption would increase annual benefit expense by $40 million.
In determining the discount rate, we use yields on high-quality fixed income investments matched to the estimated
benefit cash flows of our plans. We are also exposed to the possibility that lump sum retirement benefits taken from
pension plans during the year could exceed the total of service and interest components of annual pension expense and
trigger accelerated recognition of a portion of unrecognized net actuarial losses and gains. These benefit payments are
based on decisions by plan participants and are therefore difficult to predict. In the event there is a significant reduction
in the expected years of future service of present employees or the elimination of the accrual of defined benefits for
some or all of their future services for a significant number of employees, we could recognize a curtailment gain or loss.
See Note 16.
Contingencies
A number of claims and lawsuits are made against the company arising in the ordinary course of business. Management
exercises judgment related to accounting and disclosure of these claims which includes losses, damages, and
underpayments associated with environmental remediation, tax, contracts, and other legal disputes. As we learn new
facts concerning contingencies, we reassess our position both with respect to amounts recognized and disclosed
considering changes to the probability of additional losses and potential exposure. However, actual losses can and do
vary from estimates for a variety of reasons including legal, arbitration, or other third-party decisions; settlement
discussions; evaluation of scope of damages; interpretation of regulatory or contractual terms; expected timing of future
actions; and proportion of liability shared with other responsible parties. Estimated future costs related to contingencies
are subject to change as events evolve and as additional information becomes available during the administrative and
litigation processes. For additional information on contingent liabilities, see the “Contingencies” section within “Capital
Resources and Liquidity” and Note 11.
Income Taxes
We are subject to income taxation in numerous jurisdictions worldwide. We record deferred tax assets and liabilities to
account for the expected future tax consequences of events that have been recognized in our financial statements and
our tax returns. We routinely assess our deferred tax assets and reduce such assets by a valuation allowance if we deem
it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In assessing the need for
adjustments to existing valuation allowances, we consider all available positive and negative evidence. Positive evidence
includes reversals of temporary differences, forecasts of future taxable income, assessment of future business
assumptions and applicable tax planning strategies that are prudent and feasible. Negative evidence includes losses in
recent years as well as the forecasts of future net income (loss) in the realizable period. In making our assessment
regarding valuation allowances, we weight the evidence based on objectivity. Numerous judgments and assumptions are
inherent in the determination of future taxable income, including factors such as future operating conditions and the
assessment of the effects of foreign taxes on our U.S. federal income taxes (particularly as related to prevailing oil and gas
prices). See Note 17.
We regularly assess and, if required, establish accruals for uncertain tax positions that could result from assessments of
additional tax by taxing jurisdictions in countries where we operate. We recognize a tax benefit from an uncertain tax
position when it is more likely than not that the position will be sustained upon examination, based on the technical
merits of the position. These accruals for uncertain tax positions are subject to a significant amount of judgment and are
reviewed and adjusted on a periodic basis in light of changing facts and circumstances considering the progress of
ongoing tax audits, court proceedings, changes in applicable tax laws, including tax case rulings and legislative guidance,
or expiration of the applicable statute of limitations. See Note 17.
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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, and objectives of management for future
operations, 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.
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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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.
Global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil
and gas, including changes as a result of any ongoing military conflict, including the conflict between Russia and
Ukraine, and the global response to such conflict, security threats on facilities and infrastructure, or from a
public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be
imposed by OPEC and other producing countries and the resulting company or third-party actions in response to
such changes.
The impact of significant declines in prices for crude oil, bitumen, natural gas, LNG and NGLs, which may result in
recognition of impairment charges on our long-lived assets, leaseholds and nonconsolidated equity investments.
The potential for insufficient liquidity or other factors, such as those described herein, that could impact our
ability to repurchase shares and declare and pay dividends, whether fixed or variable.
Potential failures or delays in achieving expected reserve or production levels from existing and future oil and
gas developments, including due to operating hazards, drilling risks and the inherent uncertainties in predicting
reserves and reservoir performance.
Reductions in reserves replacement rates, whether as a result of the significant declines in commodity prices or
otherwise.
Unsuccessful exploratory drilling activities or the inability to obtain access to exploratory acreage.
Unexpected changes in costs, inflationary pressures or technical requirements for constructing, modifying or
operating E&P facilities.
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.
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.
Substantial investment in and development use of, competing or alternative energy sources, including as a result
of existing or future environmental rules and regulations.
The impact of broader societal attention to and efforts to address climate change may impact our access to
capital and insurance.
Potential failures or delays in delivering on our current or future low-carbon strategy, including our inability to
develop new technologies.
The impact of public health crises, including pandemics (such as COVID-19) and epidemics and any related
company or government policies or actions.
63
ConocoPhillips 2022 10-K
Table of Contents
•
•
•
•
•
•
•
•
•
•
•
•
•
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 and any resulting consequences due to accidents,
extraordinary weather events, supply chain disruptions, civil unrest, political events, war, terrorism,
cybersecurity threats, 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, including any sanctions imposed as a result of any ongoing military conflict,
including the conflict between Russia and Ukraine.
Liability for remedial actions, including removal and reclamation obligations, under existing and future
environmental regulations and litigation.
Liability resulting from litigation, including litigation directly or indirectly related to the transaction with Concho
Resources Inc., or our failure to comply with applicable laws and regulations.
General domestic and international economic and political developments, including armed hostilities;
expropriation of assets; changes in governmental policies relating to crude oil, bitumen, natural gas, LNG and
NGLs pricing, including the imposition of price caps; regulation or taxation; and other political, economic or
diplomatic developments, including as a result of any ongoing military conflict, including the conflict between
Russia and Ukraine.
Volatility in the commodity futures markets.
Changes in tax and other laws, regulations (including alternative energy mandates) or royalty rules applicable to
our business.
Competition and consolidation in the oil and gas E&P industry, including competition for personnel and
equipment.
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, including as a result of
increased societal attention to and efforts to address climate change.
• 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.
The operation and financing of our joint ventures.
The ability of our customers and other contractual counterparties to satisfy their obligations to us, including our
ability to collect payments when due from the government of Venezuela or PDVSA.
• Our inability to realize anticipated cost savings and capital expenditure reductions.
•
The inadequacy of storage capacity for our products, and ensuing curtailments, whether voluntary or
involuntary, required to mitigate this physical constraint.
The risk that we will be unable to retain and hire key personnel.
Uncertainty as to the long-term value of our common stock.
The factors generally described in Part I—Item 1A in this 2022 Annual Report on Form 10-K and any additional
risks described in our other filings with the SEC.
•
•
•
ConocoPhillips 2022 10-K
64
Table of Contents
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Instrument Market Risk
We and certain of our subsidiaries hold and issue derivative contracts and financial instruments that expose our cash
flows or earnings to changes in commodity prices, foreign currency exchange rates or interest rates. We may use financial
and commodity-based derivative contracts to manage the risks produced by changes in the prices of natural gas, crude oil
and related products; fluctuations in interest rates and foreign currency exchange rates; or to capture market
opportunities.
Our use of derivative instruments is governed by an “Authority Limitations” document approved by our Board of
Directors that prohibits the use of highly leveraged derivatives or derivative instruments without sufficient liquidity. The
Authority Limitations document also establishes the Value at Risk (VaR) limits for the company, and compliance with
these limits is monitored daily. The Executive Vice President and Chief Financial Officer, who reports to the Chief
Executive Officer, monitors commodity price risk and risks resulting from foreign currency exchange rates and interest
rates. The Commercial organization manages our commercial marketing, optimizes our commodity flows and positions,
and monitors risks.
Commodity Price Risk
Our Commercial organization uses futures, forwards, swaps and options in various markets to accomplish the following
objectives:
•
Consistent with our policy to generally remain exposed to market prices, we use swap contracts to convert fixed-
price sales contracts, which are often requested by natural gas consumers, to floating market prices.
Enable us to use market knowledge to capture opportunities such as moving physical commodities to more
profitable locations and storing commodities to capture seasonal or time premiums. We may use derivatives to
optimize these activities.
•
We use a VaR model to estimate the loss in fair value that could potentially result on a single day from the effect of
adverse changes in market conditions on the derivative financial instruments and derivative commodity contracts we
hold or issue, including commodity purchases and sales contracts recorded on the balance sheet at December 31, 2022.
Using Monte Carlo simulation, a 95 percent confidence level and a one-day holding period, the VaR for those instruments
issued or held for trading purposes or held for purposes other than trading at December 31, 2022 and 2021, was
immaterial to our consolidated cash flows and net income attributable to ConocoPhillips.
65
ConocoPhillips 2022 10-K
Table of Contents
Interest Rate Risk
The following table provides information about our debt instruments that are sensitive to changes in U.S. interest rates.
The table presents principal cash flows and related weighted-average interest rates by expected maturity dates.
Weighted-average variable rates are based on effective rates at the reporting date. The carrying amount of our floating-
rate debt approximates its fair value. A hypothetical 10 percent change in prevailing interest rates would not have a
material impact on interest expense associated with our floating-rate debt. The fair value of the fixed-rate debt is
measured using prices available from a pricing service that is corroborated by market data. Changes to prevailing interest
rates would not impact our cash flows associated with fixed rate debt, unless we elect to repurchase or retire such debt
prior to maturity.
Expected Maturity Date
Year-End 2022
2023
2024
2025
2026
2027
Remaining years
Total
Fair value
Year-End 2021
2022
2023
2024
2025
2026
Remaining years
Total
Fair value
Millions of Dollars Except as Indicated
Debt
Fixed
Rate
Maturity
Average
Interest
Rate
Floating
Rate
Maturity
Average
Interest
Rate
$
$
$
$
$
$
110
1,359
1,268
104
438
12,293
15,572
15,262
346
116
459
369
1,355
14,338
16,983
21,668
7.04 %
2.59
3.25
6.41
5.79
5.45
$
$
2.53 % $
6.64
3.51
5.32
5.06
5.80
$
$
3.91 %
1.03 %
—
—
—
—
0.11
283
283
283
500
—
—
—
—
283
783
783
ConocoPhillips 2022 10-K
66
Table of Contents
Foreign Currency Exchange Risk
We have foreign currency exchange rate risk resulting from international operations. We do not comprehensively hedge
the exposure to currency exchange rate changes although we may choose to selectively hedge certain foreign currency
exchange rate exposures, such as firm commitments for capital projects or local currency tax payments, dividends and
cash returns from net investments in foreign affiliates to be remitted within the coming year, investments in equity
securities and acquisitions.
At December 31, 2022 and 2021, we held foreign currency exchange forwards hedging cross-border commercial activity
and foreign currency exchange swaps for purposes of mitigating our cash-related exposures. Although these forwards and
swaps hedge exposures to fluctuations in exchange rates, we elected not to utilize hedge accounting. As a result, the
change in the fair value of these foreign currency exchange derivatives is recorded directly in earnings.
At December 31, 2022, we had outstanding foreign currency exchange forward swap contracts. Since the gain or loss on
the swaps is offset by the gain or loss from remeasuring cash related balances, and since our aggregate position in the
forwards was not material, there would be no material impact to our income from an adverse hypothetical 10 percent
change in the December 2022 exchange rates.
At December 31, 2021, we had outstanding foreign currency exchange forward contracts to buy $1.9 billion AUD at
$0.715 AUD against the U.S. dollar. Based on the assumed volatility in the fair value calculation, the net fair value of these
foreign currency contracts at December 31, 2021, was a before-tax gain of $21 million. Based on an adverse hypothetical
10 percent change in the December 31, 2021 exchange rate, this would result in an additional before-tax loss of $134
million. The sensitivity analysis is based on changing one assumption while holding all other assumptions constant, which
in practice may be unlikely to occur, as changes in some of the assumptions may be correlated. The contracts settled in
the first quarter of 2022.
The gross notional and fair value of these positions at December 31, 2022 and 2021, were as follows:
Foreign Currency Exchange Derivatives
In Millions
Buy Canadian dollar, sell U.S. dollar
Buy Australian dollar, sell U.S. dollar
Sell British pound, buy euro
Buy British pound, sell euro
*Denominated in USD.
CAD
AUD
GBP
GBP
Notional
2022
2021
Fair Value*
2022
2021
15
—
312
264
77
1,850
239
394
(1)
—
7
(10)
(1)
21
(8)
7
67
ConocoPhillips 2022 10-K
Item 8. Financial Statements and Supplementary Data
ConocoPhillips
Index to Financial Statements
Reports of Management
Reports of Independent Registered Public Accounting Firm (PCAOB ID #42)
Consolidated Income Statement for the years ended December 31, 2022, 2021 and 2020
Consolidated Statement of Comprehensive Income for the years ended
December 31, 2022, 2021 and 2020
Consolidated Balance Sheet at December 31, 2022 and 2021
Consolidated Statement of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Consolidated Statement of Changes in Equity for the years ended
December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
Supplementary Information
Oil and Gas Operations
Table of Contents
Page
69
70
74
75
76
77
78
79
134
ConocoPhillips 2022 10-K
68
Table of Contents
Reports of Management
Management prepared, and is responsible for, the consolidated financial statements and the other information appearing
in this annual report. The consolidated financial statements present fairly the company’s financial position, results of
operations and cash flows in conformity with accounting principles generally accepted in the United States. In preparing
its consolidated financial statements, the company includes amounts that are based on estimates and judgments
management believes are reasonable under the circumstances. The company’s financial statements have been audited by
Ernst & Young LLP, an independent registered public accounting firm appointed by the Audit and Finance Committee of
the Board of Directors and ratified by stockholders. Management has made available to Ernst & Young LLP all of the
company’s financial records and related data, as well as the minutes of stockholders’ and directors’ meetings.
Assessment of Internal Control Over Financial Reporting
Management is also responsible for establishing and maintaining adequate internal control over financial reporting.
ConocoPhillips’ internal control system was designed to provide reasonable assurance to the company’s management
and directors regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation.
Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31,
2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control—Integrated Framework (2013). Based on our assessment, we believe the
company’s internal control over financial reporting was effective as of December 31, 2022.
Ernst & Young LLP has issued an audit report on the company’s internal control over financial reporting as of
December 31, 2022, and their report is included herein.
/s/ Ryan M. Lance
Ryan M. Lance
Chairman and
Chief Executive Officer
/s/ William L. Bullock, Jr.
William L. Bullock, Jr.
Executive Vice President and
Chief Financial Officer
69
ConocoPhillips 2022 10-K
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ConocoPhillips
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ConocoPhillips (the Company) as of December 31,
2022 and 2021, the related consolidated income statement, consolidated statements of comprehensive income, changes
in equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated February 16, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the Audit and Finance Committee and
that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any
way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
ConocoPhillips 2022 10-K
70
Description of the
Matter
Table of Contents
Accounting for asset retirement obligations for certain offshore properties
At December 31, 2022, asset retirement obligations (ARO) totaled $6.4 billion. As further described
in Note 8, the Company records ARO in the period in which they are incurred, typically when the
asset is installed at the production location. The estimation of obligations related to certain offshore
assets requires significant judgment given the magnitude and higher estimation uncertainty related
to plugging and abandonment of wells and removal and disposal of offshore oil and gas platforms
and facilities (collectively, removal costs). Furthermore, as certain of these assets are nearing the
end of their operations, the impact of changes in these ARO may result in a material impact to
earnings given the relatively short remaining useful lives of the assets.
Auditing the Company’s ARO for the obligations identified above is complex and highly judgmental
due to the significant estimation required by management in determining the obligations. In
particular, the estimates were sensitive to significant subjective assumptions such as removal cost
estimates and end of field life, which are affected by expectations about future market or economic
conditions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
Company’s internal controls over its ARO estimation process, including management’s review of the
significant assumptions that have a material effect on the determination of the obligations. We also
tested management’s controls over the completeness and accuracy of the financial data used in the
valuation.
Description of the
Matter
To test the ARO for the obligations identified above, our audit procedures included, among others,
assessing the significant assumptions and inputs used in the valuation, including removal cost
estimates and end of field life assumptions. For example, we evaluated removal cost estimates by
comparing to settlements and recent removal activities and costs. We also compared end of field life
assumptions to production forecasts.
Depreciation, depletion and amortization of proved oil and gas properties, plants and equipment
At December 31, 2022, the net book value of the Company’s proved oil and gas properties, plants
and equipment (PP&E) was $55 billion, and depreciation, depletion and amortization (DD&A)
expense was $7.3 billion for the year then ended. As described in Note 1, under the successful
efforts method of accounting, DD&A of PP&E on producing hydrocarbon properties and steam-
assisted gravity drainage facilities and certain pipeline and liquified natural gas assets (those which
are expected to have a declining utilization pattern) are determined by the unit-of-production
method. The unit-of-production method uses proved oil and gas reserves, as estimated by the
Company’s internal reservoir engineers.
Proved oil and gas reserves estimates are based on geological and engineering assessments of in-
place hydrocarbon volumes, the production plan, historical extraction recovery and processing yield
factors, installed plant operating capacity and approved operating limits. Significant judgment is
required by the Company’s internal reservoir engineers in evaluating geological and engineering
data when estimating proved oil and gas reserves. Estimating proved oil and gas reserves also
requires the selection of inputs, including oil and gas price assumptions, future operating and capital
costs assumptions and tax rates by jurisdiction, among others. Because of the complexity involved in
estimating proved oil and gas reserves, management also used an independent petroleum
engineering consulting firm to perform a review of the processes and controls used by the
Company’s internal reservoir engineers to determine estimates of proved oil and gas reserves.
Auditing the Company’s DD&A calculation is complex because of the use of the work of the internal
reservoir engineers and the independent petroleum engineering consulting firm and the evaluation
of management’s determination of the inputs described above used by the internal reservoir
engineers in estimating proved oil and gas reserves.
71
ConocoPhillips 2022 10-K
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
Company’s internal controls over its processes to calculate DD&A, including management’s controls
over the completeness and accuracy of the financial data provided to the internal reservoir
engineers for use in estimating proved oil and gas reserves.
Table of Contents
Our audit procedures included, among others, evaluating the professional qualifications and
objectivity of the Company’s internal reservoir engineers primarily responsible for overseeing the
preparation of the proved oil and gas reserves estimates and the independent petroleum
engineering consulting firm used to review the Company’s processes and controls. In addition, in
assessing whether we can use the work of the internal reservoir engineers, we evaluated the
completeness and accuracy of the financial data and inputs described above used by the internal
reservoir engineers in estimating proved oil and gas reserves by agreeing them to source
documentation and we identified and evaluated corroborative and contrary evidence. We also
tested the accuracy of the DD&A calculation, including comparing the proved oil and gas reserves
amounts used in the calculation to the Company’s reserve report.
/s/ Ernst & Young LLP
We have served as ConocoPhillips’ auditor since 1949.
Houston, Texas
February 16, 2023
ConocoPhillips 2022 10-K
72
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ConocoPhillips
Opinion on Internal Control over Financial Reporting
We have audited ConocoPhillips’ internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ConocoPhillips (the Company) maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO
criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related
consolidated income statement, consolidated statements of comprehensive income, changes in equity and cash flows for
each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 16,
2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included under the heading “Assessment of
Internal Control Over Financial Reporting” in the accompanying “Reports of Management.” Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Houston, Texas
February 16, 2023
73
ConocoPhillips 2022 10-K
Financial Statements
Consolidated Income Statement
Years Ended December 31
Revenues and Other Income
Sales and other operating revenues
Equity in earnings of affiliates
Gain on dispositions
Other income (loss)
Total Revenues and Other Income
Costs and Expenses
Purchased commodities
Production and operating expenses
Selling, general and administrative expenses
Exploration expenses
Depreciation, depletion and amortization
Impairments
Taxes other than income taxes
Accretion on discounted liabilities
Interest and debt expense
Foreign currency transaction gains
Other expenses
Total Costs and Expenses
Income (loss) before income taxes
Income tax provision (benefit)
Net income (loss)
Less: net income attributable to noncontrolling interests
Net Income (Loss) Attributable to ConocoPhillips
Net Income (Loss) Attributable to ConocoPhillips Per Share of Common
Stock (dollars)
Basic
Diluted
Average Common Shares Outstanding (in thousands)
Basic
Diluted
See Notes to Consolidated Financial Statements.
Table of Contents
ConocoPhillips
Millions of Dollars
2022
2021
2020
78,494
2,081
1,077
504
82,156
33,971
7,006
623
564
7,504
(12)
3,364
250
805
(100)
(47)
53,928
28,228
9,548
18,680
—
18,680
45,828
832
486
1,203
48,349
18,158
5,694
719
344
7,208
674
1,634
242
884
(22)
102
35,637
12,712
4,633
8,079
—
8,079
18,784
432
549
(509)
19,256
8,078
4,344
430
1,457
5,521
813
754
252
806
(72)
13
22,396
(3,140)
(485)
(2,655)
(46)
(2,701)
14.62
14.57
6.09
6.07
(2.51)
(2.51)
1,274,028
1,278,163
1,324,194
1,328,151
1,078,030
1,078,030
$
$
$
ConocoPhillips 2022 10-K
74
Financial Statements
Consolidated Statement of Comprehensive Income
Years Ended December 31
Net Income (Loss)
Other comprehensive income (loss)
Defined benefit plans
Table of Contents
ConocoPhillips
Millions of Dollars
2022
18,680
$
2021
8,079
2020
(2,655)
Prior service (cost) credit arising during the period
Reclassification adjustment for amortization of prior service credit
(10)
—
29
included in net income (loss)
Net change
Net actuarial gain (loss) arising during the period
Reclassification adjustment for amortization of net actuarial losses
included in net income (loss)
Net change
Nonsponsored plans*
Income taxes on defined benefit plans
Defined benefit plans, net of tax
Unrealized holding gain (loss) on securities
Reclassification adjustment for loss included in net income
Income taxes on unrealized holding loss on securities
Unrealized holding gain (loss) on securities, net of tax
Foreign currency translation adjustments
Income taxes on foreign currency translation adjustments
Foreign currency translation adjustments, net of tax
Other Comprehensive Income (Loss), Net of Tax
Comprehensive Income (Loss)
Less: comprehensive income attributable to noncontrolling interests
Comprehensive Income (Loss) Attributable to ConocoPhillips
$
(39)
(49)
(623)
72
(551)
5
178
(417)
(13)
(1)
3
(11)
(623)
1
(622)
(1,050)
17,630
—
17,630
(38)
(38)
357
178
535
5
(108)
394
(2)
(1)
1
(2)
(124)
—
(124)
268
8,347
—
8,347
(32)
(3)
(210)
117
(93)
1
20
(75)
2
—
—
2
209
3
212
139
(2,516)
(46)
(2,562)
*Plans for which ConocoPhillips is not the primary obligor—primarily those administered by equity affiliates.
See Notes to Consolidated Financial Statements.
75
ConocoPhillips 2022 10-K
Financial Statements
Consolidated Balance Sheet
At December 31
Assets
Cash and cash equivalents
Short-term investments
Accounts and notes receivable (net of allowance of $2 and $2, respectively)
Accounts and notes receivable—related parties
Investment in Cenovus Energy
Inventories
Prepaid expenses and other current assets
Total Current Assets
Investments and long-term receivables
Net properties, plants and equipment (net of accumulated DD&A of $66,630 and
$64,735, respectively)
Other assets
Total Assets
Liabilities
Accounts payable
Accounts payable—related parties
Short-term debt
Accrued income and other taxes
Employee benefit obligations
Other accruals
Total Current Liabilities
Long-term debt
Asset retirement obligations and accrued environmental costs
Deferred income taxes
Employee benefit obligations
Other liabilities and deferred credits
Total Liabilities
Equity
Common stock (2,500,000,000 shares authorized at $0.01 par value) Issued
(2022—2,100,885,134 shares; 2021—2,091,562,747 shares)
Par value
Capital in excess of par
Treasury stock (at cost: 2022—877,029,062 shares; 2021—789,319,875 shares)
Accumulated other comprehensive loss
Retained earnings
Total Equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements.
Table of Contents
ConocoPhillips
Millions of Dollars
2022
2021
6,458
2,785
7,075
13
—
1,219
1,199
18,749
8,225
64,866
1,989
93,829
6,113
50
417
3,193
728
2,346
12,847
16,226
6,401
7,726
1,074
1,552
45,826
5,028
446
6,543
127
1,117
1,208
1,581
16,050
7,113
64,911
2,587
90,661
5,002
23
1,200
2,862
755
2,179
12,021
18,734
5,754
6,179
1,153
1,414
45,255
21
61,142
(60,189)
(6,000)
53,029
48,003
93,829
21
60,581
(50,920)
(4,950)
40,674
45,406
90,661
$
$
$
$
ConocoPhillips 2022 10-K
76
Financial Statements
Consolidated Statement of Cash Flows
Years Ended December 31
Cash Flows From Operating Activities
Net income (loss)
Table of Contents
ConocoPhillips
Millions of Dollars
2022
2021
2020
$
18,680
8,079
(2,655)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities
Depreciation, depletion and amortization
7,504
7,208
Impairments
Dry hole costs and leasehold impairments
Accretion on discounted liabilities
Deferred taxes
Undistributed equity earnings
Gain on dispositions
(Gain) loss on investment in Cenovus Energy
Other
Working capital adjustments
Decrease (increase) in accounts and notes receivable
Increase in inventories
Decrease (increase) in prepaid expenses and other current assets
Increase (decrease) in accounts payable
Increase (decrease) in taxes and other accruals
Net Cash Provided by Operating Activities
Cash Flows From Investing Activities
Capital expenditures and investments
Working capital changes associated with investing activities
Acquisition of businesses, net of cash acquired
Proceeds from asset dispositions
Net sales (purchases) of investments
Collection of advances/loans—related parties
Other
Net Cash Used in Investing Activities
Cash Flows From Financing Activities
Issuance of debt
Repayment of debt
Issuance of company common stock
Repurchase of company common stock
Dividends paid
Other
Net Cash Used in Financing Activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
Net Change in Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, Cash Equivalents and Restricted Cash at End of Period
$
(12)
340
250
2,086
942
(1,077)
(251)
86
(963)
(38)
(173)
901
39
674
44
242
1,346
446
(486)
(1,040)
(788)
(2,500)
(160)
(649)
1,399
3,181
5,521
813
1,083
252
(834)
645
(549)
855
43
521
(25)
76
(249)
(695)
28,314
16,996
4,802
(10,159)
520
(60)
3,471
(2,629)
114
2
(5,324)
134
(8,290)
1,653
3,091
105
87
(4,715)
(155)
—
1,317
(658)
116
(26)
(8,741)
(8,544)
(4,121)
2,897
(6,267)
362
(9,270)
(5,726)
(49)
—
(505)
145
(3,623)
(2,359)
7
(18,053)
(6,335)
(224)
1,296
5,398
6,694
(34)
2,083
3,315
5,398
300
(254)
(5)
(892)
(1,831)
(26)
(2,708)
(20)
(2,047)
5,362
3,315
Restricted cash of $236 million is included in the “Other assets” line of our Consolidated Balance Sheet as of December 31, 2022.
Restricted cash of $152 million and $218 million is 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.
77
ConocoPhillips 2022 10-K
Financial Statements
Consolidated Statement of Changes in Equity
Table of Contents
ConocoPhillips
Millions of Dollars
Attributable to ConocoPhillips
Common Stock
Par Value
Capital in
Excess of
Par
Treasury
Stock
Accum. Other
Comprehensive
Income (Loss)
Retained
Earnings
Non-
Controlling
Interests
Balances at December 31, 2019
$
18
46,983
(46,405)
(5,357)
39,742
Net income (loss)
Other comprehensive income (loss)
Dividends declared—ordinary ($1.69
per share of common stock)
Repurchase of company common stock
Distributions to noncontrolling interests
and other
Disposition
139
(2,701)
(1,831)
(892)
Distributed under benefit plans
150
Other
Balances at December 31, 2020
$
18
47,133
(47,297)
(5,218)
Net income (loss)
Other comprehensive income (loss)
Dividends declared
Ordinary ($1.75 per share of
common stock)
Variable return of cash ($0.20 per
share of common stock)
268
Acquisition of Concho
3
13,122
Repurchase of company common stock
Distributed under benefit plans
Other
(3,623)
326
Balances at December 31, 2021
$
21
60,581
(50,920)
(4,950)
Net income (loss)
Other comprehensive income (loss)
Dividends declared
Ordinary ($1.89 per share of
common stock)
Variable return of cash ($3.10 per
share of common stock)
Repurchase of company common stock
Distributed under benefit plans
Other
(1,050)
561
(9,270)
1
3
35,213
8,079
(2,359)
(260)
1
40,674
18,680
(2,419)
(3,908)
2
69
46
(32)
(84)
1
—
—
Total
35,050
(2,655)
139
(1,831)
(892)
(32)
(84)
150
4
29,849
8,079
268
(2,359)
(260)
13,125
(3,623)
326
1
45,406
18,680
(1,050)
(2,419)
(3,908)
(9,270)
561
3
Balances at December 31, 2022
$
21
61,142
(60,189)
(6,000)
53,029
—
48,003
ConocoPhillips 2022 10-K
78
Notes to Consolidated Financial Statements
Table of Contents
Notes to Consolidated Financial Statements
Note 1—Accounting Policies
•
•
Consolidation Principles and Investments—Our consolidated financial statements include the accounts of
majority-owned, controlled subsidiaries and, if applicable, variable interest entities where we are the primary
beneficiary. The equity method is used to account for investments in affiliates in which we have the ability to
exert significant influence over the affiliates’ operating and financial policies. When we do not have the ability to
exert significant influence, the investment is measured at fair value except when the investment does not have a
readily determinable fair value. For those exceptions, it will be measured at cost minus impairment, plus or
minus observable price changes in orderly transactions for an identical or similar investment of the same issuer.
Undivided interests in oil and gas joint ventures, pipelines, natural gas plants and terminals are consolidated on a
proportionate basis. Other securities and investments are generally carried at cost. We manage our operations
through six operating segments, defined by geographic region: Alaska; Lower 48; Canada; Europe, Middle East
and North Africa; Asia Pacific; and Other International. See Note 24.
Foreign Currency Translation—Adjustments resulting from the process of translating foreign functional currency
financial statements into U.S. dollars are included in accumulated other comprehensive loss in common
stockholders’ equity. Foreign currency transaction gains and losses are included in current earnings. Some of our
foreign operations use their local currency as the functional currency.
• Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosures of contingent assets and liabilities. Actual results could differ from these estimates.
•
•
•
•
•
Revenue Recognition—Revenues associated with the sales of crude oil, bitumen, natural gas, LNG, NGLs and
other items are recognized at the point in time when the customer obtains control of the asset. In evaluating
when a customer has control of the asset, we primarily consider whether the transfer of legal title and physical
delivery has occurred, whether the customer has significant risks and rewards of ownership and whether the
customer has accepted delivery and a right to payment exists. These products are typically sold at prevailing
market prices. We allocate variable market-based consideration to deliveries (performance obligations) in the
current period as that consideration relates specifically to our efforts to transfer control of current period
deliveries to the customer and represents the amount we expect to be entitled to in exchange for the related
products. Payment is typically due within 30 days or less.
Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of
inventory with the same counterparty are entered into “in contemplation” of one another, are combined and
reported net (i.e., on the same income statement line).
Shipping and Handling Costs—We typically incur shipping and handling costs prior to control transferring to the
customer and account for these activities as fulfillment costs. Accordingly, we include shipping and handling
costs in production and operating expenses for production activities. Transportation costs related to marketing
activities are recorded in purchased commodities. Freight costs billed to customers are treated as a component
of the transaction price and recorded as a component of revenue when the customer obtains control.
Cash Equivalents—Cash equivalents are highly liquid, short-term investments that are readily convertible to
known amounts of cash and have original maturities of 90 days or less from their date of purchase. They are
carried at cost plus accrued interest, which approximates fair value.
Short-Term Investments—Short-term investments include investments in bank time deposits and marketable
securities (commercial paper and government obligations) which are carried at cost plus accrued interest and
have original maturities of greater than 90 days but within one year or when the remaining maturities are within
one year. We also invest in financial instruments classified as available for sale debt securities which are carried
at fair value. Those instruments are included in short-term investments when they have remaining maturities of
one year or less, as of the balance sheet date.
Long-Term Investments in Debt Securities—Long-term investments in debt securities includes financial
instruments classified as available for sale debt securities with remaining maturities greater than one year as of
the balance sheet date. They are carried at fair value and presented within the “Investments and long-term
receivables” line of our consolidated balance sheet.
79
ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
•
•
•
Inventories—We have several valuation methods for our various types of inventories and consistently use the
following methods for each type of inventory. The majority of our commodity-related inventories are recorded
at cost using the LIFO basis. We measure these inventories at the lower-of-cost-or-market in the aggregate. Any
necessary lower-of-cost-or-market write-downs at year end are recorded as permanent adjustments to the LIFO
cost basis. LIFO is used to better match current inventory costs with current revenues. Costs include both direct
and indirect expenditures incurred in bringing an item or product to its existing condition and location, but not
unusual/nonrecurring costs or research and development costs. Materials, supplies and other miscellaneous
inventories, such as tubular goods and well equipment, are valued using various methods, including the
weighted-average-cost method and the FIFO method, consistent with industry practice.
Fair Value Measurements—Assets and liabilities measured at fair value and required to be categorized within
the fair value hierarchy are categorized into one of three different levels depending on the observability of the
inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or
liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or
liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs
for the asset or liability reflecting significant modifications to observable related market data or our assumptions
about pricing by market participants.
Derivative Instruments—Derivative instruments are recorded on the balance sheet at fair value. If the right of
offset exists and certain other criteria are met, derivative assets and liabilities with the same counterparty are
netted on the balance sheet and the collateral payable or receivable is netted against derivative assets and
derivative liabilities, respectively.
Recognition and classification of the gain or loss that results from recording and adjusting a derivative to fair
value depends on the purpose for issuing or holding the derivative. Gains and losses from derivatives not
accounted for as hedges are recognized immediately in earnings. We do not apply hedge accounting to our
derivative instruments.
• Oil and Gas Exploration and Development—Oil and gas exploration and development costs are accounted for
using the successful efforts method of accounting.
Property Acquisition Costs—Oil and gas leasehold acquisition costs are capitalized and included in the
balance sheet caption PP&E. Leasehold impairment is recognized based on exploratory experience and
management’s judgment. Upon achievement of all conditions necessary for reserves to be classified as
proved, the associated leasehold costs are reclassified to proved properties.
Exploratory Costs—Geological and geophysical costs and the costs of carrying and retaining undeveloped
properties are expensed as incurred. Exploratory well costs are capitalized, or “suspended,” on the balance
sheet pending further evaluation of whether economically recoverable reserves have been found. If
economically recoverable reserves are not found, exploratory well costs are expensed as dry holes. If
exploratory wells encounter potentially economic quantities of oil and gas, the well costs remain capitalized
on the balance sheet as long as sufficient progress assessing the reserves and the economic and operating
viability of the project is being made. For complex exploratory discoveries, it is not unusual to have
exploratory wells remain suspended on the balance sheet for several years while we perform additional
appraisal drilling and seismic work on the potential oil and gas field or while we seek government or co-
venturer approval of development plans or seek environmental permitting. Once all required approvals and
permits have been obtained, the projects are moved into the development phase, and the oil and gas
resources are designated as proved reserves.
Management reviews suspended well balances quarterly, continuously monitors the results of the
additional appraisal drilling and seismic work, and expenses the suspended well costs as dry holes when it
judges the potential field does not warrant further investment in the near term. See Note 6.
Development Costs—Costs incurred to drill and equip development wells, including unsuccessful
development wells, are capitalized.
Depletion and Amortization—Leasehold costs of producing properties are depleted using the unit-of-
production method based on estimated proved oil and gas reserves. Amortization of development costs is
based on the unit-of-production method using estimated proved developed oil and gas reserves.
ConocoPhillips 2022 10-K
80
Notes to Consolidated Financial Statements
Table of Contents
•
•
•
Capitalized Interest—Interest from external borrowings is capitalized on major projects with an expected
construction period of one year or longer. Capitalized interest is added to the cost of the underlying asset and is
amortized over the useful lives of the assets in the same manner as the underlying assets.
Depreciation and Amortization—Depreciation and amortization of PP&E on producing hydrocarbon properties
and SAGD facilities and certain pipeline and LNG assets (those which are expected to have a declining utilization
pattern), are determined by the unit-of-production method. Depreciation and amortization of all other PP&E are
determined by either the individual-unit-straight-line method or the group-straight-line method (for those
individual units that are highly integrated with other units).
Impairment of Properties, Plants and Equipment—Long-lived assets used in operations are assessed for
impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the
future cash flows expected to be generated by an asset group. If there is an indication the carrying amount of an
asset may not be recovered, a recoverability test is performed using management’s assumptions for prices,
volumes and future development plans. If the sum of the undiscounted cash flows before income-taxes is less
than the carrying value of the asset group, the carrying value is written down to estimated fair value and
reported as an impairment in the period in which the determination is made. Individual assets are grouped for
impairment purposes at the lowest level for which there are identifiable cash flows that are largely independent
of the cash flows of other groups of assets—generally on a field-by-field basis for E&P assets. Because there
usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically
determined based on the present values of expected future cash flows using discount rates and prices believed
to be consistent with those used by principal market participants, or based on a multiple of operating cash flow
validated with historical market transactions of similar assets where possible.
The expected future cash flows used for impairment reviews and related fair value calculations are based on
estimated future production volumes, commodity prices, operating costs and capital decisions, considering all
available evidence at the date of review. The impairment review includes cash flows from proved developed and
undeveloped reserves, including any development expenditures necessary to achieve that production.
Additionally, when probable and possible reserves exist, an appropriate risk-adjusted amount of these reserves
may be included in the impairment calculation.
Long-lived assets committed by management for disposal within one year are accounted for at the lower of
amortized cost or fair value, less cost to sell, with fair value determined using a binding negotiated price, if
available, or present value of expected future cash flows as previously described.
• Maintenance and Repairs—Costs of maintenance and repairs, which are not significant improvements, are
expensed when incurred.
•
•
Property Dispositions—When complete units of depreciable property are sold, the asset cost and related
accumulated depreciation are eliminated, with any gain or loss reflected in the “Gain on dispositions” line of our
consolidated income statement. When partial units of depreciable property are disposed of or retired which do
not significantly alter the DD&A rate, the difference between asset cost and salvage value is charged or credited
to accumulated depreciation.
Asset Retirement Obligations and Environmental Costs—The fair value of legal obligations to retire and remove
long-lived assets are recorded in the period in which the obligation is incurred (typically when the asset is
installed at the production location). Fair value is estimated using a present value approach, incorporating
assumptions about estimated amounts and timing of settlements and impacts of the use of technologies. See
Note 8.
Environmental expenditures are expensed or capitalized, depending upon their future economic benefit.
Expenditures relating to an existing condition caused by past operations, and those having no future economic
benefit, are expensed. Liabilities for environmental expenditures are recorded on an undiscounted basis (unless
acquired through a business combination, which we record on a discounted basis) when environmental
assessments or cleanups are probable and the costs can be reasonably estimated. Recoveries of environmental
remediation costs from other parties are recorded as assets when their receipt is probable and estimable.
81
ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
•
•
•
•
Impairment of Investments in Nonconsolidated Entities—Investments in nonconsolidated entities are assessed
for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When
such a condition is judgmentally determined to be other than temporary, the carrying value of the investment is
written down to fair value. The fair value of the impaired investment is based on quoted market prices, if
available, or upon the present value of expected future cash flows using discount rates and prices believed to be
consistent with those used by principal market participants, plus market analysis of comparable assets owned by
the investee, if appropriate.
Guarantees—The fair value of a guarantee is determined and recorded as a liability at the time the guarantee is
given. The initial liability is subsequently reduced as we are released from exposure under the guarantee. We
amortize the guarantee liability over the relevant time period, if one exists, based on the facts and circumstances
surrounding each type of guarantee. In cases where the guarantee term is indefinite, we reverse the liability
when we have information indicating the liability is essentially relieved or amortize it over an appropriate time
period as the fair value of our guarantee exposure declines over time. We amortize the guarantee liability to the
related income statement line item based on the nature of the guarantee. When it becomes probable that we
will have to perform on a guarantee, we accrue a separate liability if it is reasonably estimable, based on the
facts and circumstances at that time. We reverse the fair value liability only when there is no further exposure
under the guarantee.
Share-Based Compensation—We recognize share-based compensation expense over the shorter of the service
period (i.e., the stated period of time required to earn the award) or the period beginning at the start of the
service period and ending when an employee first becomes eligible for retirement. We have elected to recognize
expense on a straight-line basis over the service period for the entire award, whether the award was granted
with ratable or cliff vesting.
Income Taxes—Deferred income taxes are computed using the liability method and are provided on all
temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, except
for deferred taxes on income and temporary differences related to the cumulative translation adjustment
considered to be permanently reinvested in certain foreign subsidiaries and foreign corporate joint ventures.
Allowable tax credits are applied currently as reductions of the provision for income taxes. Interest related to
unrecognized tax benefits is reflected in interest and debt expense, and penalties related to unrecognized tax
benefits are reflected in production and operating expenses.
•
Taxes Collected from Customers and Remitted to Governmental Authorities—Sales and value-added taxes are
recorded net.
• Net Income (Loss) Per Share of Common Stock—Basic net income (loss) per share (EPS) is calculated using the
two-class method. Under the two-class method, all earnings (distributed and undistributed) are allocated to
common stock (including fully vested stock and unit awards that have not yet been issued as common stock) and
participating securities. ConocoPhillips grants RSUs under its share-based compensation programs, the majority
of which entitle recipients to receive non-forfeitable dividends during the vesting period on a basis equivalent to
dividends paid to holders of the Company’s common stock. See Note 16. These unvested RSUs meet the
definition of participating securities based on their respective rights to receive non-forfeitable dividends and are
treated as a separate class of securities in computing basic EPS. Participating securities are not included as
incremental shares in computing diluted EPS. Diluted EPS includes the potential impact of contingently issuable
shares, including awards which require future service as a condition of delivery of the underlying common stock.
Diluted EPS is calculated under both the two-class and treasury stock methods, and the more dilutive amount is
reported. Diluted net loss per share does not assume conversion or exercise of securities as that would always
have an antidilutive effect. Treasury stock is excluded from the daily weighted-average number of common
shares outstanding in both calculations. See Note 23.
ConocoPhillips 2022 10-K
82
Notes to Consolidated Financial Statements
Table of Contents
Note 2—Inventories
Inventories at December 31 were:
Crude oil and natural gas
Materials and supplies
Total inventories
Inventories valued on the LIFO basis
Millions of Dollars
2022
2021
$
$
$
641
578
1,219
647
561
1,208
396
395
The estimated excess of current replacement cost over LIFO cost of inventories was approximately $149 million and $251
million at December 31, 2022 and 2021, respectively.
Note 3—Acquisitions and Dispositions
All gains or losses on asset dispositions are reported before-tax and are included net in the “Gain on dispositions” line on
our consolidated income statement. All cash proceeds and payments are included in the “Cash Flows From Investing
Activities” section of our consolidated statement of cash flows.
2022
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 25.0 percent, respectively. APLNG is reported as an equity investment in our Asia Pacific segment.
Qatar Liquefied Gas Company Limited (8) (QG8)
During 2022, we were awarded a 25 percent interest in a new joint venture (QG8) with QatarEnergy that will participate
in the North Field East (NFE) LNG project. QG8 has a 12.5 percent interest in the NFE project and is reported as an equity
method investment in our Europe, Middle East and North Africa segment. See Note 4.
Asset Acquisition
In September 2022, we completed the acquisition of an 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, with the consideration allocated primarily to PP&E.
Assets Sold
During 2022, we sold our interests in certain noncore assets in our Lower 48 segment for net proceeds of $680 million,
with no gain or loss recognized on sale. At the time of disposition, our interest in these assets had a net carrying value of
$680 million, consisting of $825 million of assets, primarily related to $818 million of PP&E, and $145 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 $604 million and $394 million for the years ended December 31,
2022, 2021 and 2020, respectively. Results of operations for the Indonesia interests sold were reported in our Asia Pacific
segment.
83
ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
In 2022, we recorded contingent payments of $451 million relating to the previous dispositions of our interest in the
Foster Creek Christina Lake Partnership and western Canada gas assets and our San Juan assets. The contingent payments
are recorded as gain on disposition on our consolidated income statement and are reflected within our Canada and
Lower 48 segments. In our Canada segment, the contingent payment, calculated and paid on a quarterly basis, is
$6 million CAD for every $1 CAD by which the WCS quarterly average crude price exceeds $52 CAD per barrel. In our
Lower 48 segment, the contingent payment, paid on an annual basis, is calculated monthly at $7 million per month in
which the U.S. Henry Hub price is at or above $3.20 per MMBTU. The term of contingent payments in our Canada
segment ended in the second quarter of 2022 and continues through 2023 for the Lower 48 segment. We recorded
contingent payments of $369 million in 2021. No payments were recorded in 2020.
2021
During the year, we completed the acquisitions of Concho Resources Inc. (Concho) and of Shell Enterprises LLC’s (Shell)
Permian assets. The acquisitions were accounted for as business combinations 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.
Acquisition of Concho Resources Inc.
In January 2021, we completed our acquisition of Concho, an independent oil and gas exploration and production
company with operations across New Mexico and West Texas focused in the Permian-based Delaware and Midland
Basins. Total consideration for the all-stock transaction was valued at $13.1 billion, in which 1.46 shares of ConocoPhillips
common stock were exchanged for each outstanding share of Concho common stock.
Total Consideration
Number of shares of Concho common stock issued and outstanding (in thousands)*
Number of shares of Concho stock awards outstanding (in thousands)*
Number of shares exchanged
Exchange ratio
Additional shares of ConocoPhillips common stock issued as consideration (in thousands)
Average price per share of ConocoPhillips common stock**
Total Consideration (Millions)
*Outstanding as of January 15, 2021.
**Based on the ConocoPhillips average stock price on January 15, 2021.
194,243
1,599
195,842
1.46
285,929
45.9025
13,125
$
$
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. Debt assumed in
the acquisition was valued based on observable market prices. 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 $13.1 billion was allocated to the identifiable assets and liabilities based on
their fair values as of January 15, 2021.
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84
Notes to Consolidated Financial Statements
Assets Acquired
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Investments and long-term receivables
Net properties, plants and equipment
Other assets
Total assets acquired
Liabilities Assumed
Accounts payable
Accrued income and other taxes
Employee benefit obligations
Other accruals
Long-term debt
Asset retirement obligations and accrued environmental costs
Deferred income taxes
Other liabilities and deferred credits
Total liabilities assumed
Net assets acquired
Table of Contents
Millions of
Dollars
$
$
$
$
$
382
745
45
37
333
18,923
62
20,527
638
56
4
510
4,696
310
1,071
117
7,402
13,125
With the completion of the Concho transaction, we acquired proved and unproved properties of approximately $11.8
billion and $6.9 billion, respectively.
We recognized approximately $157 million of transaction-related costs, all of which were expensed in the first quarter of
2021. These non-recurring costs related primarily to fees paid to advisors and the settlement of share-based awards for
certain Concho employees based on the terms of the Merger Agreement.
In the first quarter of 2021, we commenced a company-wide restructuring program, the scope of which included
combining the operations of the two companies as well as other global restructuring activities. We recognized non-
recurring restructuring costs mainly for employee severance and related incremental pension benefit costs.
The impact from the transaction and restructuring costs to the lines of our consolidated income statement for the year
ended December 31, 2021, are below:
Production and operating expenses
Selling, general and administration expenses
Exploration expenses
Taxes other than income taxes
Other expenses
$
Transaction
Cost
Millions of Dollars
Restructuring
Cost
128
67
8
2
29
234
135
18
4
—
157
Total Cost
128
202
26
6
29
391
In February 2021, we completed a debt exchange offer related to the debt assumed from Concho. As a result of the debt
exchange, we recognized an additional income tax-related restructuring charge of $75 million.
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From the acquisition date through December 31, 2021, “Total Revenues and Other Income” and “Net Income (Loss)
Attributable to ConocoPhillips” associated with the acquired Concho business were approximately $6,571 million and
$2,330 million, respectively. The results associated with the Concho business for the same period include a before- and
after-tax loss of $305 million and $233 million, respectively, on the acquired derivative contracts. The before-tax loss is
recorded within “Total Revenues and Other Income” on our consolidated income statement. See Note 12.
Acquisition of Shell Permian Assets
In December 2021, we completed our acquisition of Shell assets in the Permian based Delaware Basin. The accounting
close date used for reporting purposes was December 31, 2021. Assets acquired include approximately 225,000 net acres
and producing properties located entirely in Texas. Total consideration for the transaction was $8.6 billion.
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.
Assets Acquired
Accounts receivable, net
Inventories
Net properties, plants and equipment
Other assets
Total assets acquired
Liabilities Assumed
Accounts payable
Accrued income and other taxes
Other accruals
Asset retirement obligations and accrued environmental costs
Other liabilities and deferred credits
Total liabilities assumed
Net assets acquired
Millions of
Dollars
$
$
$
$
$
337
20
8,582
50
8,989
206
6
20
86
36
354
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. We recognized approximately $44 million of transaction-related costs which
were expensed in 2021.
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Supplemental Pro Forma (unaudited)
The following tables summarize the unaudited supplemental pro forma financial information for the year ended
December 31, 2021, and 2020, as if we had completed the acquisitions of Concho and the Shell Permian assets on January
1, 2020.
Millions of Dollars
Year Ended December 31, 2021
Pro forma
Shell
Pro forma
Combined
As reported
Total Revenues and Other Income
Income (loss) before income taxes
Net Income (Loss) attributable to ConocoPhillips
Earnings per share:
Basic net income
Diluted net income
$
$
48,349
12,712
8,079
6.09
6.07
Millions of Dollars
Year Ended December 31, 2020
Pro forma
Shell
1,685
(247)
(189)
Pro forma
Concho
3,762
787
498
As reported
19,256
(3,140)
(2,701)
Total Revenues and Other Income
Income (loss) before income taxes
Net Income (Loss) attributable to ConocoPhillips
Earnings per share:
Basic net loss
Diluted net loss
$
$
(2.51)
(2.51)
3,220
1,201
920
51,569
13,913
8,999
6.78
6.76
Pro forma
Combined
24,703
(2,600)
(2,392)
(1.75)
(1.75)
The unaudited supplemental pro forma financial information is presented for illustration purposes only and is not
necessarily indicative of the operating results that would have occurred had the transactions 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 twelve-month period ending December 31, 2020 is a result of combining the consolidated
income statement of ConocoPhillips with the results of Concho and 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 transactions. The pro forma
results include adjustments from Concho’s historical results to reverse impairment expense of $10.5 billion and $1.9
billion related to oil and gas properties and goodwill, respectively. Other adjustments made relate primarily to DD&A,
which is based on the unit-of-production method, resulting from the purchase price allocated to properties, plants and
equipment. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are
properly reflected.
Assets Sold
In 2020, we completed the sale of our Australia-West asset and operations. The sales agreement entitled us to a $200
million payment upon a final investment decision (FID) of the Barossa development project. In March 2021, FID was
announced and as such, we recognized a $200 million gain on disposition in the first quarter of 2021. The purchaser failed
to pay the FID bonus when due. We have commenced an arbitration proceeding against the purchaser to enforce our
contractual right to the $200 million, plus interest accruing from the due date. Results of operations related to this
transaction are reflected in our Asia Pacific segment. See Note 11.
In the second half of 2021, we sold our interests in certain noncore assets in our Lower 48 segment for approximately
$250 million after customary adjustments, recognizing a before-tax gain on sale of approximately $58 million. We also
completed the sale of our noncore exploration interests in Argentina, recognizing a before-tax loss on disposition of $179
million. Results of operations for Argentina were reported in our Other International segment.
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2020
Asset Acquisition
In August 2020, we completed the acquisition of additional Montney acreage in Canada from Kelt Exploration Ltd. for
$382 million after customary adjustments, plus the assumption of $31 million in financing obligations associated with
partially owned infrastructure. This acquisition consisted primarily of undeveloped properties and included 140,000 net
acres in the liquids-rich Inga Fireweed asset Montney zone, which is directly adjacent to our existing Montney position.
The transaction increased our Montney acreage position to approximately 295,000 net acres with a 100 percent working
interest. This agreement was accounted for as an asset acquisition resulting in the recognition of $490 million of PP&E;
$77 million of ARO and accrued environmental costs; and $31 million of financing obligations recorded primarily to long-
term debt. Results of operations for the Montney asset are reported in our Canada segment.
Assets Sold
In February 2020, we sold our Waddell Ranch interests in the Permian Basin for $184 million after customary
adjustments. No gain or loss was recognized on the sale. Results of operations for the Waddell Ranch interests sold were
reported in our Lower 48 segment.
In March 2020, we completed the sale of our Niobrara interests for approximately $359 million after customary
adjustments and recognized a before-tax loss on disposition of $38 million. At the time of disposition, our interest in
Niobrara had a net carrying value of $397 million, consisting primarily of $433 million of PP&E and $34 million of ARO.
The before-tax loss associated with our interests in Niobrara, including the loss on disposition noted above, was $25
million for the year ended December 31, 2020. Results of operations for the Niobrara interests sold were reported in our
Lower 48 segment.
In May 2020, we completed the divestiture of our subsidiaries that held our Australia-West assets and operations, and
based on an effective date of January 1, 2019, we received proceeds of $765 million. We recognized a before-tax gain of
$587 million related to this transaction in 2020. At the time of disposition, the net carrying value of the subsidiaries sold
was approximately $0.2 billion, excluding $0.5 billion of cash. The net carrying value consisted primarily of $1.3 billion of
PP&E and $0.1 billion of other current assets offset by $0.7 billion of ARO, $0.3 billion of deferred tax liabilities, and $0.2
billion of other liabilities. The before-tax earnings associated with the subsidiaries sold, including the gain on disposition
noted above, was $851 million for the year ended December 31, 2020. The sales agreement entitled us to an additional
$200 million upon FID of the Barossa development project. Results of operations for the subsidiaries sold were reported
in our Asia Pacific segment.
Note 4—Investments, Loans and Long-Term Receivables
Components of investments and long-term receivables at December 31 were:
Equity investments
Long-term receivables
Long-term investments in debt securities
Other investments
Millions of Dollars
2022
7,493
142
522
68
8,225
$
$
2021
6,701
98
248
66
7,113
Equity Investments
Affiliated companies in which we had a significant equity investment at December 31, 2022, included:
•
APLNG—47.5 percent owned joint venture with Origin Energy (27.5 percent) and Sinopec (25 percent)—to
produce CBM from the Bowen and Surat basins in Queensland, Australia, as well as process and export LNG.
• Qatar Liquefied Gas Company Limited (3) (QG3)—30 percent owned joint venture with affiliates of QatarEnergy
(68.5 percent) and Mitsui & Co., Ltd. (1.5 percent)—produces and liquefies natural gas from Qatar’s North Field,
as well as exports LNG.
• Qatar Liquefied Gas Company Limited (8) (QG8)—25 percent owned joint venture with QatarEnergy (75 percent)
—participant in the North Field East (NFE) LNG project. See Note 3.
ConocoPhillips 2022 10-K
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Summarized 100 percent earnings information for equity method investments in affiliated companies, combined, was as
follows:
Revenues
Income before income taxes
Net income
$
Millions of Dollars
2022
18,356
8,234
5,507
2021
11,824
3,946
2,557
2020
7,931
1,843
1,426
Summarized 100 percent balance sheet information for equity method investments in affiliated companies, combined,
was as follows:
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
$
Millions of Dollars
2022
5,001
37,789
4,169
17,244
2021
4,493
36,602
3,498
17,465
Our share of income taxes incurred directly by an equity method investee is reported in equity in earnings of affiliates,
and as such is not included in income taxes on our consolidated financial statements.
At December 31, 2022, retained earnings included $42 million related to the undistributed earnings of affiliated
companies. Dividends received from affiliates were $3,045 million, $1,279 million and $1,076 million in 2022, 2021 and
2020, respectively.
APLNG
APLNG is a joint venture focused on producing CBM from the Bowen and Surat basins in Queensland, Australia. Natural
gas is sold to domestic customers and LNG is processed and exported to Asia Pacific markets. Our investment in APLNG
gives us access to CBM resources in Australia and enhances our LNG position. The majority of APLNG LNG is sold under
two long-term sales and purchase agreements, supplemented with sales of additional LNG cargoes targeting the Asia
Pacific markets. Origin Energy, an integrated Australian energy company, is the operator of APLNG’s production and
pipeline system, while we operate the LNG facility.
In 2012, APLNG executed an $8.5 billion project finance facility that became non-recourse following financial completion
in 2017. 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 December 31, 2022, a
balance of $5.2 billion was outstanding on the facilities. See Note 10.
During the fourth quarter of 2021, Origin Energy Limited agreed to the sale of 10 percent of their interest in APLNG for
$1.645 billion, before customary adjustments. ConocoPhillips announced in December 2021 that we were exercising our
preemption right under the APLNG Shareholders Agreement to purchase an additional 10 percent shareholding interest
in APLNG, subject to government approvals. The sales price associated with this preemption right was determined to
reflect a relevant observable market participant view of APLNG’s fair value which was below the carrying value of our
existing investment in APLNG. Based on a review of the facts and circumstances surrounding this decline in fair value, we
concluded in the fourth quarter of 2021 the impairment was other than temporary under the guidance of FASB ASC Topic
323, and the recognition of an impairment of our existing investment was necessary. Accordingly, we recorded a noncash
$688 million before-tax and after-tax impairment in the fourth quarter of 2021. The impairment was included in the
“Impairments” line on our consolidated income statement. See Note 7.
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At December 31, 2022, the carrying value of our equity method investment in APLNG was approximately $6.2 billion. The
historical cost basis of our 47.5 percent share of net assets of APLNG was $6.1 billion, resulting in a basis difference of $41
million on our books. The basis difference, which is substantially all associated with PP&E and subject to amortization, has
been allocated on a relative fair value basis to individual production license areas owned by APLNG. Any future additional
payments are expected to be allocated in a similar manner. As the joint venture produces natural gas from each license,
we amortize the basis difference allocated to that license using the unit-of-production method. Included in net income
(loss) attributable to ConocoPhillips for 2022, 2021 and 2020 was after-tax expense of $10 million, $39 million and $41
million, respectively, representing the amortization of this basis difference on currently producing licenses.
QG3
QG3 is a joint venture that owns an integrated large-scale LNG project located in Qatar. We provided project financing,
which was fully repaid in the third quarter of 2022, as described below under “Loans.” At December 31, 2022, the book
value of our equity method investment in QG3 was approximately $0.7 billion. We have terminal and pipeline use
agreements with Golden Pass LNG Terminal and affiliated Golden Pass Pipeline near Sabine Pass, Texas, intended to
provide us with terminal and pipeline capacity for the receipt, storage and regasification of LNG purchased from QG3.
Currently, the LNG from QG3 is being sold to markets outside of the U.S.
QG8
During 2022, we were awarded a 25 percent interest in a new joint venture (QG8) with QatarEnergy that will participate
in the NFE LNG project. QG8 has a 12.5 percent interest in the NFE project. At December 31, 2022, the book value of our
equity method investment was approximately $0.3 billion. See Note 3.
Loans
As part of our normal ongoing business operations and consistent with industry practice, we enter into numerous
agreements with other parties to pursue business opportunities. Included in such activity are loans to certain affiliated
and non-affiliated companies.
At December 31, 2022, there were no outstanding loans to affiliated companies as the final loan payment related to QG3
project financing was received in the third quarter of 2022. QG3 secured project financing of $4.0 billion in December
2005, consisting of $1.3 billion of loans from export credit agencies (ECA), $1.5 billion from commercial banks and $1.2
billion from ConocoPhillips. The ConocoPhillips loan facilities had substantially the same terms as the ECA and commercial
bank facilities. On December 15, 2011, QG3 achieved financial completion and all project loan facilities became
nonrecourse to the project participants. Semi-annual repayments began in January 2011 and were completed in July
2022, for all loan arrangements.
Note 5—Investment in Cenovus Energy
At December 31, 2021, we held 91 million common shares of Cenovus Energy (CVE), which approximated 4.5 percent of
the issued and outstanding common shares of CVE. 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 (loss)" 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 13.
Total Net gain (loss) on equity securities
Less: Net gain (loss) on equity securities sold during the period
Unrealized gain (loss) on equity securities still held at the reporting date
$
$
Millions of Dollars
2022
251
251
2021
1,040
473
567
2020
(855)
(855)
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Note 6—Suspended Wells and Exploration Expenses
The following table reflects the net changes in suspended exploratory well costs during 2022, 2021 and 2020:
Beginning balance at January 1
Additions pending the determination of proved reserves
Reclassifications to proved properties
Sales of suspended wells
Charged to dry hole expense
Ending balance at December 31
Millions of Dollars
2022
2021
2020
$
$
660
5
(7)
—
(131)
527
682
10
—
—
(32)
660
1,020
164
(42)
(313)
(147)
682
The following table provides an aging of suspended well balances at December 31:
Millions of Dollars
2022
2021
2020
Exploratory well costs capitalized for a period of one year or less
Exploratory well costs capitalized for a period greater than one year
Ending balance
$
$
15
512
527
4
656
660
156
526
682
Number of projects with exploratory well costs capitalized for a period
greater than one year
17
22
22
The following table provides a further aging of those exploratory well costs that have been capitalized for more than one
year since the completion of drilling as of December 31, 2022:
Willow—Alaska(2)
PL 1009—Norway(1)
PL 891—Norway(1)
Narwhal Trend—Alaska(1)
WL4-00—Malaysia(2)
PL782S—Norway(1)
Montney—Canada(1)
Other of $10 million or less each(1)(2)
Total
(1) Additional appraisal wells planned.
(2) Appraisal drilling complete; costs being incurred to assess development.
Millions of Dollars
Suspended Since
2019-2021
2016-2018
201
39
31
—
7
19
4
7
308
114
—
—
25
17
—
8
10
174
Total
315
39
31
25
24
19
12
47
512
2006-2015
—
—
—
—
—
—
—
30
30
$
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Exploration Expenses
The charges discussed below are included in the “Exploration expenses” line on our consolidated income statement.
2022
In the fourth quarter, we recorded a before-tax expense of $129 million for impairment of certain aged, suspended wells
associated with Surmont in our Canada segment.
In our Europe, Middle East and North Africa segment, we recorded a before-tax expense of $102 million for dry hole costs
associated with four operated exploration and appraisal wells and one partner operated well that were drilled in Norway
in 2022.
2020
In our Alaska segment, we recorded a before-tax impairment of $828 million for the entire associated carrying value of
capitalized undeveloped leasehold costs related to our Alaska North Slope Gas asset. We had stopped participating in
evaluating gas line projects and did not believe a project would advance. We remain willing to sell our Alaska North Slope
gas to interested parties on a competitive basis if a market materializes in the future.
In our Other International segment, our interests in the Middle Magdalena Basin of Colombia are in force majeure.
Because we had no immediate plans to perform under existing contracts, in 2020, we recorded a before-tax expense
totaling $84 million for dry hole costs of a previously suspended well and an impairment of the associated capitalized
undeveloped leasehold carrying value.
In our Asia Pacific segment, we recorded before-tax expense of $50 million related to dry hole costs of a previously
suspended well and an impairment of the associated capitalized undeveloped leasehold carrying value associated with
the Kamunsu East Field in Malaysia that is no longer in our development plans.
Note 7—Impairments
During 2022, 2021 and 2020, we recognized the following before-tax impairment charges:
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Millions of Dollars
2022
2021
2020
$
$
2
(11)
(2)
(1)
—
(12)
5
(8)
6
(24)
695
674
—
804
3
6
—
813
2021
We recorded an impairment of $688 million on our APLNG investment included within the Asia Pacific segment. See Note
4 and Note 13.
In our Lower 48 segment, we recorded a credit to impairment of $89 million due to a decreased ARO estimate for a
previously sold asset, in which we retained the ARO liability. This was offset by recorded impairments of $84 million
during the fourth quarter of 2021, related to certain noncore assets due to changes in development plans. See Note 13.
In our Europe, Middle East and North Africa segment, we recorded a credit to impairment of $24 million due to decreased
ARO estimates on fields in Norway which ceased production and were fully depreciated in prior years.
2020
We recorded impairments of $813 million, primarily related to certain noncore assets in the Lower 48. Due to a significant
decrease in the outlook for current and long-term natural gas prices in early 2020, we recorded impairments of $523
million, primarily for the Wind River Basin operations area, consisting of developed properties in the Madden Field and
the Lost Cabin Gas Plant, in the first quarter of 2020. Additionally, due primarily to changes in development plans
solidified in the last quarter of 2020, we recognized additional impairments of $287 million in the Lower 48 during the
fourth quarter.
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Note 8—Asset Retirement Obligations and Accrued Environmental Costs
Asset retirement obligations and accrued environmental costs at December 31 were:
Millions of Dollars
2022
2021
Asset retirement obligations
Accrued environmental costs
Total asset retirement obligations and accrued environmental costs
Asset retirement obligations and accrued environmental costs due within one year*
Long-term asset retirement obligations and accrued environmental costs
$
$
6,380
182
6,562
(161)
6,401
5,926
187
6,113
(359)
5,754
*Classified as a current liability on the balance sheet under “Other accruals.”
Asset Retirement Obligations
We record the fair value of a liability for an ARO when it is incurred (typically when the asset is installed at the production
location). When the liability is initially recorded, we capitalize the associated asset retirement cost by increasing the
carrying amount of the related PP&E. Over time, the liability increases for the change in its present value, while the
capitalized cost depreciates over the useful life of the related asset. If, in subsequent periods, our estimate of this liability
changes, we will record an adjustment to both the liability and PP&E. Reductions to estimated liabilities for assets that
are no longer producing are recorded as a credit to impairment.
We have numerous AROs we are required to perform under law or contract once an asset is permanently taken out of
service. Most of these obligations are not expected to be paid until several years, or decades, in the future and will be
funded from general company resources at the time of removal. Our largest individual obligations involve plugging and
abandonment of wells and removal and disposal of offshore oil and gas platforms around the world, as well as oil and gas
production facilities and pipelines in Alaska.
During 2022 and 2021, our overall ARO changed as follows:
Balance at January 1
Accretion of discount
New obligations
Changes in estimates of existing obligations
Spending on existing obligations
Property dispositions
Foreign currency translation
Balance at December 31
Millions of Dollars
2022
2021
$
$
5,926
245
144
681
(231)
(203)
(182)
6,380
5,573
238
555
(113)
(164)
(108)
(55)
5,926
Accrued Environmental Costs
Total accrued environmental costs at December 31, 2022 and 2021, were $182 million and $187 million, respectively.
We had accrued environmental costs of $107 million and $135 million at December 31, 2022 and 2021, respectively,
related to remediation activities in the U.S. and Canada. We had also accrued in Corporate and Other $59 million and $36
million of environmental costs associated with sites no longer in operation at December 31, 2022 and 2021, respectively.
In addition, both December 31, 2022 and 2021, included a $16 million accrual, where the company has been named a
potentially responsible party under the Federal Comprehensive Environmental Response, Compensation and Liability Act,
or similar state laws. Accrued environmental liabilities are expected to be paid over periods extending up to 30 years.
Expected expenditures for environmental obligations acquired in various business combinations are discounted using a
weighted-average 5 percent discount factor, resulting in an accrued balance for acquired environmental liabilities of $111
million at December 31, 2022. The total expected future undiscounted payments related to the portion of the accrued
environmental costs that have been discounted are $147 million.
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Note 9—Debt
Long-term debt at December 31 was:
2.40% Notes due 2022
7.65% Debentures due 2023
3.35% Notes due 2024
2.125% Notes due 2024
8.2% Notes due 2025
3.35% Debentures due 2025
2.40% Notes due 2025
6.875% Debentures due 2026
4.95% Notes due 2026
7.8% Debentures due 2027
3.75% Notes due 2027
4.3% Notes due 2028
7.375% Debentures due 2029
7.0% Debentures due 2029
6.95% Notes due 2029
8.125% Notes due 2030
7.4% Notes due 2031
7.25% Notes due 2031
7.2% Notes due 2031
2.4% Notes due 2031
5.9% Notes due 2032
4.15% Notes due 2034
5.95% Notes due 2036
5.951% Notes due 2037
5.9% Notes due 2038
6.5% Notes due 2039
3.758% Notes due 2042
4.3% Notes due 2044
5.95% Notes due 2046
7.9% Debentures due 2047
4.875% Notes due 2047
4.85% Notes due 2048
3.8% Notes due 2052
4.025% Notes due 2062
Floating rate notes due 2022 at 1.06% – 1.41% during 2022 and 1.02% – 1.12% during 2021
Marine Terminal Revenue Refunding Bonds due 2031 at 0.07% – 4.10% during 2022 and
0.04% – 0.15% during 2021
Industrial Development Bonds due 2035 at 0.07% – 4.10% during 2022 and 0.04% – 0.12%
Millions of Dollars
2022
—
78
426
900
134
199
900
67
—
203
196
223
92
112
1,195
390
382
400
447
227
505
246
326
631
350
1,588
785
750
329
60
319
219
1,100
1,770
—
265
2021
329
78
426
—
134
199
—
67
1,250
203
1,000
1,000
92
200
1,549
390
500
500
575
500
505
246
500
645
600
2,750
—
750
500
60
800
600
—
—
500
265
during 2021
Other
Debt at face value
Finance leases
Net unamortized premiums, discounts and debt issuance costs
Total debt
Short-term debt
Long-term debt
18
23
15,855
1,320
(532)
16,643
(417)
16,226
18
35
17,766
1,261
907
19,934
(1,200)
18,734
$
ConocoPhillips 2022 10-K
94
Notes to Consolidated Financial Statements
Table of Contents
In December 2022, the company retired $329 million principal amount of our 2.40 percent Notes at the natural maturity
date. 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:
•
•
•
•
•
•
•
•
•
7.0% 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
In March 2022, we issued the following new notes consisting of:
2.125% Notes due 2024 with principal of $900 million
2.4% Note due 2025 with principal of $900 million
3.8% Note 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.
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Table of Contents
Credit facility borrowings may bear interest at a margin above the Secured Overnight Financing Rate (SOFR). 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 December 31, 2022. At December 31, 2021, we had no
commercial paper outstanding and no direct borrowings or letters of credit issued.
In January 2021, we completed the acquisition of Concho in an all-stock transaction. In the acquisition, we assumed
Concho’s publicly traded debt, with an outstanding principal balance of $3.9 billion, which was recorded at fair value of
$4.7 billion on the acquisition date. The adjustment to fair value of the senior notes of approximately $0.8 billion on the
acquisition date will be amortized as an adjustment to interest expense over the remaining contractual terms of the
senior notes.
In February 2021, we completed a debt exchange offer related to the debt assumed from Concho. Of the approximately
$3.9 billion in aggregate principal amount of Concho’s senior notes offered in the exchange, 98 percent, or approximately
$3.8 billion, was tendered and accepted. The new debt issued by ConocoPhillips had the same interest rates and maturity
dates as the Concho senior notes. The portion not exchanged, approximately $67 million, remained outstanding across
five series of senior notes issued by Concho. The debt exchange was treated as a debt modification for accounting
purposes resulting in a portion of the unamortized fair value adjustment of the Concho senior notes allocated to the new
debt issued by ConocoPhillips on the settlement date of the exchange. The new debt issued in the exchange is fully and
unconditionally guaranteed by ConocoPhillips Company. See Note 3.
For information on Finance Leases, see Note 15.
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 both December 31, 2022 and 2021, 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 10-K
96
Notes to Consolidated Financial Statements
Table of Contents
Note 10—Guarantees
At December 31, 2022, we were liable for certain contingent obligations under various contractual arrangements as
described below. We recognize a liability, at inception, for the fair value of our obligation as a guarantor for newly issued
or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability
because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently
performing with any significance under the guarantee and expect future performance to be either immaterial or have
only a remote chance of occurrence.
APLNG Guarantees
At December 31, 2022, we had outstanding multiple guarantees in connection with our 47.5 percent ownership interest
in APLNG. The following is a description of the guarantees with values calculated utilizing December 2022 exchange rates:
•
•
During the third quarter of 2016, we issued a guarantee to facilitate the withdrawal of our pro-rata portion of
the funds in a project finance reserve account. We estimate the remaining term of this guarantee to be eight
years. Our maximum exposure under this guarantee is approximately $210 million and may become payable if
an enforcement action is commenced by the project finance lenders against APLNG. At December 31, 2022, the
carrying value of this guarantee was approximately $14 million.
In conjunction with our original purchase of an ownership interest in APLNG from Origin Energy Limited in
October 2008, we agreed to reimburse Origin Energy Limited for our share of the existing contingent liability
arising under guarantees of an existing obligation of APLNG to deliver natural gas under several sales
agreements. The final guarantee expires in the fourth quarter of 2041. Our maximum potential liability for future
payments, or cost of volume delivery, under these guarantees is estimated to be $780 million ($1.3 billion in the
event of intentional or reckless breach) and would become payable if APLNG fails to meet its obligations under
these agreements and the obligations cannot otherwise be mitigated. Future payments are considered unlikely,
as the payments, or cost of volume delivery, would only be triggered if APLNG does not have enough natural gas
to meet these sales commitments and if the co-ventures do not make necessary equity contributions into
APLNG.
• We have guaranteed the performance of APLNG with regard to certain other contracts executed in connection
with the project’s continued development. The guarantees have remaining terms of 14 to 23 years or the life of
the venture. Our maximum potential amount of future payments related to these guarantees is approximately
$290 million and would become payable if APLNG does not perform. At December 31, 2022, the carrying value of
these guarantees was approximately $20 million.
QG8 Guarantee
We have guaranteed our portion of certain fiscal and other joint venture obligations as a shareholder in QG8. This
guarantee has an approximate 30-year term with no maximum limit. At December 31, 2022, the carrying value of this
guarantee was approximately $7 million.
Other Guarantees
We have other guarantees with maximum future potential payment amounts totaling approximately $600 million, which
consist primarily of guarantees of the residual value of leased office buildings and guarantees of the residual value of
corporate aircraft. These guarantees have remaining terms of three to four years and would become payable if certain
asset values are lower than guaranteed amounts at the end of the lease or contract term, business conditions decline at
guaranteed entities, or as a result of nonperformance of contractual terms by guaranteed parties. At December 31, 2022,
there was no carrying value associated with these guarantees.
Indemnifications
Over the years, we have entered into agreements to sell ownership interests in certain legal entities, joint ventures and
assets that gave rise to qualifying indemnifications. These agreements include indemnifications for taxes and
environmental liabilities. The carrying amount recorded for these indemnifications at December 31, 2022, was
approximately $20 million. Those related to environmental issues have terms that are generally indefinite and the
maximum amounts of future payments are generally unlimited. Although it is reasonably possible future payments may
exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of
the maximum potential amount of future payments. See Note 11 for additional information about environmental
liabilities.
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Table of Contents
Note 11—Contingencies and Commitments
A number of lawsuits involving a variety of claims arising in the ordinary course of business have been filed against
ConocoPhillips. We also may be required to remove or mitigate the effects on the environment of the placement,
storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites.
We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known
contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount
is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better
estimate than any other amount, then the low end of the range is accrued. We do not reduce these liabilities for potential
insurance or third-party recoveries. We accrue receivables for insurance or other third-party recoveries when applicable.
With respect to income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where
sustaining a tax position is less than certain. See Note 17, for additional information about income tax-related
contingencies.
Based on currently available information, we believe it is remote that future costs related to known contingent liability
exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated
financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to
accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent
liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation
costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and
extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other
responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as
additional information becomes available during the administrative and litigation processes.
Environmental
We are subject to international, federal, state and local environmental laws and regulations and record accruals for
environmental liabilities based on management’s best estimates. These estimates are based on currently available facts,
existing technology, and presently enacted laws and regulations, taking into account stakeholder and business
considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of
contaminated sites, other companies’ cleanup experience, and data released by the U.S. EPA or other organizations. We
consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are
both probable and reasonably estimable.
Although liability of those potentially responsible for environmental remediation costs is generally joint and several for
federal sites and frequently so for other sites, we are usually only one of many companies cited at a particular site. Due to
the joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been
designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other
financially sound companies. Many of the sites at which we are potentially responsible are still under investigation by the
EPA or the agency concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions,
apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may
attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to
bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals
accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these
environmental obligations are mitigated by indemnifications made by others for our benefit, and some of the
indemnifications are subject to dollar limits and time limits.
We are currently participating in environmental assessments and cleanups at numerous federal Superfund and
comparable state and international sites. After an assessment of environmental exposures for cleanup and other costs,
we make accruals on an undiscounted basis (except those acquired in a purchase business combination, which we record
on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will
be incurred and these costs can be reasonably estimated. We have not reduced these accruals for possible insurance
recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.
See Note 8 for a summary of our accrued environmental liabilities.
ConocoPhillips 2022 10-K
98
Notes to Consolidated Financial Statements
Table of Contents
Litigation and Other Contingencies
We are subject to various lawsuits and claims including but not limited to matters involving oil and gas royalty and
severance tax payments, gas measurement and valuation methods, contract disputes, environmental damages, climate
change, personal injury, and property damage. Our primary exposures for such matters relate to alleged royalty and tax
underpayments on certain federal, state and privately owned properties, claims of alleged environmental contamination
and damages from historic operations, and climate change. We will continue to defend ourselves vigorously in these
matters.
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our
cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process
facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us
to track those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience
in using these litigation management tools and available information about current developments in all our cases, our
legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals,
or establishment of new accruals, is required.
We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not
associated with financing arrangements. Under these agreements, we may be required to provide any such company with
additional funds through advances and penalties for fees related to throughput capacity not utilized. In addition, at
December 31, 2022, we had performance obligations secured by letters of credit of $368 million (issued as direct bank
letters of credit) related to various purchase commitments for materials, supplies, commercial activities and services
incident to the ordinary conduct of business.
In 2007, ConocoPhillips was unable to reach agreement with respect to the empresa mixta structure mandated by the
Venezuelan government’s Nationalization Decree. As a result, Venezuela’s national oil company, Petróleos de Venezuela,
S.A. (PDVSA), or its affiliates, directly assumed control over ConocoPhillips’ interests in the Petrozuata and Hamaca heavy
oil ventures and the offshore Corocoro development project. In response to this expropriation, ConocoPhillips initiated
international arbitration on November 2, 2007, with the ICSID. On September 3, 2013, an ICSID arbitration tribunal held
that Venezuela unlawfully expropriated ConocoPhillips’ significant oil investments in June 2007. On January 17, 2017, the
Tribunal reconfirmed the decision that the expropriation was unlawful. In March 2019, the Tribunal unanimously ordered
the government of Venezuela to pay ConocoPhillips approximately $8.7 billion in compensation for the government’s
unlawful expropriation of the company’s investments in Venezuela in 2007. On August 29, 2019, the ICSID Tribunal issued
a decision rectifying the award and reducing it by approximately $227 million. The award now stands at $8.5 billion plus
interest. The government of Venezuela sought annulment of the award, which automatically stayed enforcement of the
award. On September 29, 2021, the ICSID annulment committee lifted the stay of enforcement of the award. The
annulment proceedings are underway.
In 2014, ConocoPhillips filed a separate and independent arbitration under the rules of the ICC against PDVSA under the
contracts that had established the Petrozuata and Hamaca projects. The ICC Tribunal issued an award in April 2018,
finding that PDVSA owed ConocoPhillips approximately $2 billion under their agreements in connection with the
expropriation of the projects and other pre-expropriation fiscal measures. In August 2018, ConocoPhillips entered into a
settlement with PDVSA to recover the full amount of this ICC award, plus interest through the payment period, including
initial payments totaling approximately $500 million within a period of 90 days from the time of signing of the settlement
agreement. The balance of the settlement is to be paid quarterly over a period of four and a half years. Per the
settlement, PDVSA recognized the ICC award as a judgment in various jurisdictions, and ConocoPhillips agreed to suspend
its legal enforcement actions. ConocoPhillips sent notices of default to PDVSA on October 14 and November 12, 2019,
and to date PDVSA has failed to cure its breach. As a result, ConocoPhillips has resumed legal enforcement actions. To
date, ConocoPhillips has received approximately $774 million in connection with the ICC award. ConocoPhillips has
ensured that the settlement and any actions taken in enforcement thereof meet all appropriate U.S. regulatory
requirements, including those related to any applicable sanctions imposed by the U.S. against Venezuela.
In 2016, ConocoPhillips filed a separate and independent arbitration under the rules of the ICC against PDVSA under the
contracts that had established the Corocoro Project. On August 2, 2019, the ICC Tribunal awarded ConocoPhillips
approximately $33 million plus interest under the Corocoro contracts. ConocoPhillips is seeking recognition and
enforcement of the award in various jurisdictions. ConocoPhillips has ensured that all the actions related to the award
meet all appropriate U.S. regulatory requirements, including those related to any applicable sanctions imposed by the
U.S. against Venezuela.
99
ConocoPhillips 2022 10-K
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Table of Contents
Beginning in 2017, governmental and other entities in several states/territories in the U.S. have filed lawsuits against oil
and gas companies, including ConocoPhillips, seeking compensatory damages and equitable relief to abate alleged
climate change impacts. Additional lawsuits with similar allegations are expected to be filed. The amounts claimed by
plaintiffs are unspecified and the legal and factual issues are unprecedented, therefore, there is significant uncertainty
about the scope of the claims and alleged damages and any potential impact on the Company’s financial condition.
ConocoPhillips believes these lawsuits are factually and legally meritless and are an inappropriate vehicle to address the
challenges associated with climate change and will vigorously defend against such lawsuits.
Several Louisiana parishes and the State of Louisiana have filed 43 lawsuits under Louisiana’s State and Local Coastal
Resources Management Act (SLCRMA) against oil and gas companies, including ConocoPhillips, seeking compensatory
damages for contamination and erosion of the Louisiana coastline allegedly caused by historical oil and gas operations.
ConocoPhillips entities are defendants in 22 of the lawsuits and will vigorously defend against them. On October 17,
2022, the Fifth Circuit affirmed remand of lead cases to state court and the subsequent request for rehearing was denied.
Accordingly, the federal district courts have issued remands to state court. Because Plaintiffs’ SLCRMA theories are
unprecedented, there is uncertainty about these claims (both as to scope and damages) and we continue to evaluate our
exposure in these lawsuits.
In October 2020, the Bureau of Safety and Environmental Enforcement (BSEE) ordered the prior owners of Outer
Continental Shelf (OCS) Lease P-0166, including ConocoPhillips, to decommission the lease facilities, including two
offshore platforms located near Carpinteria, California. This order was sent after the current owner of OCS Lease P-0166
relinquished the lease and abandoned the lease platforms and facilities. BSEE’s order to ConocoPhillips is premised on its
connection to Phillips Petroleum Company, a legacy company of ConocoPhillips, which held a historical 25 percent
interest in this lease and operated these facilities, but sold its interest approximately 30 years ago. ConocoPhillips
continues to evaluate its exposure in this matter.
On May 10, 2021, ConocoPhillips filed arbitration under the rules of the Singapore International Arbitration Centre (SIAC)
against Santos KOTN Pty Ltd. and Santos Limited for their failure to timely pay the $200 million bonus due upon FID of the
Barossa development project under the sale and purchase agreement. Santos KOTN Pty Ltd. and Santos Limited have filed
a response and counterclaim, and the arbitration is underway.
In July 2021, a federal securities class action was filed against Concho, certain of Concho’s officers, and ConocoPhillips as
Concho’s successor in the United States District Court for the Southern District of Texas. On October 21, 2021, the court
issued an order appointing Utah Retirement Systems and the Construction Laborers Pension Trust for Southern California
as lead plaintiffs (Lead Plaintiffs). On January 7, 2022, the Lead Plaintiffs filed their consolidated complaint alleging that
Concho made materially false and misleading statements regarding its business and operations in violation of the federal
securities laws and seeking unspecified damages, attorneys’ fees, costs, equitable/injunctive relief, and such other relief
that may be deemed appropriate. We believe the allegations in the action are without merit and are vigorously defending
this litigation.
Long-Term Throughput Agreements and Take-or-Pay Agreements
We have certain throughput agreements and take-or-pay agreements in support of financing arrangements. The
agreements typically provide for natural gas or crude oil transportation to be used in the ordinary course of business. The
aggregate amounts of estimated payments under these various agreements are: 2023—$7 million; 2024—$7 million;
2025—$7 million; 2026—$7 million; 2027—$7 million; and 2028 and after—$33 million. Total payments under the
agreements were $26 million in 2022, $27 million in 2021 and $25 million in 2020.
ConocoPhillips 2022 10-K 100
Notes to Consolidated Financial Statements
Table of Contents
Note 12—Derivative and Financial Instruments
We use futures, forwards, swaps and options in various markets to meet our customer needs, capture market
opportunities and manage foreign exchange currency risk.
Commodity Derivative Instruments
Our commodity business primarily consists of natural gas, crude oil, bitumen, LNG and NGLs.
Commodity derivative instruments are held at fair value on our consolidated balance sheet. Where these balances have
the right of setoff, they are presented on a net basis. Related cash flows are recorded as operating activities on our
consolidated statement of cash flows. On our consolidated income statement, gains and losses are recognized either on a
gross basis if directly related to our physical business or a net basis if held for trading. Gains and losses related to
contracts that meet and are designated with the NPNS exception are recognized upon settlement. We generally apply
this exception to eligible crude contracts and certain gas contracts. We do not apply hedge accounting for our commodity
derivatives.
The following table presents the gross fair values of our commodity derivatives, excluding collateral, and the line items
where they appear on our consolidated balance sheet:
Assets
Prepaid expenses and other current assets
Other assets
Liabilities
Other accruals
Other liabilities and deferred credits
Millions of Dollars
2022
2021
$
1,795
242
1,800
210
1,168
75
1,160
63
The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated
income statement were:
Sales and other operating revenues
Other income (loss)
Purchased commodities
Millions of Dollars
2021
2020
2022
$
(88)
(5)
(91)
(228)
25
75
19
4
11
On January 15, 2021, we assumed financial derivative instruments consisting of oil and natural gas swaps in connection
with the acquisition of Concho. At the acquisition date, these financial derivative instruments acquired were recognized
at fair value as a net liability of $456 million with settlement dates under the contracts through December 31, 2022.
During 2021, we recognized a loss on settlement of these derivatives contracts of $305 million. This loss is recorded
within the “Sales and other operating revenues” line on our consolidated income statement. In connection with the
settlement, we issued a cash payment of $761 million during 2021 which is included within “Cash Flows From Operating
Activities” on our consolidated statement of cash flows.
The table below summarizes our net exposures resulting from outstanding commodity derivative contracts:
Commodity
Natural gas and power (billions of cubic feet equivalent)
Fixed price
Basis
101 ConocoPhillips 2022 10-K
Open Position
Long/(Short)
2022
2021
(14)
(8)
4
(22)
Notes to Consolidated Financial Statements
Table of Contents
Financial Instruments
We invest in financial instruments with maturities based on our cash forecasts for the various accounts and currency
pools we manage. The types of financial instruments in which we currently invest include:
•
•
•
•
•
•
•
Time deposits: Interest bearing deposits placed with financial institutions for a predetermined amount of time.
Demand deposits: Interest bearing deposits placed with financial institutions. Deposited funds can be
withdrawn without notice.
Commercial paper: Unsecured promissory notes issued by a corporation, commercial bank or government
agency purchased at a discount to mature at par.
U.S. government or government agency obligations: Securities issued by the U.S. government or U.S.
government agencies.
Foreign government obligations: Securities issued by foreign governments.
Corporate bonds: Unsecured debt securities issued by corporations.
Asset-backed securities: Collateralized debt securities.
The following investments are carried on our consolidated balance sheet at cost, plus accrued interest and the table
reflects remaining maturities at December 31, 2022 and 2021:
Cash
Demand Deposits
Time Deposits
1 to 90 days
91 to 180 days
Within one year
U.S. Government Obligations
1 to 90 days
Millions of Dollars
Carrying Amount
Cash and Cash
Equivalents
2022
593
1,638
2021
670
1,554
4,116
2,363
14
6,361
431
5,018
$
$
Short-Term
Investments
2022
2021
1,288
883
11
—
2,182
217
4
4
—
225
The following investments in debt securities classified as available for sale are carried at fair value on our consolidated
balance sheet at December 31, 2022 and 2021:
Cash and Cash
Equivalents
2022
2021
$
—
97
—
3
7
—
$
97
10
Millions of Dollars
Carrying Amount
Short-Term
Investments
2022
Investments and Long-Term
Receivables
2022
2021
2021
323
156
115
8
—
1
603
128
82
—
2
7
2
221
309
173
63
5
7
138
522
2
8
2
63
248
Major Security Type
Corporate Bonds
Commercial Paper
U.S. Government Obligations
U.S. Government Agency
Obligations
Foreign Government
Obligations
Asset-backed Securities
Cash and Cash Equivalents and Short-Term Investments have remaining maturities within one year.
Investments and Long-Term Receivables have remaining maturities that vary from greater than one year through five
years.
ConocoPhillips 2022 10-K 102
Notes to Consolidated Financial Statements
Table of Contents
The following table summarizes the amortized cost basis and fair value of investments in debt securities classified as
available for sale at December 31:
Major Security Type
Corporate Bonds
Commercial Paper
U.S. Government Obligations
U.S. Government Agency Obligations
Foreign Government Obligations
Asset-backed Securities
Millions of Dollars
Amortized Cost Basis
2021
2022
Fair Value
2022
2021
$
$
641
253
181
13
7
139
1,234
305
88
2
10
9
65
479
632
253
178
13
7
139
1,222
304
89
2
10
9
65
479
As of December 31, 2022 and 2021, total unrealized losses for debt securities classified as available for sale with net
losses were $12 million and negligible, respectively. No allowance for credit losses has been recorded on investments in
debt securities which are in an unrealized loss position.
For the years ended December 31, 2022 and 2021, proceeds from sales and redemptions of investments in debt
securities classified as available for sale were $644 million and $594 million, respectively. Gross realized gains and losses
included in earnings from those sales and redemptions were negligible. The cost of securities sold and redeemed is
determined using the specific identification method.
Credit Risk
Financial instruments potentially exposed to concentrations of credit risk consist primarily of cash equivalents, short-term
investments, long-term investments in debt securities, OTC derivative contracts and trade receivables. Our cash
equivalents and short-term investments are placed in high-quality commercial paper, government money market funds,
U.S. government and government agency obligations, time deposits with major international banks and financial
institutions, high-quality corporate bonds, foreign government obligations and asset-backed securities. Our long-term
investments in debt securities are placed in high-quality corporate bonds, asset-backed securities, U.S. government and
government agency obligations, foreign government obligations, and time deposits with major international banks and
financial institutions.
The credit risk from our OTC derivative contracts, such as forwards, swaps and options, derives from the counterparty to
the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of
cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps
and option contracts that have a negligible credit risk because these trades are cleared primarily with an exchange
clearinghouse and subject to mandatory margin requirements until settled; however, we are exposed to the credit risk of
those exchange brokers for receivables arising from daily margin cash calls, as well as for cash deposited to meet initial
margin requirements.
Our trade receivables result primarily from our petroleum operations and reflect a broad national and international
customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have
payment terms of 30 days or less, and we continually monitor this exposure and the creditworthiness of the
counterparties. We may require collateral to limit the exposure to loss including, letters of credit, prepayments and
surety bonds, as well as master netting arrangements to mitigate credit risk with counterparties that both buy from and
sell to us, as these agreements permit the amounts owed by us or owed to others to be offset against amounts due to us.
Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure
exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable
threshold amounts that are contingent on our credit rating. The variable threshold amounts typically decline for lower
credit ratings, while both the variable and fixed threshold amounts typically revert to zero if we fall below investment
grade. Cash is the primary collateral in all contracts; however, many also permit us to post letters of credit as collateral,
such as transactions administered through the New York Mercantile Exchange.
103 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
The aggregate fair value of all derivative instruments with such credit risk-related contingent features that were in a
liability position on December 31, 2022 and December 31, 2021, was $333 million and $281 million, respectively. For
these instruments, $42 million of collateral was posted as of December 31, 2022 and no collateral was posted as of
December 31, 2021. If our credit rating had been downgraded below investment grade on December 31, 2022, we would
have been required to post $270 million of additional collateral, either with cash or letters of credit.
Note 13—Fair Value Measurement
We carry a portion of our assets and liabilities at fair value that are measured at the reporting date using an exit price
(i.e., the price that would be received to sell an asset or paid to transfer a liability) and disclosed according to the quality
of valuation inputs under the fair value hierarchy.
The classification of an asset or liability is based on the lowest level of input significant to its fair value. Those that are
initially classified as Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is
inconsequential to the overall fair value, or if corroborated market data becomes available. Assets and liabilities initially
reported as Level 2 are subsequently reported as Level 3 if corroborated market data is no longer available. There were
no material transfers into or out of Level 3 during 2022 or 2021.
Recurring Fair Value Measurement
Financial assets and liabilities reported at fair value on a recurring basis primarily include our investment in CVE common
shares, our investments in debt securities classified as available for sale, and commodity derivatives.
•
Level 1 derivative assets and liabilities primarily represent exchange-traded futures and options that are valued using
unadjusted prices available from the underlying exchange. Level 1 also includes our investment in common shares of
CVE, which is valued using quotes for shares on the NYSE, and our investments in U.S. government obligations
classified as available for sale debt securities, which are valued using exchange prices.
Level 2 derivative assets and liabilities primarily represent OTC swaps, options and forward purchase and sale
contracts that are valued using adjusted exchange prices, prices provided by brokers or pricing service companies
that are all corroborated by market data. Level 2 also includes our investments in debt securities classified as
available for sale including investments in corporate bonds, commercial paper, asset-backed securities, U.S.
government agency obligations and foreign government obligations that are valued using pricing provided by brokers
or pricing service companies that are corroborated with market data.
Level 3 derivative assets and liabilities consist of OTC swaps, options and forward purchase and sale contracts where
a significant portion of fair value is calculated from underlying market data that is not readily available. The derived
value uses industry standard methodologies that may consider the historical relationships among various
commodities, modeled market prices, time value, volatility factors and other relevant economic measures. The use of
these inputs results in management’s best estimate of fair value. Level 3 activity was not material for all periods
presented.
•
•
The following table summarizes the fair value hierarchy for gross financial assets and liabilities (i.e., unadjusted where the
right of setoff exists for commodity derivatives accounted for at fair value on a recurring basis):
December 31, 2022
Level 3
Level 2
Level 1
Total
Level 1
December 31, 2021
Level 3
Level 2
Millions of Dollars
Assets
Investment in Cenovus Energy $
Investments in debt securities
Commodity derivatives
Total assets
178
958
$ 1,136
1,044
951
1,995
—
128
128
1,222
2,037
3,259
1,117
2
562
1,681
—
477
619
1,096
—
—
62
62
Total
1,117
479
1,243
2,839
Liabilities
Commodity derivatives
Total liabilities
$
$
906
906
843
843
261
261
2,010
2,010
593
593
543
543
87
87
1,223
1,223
ConocoPhillips 2022 10-K 104
Notes to Consolidated Financial Statements
Table of Contents
The following table summarizes those commodity derivative balances subject to the right of setoff as presented on our
consolidated balance sheet. We have elected to offset the recognized fair value amounts for multiple derivative
instruments executed with the same counterparty in our financial statements when a legal right of setoff exists.
Millions of Dollars
Amounts Subject to Right of Setoff
Amounts
Not
Subject to
Right of
Setoff
Gross
Amounts
Recognized
Gross
Amounts
Gross
Amounts
Offset
Net
Amounts
Presented
Cash
Collateral
Net
Amounts
December 31, 2022
Assets
Liabilities
December 31, 2021
Assets
Liabilities
$
$
2,037
2,010
39
20
1,998
1,990
1,176
1,176
822
814
1,243
1,223
85
82
1,158
1,141
650
650
508
491
37
52
—
36
785
762
508
455
At December 31, 2022 and December 31, 2021, we did not present any amounts gross on our consolidated balance sheet
where we had the right of setoff.
Non-Recurring Fair Value Measurement
The following table summarizes the fair value hierarchy by major category and date of remeasurement for assets
accounted for at fair value on a non-recurring basis:
Millions of Dollars
Fair Value Measurements Using
Level 1
Inputs
Level 2
Inputs
Level 3
Inputs
Before-Tax
Loss
Fair Value
Year ended December 31, 2021
Net PP&E (held for use)
December 31, 2021
Equity Method Investments
December 31, 2021
$
472
—
—
472
80
5,574
—
5,574
—
688
Net PP&E (held for use)
During 2021, the estimated fair value of certain noncore assets included in our Lower 48 segment declined to amounts
below the carrying values. The carrying values were written down to fair value. The fair values were estimated based on
internal discounted cash flow models using the following estimated assumptions: estimated future production, an
outlook of future prices from a combination of exchanges (short-term) coupled with pricing service companies and our
internal outlook (long-term), future operating costs and capital expenditures, and a discount rate believed to be
consistent with those used by principal market participants. The range and arithmetic average of significant unobservable
inputs used in the Level 3 fair value measurements for significant assets were as follows:
Fair Value
(Millions of
Dollars)
Valuation
Technique
Unobservable Inputs
Range
(Arithmetic Average)
December 31, 2021
Lower 48 Gulf Coast and Rockies
noncore field
$
472
Discounted
cash flow
Commodity production
(MBOED)
Commodity price outlook*
($/BOE)
Discount rate**
0.2 - 17 (5.4)
$41.45 - $93.68 ($64.39)
7.3% - 9.7% (8.7%)
*Commodity price outlook based on a combination of external pricing service companies' and our internal outlook for years 2024-2050; future prices
escalated at 2.0% annually after year 2050.
**Determined as the weighted average cost of capital of a group of peer companies, adjusted for risks where appropriate.
105 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Equity Method Investments
During the fourth quarter of 2021, Origin Energy Limited agreed to the sale of 10 percent of their interest in APLNG for
$1.645 billion, before customary adjustments. ConocoPhillips announced in December 2021 that we were exercising our
preemption right under the APLNG Shareholders Agreement to purchase an additional 10 percent shareholding interest
in APLNG, subject to government approvals. The sales price associated with this preemption right was determined to
reflect a relevant observable market participant view of APLNG’s fair value which was below the carrying value of our
existing investment in APLNG. As such, our investment in APLNG was written down to its fair value of $5,574 million,
resulting in a before-tax charge of $688 million. See Note 4 and Note 7.
Reported Fair Values of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:
•
•
•
•
•
•
•
•
Cash and cash equivalents and short-term investments: The carrying amount reported on the balance sheet
approximates fair value. For those investments classified as available for sale debt securities, the carrying
amount reported on the balance sheet is fair value.
Accounts and notes receivable (including long-term and related parties): The carrying amount reported on the
balance sheet approximates fair value. The valuation technique and methods used to estimate the fair value of
the current portion of fixed-rate related party loans is consistent with Loans and advances—related parties.
Investment in Cenovus Energy: See Note 5 for a discussion of the carrying value and fair value of our investment
in CVE common shares.
Investments in debt securities classified as available for sale: The fair value of investments in debt securities
categorized as Level 1 in the fair value hierarchy is measured using exchange prices. The fair value of
investments in debt securities categorized as Level 2 in the fair value hierarchy is measured using pricing
provided by brokers or pricing service companies that are corroborated with market data. See Note 12.
Loans and advances—related parties: The carrying amount of floating-rate loans approximates fair value. The
fair value of fixed-rate loan activity is measured using market observable data and is categorized as Level 2 in the
fair value hierarchy. See Note 4.
Accounts payable (including related parties) and floating-rate debt: The carrying amount of accounts payable
and floating-rate debt reported on the balance sheet approximates fair value.
Fixed-rate debt: The estimated fair value of fixed-rate debt is measured using prices available from a pricing
service that is corroborated by market data; therefore, these liabilities are categorized as Level 2 in the fair value
hierarchy.
Commercial paper: The carrying amount of our commercial paper instruments approximates fair value and is
reported on the balance sheet as short-term debt.
The following table summarizes the net fair value of financial instruments (i.e., adjusted where the right of setoff exists
for commodity derivatives):
Financial assets
Investment in CVE common shares
Commodity derivatives
Investments in debt securities
Loans and advances—related parties
Financial liabilities
Total debt, excluding finance leases
Commodity derivatives
Millions of Dollars
Carrying Amount
2022
2021
Fair Value
2022
$
—
824
1,222
—
1,117 $
593
479
114
—
824
1,222
—
2021
1,117
593
479
114
15,323
782
18,673
537
15,545
782
22,451
537
ConocoPhillips 2022 10-K 106
Notes to Consolidated Financial Statements
Table of Contents
Note 14—Equity
Common Stock
The changes in our shares of common stock, as categorized in the equity section of the balance sheet, were:
Issued
Beginning of year
Acquisition of Concho
Distributed under benefit plans
End of year
Held in Treasury
Beginning of year
Repurchase of common stock
End of year
Shares
2022
2021
2020
2,091,562,747 1,798,844,267 1,795,652,203
—
— 285,928,872
3,192,064
6,789,608
2,100,885,134 2,091,562,747 1,798,844,267
9,322,387
789,319,875 730,802,089 710,783,814
20,018,275
877,029,062 789,319,875 730,802,089
87,709,187
58,517,786
Preferred Stock
We have authorized 500 million shares of preferred stock, par value $0.01 per share, none of which was issued or
outstanding at December 31, 2022 or 2021.
Noncontrolling Interests
In 2020, we completed the divestiture of our subsidiaries that held our Australia-West assets and operations. These
assets included the Darwin LNG and Bayu-Darwin Pipeline operating joint ventures in which there was a noncontrolling
interest. As a result, as of December 31, 2020, we had no noncontrolling interests.
Repurchase of Common Stock
In late 2016, we initiated our current share repurchase program. In October 2022, our Board of Directors approved an
increase to our authorization from $25 billion to $45 billion of our common stock to support our plan for future share
repurchases. In May 2021, we began a paced monetization of our CVE common shares, the proceeds of which have been
applied to share repurchases. During the first quarter of 2022, we sold our remaining 91 million CVE common shares.
Share repurchases since inception of our current program totaled 335 million shares at a cost of $23 billion through the
end of December 2022.
107 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Note 15—Non-Mineral Leases
The company primarily leases office buildings and drilling equipment, as well as ocean transport vessels, tugboats,
corporate aircraft, and other facilities and equipment. Certain leases include escalation clauses for adjusting rental
payments to reflect changes in price indices and other leases include payment provisions that vary based on the nature of
usage of the leased asset. Additionally, the company has executed certain leases that provide it with the option to extend
or renew the term of the lease, terminate the lease prior to the end of the lease term, or purchase the leased asset as of
the end of the lease term. In other cases, the company has executed lease agreements that require it to guarantee the
residual value of certain leased office buildings. For additional information about guarantees, see Note 10. There are no
significant restrictions imposed on us by the lease agreements with regard to dividends, asset dispositions or borrowing
ability.
We determine if an arrangement is or contains a lease at contract inception. Certain contractual arrangements may
contain both lease and non-lease components. Only the lease components of these contractual arrangements are subject
to the provisions of ASC Topic 842, and any non-lease components are subject to other applicable accounting guidance;
however, we have elected to adopt the optional practical expedient not to separate lease components apart from non-
lease components for existing asset classes (as of the adoption date of ASC 842) for accounting purposes. For contractual
arrangements involving a new leased asset class, we determine at contract inception whether it will apply the optional
practical expedient to the new leased asset class.
Leases are evaluated for classification as operating or finance leases at the commencement date of the lease and right-of-
use assets and corresponding liabilities are recognized on our consolidated balance sheet based on the present value of
future lease payments relating to the use of the underlying asset during the lease term. Future lease payments include
variable lease payments that depend upon an index or rate using the index or rate at the commencement date and
probable amounts owed under residual value guarantees. The amount of future lease payments may be increased to
include additional payments related to lease extension, termination, and/or purchase options when the company has
determined, at or subsequent to lease commencement, generally due to limited asset availability or operating
commitments, it is reasonably certain of exercising such options. We use our incremental borrowing rate as the discount
rate in determining the present value of future lease payments, unless the interest rate implicit in the lease arrangement
is readily determinable. Lease payments that vary subsequent to the commencement date based on future usage levels,
the nature of leased asset activities, or certain other contingencies are not included in the measurement of lease right-of-
use assets and corresponding liabilities. We have elected not to record assets and liabilities on our consolidated balance
sheet for lease arrangements with terms of 12 months or less.
We often enter into leasing arrangements acting in the capacity as operator for and/or on behalf of certain oil and gas
joint ventures of undivided interests. If the lease arrangement can be legally enforced only against us as operator and
there is no separate arrangement to sublease the underlying leased asset to our coventurers, we recognize at lease
commencement a right-of-use asset and corresponding lease liability on our consolidated balance sheet on a gross basis.
While we record lease costs on a gross basis in our consolidated income statement and statement of cash flows, such
costs are offset by the reimbursement we receive from our coventurers for their share of the lease cost as the underlying
leased asset is utilized in joint venture activities. As a result, lease cost is presented in our consolidated income statement
and statement of cash flows on a proportional basis. If we are a nonoperating coventurer, we recognize a right-of-use
asset and corresponding lease liability only if we were a specified contractual party to the lease arrangement and the
arrangement could be legally enforced against us. In this circumstance, we would recognize both the right-of-use asset
and corresponding lease liability on our consolidated balance sheet on a proportional basis consistent with our undivided
interest ownership in the related joint venture.
The company has historically recorded certain finance leases executed by investee companies accounted for under the
proportionate consolidation method of accounting on its consolidated balance sheet on a proportional basis consistent
with its ownership interest in the investee company. In addition, the company has historically recorded finance lease
assets and liabilities associated with certain oil and gas joint ventures on a proportional basis pursuant to accounting
guidance applicable prior to the adoption date of ASC 842 on January 1, 2019. In accordance with the transition
provisions of ASC Topic 842, and since we have elected to adopt the package of optional transition-related practical
expedients, the historical accounting treatment for these leases has been carried forward and is subject to
reconsideration upon the modification or other required reassessment of the arrangements prior to lease term
expiration.
ConocoPhillips 2022 10-K 108
Notes to Consolidated Financial Statements
Table of Contents
The following table summarizes the right-of-use assets and lease liabilities for both the operating and finance leases on
our consolidated balance sheet as of December 31:
Millions of Dollars
2022
2021
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Right-of-Use Assets
Properties, plants and equipment
Gross
Accumulated DD&A
Net PP&E*
Prepaid expenses and other current assets
Other assets
Lease Liabilities
Short-term debt**
Other accruals
Long-term debt***
Other liabilities and deferred credits
Total lease liabilities
$
2,043
(1,022)
1,021
284
1,036
1,320
536
155
390
545
1,812
(857)
955
2
280
981
1,261
16
649
188
479
667
* Includes proportionately consolidated finance lease assets of $171 million at December 31, 2022 and $208 million at December 31, 2021.
** Includes proportionately consolidated finance lease liabilities of $169 million at December 31, 2022 and $154 million at December 31, 2021.
*** Includes proportionately consolidated finance lease liabilities of $399 million at December 31, 2022 and $462 million at December 31, 2021.
The following table summarizes our lease costs:
Lease Cost*
Operating lease cost
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Short-term lease cost**
Total lease cost***
Millions of Dollars
2022
2021
2020
$
212
278
189
32
94
527
148
27
21
474
$
321
163
34
42
560
* The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers.
** Short-term leases are not recorded on our consolidated balance sheet.
*** Variable lease cost and sublease income are immaterial for the periods presented and therefore are not included in the table above.
The following table summarizes the lease terms and discount rates as of December 31:
Lease Term and Discount Rate
Weighted-average term (years)
Operating leases
Finance leases
Weighted-average discount rate (percent)
Operating leases
Finance leases
109 ConocoPhillips 2022 10-K
2022
2021
5.64
6.60
2.99
3.40
5.97
7.49
2.66
3.24
The following table summarizes other lease information:
Other Information*
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for operating lease liabilities
Right-of-use assets obtained in exchange for finance lease liabilities
Millions of Dollars
2022
2021
2020
$
$
148
30
166
114
256
204
6
73
174
447
232
11
255
250
426
*The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers. In addition,
pursuant to other applicable accounting guidance, lease payments made in connection with preparing another asset for its intended use are reported in
the "Cash Flows From Investing Activities" section of our consolidated statement of cash flows.
The following table summarizes future lease payments for operating and finance leases at December 31, 2022:
Maturity of Lease Liabilities
2023
2024
2025
2026
2027
Remaining years
Total*
Less: portion representing imputed interest
Total lease liabilities
Millions of Dollars
Operating
Leases
Finance
Leases
$
$
169
126
81
59
46
118
599
(54)
545 $
356
215
210
207
164
352
1,504
(184)
1,320
*Future lease payments for operating and finance leases commencing on or after January 1, 2019, also include payments related to non-lease
components in accordance with our election to adopt the optional practical expedient not to separate lease components apart from non-lease
components for accounting purposes. In addition, future payments related to operating and finance leases proportionately consolidated by the company
have been included in the table on a proportionate basis consistent with our respective ownership interest in the underlying investee company or oil and
gas venture.
ConocoPhillips 2022 10-K 110
Notes to Consolidated Financial Statements
Table of Contents
Note 16—Employee Benefit Plans
Pension and Postretirement Plans
An analysis of the projected benefit obligations for our pension plans and accumulated benefit obligations for our
postretirement health and life insurance plans follows:
Millions of Dollars
Pension Benefits
2022
2021
Other Benefits
2022
2021
U.S.
Int’l.
U.S.
Int’l.
Change in Benefit Obligation
Benefit obligation at January 1
Service cost
Interest cost
Plan participant contributions
Plan amendments
Actuarial (gain) loss
Benefits paid
Divestiture
Curtailment
Recognition of termination benefits
Foreign currency exchange rate change
Benefit obligation at December 31*
*Accumulated benefit obligation portion of
above at December 31:
Change in Fair Value of Plan Assets
Fair value of plan assets at January 1
Actual return on plan assets
Company contributions
Plan participant contributions
Benefits paid
Divestiture
Foreign currency exchange rate change
Fair value of plan assets at December 31
Funded Status
$
$
$
$
$
$
1,924
58
62
—
—
(325)
(241)
—
—
—
—
1,478
4,124
47
77
—
—
(847)
(144)
(56)
—
—
(425)
2,776
2,548
73
53
—
—
(117)
(654)
—
12
9
—
1,924
4,403
61
79
—
—
(176)
(162)
—
—
—
(81)
4,124
1,384
2,542
1,793
3,658
1,664
(319)
75
—
(241)
—
—
1,179
(299)
4,812
(1,372)
96
1
(144)
(46)
(468)
2,879
103
1,770
97
451
—
(654)
—
—
1,664
(260)
4,793
147
119
1
(162)
—
(86)
4,812
688
137
1
4
16
9
(27)
(38)
—
—
—
—
102
—
—
22
16
(38)
—
—
—
(102)
170
2
4
16
—
(16)
(40)
—
1
—
—
137
—
—
24
16
(40)
—
—
—
(137)
111 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Millions of Dollars
Pension Benefits
2022
2021
Other Benefits
2022
2021
U.S.
Int’l.
U.S.
Int’l.
Amounts Recognized in the Consolidated
Balance Sheet at December 31
Noncurrent assets
Current liabilities
Noncurrent liabilities
Total recognized
$
$
—
(28)
(271)
(299)
373
(10)
(260)
103
1
(29)
(232)
(260)
991
(15)
(288)
688
—
(32)
(70)
(102)
—
(34)
(103)
(137)
Weighted-Average Assumptions Used to
Determine Benefit Obligations at
December 31
Discount rate
Rate of compensation increase
Interest crediting rate for applicable benefits
5.65 %
5.00
3.55
Weighted-Average Assumptions Used to
Determine Net Periodic Benefit Cost for
Years Ended December 31
Discount rate
Expected return on plan assets
Rate of compensation increase
Interest crediting rate for applicable benefits
3.85 %
3.90
4.00
2.50
4.20
3.65
2.15
2.85
3.40
2.80
4.00
2.50
2.60
5.20
4.00
2.10
2.15
3.40
1.80
2.50
3.40
5.65
2.65
2.65
2.35
For both U.S. and international pension plans, the overall expected long-term rate of return is developed from the
expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. We
rely on a variety of independent market forecasts in developing the expected rate of return for each class of assets.
During 2022 and 2021, the actuarial gains related to the benefit obligations for U.S. and international plans were primarily
related to an increase in the discount rates. During 2020, the actuarial losses related to the benefit obligations for U.S.
and international plans were primarily related to a decrease in the discount rates.
The following tables summarize information related to the Company's pension plans with projected and accumulated
benefit obligations in excess of the fair value of the plans' assets:
Millions of Dollars
Pension Benefits
2022
U.S.
Int’l.
2021
U.S.
Int’l.
Pension Plans with Projected Benefit Obligation in Excess
of Plan Assets
Projected benefit obligation
Fair value of plan assets
Pension Plans with Accumulated Benefit Obligation in
Excess of Plan Assets
Accumulated benefit obligation
Fair value of plan assets
$
$
1,478
1,179
1,384
1,179
277
6
239
6
261
—
234
—
362
58
271
9
ConocoPhillips 2022 10-K 112
Notes to Consolidated Financial Statements
Table of Contents
Included in accumulated other comprehensive income (loss) at December 31 were the following before-tax amounts that
had not been recognized in net periodic benefit cost:
Millions of Dollars
Pension Benefits
2022
2021
Other Benefits
2022
2021
U.S.
Int’l.
U.S.
Int’l.
Unrecognized net actuarial loss (gain)
Unrecognized prior service cost (credit)
$
172
—
681
1
188
—
86
1
(28)
(98)
(1)
(145)
Millions of Dollars
Pension Benefits
2022
2021
Other Benefits
2022
2021
U.S.
Int’l.
U.S.
Int’l.
(44)
(606)
134
61
17
11
(595)
145
279
207
33
240
27
—
27
16
—
16
—
—
—
(1)
(1)
(2)
—
—
—
—
(1)
(1)
(9)
—
(38)
(47)
(37)
(37)
Sources of Change in Other Comprehensive
Income (Loss)
Net gain (loss) arising during the period
Amortization of actuarial loss included in
income (loss)*
Net change during the period
Prior service credit (cost) arising during the
period
Amortization of prior service (credit)
included in income (loss)
Net change during the period
$
$
$
$
*Includes settlement (gains) losses recognized in 2022 and 2021.
The components of net periodic benefit cost of all defined benefit plans are presented in the following table:
Millions of Dollars
2022
Pension Benefits
2021
Other Benefits
2020
2022
2021
2020
U.S.
Int’l.
U.S.
Int’l.
U.S.
Int’l.
Components of Net Periodic
Benefit Cost
Service cost
Interest cost
Expected return on plan
assets
Amortization of prior service
credit
Recognized net actuarial loss
(gain)
Settlements loss (gain)
Curtailment loss
Net periodic benefit cost
$
58
62
47
77
73
53
61
79
85
66
54
85
1
4
2
4
2
6
(50)
(124)
(80)
(120)
(85)
(145)
—
—
—
—
(1)
—
(1)
—
(1)
(38)
(37)
(31)
24
37
—
131
$
11
—
—
10
43
102
12
203
33
—
—
52
51
44
—
161
22
(1)
—
14
—
—
—
(33)
—
—
—
(31)
1
—
—
(22)
The components of net periodic benefit cost, other than the service cost component, are included in the “Other
expenses” line item on our consolidated income statement.
113 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
We recognized pension settlement losses of $37 million in 2022, $102 million in 2021, and $43 million in 2020 as lump-
sum benefit payments from certain U.S. and international pension plans exceeded the sum of service and interest costs
for those plans and led to recognition of settlement losses.
In determining net pension and other postretirement benefit costs, we amortize prior service costs on a straight-line basis
over the average remaining service period of employees expected to receive benefits under the plan. For net actuarial
gains and losses, we amortize 10 percent of the unamortized balance each year.
We have multiple non-pension postretirement benefit plans for health and life insurance. The health care plans are
contributory and subject to various cost sharing features, most with participant and company contributions adjusted
annually; the life insurance plans are noncontributory. The measurement of the U.S. pre-65 retiree medical accumulated
postretirement benefit obligation assumes a health care cost trend rate of 6.5 percent in 2023 that declines to 5 percent
by 2029. The measurement of the U.S. post-65 retiree medical accumulated postretirement benefit obligation assumes a
health care cost trend rate of 4.5 percent in 2023 that increases to 5 percent by 2029.
Plan Assets
We follow a policy of broadly diversifying pension plan assets across asset classes and individual holdings. As a result, our
plan assets have no significant concentrations of credit risk. Asset classes that are considered appropriate include U.S.
equities, non-U.S. equities, U.S. fixed income, non-U.S. fixed income, real estate and private equity investments. Plan
fiduciaries may consider and add other asset classes to the investment program from time to time. The target allocations
for plan assets are 25 percent equity securities, 71 percent debt securities, and 4 percent real estate. Generally, the plan
investments are publicly traded, therefore minimizing liquidity risk in the portfolio.
The following is a description of the valuation methodologies used for the pension plan assets. There have been no
changes in the methodologies used at December 31, 2022 and 2021.
•
•
•
•
•
•
•
•
•
Fair values of equity securities and government debt securities categorized in Level 1 are primarily based on
quoted market prices in active markets for identical assets and liabilities.
Fair values of corporate debt securities, agency and mortgage-backed securities and government debt securities
categorized in Level 2 are estimated using recently executed transactions and quoted market prices for similar
assets and liabilities in active markets and for identical assets and liabilities in markets that are not active. If
there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing
models that benchmark the security against other securities with actual market prices. When observable quoted
market prices are not available, fair value is based on pricing models that use something other than actual
market prices (e.g., observable inputs such as benchmark yields, reported trades and issuer spreads for similar
securities), and these securities are categorized in Level 3 of the fair value hierarchy.
Fair values of investments in common/collective trusts are determined by the issuer of each fund based on the
fair value of the underlying assets.
Fair values of mutual funds are based on quoted market prices, which represent the net asset value of shares
held.
Time deposits are valued at cost, which approximates fair value.
Cash is valued at cost, which approximates fair value. Fair values of international cash equivalents categorized in
Level 2 are valued using observable yield curves, discounting and interest rates. U.S. cash balances held in the
form of short-term fund units that are redeemable at the measurement date are categorized as Level 2.
Fair values of exchange-traded derivatives classified in Level 1 are based on quoted market prices. For other
derivatives classified in Level 2, the values are generally calculated from pricing models with market input
parameters from third-party sources.
Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the
insurance company to the plans’ participants.
Fair values of real estate investments are valued using real estate valuation techniques and other methods that
include reference to third-party sources and sales comparables where available.
ConocoPhillips 2022 10-K 114
Notes to Consolidated Financial Statements
Table of Contents
•
A portion of U.S. pension plan assets is held as a participating interest in an insurance annuity contract, which is
calculated as the market value of investments held under this contract, less the accumulated benefit obligation
covered by the contract. The participating interest is classified as Level 3 in the fair value hierarchy as the fair
value is determined via a combination of quoted market prices, recently executed transactions, and an actuarial
present value computation for contract obligations. At December 31, 2022, the participating interest in the
annuity contract was valued at $55 million and consisted of $144 million in debt securities, less $89 million for
the accumulated benefit obligation covered by the contract. At December 31, 2021, the participating interest in
the annuity contract was valued at $83 million and consisted of $206 million in debt securities, less $123 million
for the accumulated benefit obligation covered by the contract. The participating interest is not available for
meeting general pension benefit obligations in the near term. No future company contributions are required and
no new benefits are being accrued under this insurance annuity contract.
The fair values of our pension plan assets at December 31, by asset class were as follows:
Millions of Dollars
U.S.
Level 1
Level 2
Level 3
Total
Level 1
International
Level 2
Level 3
Total
2022
Equity securities
U.S.
International
Mutual funds
Debt securities
Corporate
Mutual funds
$
Cash and cash equivalents
Real estate
Total in fair value hierarchy
$
4
36
14
—
—
—
—
54
—
—
—
1
—
—
—
1
—
—
—
—
—
—
—
—
4
36
14
1
—
—
—
55
—
—
201
—
365
36
—
602
—
—
298
—
—
—
—
298
—
—
—
—
—
499
—
—
365
—
36
—
146
146
146 1,046
Investments measured at net asset
value*
Equity securities
Common/collective trusts
Debt securities
Common/collective trusts
Cash and cash equivalents
Real estate
Total**
265
759
10
34
— 1,123
192
1,637
—
—
146 2,875
602
298
$
54
1
*In accordance with FASB ASC Topic 715, “Compensation—Retirement Benefits,” certain investments that are to be measured at fair value using the net
asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in
this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Change in Fair Value of Plan Assets.
**Excludes the participating interest in the insurance annuity contract with a net asset of $55 million and net receivables related to security
transactions of $5 million.
115 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
The fair values of our pension plan assets at December 31, by asset class were as follows:
Millions of Dollars
U.S.
Level 1
Level 2
Level 3
Total
Level 1
International
Level 2
Level 3
Total
2021
Equity securities
U.S.
International
Mutual funds
Debt securities
Corporate
Mutual funds
$
Cash and cash equivalents
Derivatives
Real estate
Total in fair value hierarchy
$
3
42
17
—
—
—
—
—
62
—
—
—
1
—
—
—
—
1
5
—
—
—
—
—
—
—
5
8
42
17
1
—
—
—
—
68
—
—
236
—
511
68
—
—
815
—
—
403
—
—
—
—
—
403
—
—
—
—
—
639
—
—
511
—
68
—
—
—
157
157
157 1,375
Investments measured at net asset
value*
Equity securities
Common/collective trusts
Debt securities
Common/collective trusts
Cash and cash equivalents
Real estate
Total**
394
1,073
9
36
5 1,580
417
3,015
—
1
157 4,808
815
403
$
62
1
*In accordance with FASB ASC Topic 715, “Compensation—Retirement Benefits,” certain investments that are to be measured at fair value using the
net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented
in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Change in Fair Value of Plan Assets.
**Excludes the participating interest in the insurance annuity contract with a net asset of $83 million and net receivables related to security transactions
of $5 million.
Level 3 activity was not material for all periods.
Our funding policy for U.S. plans is to contribute at least the minimum required by the Employee Retirement Income
Security Act of 1974 and the Internal Revenue Code of 1986, as amended. Contributions to foreign plans are dependent
upon local laws and tax regulations. In 2023, we expect to contribute approximately $90 million to our domestic qualified
and nonqualified pension and postretirement benefit plans and $45 million to our international qualified and
nonqualified pension and postretirement benefit plans.
ConocoPhillips 2022 10-K 116
Notes to Consolidated Financial Statements
Table of Contents
The following benefit payments, which are exclusive of amounts to be paid from the insurance annuity contract and
which reflect expected future service, as appropriate, are expected to be paid:
2023
2024
2025
2026
2027
2028–2032
The following table summarizes our severance accrual activity:
Balance at January 1
Accruals
Benefit payments
Balance at December 31
Millions of Dollars
Pension
Benefits
Other
Benefits
U.S.
Int’l.
$
216
199
188
173
171
685
121
123
125
126
128
677
17
15
14
12
11
38
Millions of Dollars
2022
2021
2020
$
$
78
1
(48)
31
24
170
(116)
78
23
14
(13)
24
Accruals include severance costs associated with our company-wide restructuring program. Of the remaining balance at
December 31, 2022, $19 million is classified as short-term.
Defined Contribution Plans
Most U.S. employees are eligible to participate in the ConocoPhillips Savings Plan (CPSP). Employees can deposit up to 75
percent of their eligible pay, subject to statutory limits, in the CPSP to a choice of 17 investment options. Employees who
participate in the CPSP and contribute 1 percent of their eligible pay receive a 6 percent company cash match with a
potential company discretionary cash contribution of up to 6 percent. Effective January 1, 2019, new employees, rehires
and employees that elected to opt out of Title II of the ConocoPhillips Retirement Plan are eligible to receive a Company
Retirement Contribution (CRC) of 6 percent of eligible pay into their CPSP. After three years of service with the company,
the employee is 100 percent vested in any CRC. Company contributions charged to expense for the CPSP and predecessor
plans were $140 million in 2022, $93 million in 2021 and $62 million in 2020.
We have several defined contribution plans for our international employees, each with its own terms and eligibility
depending on location. Total compensation expense recognized for these international plans was approximately $24
million in 2022, $26 million in 2021 and $25 million in 2020.
Share-Based Compensation Plans
The 2014 Omnibus Stock and Performance Incentive Plan of ConocoPhillips (the Plan) was approved by shareholders in
May 2014, replacing similar prior plans and providing that no new awards shall be granted under the prior plans. Over its
10-year life, the Plan allows the issuance of up to 79 million shares of our common stock for compensation to our
employees and directors; however, as of the effective date of the Plan, (i) any shares of common stock available for
future awards under the prior plans and (ii) any shares of common stock represented by awards granted under the Plan
or the prior plans that are forfeited, expire or are cancelled without delivery of shares of common stock or which result in
the forfeiture of shares of common stock back to the company shall be available for awards under the Plan. Of the 79
million shares available for issuance under the Plan, no more than 40 million shares of common stock are available for
incentive stock options. The Human Resources and Compensation Committee of our Board of Directors is authorized to
determine the types, terms, conditions and limitations of awards granted. Awards may be granted in the form of, but not
limited to, stock options, restricted stock units and performance share units to employees and non-employee directors
who contribute to the company’s continued success and profitability.
117 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Total share-based compensation expense is measured using the grant date fair value for our equity-classified awards and
the settlement date fair value for our liability-classified awards. We recognize share-based compensation expense over
the shorter of the service period (i.e., the stated period of time required to earn the award); or the period beginning at
the start of the service period and ending when an employee first becomes eligible for retirement, but not less than six
months, as this is the minimum period of time required for an award to not be subject to forfeiture. Our share-based
compensation programs generally provide accelerated vesting (i.e., a waiver of the remaining period of service required
to earn an award) for awards held by employees at the time of their retirement. Some of our share-based awards vest
ratably (i.e., portions of the award vest at different times) while some of our awards cliff vest (i.e., all of the award vests
at the same time). We recognize expense on a straight-line basis over the service period for the entire award, whether
the award was granted with ratable or cliff vesting.
Compensation Expense—Total share-based compensation expense recognized in net income (loss) and the associated
tax benefit were:
Compensation cost
Tax benefit
Millions of Dollars
2022
2021
2020
$
377
95
304
76
159
40
Stock Options—Stock options granted under the provisions of the Plan and prior plans permit purchase of our common
stock at exercise prices equivalent to the average fair market value of ConocoPhillips common stock on the date the
options were granted. The options have terms of 10 years and generally vest ratably, with one-third of the options
awarded vesting and becoming exercisable on each anniversary date following the date of grant. Options awarded to
certain employees already eligible for retirement vest within six months of the grant date, but those options do not
become exercisable until the end of the normal vesting period. Beginning in 2018, stock option grants were discontinued
and replaced with three-year, time-vested restricted stock units which generally will be cash-settled for 2018 and 2019
awards and stock-settled beginning with 2020 awards.
The following summarizes our stock option activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Exercised
Expired or cancelled
Outstanding at December 31, 2022
Vested at December 31, 2022
Exercisable at December 31, 2022
Options
Weighted-Average
Exercise Price
Millions of Dollars
Aggregate
Intrinsic Value
11,973,783 $
(7,670,208)
—
4,303,575 $
4,303,575 $
4,303,575 $
56.46 $
57.12
—
55.28 $
55.28 $
55.28 $
188
(308)
266
266
266
The weighted-average remaining contractual term of outstanding options, vested options and exercisable options at
December 31, 2022, were all 2.57 years. The aggregate intrinsic value of options exercised was $68 million in 2021 and
$23 million in 2020.
During 2022, we received $438 million in cash and realized a tax benefit of $59 million from the exercise of options. At
December 31, 2022, all outstanding stock options were fully vested and there was no remaining compensation cost to be
recorded.
Stock Unit Program—Generally, restricted stock units (RSU) are granted annually under the provisions of the Plan and
vest in an aggregate installment on the third anniversary of the grant date. In addition, RSUs granted under the Plan for a
variable long-term incentive program vest ratably in three equal annual installments beginning on the first anniversary of
the grant date. Restricted stock units are also granted ad hoc to attract or retain key personnel, and the terms and
conditions under which these restricted stock units vest vary by award.
ConocoPhillips 2022 10-K 118
Notes to Consolidated Financial Statements
Table of Contents
Stock-Settled
Upon vesting, these restricted stock units are settled by issuing one share of ConocoPhillips common stock per unit. Units
awarded to retirement eligible employees vest six months from the grant date; however, those units are not issued as
common stock until the earlier of separation from the company or the end of the regularly scheduled vesting period.
Until issued as stock, most recipients of the RSUs receive a cash payment of a dividend equivalent or an accrued
reinvested dividend equivalent that is charged to retained earnings. The grant date fair market value of these RSUs is
deemed equal to the average ConocoPhillips stock price on the grant date. The grant date fair market value of units that
do not receive a dividend equivalent while unvested is deemed equal to the average ConocoPhillips stock price on the
grant date, less the net present value of the dividends that will not be received.
The following summarizes our stock-settled stock unit activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Forfeited
Issued
Outstanding at December 31, 2022
Not Vested at December 31, 2022
Stock Units
Weighted-Average
Grant Date Fair Value
Millions of Dollars
Total Fair Value
7,645,311 $
2,139,168
(137,011)
(2,069,275)
7,578,193 $
5,264,282 $
53.81
90.57
71.38
63.57 $
61.20
61.58
193
At December 31, 2022, the remaining unrecognized compensation cost from the unvested stock-settled units was $135
million, which will be recognized over a weighted-average period of 1.67 years, the longest period being 2.67 years. The
weighted-average grant date fair value of stock unit awards granted during 2021 and 2020 was $46.56 and $57.40,
respectively. The total fair value of stock units issued during 2021 and 2020 was $144 million and $143 million,
respectively.
Cash-Settled
Cash settled executive restricted stock units granted in 2018 and 2019 replaced the stock option program. These
restricted stock units, subject to elections to defer, will be settled in cash equal to the fair market value of a share of
ConocoPhillips common stock per unit on the settlement date and are classified as liabilities on the balance sheet. Units
awarded to retirement eligible employees vest six months from the grant date; however, those units are not settled until
the earlier of separation from the company or the end of the regularly scheduled vesting period. Compensation expense
is initially measured using the average fair market value of ConocoPhillips common stock and is subsequently adjusted,
based on changes in the ConocoPhillips stock price through the end of each subsequent reporting period, through the
settlement date. Recipients receive an accrued reinvested dividend equivalent that is charged to compensation expense.
The accrued reinvested dividend is paid at the time of settlement, subject to the terms and conditions of the award.
Beginning with executive restricted stock units granted in 2020, awards will be settled in stock.
The following summarizes our cash-settled stock unit activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Forfeited
Issued
Outstanding at December 31, 2022
Stock Units
Weighted-Average
Grant Date Fair Value
Millions of Dollars
Total Fair Value
226,476 $
531
—
(227,007)
— $
72.18
85.37
—
91.47 $
—
21
At December 31, 2022, there was no remaining unrecognized compensation cost to be recorded for the unvested cash-
settled units. The weighted-average grant date fair value of stock unit awards granted during 2021 and 2020 were $57.19
and $41.59, respectively. The total fair value of stock units issued during 2021 and 2020 were $20 million and negligible,
respectively.
119 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Performance Share Program—Under the Plan, we also annually grant restricted performance share units (PSUs) to senior
management. These PSUs are authorized three years prior to their effective grant date (the performance period).
Compensation expense is initially measured using the average fair market value of ConocoPhillips common stock and is
subsequently adjusted, based on changes in the ConocoPhillips stock price through the end of each subsequent reporting
period, through the grant date for stock-settled awards and the settlement date for cash-settled awards.
Stock-Settled
For performance periods beginning before 2009, PSUs do not vest until the employee becomes eligible for retirement by
reaching age 55 with five years of service, and restrictions do not lapse until the employee separates from the company.
With respect to awards for performance periods beginning in 2009 through 2012, PSUs do not vest until the earlier of the
date the employee becomes eligible for retirement by reaching age 55 with five years of service or five years after the
grant date of the award, and restrictions do not lapse until the earlier of the employee’s separation from the company or
five years after the grant date (although recipients can elect to defer the lapsing of restrictions until separation). We
recognize compensation expense for these awards beginning on the grant date and ending on the date the PSUs are
scheduled to vest. Since these awards are authorized three years prior to the effective grant date, for employees eligible
for retirement by or shortly after the grant date, we recognize compensation expense over the period beginning on the
date of authorization and ending on the date of grant. Until issued as stock, recipients of the PSUs receive a cash payment
of a dividend equivalent that is charged to retained earnings. Beginning in 2013, PSUs authorized for future grants will
vest, absent employee election to defer, upon settlement following the conclusion of the three-year performance period.
We recognize compensation expense over the period beginning on the date of authorization and ending on the
conclusion of the performance period. PSUs are settled by issuing one share of ConocoPhillips common stock per unit.
The following summarizes our stock-settled Performance Share Program activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Issued
Outstanding at December 31, 2022
Stock Units
Weighted-Average
Grant Date Fair Value
Millions of Dollars
Total Fair Value
1,448,847 $
1,754
(218,986)
1,231,615 $
50.69
91.58
51.04 $
50.68
21
At December 31, 2022, there was no remaining unrecognized compensation cost to be recorded on the unvested stock-
settled performance shares. There were no stock-settled PSUs granted during 2021; however, the weighted-average
grant date fair value of stock-settled PSUs granted during 2020 was $58.61. The total fair value of stock-settled PSUs
issued during 2021 and 2020 were $18 million and $13 million, respectively.
Cash-Settled
In connection with and immediately following the separation of our Downstream businesses in 2012, grants of new PSUs,
subject to a shortened performance period, were authorized. Once granted, these PSUs vest, absent employee election
to defer, on the earlier of five years after the grant date of the award or the date the employee becomes eligible for
retirement. For employees eligible for retirement by or shortly after the grant date, we recognize compensation expense
over the period beginning on the date of authorization and ending on the date of grant. Otherwise, we recognize
compensation expense beginning on the grant date and ending on the date the PSUs are scheduled to vest. These PSUs
are settled in cash equal to the fair market value of a share of ConocoPhillips common stock per unit on the settlement
date and thus are classified as liabilities on the balance sheet. Until settlement occurs, recipients of the PSUs receive a
cash payment of a dividend equivalent that is charged to compensation expense.
Beginning in 2013, PSUs authorized for future grants will vest upon settlement following the conclusion of the three-year
performance period. We recognize compensation expense over the period beginning on the date of authorization and
ending at the conclusion of the performance period. These PSUs will be settled in cash equal to the fair market value of a
share of ConocoPhillips common stock per unit on the settlement date and are classified as liabilities on the balance
sheet. For performance periods beginning before 2018, during the performance period, recipients of the PSUs do not
receive a cash payment of a dividend equivalent, but after the performance period ends, until settlement in cash occurs,
recipients of the PSUs receive a cash payment of a dividend equivalent that is charged to compensation expense. For the
performance period beginning in 2018, recipients of the PSUs receive an accrued reinvested dividend equivalent that is
charged to compensation expense. The accrued reinvested dividend is paid at the time of settlement, subject to the
terms and conditions of the award.
ConocoPhillips 2022 10-K 120
Notes to Consolidated Financial Statements
Table of Contents
The following summarizes our cash-settled Performance Share Program activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Settled
Outstanding at December 31, 2022
Stock Units
Weighted-Average
Grant Date Fair Value
Millions of Dollars
Total Fair Value
117,679 $
967,151
(975,007)
109,823 $
72.18
91.58
89.87 $
117.11
88
At December 31, 2022, all outstanding cash-settled performance awards were fully vested and there was no remaining
compensation cost to be recorded. The weighted-average grant date fair value of cash-settled PSUs granted during 2021
and 2020 was $46.65 and $58.61, respectively. The total fair value of cash-settled performance share awards settled
during 2021 and 2020 was $52 million and $116 million, respectively.
From inception of the Performance Share Program through 2013, approved PSU awards were granted after the
conclusion of performance periods. Beginning in February 2014, initial target PSU awards are issued near the beginning of
new performance periods. These initial target PSU awards will terminate at the end of the performance periods and will
be settled after the performance periods have ended. Also in 2014, initial target PSU awards were issued for open
performance periods that began in prior years. For the open performance period beginning in 2012, the initial target PSU
awards terminated at the end of the three-year performance period and were replaced with approved PSU awards. For
the open performance period beginning in 2013, the initial target PSU awards terminated at the end of the three-year
performance period and were settled after the performance period ended. There is no effect on recognition of
compensation expense.
Other—In addition to the above active programs, we have outstanding shares of restricted stock and restricted stock
units that were either issued as part of our non-employee director compensation program for current and former
members of the company’s Board of Directors, as part of an executive compensation program that has been discontinued
or acquired as a result of an acquisition. Generally, the recipients of the restricted shares or units receive a dividend or
dividend equivalent.
The following summarizes the aggregate activity of these restricted shares and units for the year ended December 31,
2022:
Outstanding at December 31, 2021
Granted
Cancelled
Issued
Outstanding at December 31, 2022
Not Vested at December 31, 2022
Stock Units
Weighted-Average
Grant Date Fair Value
Millions of Dollars
Total Fair Value
1,616,367 $
73,450
(1,030)
(449,028)
1,239,759 $
437,994 $
47.24
96.20
24.61
48.28 $
49.78
45.90
40
At December 31, 2022, the remaining compensation cost from the unvested restricted stock was $10 million, which will
be recognized over a weighted-average period of 1 year. The weighted-average grant date fair value of awards granted
during 2021 and 2020 was $46.43 and $51.46, respectively. The total fair value of awards issued during 2021 and 2020
was $8 million and $6 million, respectively.
121 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Note 17—Income Taxes
Components of income tax provision (benefit) were:
Income Taxes
Federal
Current
Deferred
Foreign
Current
Deferred
State and local
Current
Deferred
Total tax provision (benefit)
Millions of Dollars
2022
2021
2020
$
$
1,263
1,629
5,813
387
386
70
9,548
32
1,161
3,128
66
127
119
4,633
3
(625)
350
(70)
(4)
(139)
(485)
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax
liabilities and assets at December 31 were:
Deferred Tax Liabilities
PP&E and intangibles
Inventory
Other
Total deferred tax liabilities
Deferred Tax Assets
Benefit plan accruals
Asset retirement obligations and accrued environmental costs
Investments in joint ventures
Other financial accruals and deferrals
Loss and credit carryforwards
Other
Total deferred tax assets
Less: valuation allowance
Total deferred tax assets net of valuation allowance
Net deferred tax liabilities
Millions of Dollars
2022
2021
$
11,100
48
190
11,338
10,170
44
213
10,427
450
2,333
1,917
736
6,354
112
11,902
(8,049)
3,853
7,485
321
2,297
1,684
827
7,402
399
12,930
(8,342)
4,588
5,839
$
At December 31, 2022, noncurrent assets and liabilities included deferred taxes of $241 million and $7,726 million,
respectively. At December 31, 2021, noncurrent assets and liabilities included deferred taxes of $340 million and $6,179
million, respectively.
At December 31, 2022, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax
credit carryforwards of $5.3 billion and various jurisdictions net operating loss and credit carryforwards of $1.1 billion. If
not utilized, U.S. foreign tax credits and net operating losses will begin to expire in 2023.
ConocoPhillips 2022 10-K 122
Notes to Consolidated Financial Statements
Table of Contents
The following table shows a reconciliation of the beginning and ending deferred tax asset valuation allowance for 2022,
2021 and 2020:
Balance at January 1
Charged to expense (benefit)
Other*
Balance at December 31
Millions of Dollars
2022
2021
2020
$
$
8,342
5
(298)
8,049
9,965
(45)
(1,578)
8,342
10,214
460
(709)
9,965
*Represents changes due to originating deferred tax assets that have no impact to our effective tax rate, acquisitions/dispositions/revisions and the
effect of translating foreign financial statements.
Valuation allowances have been established to reduce deferred tax assets to an amount that will, more likely than not, be
realized. At December 31, 2022, we have maintained a valuation allowance with respect to substantially all U.S. foreign
tax credit carryforwards, basis differences in our APLNG investment, and certain net operating loss carryforwards for
various jurisdictions. During 2022, the valuation allowance movement charged to earnings primarily relates to the impact
of 2022 changes to Norway’s Petroleum Tax System which is partly offset by the U.S. tax impact of the disposition of our
CVE common shares. Other movements are primarily related to valuation allowances on expiring tax attributes. Based on
our historical taxable income, expectations for the future, and available tax-planning strategies, management expects
deferred tax assets, net of valuation allowances, will primarily be realized as offsets to reversing deferred tax liabilities.
During the second quarter of 2022, Norway enacted changes to the Petroleum Tax System. As a result of the enactment,
a valuation allowance of $58 million was recorded during the second quarter to reflect changes to our ability to realize
certain deferred tax assets under the new law.
During 2021, the valuation allowance movement charged to earnings primarily relates to the fair value measurement of
our CVE common shares that are not expected to be realized, and the expected realization of certain U.S. tax attributes
associated with our planned disposition of our Indonesia assets. This is partially offset by Australian tax benefits
associated with our impairment of APLNG that we do not expect to be realized. Other movements are primarily related to
valuation allowances on expiring tax attributes. For more information on our Indonesia disposition see Note 3.
During 2020, the valuation allowance movement charged to earnings primarily related to capital losses in Australia and to
the fair value measurement of our CVE common shares that are not expected to be realized. Other movements are
primarily related to valuation allowances on expiring tax attributes.
At December 31, 2022, unremitted income considered to be permanently reinvested in certain foreign subsidiaries and
foreign corporate joint ventures totaled approximately $4,477 million. Deferred income taxes have not been provided on
this amount, as we do not plan to initiate any action that would require the payment of income taxes. The estimated
amount of additional tax, primarily local withholding tax, that would be payable on this income if distributed is
approximately $224 million.
123 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
The following table shows a reconciliation of the beginning and ending unrecognized tax benefits for 2022, 2021 and
2020:
Balance at January 1
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapse of statute
Balance at December 31
Millions of Dollars
2022
2021
2020
$
$
1,345
6
6
(62)
(510)
(75)
710
1,206
15
177
(5)
—
(48)
1,345
1,177
6
67
(34)
(9)
(1)
1,206
Included in the balance of unrecognized tax benefits for 2022, 2021 and 2020 were $701 million, $1,261 million and
$1,128 million respectively, which, if recognized, would impact our effective tax rate. The balance of the unrecognized tax
benefits decreased due to the closing of the 2017 audit of our federal income tax return. As a result, we recognized
federal and state tax benefits totaling $515 million relating to the recovery of outside tax basis previously offset by a full
reserve. The balance of the unrecognized tax benefits increased in 2021 mainly due to U.S. tax credits acquired through
our Concho acquisition. See Note 3 and Note 11.
At December 31, 2022, 2021 and 2020, accrued liabilities for interest and penalties totaled $35 million, $47 million and
$46 million, respectively, net of accrued income taxes. Interest and penalties resulted in an increase to earnings of $12
million in 2022, a reduction of $1 million in 2021 and a reduction to earnings of $4 million in 2020.
We file tax returns in the U.S. federal jurisdiction and in many foreign and state jurisdictions. Audits in major jurisdictions
are generally complete as follows: Canada (2016), Norway (2021) and U.S. (2018). Issues in dispute for audited years and
audits for subsequent years are ongoing and in various stages of completion in the many jurisdictions in which we
operate around the world. Consequently, the balance in unrecognized tax benefits can be expected to fluctuate from
period to period. Within the next twelve months, we may have audit periods close that could significantly impact our
total unrecognized tax benefits. It is reasonably possible such changes could be significant when compared with our total
unrecognized tax benefits, but the amount of change is not estimable.
The amounts of U.S. and foreign income (loss) before income taxes, with a reconciliation of tax at the federal statutory
rate to the provision for income taxes, were:
Income (loss) before income taxes
United States
Foreign
Federal statutory income tax
Non-U.S. effective tax rates
Australia disposition
Recovery of outside basis
Adjustment to tax reserves
Adjustment to valuation allowance
State income tax
Enhanced oil recovery credit
Other
Total
Millions of Dollars
Percent of Pre-Tax Income (Loss)
2022
2021
2020
2022
2021
2020
$ 16,739
11,489
$ 28,228
8,024
4,688
12,712
(3,587)
447
(3,140)
59.3 %
40.7
100.0 %
63.1
36.9
100.0
$
$
5,928
3,866
—
(30)
(551)
5
405
(37)
(38)
9,548
2,670
1,915
—
(55)
(11)
(45)
194
(99)
64
4,633
(659)
194
(349)
(22)
18
460
(112)
(6)
(9)
(485)
21.0 %
13.7
—
(0.1)
(2.0)
—
1.4
(0.1)
(0.1)
33.8 %
21.0
15.1
—
(0.4)
(0.1)
(0.4)
1.5
(0.8)
0.5
36.4
114.2
(14.2)
100.0
21.0
(6.2)
11.1
0.7
(0.6)
(14.6)
3.6
0.2
0.3
15.5
ConocoPhillips 2022 10-K 124
Notes to Consolidated Financial Statements
Table of Contents
Our effective tax rate for 2022 was driven by our jurisdictional tax rates for this profit mix with net favorable impacts
from routine tax credits and valuation allowance adjustments. The adjustment to tax reserves primarily relates to the
closing of the audit of our 2017 U.S. federal tax return and the recognition of the U.S. federal and state tax benefits
described above.
Our effective tax rate for 2021 was driven by our jurisdictional tax rates for this profit mix with net favorable impacts
from routine tax credits and valuation allowance adjustments. The valuation allowance adjustment is primarily related to
the fair value measurement and disposition of our CVE common shares of $218 million and the ability to utilize the U.S.
foreign tax credit and capital loss carryforward due to our anticipated disposition of our Indonesia entities of $29 million.
This was partially offset by an increase to our valuation allowance related to the tax impact of the impairment of our
APLNG investment of $206 million for which we do not expect to receive a tax benefit.
Our effective tax rate for 2020 was impacted by the disposition of our Australia-West assets as well as the valuation
allowance related to the fair value measurement of our CVE common shares. The Australia-West disposition generated a
before-tax gain of $587 million with an associated tax benefit of $10 million and resulted in the de-recognition of
deferred tax assets resulting in $92 million of tax expense. The disposition also generated an Australia capital loss tax
benefit of $313 million which has been fully offset by a valuation allowance. Due to changes in the fair market value of
CVE common shares, the valuation allowance was increased by $178 million to offset the expected capital loss.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which among other things, implements a 15
percent minimum tax on book income of certain large corporations, a 1 percent excise tax on net stock repurchases and
several tax incentives to promote lower carbon energy. We are continuing to evaluate the impacts of this legislation as
additional guidance is released; however, we do not believe any impacts will be material to our consolidated financial
statements.
Note 18—Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss in the equity section of the balance sheet included:
December 31, 2019
Other comprehensive income (loss)
December 31, 2020
Other comprehensive income (loss)
December 31, 2021
Other comprehensive income (loss)
December 31, 2022
Millions of Dollars
Defined
Benefit Plans
Net
Unrealized
Gain/(Loss)
on Securities
Foreign
Currency
Translation
Accumulated
Other
Comprehensive
Loss
$
$
(350)
(75)
(425)
394
(31)
(417)
(448)
—
2
2
(2)
—
(11)
(11)
(5,007)
212
(4,795)
(124)
(4,919)
(622)
(5,541)
(5,357)
139
(5,218)
268
(4,950)
(1,050)
(6,000)
The following table summarizes reclassifications out of accumulated other comprehensive loss during the years ended
December 31:
Defined Benefit Plans
Above amounts are included in the computation of net periodic benefit cost and are
presented net of tax expense of:
See Note 16.
Millions of Dollars
2022
2021
$
$
26
7
109
31
125 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Note 19—Cash Flow Information
Noncash Investing Activities
Increase (decrease) in PP&E related to an increase (decrease) in asset
retirement obligations
Cash Payments
Interest
Income taxes
Net Sales (Purchases) of Investments
Short-term investments purchased
Short-term investments sold
Investments and long-term receivables purchased
Investments and long-term receivables sold
Millions of Dollars
2022
2021
2020
825
442
(116)
873
7,368
924
856
785
905
(5,046)
3,102
(775)
90
(2,629)
(5,554)
8,810
(279)
114
3,091
(12,435)
12,015
(325)
87
(658)
$
$
$
$
Income tax payments have increased in 2022 as the company is returning to a tax paying position in the U.S. as well as,
increased taxes in Norway, and timing of tax payments in Libya.
See Note 3 and Note 12 for additional information on cash and non-cash changes to our consolidated balance sheet
associated with our Concho acquisition.
ConocoPhillips 2022 10-K 126
Notes to Consolidated Financial Statements
Table of Contents
Note 20—Other Financial Information
$
$
$
$
$
$
$
$
Millions of Dollars
2022
2021
2020
791
72
863
(58)
805
195
251
58
504
887
59
946
(62)
884
33
1,040
130
1,203
788
73
861
(55)
806
100
(855)
246
(509)
71
62
75
1,595
1,047
857
—
—
(20)
(110)
30
(1)
21
(80)
—
—
(1)
(11)
2
1
(7)
(16)
—
—
(7)
(15)
(11)
2
(31)
(62)
Millions of Dollars
2022
2021
$
$
119,609
7,325
4,562
131,496
(66,630)
64,866
114,274 *
10,993
4,379
129,646
(64,735) *
64,911
Interest and Debt Expense
Incurred
Debt
Other
Capitalized
Expensed
Other Income (Loss)
Interest income
Gain (loss) on investment in Cenovus Energy*
Other, net
*See Note 5.
Research and Development Expenditures—expensed
Shipping and Handling Costs
Foreign Currency Transaction (Gains) Losses—after-tax
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Properties, Plants and Equipment
Proved properties
Unproved properties
Other
Gross properties, plants and equipment
Less: Accumulated depreciation, depletion and amortization
Net properties, plants and equipment
*Excludes assets classified as held for sale at December 31, 2021. See Note 3.
127 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Note 21—Related Party Transactions
Our related parties primarily include equity method investments and certain trusts for the benefit of employees. For
disclosures on trusts for the benefit of employees, see Note 16.
Significant transactions with our equity affiliates were:
Millions of Dollars
2022
2021
2020
Operating revenues and other income
Purchases
Operating expenses and selling, general and administrative expenses
Net interest income*
$
88
1
189
(1)
88
5
196
(2)
79
—
63
(5)
*We paid interest to, or received interest from, various affiliates. See Note 4, for additional information on loans to affiliated companies.
Note 22—Sales and Other Operating Revenues
Revenue from Contracts with Customers
The following table provides further disaggregation of our consolidated sales and other operating revenues:
Revenue from contracts with customers
Revenue from contracts outside the scope of ASC Topic 606
Physical contracts meeting the definition of a derivative
Financial derivative contracts
Consolidated sales and other operating revenues
Millions of Dollars
2022
2021
2020
$
61,049
34,590
13,662
17,150
295
78,494
11,500
(262)
45,828
5,177
(55)
18,784
$
Revenues from contracts outside the scope of ASC Topic 606 relate primarily to physical gas contracts at market prices,
which qualify as derivatives accounted for under ASC Topic 815, “Derivatives and Hedging,” and for which we have not
elected NPNS. There is no significant difference in contractual terms or the policy for recognition of revenue from these
contracts and those within the scope of ASC Topic 606. The following disaggregation of revenues is provided in
conjunction with Note 24—Segment Disclosures and Related Information:
Revenue from Outside the Scope of ASC Topic 606
by Segment
Lower 48
Canada
Europe, Middle East and North Africa
Physical contracts meeting the definition of a derivative
Revenue from Outside the Scope of ASC Topic 606
by Product
Crude oil
Natural gas
Other
Physical contracts meeting the definition of a derivative
Millions of Dollars
2022
2021
2020
$
$
$
$
13,919
2,717
514
17,150
9,050
1,457
993
11,500
3,966
727
484
5,177
Millions of Dollars
2022
2021
2020
495
15,368
1,287
17,150
757
10,034
709
11,500
395
4,339
443
5,177
ConocoPhillips 2022 10-K 128
Notes to Consolidated Financial Statements
Table of Contents
Practical Expedients
Typically, our commodity sales contracts are less than 12 months in duration; however, in certain specific cases may
extend longer, which may be out to the end of field life. We have long-term commodity sales contracts which use
prevailing market prices at the time of delivery, and under these contracts, the market-based variable consideration for
each performance obligation (i.e., delivery of commodity) is allocated to each wholly unsatisfied performance obligation
within the contract. Accordingly, we have applied the practical expedient allowed in ASC Topic 606 and do not disclose
the aggregate amount of the transaction price allocated to performance obligations or when we expect to recognize
revenues that are unsatisfied (or partially unsatisfied) as of the end of the reporting period.
Receivables and Contract Liabilities
Receivables from Contracts with Customers
At December 31, 2022, the “Accounts and notes receivable” line on our consolidated balance sheet included trade
receivables of $5,241 million compared with $5,268 million at December 31, 2021, and included both contracts with
customers within the scope of ASC Topic 606 and those that are outside the scope of ASC Topic 606. We typically receive
payment within 30 days or less (depending on the terms of the invoice) once delivery is made. Revenues that are outside
the scope of ASC Topic 606 relate primarily to physical gas sales contracts at market prices for which we do not elect
NPNS and are therefore accounted for as a derivative under ASC Topic 815. There is little distinction in the nature of the
customer or credit quality of trade receivables associated with gas sold under contracts for which NPNS has not been
elected compared with trade receivables where NPNS has been elected.
Contract Liabilities from Contracts with Customers
We have entered into certain agreements under which we license our proprietary technology, including the Optimized
Cascade® process technology, to customers to maximize the efficiency of LNG plants. These agreements typically provide
for milestone payments to be made during and after the construction phases of the LNG plant. The payments are not
directly related to our performance obligations under the contract and are recorded as deferred revenue to be
recognized when the customer is able to benefit from their right to use the applicable licensed technology. During the
year ended December 31, 2022, we recognized revenue of $57 million in the "Sales and other operating revenues" line on
our consolidated income statement. We expect to recognize the outstanding contract liabilities of $19 million as of
December 31, 2022, as revenue during 2026.
129 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Note 23—Earnings Per Share
The following table presents the calculation of net income available to common shareholders and basic and diluted EPS
for the years ended December 31, 2022, 2021, and 2020. For each of the periods with net income presented in the table
below, diluted EPS calculated under the two-class method was more dilutive.
Years Ended December 31
Basic earnings per share
Millions of Dollars (except per share amounts)
2022
2021
2020
Net Income (Loss) Attributable to ConocoPhillips
Less: Dividends and undistributed earnings
allocated to participating securities
Net Income (Loss) available to common shareholders
Average common shares outstanding (in Millions)
Net Income (Loss) Attributable to ConocoPhillips Per Share
of Common Stock
Diluted earnings per share
Net Income (Loss) available to common shareholders
Average common shares outstanding (in Millions)
Add: Dilutive impact of options and unvested
non-participating RSU/PSUs
Average diluted shares outstanding (in Millions)
Net Income (Loss) Attributable to ConocoPhillips Per Share
of Common Stock
$
$
$
$
18,680
8,079
(2,701)
60
18,620
1,274
19
8,060
1,324
6
(2,707)
1,078
14.62
6.09
(2.51)
18,620
1,274
4
1,278
8,060
1,324
4
1,328
(2,707)
1,078
—
1,078
$
14.57
6.07
(2.51)
Note 24—Segment Disclosures and Related Information
We explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and NGLs on a worldwide basis. We
manage our operations through six operating segments, which are primarily defined by geographic region: Alaska; Lower
48; Canada; Europe, Middle East and North Africa; Asia Pacific; and Other International.
Corporate and Other represents income and costs not directly associated with an operating segment, such as most
interest expense, premiums on early retirement of debt, corporate overhead and certain technology activities, including
licensing revenues. Corporate assets include all cash and cash equivalents and short-term investments.
We evaluate performance and allocate resources based on net income (loss) attributable to ConocoPhillips. Segment
accounting policies are the same as those in Note 1. Intersegment sales are at prices that approximate market.
In 2021, we completed our acquisition of Concho, an independent oil and gas exploration and production company with
operations across New Mexico and West Texas as well as our acquisition of Shell’s Permian assets in the Texas Delaware
Basin. The accounting close date of the Shell transaction, used for reporting purposes, was December 31, 2021. Results of
operations for Concho and assets acquired from Shell are included in our Lower 48 segment. Certain transaction and
restructuring costs associated with these acquisitions are included in our Corporate and Other segment. See Note 3.
ConocoPhillips 2022 10-K 130
Notes to Consolidated Financial Statements
Table of Contents
Analysis of Results by Operating Segment
Sales and Other Operating Revenues
Alaska
Intersegment eliminations
Alaska
Lower 48
Intersegment eliminations
Lower 48
Canada
Intersegment eliminations
Canada
Europe, Middle East and North Africa
Intersegment eliminations
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated sales and other operating revenues
Millions of Dollars
2022
2021
2020
$
$
7,905
—
7,905
52,921
(18)
52,903
6,159
(2,445)
3,714
11,271
(1)
11,270
2,606
—
96
78,494
5,480
—
5,480
29,306
(12)
29,294
4,077
(1,583)
2,494
5,902
—
5,902
2,579
4
75
45,828
3,408
(11)
3,397
9,872
(51)
9,821
1,666
(405)
1,261
1,919
(2)
1,917
2,363
7
18
18,784
The market for our products is large and diverse, therefore, our sales and other operating revenues are not dependent
upon any single customer.
Millions of Dollars
2022
2021
2020
$
$
$
$
941
4,854
400
735
518
—
44
7,492
4
(14)
—
780
1,310
1
—
2,081
1,002
4,067
392
862
1,483
—
76
7,882
5
(18)
—
502
343
—
—
832
996
3,358
342
775
809
—
54
6,334
(7)
(11)
—
311
137
2
—
432
Depreciation, Depletion, Amortization and Impairments
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated depreciation, depletion, amortization and impairments
Equity in Earnings of Affiliates
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated equity in earnings of affiliates
131 ConocoPhillips 2022 10-K
Notes to Consolidated Financial Statements
Table of Contents
Income Tax Provision (Benefit)
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated income tax provision (benefit)
Net Income (Loss) Attributable to ConocoPhillips
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated net income (loss) attributable to ConocoPhillips
Investments in and Advances to Affiliates
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated investments in and advances to affiliates
Total Assets
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated total assets
Millions of Dollars
2022
2021
2020
$
$
$
$
$
$
$
$
885
3,088
206
5,445
480
53
(609)
9,548
2,352
11,015
714
2,244
2,736
(51)
(330)
18,680
55
235
—
1,049
6,154
—
—
7,493
15,126
42,950
6,971
8,263
9,511
—
11,008
93,829
402
1,390
150
2,543
483
(53)
(282)
4,633
1,386
4,932
458
1,167
453
(107)
(210)
8,079
58
242
—
797
5,603
1
—
6,701
14,812
41,699
7,439
9,125
9,840
1
7,745
90,661
(256)
(378)
(185)
136
294
(20)
(76)
(485)
(719)
(1,122)
(326)
448
962
(64)
(1,880)
(2,701)
62
25
—
918
6,705
—
—
7,710
14,623
11,932
6,863
8,756
11,231
226
8,987
62,618
ConocoPhillips 2022 10-K 132
Notes to Consolidated Financial Statements
Table of Contents
Capital Expenditures and Investments
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Consolidated capital expenditures and investments
Interest Income and Expense
Interest income
Alaska
Lower 48
Canada
Europe, Middle East and North Africa
Asia Pacific
Other International
Corporate and Other
Interest and debt expense
Corporate and Other
Sales and Other Operating Revenues by Product
Crude oil
Natural gas
Natural gas liquids
Other*
Consolidated sales and other operating revenues by product
Millions of Dollars
2022
2021
2020
1,091
5,630
530
998
1,880
—
30
10,159
—
—
—
1
9
—
185
982
3,129
203
534
390
33
53
5,324
—
—
—
2
9
—
22
1,038
1,881
651
600
384
121
40
4,715
—
—
—
5
7
—
88
805
884
806
41,492
26,941
3,650
6,411
78,494
23,648
16,904
1,668
3,608
45,828
9,736
6,427
528
2,093
18,784
$
$
$
$
$
$
*Includes LNG and bitumen.
Geographic Information
United States
Australia and Timor-Leste
Canada
China
Indonesia(3)
Libya
Malaysia
Norway
United Kingdom
Other foreign countries
Worldwide consolidated
Sales and Other Operating Revenues(1)
Millions of Dollars
2022
2021
$
$
60,899
—
3,714
1,135
159
1,582
1,312
3,415
6,273
5
78,494
34,847
—
2,494
724
879
1,102
975
2,563
2,236
8
45,828
2020
13,230
605
1,261
460
689
155
610
1,426
336
12
18,784
Long-Lived Assets(2)
2022
2021
51,200
6,158
6,269
1,538
—
714
1,107
4,369
1
1,003
72,359
50,580
5,579
6,608
1,476
28
659
1,252
4,681
1
748
71,612
2020
24,034
6,676
6,385
1,491
464
670
1,501
5,294
1
1,087
47,603
Sales and other operating revenues are attributable to countries based on the location of the selling operation.
(1)
(2) Defined as net PP&E plus equity investments and advances to affiliated companies.
(3) Assets divested in 2022. See Note 3.
133 ConocoPhillips 2022 10-K
Supplementary Data
Table of Contents
Oil and Gas Operations (Unaudited)
In accordance with FASB ASC Topic 932, “Extractive Activities—Oil and Gas,” and regulations of the SEC, we are making certain
supplemental disclosures about our oil and gas exploration and production operations.
These disclosures include information about our consolidated oil and gas activities and our proportionate share of our equity
affiliates’ oil and gas activities in our operating segments. As a result, amounts reported as equity affiliates in Oil and Gas
Operations may differ from those shown in the individual segment disclosures reported elsewhere in this report. Our
disclosures by geographic area include the U.S., Canada, Europe, Asia Pacific/Middle East (inclusive of equity affiliates) and
Africa.
As required by current authoritative guidelines, the estimated future date when an asset will be permanently shut down for
economic reasons is based on historical 12-month first-of-month average prices and current costs. This estimated date when
production will end affects the amount of estimated reserves. Therefore, as prices and cost levels change from year to year,
the estimate of proved reserves also changes. Generally, our proved reserves decrease as prices decline and increase as prices
rise.
Our proved reserves include estimated quantities related to PSCs, which are reported under the “economic interest” method,
as well as variable-royalty regimes, and are subject to fluctuations in commodity prices, recoverable operating expenses and
capital costs. If costs remain stable, reserve quantities attributable to recovery of costs will change inversely to changes in
commodity prices. For example, if prices increase, then our applicable reserve quantities would decline. At December 31,
2022, approximately 3 percent of our total proved reserves were under PSCs, located in our Asia Pacific/Middle East
geographic reporting area, and 4 percent of our total proved reserves were under a variable-royalty regime, located in our
Canada geographic reporting area.
Reserves Governance
The recording and reporting of proved reserves are governed by criteria established by regulations of the SEC and FASB.
Proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated
with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under
existing economic conditions, operating methods, and government regulations—prior to the time at which contracts
providing the right to operate expire, unless evidence indicates renewal is reasonably certain, regardless of whether
deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain it will commence the project within a reasonable time.
Proved reserves are further classified as either developed or undeveloped. Proved developed reserves are proved reserves
that can be expected to be recovered through existing wells with existing equipment and operating methods, or in which the
cost of the required equipment is relatively minor compared with the cost of a new well, and through installed extraction
equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a
well. Proved undeveloped reserves are proved reserves expected to be recovered from new wells on undrilled acreage, or
from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are
limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless
evidence provided by reliable technologies exists that establishes reasonable certainty of economic producibility at greater
distances. As defined by SEC regulations, reliable technologies may be used in reserve estimation when they have been
demonstrated in the field to provide reasonably certain results with consistency and repeatability in the formation being
evaluated or in an analogous formation. The technologies and data used in the estimation of our proved reserves include, but
are not limited to, performance-based methods, volumetric-based methods, geologic maps, seismic interpretation, well logs,
well test data, core data, analogy and statistical analysis.
ConocoPhillips 2022 10-K 134
Supplementary Data
Table of Contents
We have a company-wide, comprehensive, SEC-compliant internal policy that governs the determination and reporting of
proved reserves. This policy is applied by the geoscientists and reservoir engineers in our business units around the world. As
part of our internal control process, each business unit’s reserves processes and controls are reviewed annually by an internal
team which is headed by the company’s Manager of Reserves Compliance and Reporting. This team, composed of internal
reservoir engineers, geoscientists, finance personnel and a senior representative from DeGolyer and MacNaughton (D&M), a
third-party petroleum engineering consulting firm, reviews the business units’ reserves for adherence to SEC guidelines and
company policy through on-site visits, teleconferences and review of documentation. In addition to providing independent
reviews, this internal team also ensures reserves are calculated using consistent and appropriate standards and procedures.
This team is independent of business unit line management and is responsible for reporting its findings to senior
management. The team is responsible for communicating our reserves policy and procedures and is available for internal peer
reviews and consultation on major projects or technical issues throughout the year. All of our proved reserves held by
consolidated companies and our share of equity affiliates have been estimated by ConocoPhillips.
During 2022, our processes and controls used to assess over 90 percent of proved reserves as of December 31, 2022, were
reviewed by D&M. The purpose of their review was to assess whether the adequacy and effectiveness of our internal
processes and controls used to determine estimates of proved reserves are in accordance with SEC regulations. In such
review, ConocoPhillips’ technical staff presented D&M with an overview of the reserves data, as well as the methods and
assumptions used in estimating reserves. The data presented included pertinent seismic information, geologic maps, well logs,
production tests, material balance calculations, reservoir simulation models, well performance data, operating procedures
and relevant economic criteria. Management’s intent in retaining D&M to review its processes and controls was to provide
objective third-party input on these processes and controls. D&M’s opinion was the general processes and controls employed
by ConocoPhillips in estimating its December 31, 2022, proved reserves for the properties reviewed are in accordance with
the SEC reserves definitions. D&M’s report is included as Exhibit 99 of this Annual Report on Form 10-K.
The technical person primarily responsible for overseeing the processes and internal controls used in the preparation of the
company’s reserves estimates is the Manager of Reserves Compliance and Reporting. This individual holds a master’s degree
in petroleum engineering. He is a member of the Society of Petroleum Engineers with over 30 years of oil and gas industry
experience and has held positions of increasing responsibility in reservoir engineering, subsurface and asset management in
the U.S. and several international field locations.
Engineering estimates of the quantities of proved reserves are inherently imprecise. See the “Critical Accounting Estimates”
section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion of
the sensitivities surrounding these estimates.
135 ConocoPhillips 2022 10-K
Supplementary Data
Proved Reserves
Years Ended
December 31
Developed and Undeveloped
End of 2019
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2020
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2022
Years Ended
December 31
Developed
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Undeveloped
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Table of Contents
Alaska
Lower
48
Total
U.S. Canada
Crude Oil
Millions of Barrels
Asia Pacific/
Middle East
Europe
Africa
Total
Consolidated
Equity
Affiliates*
1,231
(297)
—
—
10
(65)
—
879
209
1
—
10
(64)
—
1,035
797
(126)
—
5
108
(77)
(14)
693
(52)
—
691
289
(160)
(9)
2,028
(423)
—
5
118
(142)
(14)
1,572
157
1
691
299
(224)
(9)
2,487
(7)
—
6
265
(257)
(31)
1,452
24
—
6
250
(193)
(31)
(31)
—
—
15
(64)
—
955
1,508
2,463
5
(2)
—
3
3
(2)
(1)
6
2
—
—
5
(3)
—
10
—
—
—
—
(2)
—
8
198
4
—
—
—
(28)
—
174
14
—
—
2
(29)
—
161
31
—
—
8
(25)
—
175
134
(4)
3
—
—
(25)
—
108
37
—
—
1
(24)
—
122
19
3
—
—
(22)
(3)
119
197
(3)
—
—
—
(3)
—
191
6
—
—
—
(13)
—
184
(3)
—
42
—
(13)
—
210
2,562
(428)
3
8
121
(200)
(15)
2,051
216
1
691
307
(293)
(9)
2,964
40
3
48
273
(319)
(34)
2,975
73
—
—
—
—
(5)
—
68
—
—
—
—
(5)
—
63
—
—
—
35
(5)
—
93
Total
2,635
(428)
3
8
121
(205)
(15)
2,119
216
1
691
307
(298)
(9)
3,027
40
3
48
308
(324)
(34)
3,068
Alaska
Lower
48
Total
U.S. Canada
Crude Oil
Millions of Barrels
Asia Pacific/
Middle East
Europe
Africa
Total
Consolidated
Equity
Affiliates*
Total
1,048
765
912
867
334
263
916
828
1,382
1,028
1,828
1,695
183
114
123
88
463
430
536
680
646
544
659
768
3
6
4
5
2
—
6
3
149
129
122
124
49
45
39
51
94
77
98
102
40
31
24
17
181
175
171
191
16
16
13
19
1,809
1,415
2,223
2,117
753
636
741
858
73
68
63
58
—
—
—
35
1,882
1,483
2,286
2,175
753
636
741
893
*All Equity Affiliate reserves are located in our Asia Pacific/Middle East Region.
ConocoPhillips 2022 10-K 136
Supplementary Data
Table of Contents
Notable changes in proved crude oil reserves in the three years ended December 31, 2022, included:
•
Revisions: In 2022, upward revisions in Lower 48 were due to additional development drilling in the unconventional
plays of 81 million barrels and higher prices of 33 million barrels, partially offset by increasing operating costs of 72
million barrels and technical revisions of 18 million barrels. Upward revisions in Europe were primarily due to
technical revisions of 23 million barrels and 8 million barrels due to higher prices. Upward revisions of 19 million
barrels in our consolidated operations in Asia Pacific/Middle East were primarily due to technical revisions.
In 2021, Alaska upward revisions were primarily driven by higher prices. Downward revisions in Lower 48 were due
to development timing for specific well locations from unconventional plays of 203 million barrels and technical
revisions of 35 million barrels, partially offset by upward revisions due to higher prices of 115 million barrels and
additional infill drilling in the unconventional plays of 71 million barrels. Upward revisions in Europe were primarily
due to higher prices. In Asia Pacific/Middle East, increases were due to higher prices of 21 million barrels and
technical revisions of 16 million barrels.
In 2020, Alaska downward revisions were primarily driven by lower prices of 243 million barrels and development
plan changes of 54 million barrels. Downward revisions in Lower 48 were due to lower prices of 89 million barrels
and development timing for specific well locations from unconventional plays of 82 million barrels, partially offset by
upward technical revisions and additional infill drilling in the unconventional plays of 45 million barrels.
Purchases: In 2022, crude oil reserve purchases were primarily in Africa, as a result of the acquisition of additional
interest in the Libya Waha Concession.
In 2021, Lower 48 purchases were due to the Concho and Shell Permian acquisitions.
Extensions and discoveries: In 2022, extensions and discoveries in Lower 48 were primarily within unconventional
plays in the Permian Basin. Extensions and discoveries in our equity affiliates were in the Middle East.
In 2021, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays which more than offset the decreases resulting from development plan timing in the
revisions category.
In 2020, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays which more than offset the decreases resulting from development plan timing in the
revisions category.
•
•
137 ConocoPhillips 2022 10-K
Supplementary Data
Years Ended
December 31
Developed and Undeveloped
Consolidated operations
End of 2019
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2020
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2022
Years Ended
December 31
Developed
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Undeveloped
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Table of Contents
Natural Gas Liquids
Millions of Barrels
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Total
Consolidated
Equity
Affiliates*
Total
100
—
—
—
—
(6)
—
94
(6)
—
—
—
(6)
—
82
1
—
—
—
(5)
—
78
245
(26)
—
2
41
(27)
(5)
230
213
—
72
82
(50)
(1)
546
208
—
3
80
(81)
(7)
749
345
(26)
—
2
41
(33)
(5)
324
207
—
72
82
(56)
(1)
628
209
—
3
80
(86)
(7)
827
2
—
—
2
1
(1)
—
4
—
—
—
2
(1)
—
5
1
—
—
—
(1)
—
5
13
1
—
—
—
(2)
—
12
1
—
—
—
(2)
—
11
3
—
—
1
(2)
—
13
1
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
361
(26)
—
4
42
(36)
(5)
340
208
—
72
84
(59)
(1)
644
213
—
3
81
(89)
(7)
845
39
—
—
—
—
(3)
—
36
—
—
—
—
(3)
—
33
—
—
—
20
(3)
—
50
400
(26)
—
4
42
(39)
(5)
376
208
—
72
84
(62)
(1)
677
213
—
3
101
(92)
(7)
895
Natural Gas Liquids
Millions of Barrels
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Total
Consolidated
Equity
Affiliates*
Total
100
94
82
78
—
—
—
—
99
83
334
409
146
147
212
340
199
177
416
487
146
147
212
340
1
4
3
3
1
—
2
2
10
9
9
10
3
3
2
3
1
—
—
—
—
—
—
—
211
190
428
500
150
150
216
345
39
36
33
31
—
—
—
19
250
226
461
531
150
150
216
364
*All Equity Affiliate reserves are located in our Asia Pacific/Middle East Region.
ConocoPhillips 2022 10-K 138
Supplementary Data
Table of Contents
Notable changes in proved NGL reserves in the three years ended December 31, 2022, included:
•
Revisions: In 2022, upward revisions in Lower 48 were due to additional development drilling in the unconventional
plays of 88 million barrels, technical revisions of 75 million barrels, continued conversion of acquired Concho Permian
two-stream contracts to a three-stream (crude oil, natural gas and natural gas liquids) basis adding 70 million barrels,
and higher prices of 13 million barrels. This was partially offset by increasing operating costs of 38 million barrels.
In 2021, upward revisions in Lower 48 were due to conversion of acquired Concho Permian two-stream contracts to a
three-stream (crude oil, natural gas and natural gas liquids) basis, adding 182 million barrels, additional infill drilling
in the unconventional plays of 44 million barrels, technical revisions of 21 million barrels and higher prices of 28
million barrels, partially offset by downward revisions related to development timing for specific well locations from
unconventional plays of 62 million barrels.
In 2020, downward revisions in Lower 48 were due to lower prices of 33 million barrels and development timing for
specific well locations from unconventional plays of 20 million barrels, partially offset by upward technical revisions
and additional infill drilling in the unconventional plays of 27 million barrels.
•
•
Purchases: In 2021, Lower 48 purchases were due to the Shell Permian acquisition.
Extensions and discoveries: In 2022, extensions and discoveries in Lower 48 were primarily within unconventional
plays in the Permian Basin. Extensions and discoveries in our equity affiliates were in the Middle East.
In 2021, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays which more than offset the decreases in the revisions category.
In 2020, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays, which more than offset the decreases in the revisions category.
139 ConocoPhillips 2022 10-K
Supplementary Data
Years Ended
December 31
Developed and Undeveloped
Consolidated operations
End of 2019
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2020
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2022
Years Ended
December 31
Developed
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Undeveloped
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Alaska
Lower
48
Total
U.S. Canada
Natural Gas
Billions of Cubic Feet
Asia Pacific/
Middle East
Europe
Africa
Total
Consolidated
Equity
Affiliates*
Total
Table of Contents
2,688
2,431
5,119
(607)
—
—
—
(85)
—
1,996
715
—
—
—
(86)
—
2,625
(35)
—
—
—
(88)
—
2,502
(439)
—
74
304
(231)
(39)
(1,046)
—
74
304
(316)
(39)
2,100
41
—
2,438
822
(473)
(270)
4,096
756
—
2,438
822
(559)
(270)
4,658
361
—
23
505
(543)
(262)
7,283
326
—
23
505
(631)
(262)
4,742
7,244
43
(15)
—
29
33
(16)
—
74
15
—
—
46
(30)
—
105
8
—
—
4
(23)
—
94
896
39
—
—
2
(112)
—
825
54
—
—
2
(113)
—
768
108
—
—
103
(117)
—
862
977
103
—
—
—
(171)
(58)
851
60
—
—
—
(147)
—
764
(2)
—
—
—
(51)
(385)
326
224
2
—
—
—
(2)
—
224
—
—
—
—
(7)
—
217
(14)
—
48
—
(10)
—
241
Natural Gas
Billions of Cubic Feet
7,259
(917)
—
103
339
(617)
(97)
6,070
885
—
2,438
870
(856)
(270)
9,137
426
—
71
612
(832)
(647)
8,767
4,421
(382)
—
2
78
(395)
—
3,724
247
—
—
116
(390)
—
3,697
898
—
479
1,118
(439)
—
5,753
11,680
(1,299)
—
105
417
(1,012)
(97)
9,794
1,132
—
2,438
986
(1,246)
(270)
12,834
1,324
—
550
1,730
(1,271)
(647)
14,520
Alaska
Lower
48
Total
U.S. Canada
Europe
Asia Pacific/
Middle East
Africa
Total
Consolidated
Equity
Affiliates*
Total
2,601
1,961
2,579
2,474
1,398
1,051
3,100
2,628
3,999
3,012
5,679
5,102
87
35
46
28
1,033
1,049
1,558
2,114
1,120
1,084
1,604
2,142
30
74
52
64
13
—
53
30
697
598
679
641
199
227
89
221
843
806
688
322
134
45
76
4
224
224
217
241
—
—
—
—
5,793
4,714
7,315
6,370
1,466
1,356
1,822
2,397
3,898
3,293
3,204
3,974
9,691
8,007
10,519
10,344
523
431
493
1,779
1,989
1,787
2,315
4,176
*All Equity Affiliate reserves are located in our Asia Pacific/Middle East Region.
Natural gas production in the reserves table may differ from gas production (delivered for sale) in our statistics disclosure,
primarily because the quantities above include gas consumed in production operations. Quantities consumed in production
operations are not significant in the periods presented. The value of net production consumed in operations is not reflected in
net revenues and production expenses, nor do the volumes impact the respective per unit metrics.
Reserve volumes include natural gas to be consumed in operations of 2,416 BCF, 2,748 BCF and 2,286 BCF, as of December 31,
2022, 2021 and 2020, respectively. These volumes are not included in the calculation of our Standardized Measure of
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserve Quantities.
Natural gas reserves are computed at 14.65 pounds per square inch absolute and 60 degrees Fahrenheit.
ConocoPhillips 2022 10-K 140
Supplementary Data
Table of Contents
Notable changes in proved natural gas reserves in the three years ended December 31, 2022, included:
•
•
•
Revisions: In 2022, upward revisions in Lower 48 were due to additional development drilling in the unconventional
plays of 544 BCF, higher prices of 109 BCF, and technical revisions of 41 BCF. These were partially offset by decreases
of 233 BCF due to increasing operating costs, and 100 BCF due to the continued conversion of acquired Concho
Permian two-stream contracts to a three-stream (crude oil, natural gas and natural gas liquids) basis. Upward
revisions in Canada were driven by higher prices of 26 BCF, partially offset by technical revisions of 18 BCF. In Europe,
technical revisions contributed 96 BCF, and higher prices 12 BCF of upward revisions. Downward revisions in Africa
were primarily due to technical revisions. In our equity affiliates in Asia Pacific/Middle East, upward revisions were
due to higher prices of 423 BCF, changing dynamics and improved prices in the regional LNG spot market of 331 BCF,
and technical revisions of 204 BCF, partially offset by downward revisions due to increasing operating costs of 60
BCF.
In 2021, upward revisions in Alaska were due to higher prices of 587 BCF and technical revisions of 128 BCF. In Lower
48, upward revisions of 614 BCF were due to higher prices, additional infill drilling in the unconventional plays of 277
BCF and technical revisions of 60 BCF, partially offset by downward revisions due to development timing for specific
well locations from unconventional plays of 498 BCF and conversion of previously acquired Permian two-stream
contracted volumes to a three-stream (crude oil, natural gas and natural gas liquids) basis of 412 BCF. Upward
revisions in Canada were due to higher prices of 29 BCF, partially offset by downward revisions due to technical
revisions of 14 BCF. In Europe, upward revisions were primarily due to higher prices. Upward revisions in our
consolidated operations in Asia Pacific/Middle East were due to technical revisions of 76 BCF, partially offset by price
revisions of 16 BCF. In our equity affiliates in Asia Pacific/Middle East, upward revisions were due to higher prices of
124 BCF and technical and cost revisions of 123 BCF.
In 2020, downward revisions in Alaska were primarily due to lower prices. In Lower 48, downward revisions of 372
BCF were due to lower prices and 154 BCF were due to development timing for specific well locations from
unconventional plays, partially offset by technical revisions of 87 BCF. Downward revisions in our equity affiliates in
Asia Pacific/Middle East were due to lower prices of 426 BCF, partially offset by performance revisions of 44 BCF.
Upward revisions in our consolidated operations in Asia Pacific/Middle East were due to technical revisions of 88 BCF
and price revisions of 15 BCF.
Purchases: In 2022, purchases in Africa were a result of the acquisition of additional interest in the Libya Waha
Concession. In our equity affiliates, purchases were due to the acquisition of additional affiliate interest in Asia
Pacific.
In 2021, Lower 48 purchases were due to the Concho and Shell Permian acquisitions.
In 2020, Canada purchases were due to the acquisition of additional Montney acreage.
Extensions and discoveries: In 2022, extensions and discoveries in Lower 48 were primarily within unconventional
plays in the Permian Basin. In Europe, extensions and discoveries were due to additional planned development.
Extensions and discoveries in our equity affiliates were primarily in the Middle East.
In 2021, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays which more than offset the decreases resulting from development plan timing in the
revisions category. Extensions and discoveries in Canada were primarily driven by ongoing drilling successes in
Montney.
In 2020, extensions and discoveries in Lower 48 were due to planned development to add specific well locations from
the unconventional plays which more than offset the decreases resulting from development plan timing in the
revisions category. Extensions and discoveries in Canada were primarily driven by ongoing drilling successes in
Montney.
•
Sales: In 2022, Lower 48 sales represent the disposition of noncore assets. Sales in our consolidated operations in
Asia Pacific/Middle East represent the disposition of our Indonesia assets.
In 2021, Lower 48 sales represent the disposition of noncore assets.
In 2020, Asia Pacific/Middle East sales represent the disposition of the Australia-West assets.
141 ConocoPhillips 2022 10-K
Supplementary Data
Years Ended
December 31
Developed and Undeveloped
Consolidated operations
End of 2019
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2020
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2022
Years Ended
December 31
Developed
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Undeveloped
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Table of Contents
Bitumen
Millions of Barrels
Canada
Total Consolidated
Equity Affiliates*
Total
282
(15)
—
—
85
(20)
—
332
(50)
—
—
—
(25)
—
257
(17)
—
—
—
(24)
—
216
282
(15)
—
—
85
(20)
—
332
(50)
—
—
—
(25)
—
257
(17)
—
—
—
(24)
—
216
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
282
(15)
—
—
85
(20)
—
332
(50)
—
—
—
(25)
—
257
(17)
—
—
—
(24)
—
216
Bitumen
Millions of Barrels
Canada
Total Consolidated
Equity Affiliates*
Total
187
117
150
127
95
215
107
89
187
117
150
127
95
215
107
89
—
—
—
—
—
—
—
—
187
117
150
127
95
215
107
89
*All Equity Affiliate reserves are located in our Asia Pacific/Middle East Region.
ConocoPhillips 2022 10-K 142
Supplementary Data
Table of Contents
Notable changes in proved bitumen reserves in the three years ended December 31, 2022, included:
•
Revisions: In 2022, the impact of variable royalties on price resulted in downward revisions of 30 million barrels,
partially offset by upward revisions primarily due to changes in development timing for specific pad locations from
the Surmont development program.
In 2021, downward revisions of 64 million barrels were driven by changes in carbon tax costs and 39 million barrels
due to changes in development timing for specific pad locations from the Surmont development program, partially
offset by upward revisions from price of 53 million barrels.
In 2020, downward revisions in Canada were due to changes in development timing for specific pad locations from
the Surmont development program of 12 million barrels with the remaining revisions primarily related to lower
prices.
•
Extensions and discoveries: In 2021, extensions and discoveries in Canada were primarily due to planned
development to add specific pad locations from the Surmont development program, which more than offset the
decrease in the revisions category.
In 2020, extensions and discoveries in Canada were due to planned development to add specific pad locations from
the Surmont development program, which offset the decrease in the revisions category of 31 million barrels.
143 ConocoPhillips 2022 10-K
Supplementary Data
Years Ended
December 31
Developed and Undeveloped
Consolidated operations
End of 2019
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2020
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Production
Sales
End of 2022
Years Ended
December 31
Developed
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Undeveloped
Consolidated operations
End of 2019
End of 2020
End of 2021
End of 2022
Total Proved Reserves
Millions of Barrels of Oil Equivalent
Alaska
Lower
48
Total
U.S. Canada
Europe
Asia Pacific/
Middle East
Africa
Total
Consolidated
Equity
Affiliates*
Total
Table of Contents
1,779
1,447
3,226
(398)
—
—
10
(85)
—
1,306
322
1
—
10
(84)
—
1,555
(35)
—
—
15
(85)
—
1,450
(226)
—
19
200
(142)
(25)
(624)
—
19
210
(227)
(25)
1,273
168
—
1,169
508
(289)
(54)
2,579
490
1
1,169
518
(373)
(54)
2,775
292
—
13
414
(364)
(82)
4,330
257
—
13
429
(449)
(82)
3,048
4,498
296
(20)
—
10
95
(25)
(1)
355
(45)
—
—
15
(35)
—
290
(15)
—
—
1
(31)
—
245
360
12
—
—
—
(49)
—
323
23
—
—
3
(50)
—
299
52
—
—
26
(46)
—
331
298
13
3
—
—
(55)
(10)
249
47
—
—
1
(48)
—
249
19
3
—
—
(31)
(67)
173
234
(3)
—
—
—
(3)
—
228
6
—
—
—
(14)
—
220
(5)
—
50
—
(15)
—
250
4,414
(622)
3
29
305
(359)
(36)
3,734
521
1
1,169
537
(520)
(54)
5,388
308
3
63
456
(572)
(149)
5,497
848
(63)
—
—
13
(73)
—
725
42
—
—
19
(73)
—
713
149
—
80
241
(81)
—
1,102
5,262
(685)
3
29
318
(432)
(36)
4,459
563
1
1,169
556
(593)
(54)
6,101
457
3
143
697
(653)
(149)
6,599
Alaska
Lower
48
Total Proved Reserves
Millions of Barrels of Oil Equivalent
Asia Pacific/
Middle East
Europe
Africa
Total
U.S. Canada
Total
Consolidated
Equity
Affiliates*
Total
1,582
1,186
1,424
1,357
666
521
1,767
1,676
2,248
1,707
3,191
3,033
197
120
131
93
781
752
1,008
1,372
978
872
1,139
1,465
197
140
166
147
99
215
124
98
275
238
244
240
85
85
55
91
236
211
212
155
62
38
37
18
218
212
207
231
16
16
13
19
3,174
2,508
4,020
3,806
1,240
1,226
1,368
1,691
761
653
631
751
87
72
82
351
3,935
3,161
4,651
4,557
1,327
1,298
1,450
2,042
*All Equity Affiliate reserves are located in our Asia Pacific/Middle East Region.
Natural gas reserves are converted to barrels of oil equivalent (BOE) based on a 6:1 ratio: six MCF of natural gas converts to
one BOE.
ConocoPhillips 2022 10-K 144
Supplementary Data
Proved Undeveloped Reserves
The following table shows changes in total proved undeveloped reserves for 2022:
Table of Contents
End of 2021
Revisions
Improved recovery
Purchases
Extensions and discoveries
Sales
Transfers to Proved Developed
End of 2022
Proved Undeveloped Reserves
Millions of Barrels of Oil Equivalent
1,450
344
3
33
627
(24)
(391)
2,042
Revisions were predominantly driven by changes in development plans in Lower 48.
Extensions and discoveries were largely driven by the addition of 344 MMBOE in Lower 48 for the continued development of
unconventional plays. Equity affiliates, primarily in the Middle East, contributed 241 MMBOE. The remaining extensions and
discoveries were driven by the continued development planned in the other geographic regions.
Transfers to proved developed reserves were driven by the ongoing development of our assets. Approximately 82 percent of
the transfers were from the development of our Lower 48 unconventional plays. The remainder of transfers were from
development across the other geographic regions.
At December 31, 2022, our PUDs represented 31 percent of total proved reserves, compared with 24 percent at December 31,
2021. Costs incurred for the year ended December 31, 2022, relating to the development of PUDs were $5.7 billion. A portion
of our costs incurred each year relates to development projects where the PUDs will be converted to proved developed
reserves in future years.
At the end of 2022, approximately 93 percent of total PUDs were under development or scheduled for development within
five years of initial disclosure, including all of our Lower 48 PUDs. The remaining PUDs are in major development areas which
are currently producing and predominantly within our Canada and Asia Pacific/Middle East geographic areas.
Results of Operations
The company’s results of operations from oil and gas activities for the years 2022, 2021 and 2020 are shown in the following
tables. Non-oil and gas activities, such as pipeline and marine operations, LNG operations, crude oil and gas marketing
activities, and the profit element of transportation operations in which we have an ownership interest are excluded.
Additional information about selected line items within the results of operations tables is shown below:
•
•
Sales include sales to unaffiliated entities attributable primarily to the company’s net working interests and royalty
interests. Sales are net of fees to transport our produced hydrocarbons beyond the production function to a final
delivery point using transportation operations which are not consolidated.
Transportation costs reflect fees to transport our produced hydrocarbons beyond the production function to a final
delivery point using transportation operations which are consolidated.
• Other revenues include gains and losses from asset sales, certain amounts resulting from the purchase and sale of
•
hydrocarbons, and other miscellaneous income.
Production costs include costs incurred to operate and maintain wells, related equipment and facilities used in the
production of petroleum liquids and natural gas.
Taxes other than income taxes include production, property and other non-income taxes.
Depreciation of support equipment is reclassified as applicable.
•
•
• Other related expenses include inventory fluctuations, foreign currency transaction gains and losses and other
miscellaneous expenses.
145 ConocoPhillips 2022 10-K
Supplementary Data
Results of Operations
Year Ended
December 31,2022
Consolidated operations
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Table of Contents
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Africa
Other
Areas
Total
$ 7,210 24,309 31,519
1,622
6,594
2,602
1,339
— 43,676
6
(647)
—
—
(1)
115
6
(647)
114
—
—
338
—
—
1
—
—
—
—
—
—
6
(647)
536
184
10
1,183
6,568 24,424 30,992
1,960
6,595
3,138
1,523
10 44,218
Production costs excluding taxes
1,160
3,600
4,760
Taxes other than income taxes
1,265
1,687
2,952
Exploration expenses
34
189
223
581
21
149
511
36
122
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
833
4,843
5,676
354
693
2
(19)
78
(11)
4
55
(9)
(15)
133
(2)
(41)
11
(1)
(178)
62
342
243
49
517
—
40
25
55
2
19
36
—
5
—
—
—
2
—
—
6
—
6,249
3,254
564
7,276
(12)
(183)
231
Income tax provision (benefit)
866
3,113
3,979
198
4,057
512
1,301
53 10,100
Results of operations
$ 2,349 10,944 13,293
689
1,293
1,410
105
(51) 16,739
3,215 14,057 17,272
887
5,350
1,922
1,406
2 26,839
$
Equity affiliates
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Production costs excluding taxes
Taxes other than income taxes
Exploration expenses
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
Income tax provision (benefit)
Results of operations
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,000
4,272
—
41
5,313
491
1,536
—
530
—
(2)
27
2,731
836
1,895
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,000
4,272
—
41
5,313
491
1,536
—
530
—
(2)
27
2,731
836
1,895
ConocoPhillips 2022 10-K 146
Supplementary Data
Year Ended
December 31,2021
Consolidated operations
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Table of Contents
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Africa
Other
Areas
Total
$ 4,832 14,093 18,925
1,219
3,568
2,525
917
— 27,154
4
(626)
—
—
14
135
4
(626)
149
—
—
323
—
—
(5)
—
—
—
—
—
—
237
141
(161)
4
(626)
684
4,224 14,228 18,452
1,542
3,563
2,762
1,058
(161) 27,216
Production costs excluding taxes
1,073
2,414
3,487
518
487
442
80
937
1,379
98
178
23
39
36
21
466
91
51
43
1
2
35
—
4
—
—
5,001
1
1,531
15
306
—
—
12
—
6,966
(14)
(63)
224
973
870
103
(189) 13,265
(53)
4,974
(136)
8,291
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
745
1,797
—
5
2,547
329
824
268
593
718
3
17
(205)
(42)
(163)
Taxes other than income taxes
Exploration expenses
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
864
4,053
4,917
383
844
787
5
(31)
71
(8)
12
47
(3)
(19)
118
6
(22)
10
(24)
(42)
70
7
4
26
1,720
6,675
8,395
585
2,171
1,330
Income tax provision (benefit)
378
1,467
1,845
145
1,673
Results of operations
$ 1,342
5,208
6,550
440
498
$
Equity affiliates
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Production costs excluding taxes
Taxes other than income taxes
Exploration expenses
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
Income tax provision (benefit)
Results of operations
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
494
836
745
1,797
—
5
2,547
329
824
268
593
718
3
17
(205)
(42)
(163)
147 ConocoPhillips 2022 10-K
Supplementary Data
Year Ended
December 31,2020
Consolidated operations
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Table of Contents
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Africa
Other
Areas
Total
$ 2,944
3,421
6,365
230
1,560
1,717
129
— 10,001
4
(587)
—
—
(1)
(20)
4
(587)
(21)
—
—
40
—
—
(21)
191
(19)
576
—
—
11
—
—
10
195
(606)
595
2,360
3,401
5,761
270
1,539
2,465
140
10 10,185
Production costs excluding taxes
1,058
1,399
2,457
366
417
Taxes other than income taxes
296
263
559
Exploration expenses
1,099
73
1,172
16
40
30
52
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
840
2,544
3,384
335
755
—
46
72
804
5
46
804
51
118
(1,051)
(1,733)
(2,784)
3
5
8
(503)
(191)
(312)
5
(58)
73
265
116
149
Income tax provision (benefit)
(271)
(430)
(701)
Results of operations
$
(780)
(1,303)
(2,083)
$
Equity affiliates
Sales
Transfers
Transportation costs
Other revenues
Total revenues
Production costs excluding taxes
Taxes other than income taxes
Exploration expenses
Depreciation, depletion and
amortization
Impairments
Other related expenses
Accretion
Income tax provision (benefit)
Results of operations
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
478
42
71
808
—
(25)
33
21
3
13
8
—
(29)
—
2
1
3,741
651
108
1,456
—
—
2
—
5,290
812
(54)
232
1,058
124
(103)
(1,943)
277
781
483
1,205
—
8
1,696
289
502
20
569
—
(2)
15
303
39
264
88
36
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(20)
(431)
(83)
(1,512)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
483
1,205
—
8
1,696
289
502
20
569
—
(2)
15
303
39
264
ConocoPhillips 2022 10-K 148
Supplementary Data
Statistics
Net Production
Crude Oil
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total company
Delaware Basin Area (Lower 48)*
Greater Prudhoe Area (Alaska)*
Natural Gas Liquids
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total company
Delaware Basin Area (Lower 48)*
Greater Prudhoe Area (Alaska)*
Bitumen
Consolidated operations—Canada
Total company
Natural Gas
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total company
Delaware Basin Area (Lower 48)*
Greater Prudhoe Area (Alaska)*
Table of Contents
2022
2021
2020
Thousands of Barrels Daily
177
534
711
6
71
61
36
885
13
898
258
67
17
221
238
3
3
—
244
8
252
114
17
66
66
178
447
625
8
81
65
37
816
13
829
162
67
16
110
126
4
4
—
134
8
142
27
16
69
69
Millions of Cubic Feet Daily
34
1,402
1,436
61
306
114
22
1,939
1,191
3,130
752
32
16
1,340
1,356
80
298
360
15
2,109
1,053
3,162
584
12
181
213
394
6
78
69
8
555
13
568
28
68
16
74
90
2
4
1
97
8
105
11
15
55
55
10
585
595
40
270
429
5
1,339
1,055
2,394
99
4
*At year-end 2022 and 2021, the Delaware Basin Area in Lower 48 contained more than 15 percent of our total proved reserves. At year-end 2021 and 2020,
the Greater Prudhoe Area in Alaska contained more than 15 percent of our total proved reserves.
149 ConocoPhillips 2022 10-K
Supplementary Data
Average Sales Prices
Crude Oil Per Barrel
Consolidated operations
Alaska*
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total operations
Natural Gas Liquids Per Barrel
Consolidated operations
Lower 48
United States
Canada
Europe
Asia Pacific
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total operations
Bitumen Per Barrel
Consolidated operations—Canada
Natural Gas Per Thousand Cubic Feet
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific*
Africa
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Total operations
Table of Contents
2022
2021
2020
$
$
92.58
94.46
93.96
79.94
99.88
105.52
97.85
100.75
95.27
97.31
95.30
35.36
35.36
37.70
54.52
—
46.16
35.67
61.22
36.50
60.81
66.12
64.53
56.38
68.94
70.36
69.06
68.85
65.53
69.45
65.59
30.63
30.63
31.18
43.97
—
37.50
31.04
54.16
32.45
33.72
35.17
34.48
23.57
42.80
42.84
48.64
42.39
36.69
39.02
36.75
12.13
12.13
5.41
23.27
33.21
20.25
12.90
32.69
14.61
$
55.56
37.52
8.02 **
$
3.64
5.92
5.92
3.62
35.33
5.84
6.59
23.54
10.56
9.39
10.60
2.81
4.38
4.38
2.54
13.75
6.56
3.73
8.91
6.00
5.31
5.77
2.91
1.65
1.66
1.21
3.23
5.27
3.71
4.31
3.13
3.71
3.38
*Average sales prices for Alaska crude oil and Asia Pacific natural gas above reflect a reduction for transportation costs in which we have an ownership
interest that are incurred subsequent to the terminal point of the production function. Accordingly, the average sales prices differ from those discussed in Item
7 of Management's Discussion and Analysis of Financial Condition and Results of Operations.
**Average sales prices include unutilized transportation costs.
ConocoPhillips 2022 10-K 150
Supplementary Data
Average Production Costs Per Barrel of Oil Equivalent*
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Average Production Costs Per Barrel—Bitumen
Consolidated operations—Canada
Taxes Other Than Income Taxes Per Barrel of Oil Equivalent
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
Depreciation, Depletion and Amortization Per Barrel of Oil Equivalent
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific
Africa
Total international
Total consolidated operations
Equity affiliates—Asia Pacific/Middle East
*Includes bitumen.
Table of Contents
2022
2021
2020
$
15.89
9.97
10.97
18.73
11.20
11.71
3.77
12.36
11.27
6.14
14.92
8.48
9.78
15.10
9.88
10.21
2.95
10.53
9.99
4.60
14.60
9.93
11.51
14.29
8.97
9.26
6.38
10.11
10.99
4.01
$
17.62
13.41
12.45
$
$
17.33
4.67
6.80
0.68
0.79
8.32
0.14
2.51
5.87
19.22
11.41
13.42
13.08
11.41
15.19
17.71
2.47
13.28
13.12
6.63
6.15
3.29
3.87
0.67
0.73
1.99
0.07
1.06
3.06
11.52
12.02
14.24
13.79
11.16
17.13
17.25
2.40
14.25
13.92
8.29
4.08
1.87
2.62
0.62
0.65
0.81
0.91
0.72
1.91
6.96
11.59
18.05
15.86
13.08
16.24
15.66
2.43
15.01
15.54
7.89
151 ConocoPhillips 2022 10-K
Supplementary Data
Development and Exploration Activities
Table of Contents
The following two tables summarize our net interest in productive and dry exploratory and development wells in the years
ended December 31, 2022, 2021 and 2020. A “development well” is a well drilled within the proved area of a reservoir to the
depth of a stratigraphic horizon known to be productive. An “exploratory well” is a well drilled to find and produce crude oil
or natural gas in an unknown field or a new reservoir within a proven field. Exploratory wells also include wells drilled in areas
near or offsetting current production, or in areas where well density or production history have not achieved statistical
certainty of results. Excluded from the exploratory well count are stratigraphic-type exploratory wells, primarily relating to oil
sands delineation wells located in Canada and CBM test wells located in Asia Pacific/Middle East.
Net Wells Completed
Exploratory
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific/Middle East
Africa
Other areas
Total consolidated operations
Equity affiliates
Asia Pacific/Middle East
Total equity affiliates
Development
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific/Middle East
Africa
Other areas
Total consolidated operations
Equity affiliates
Asia Pacific/Middle East
Total equity affiliates
*Our total proportionate interest was less than one.
Productive
2021
2022
2020
2022
2021
2020
Dry
—
118
118
6
—
—
—
—
124
*
*
11
388
399
11
3
22
2
—
437
28
28
—
87
87
12
—
*
—
—
99
3
3
1
339
340
2
7
21
1
—
371
30
30
—
3
3
23
—
*
—
—
26
8
8
7
127
134
—
7
16
2
—
159
109
109
—
—
—
—
2
1
3
—
6
—
—
—
—
—
—
—
—
—
—
—
—
—
1
—
1
—
—
*
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
3
—
3
—
*
*
*
*
3
—
—
—
—
—
—
—
—
—
—
—
—
—
ConocoPhillips 2022 10-K 152
Supplementary Data
Table of Contents
The table below represents the status of our wells drilling at December 31, 2022, and includes wells in the process of drilling
or in active completion. It also represents gross and net productive wells, including producing wells and wells capable of
production at December 31, 2022.
In Progress
Gross
2
615
617
42
22
4
8
—
693
279
279
Net
1
300
301
30
5
2
2
—
340
39
39
Oil
Gross
1,591
13,512
15,103
192
487
398
869
—
17,049
—
—
Productive
Gas
Net
Gross
Net
929
6,382
7,311
96
84
188
177
—
7,856
—
—
—
3,716
3,716
147
58
6
10
—
3,937
4,989
4,989
—
1,767
1,767
147
2
2
2
—
1,920
1,505
1,505
Thousands of Acres
Developed
Gross
715
3,654
4,369
289
430
422
358
—
5,868
1,045
1,045
Net
531
2,277
2,808
219
50
152
73
—
3,302
314
314
Undeveloped
Gross
Net
1,261
10,279
11,540
3,429
1,195
10,451
12,545
156
39,316
3,943
3,943
1,246
8,064
9,310
1,944
470
6,930
2,561
125
21,340
1,066
1,066
Wells at December 31, 2022
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific/Middle East
Africa
Other areas
Total consolidated operations
Equity affiliates
Asia Pacific/Middle East
Total equity affiliates
Acreage at December 31, 2022
Consolidated operations
Alaska
Lower 48
United States
Canada
Europe
Asia Pacific/Middle East
Africa
Other areas
Total consolidated operations
Equity affiliates
Asia Pacific/Middle East
Total equity affiliates
153 ConocoPhillips 2022 10-K
Supplementary Data
Costs Incurred
Year Ended
December 31
2022
Consolidated operations
Unproved property acquisition
Proved property acquisition
Exploration
Development
Equity affiliates
Unproved property acquisition
Proved property acquisition
Exploration
Development
2021
Consolidated operations
Unproved property acquisition
Proved property acquisition
Exploration
Development
Equity affiliates
Unproved property acquisition
Proved property acquisition
Exploration
Development
2020
Consolidated operations
Unproved property acquisition
Proved property acquisition
Exploration
Development
Equity affiliates
Unproved property acquisition
Proved property acquisition
Exploration
Development
Table of Contents
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Africa
Other
Areas
Total
Millions of Dollars
$
—
—
—
61
1,316
$ 1,377
255
249
504
1,278
4,559
6,341
255
249
504
1,339
5,875
7,718
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
1 11,261 11,262
— 16,101 16,101
1 27,362 27,363
849
3,410
$ 1,034 30,588 31,622
765
2,461
84
949
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
4
—
4
287
745
$ 1,036
10
62
72
116
1,758
1,946
14
62
76
403
2,503
2,982
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
99
475
574
—
—
—
—
—
—
4
1
5
80
175
260
—
—
—
—
—
—
378
129
507
218
102
827
—
—
—
—
—
—
—
—
—
121
711
832
—
—
—
—
—
—
—
—
—
31
398
429
—
—
—
—
—
—
—
—
—
110
451
561
—
—
—
—
—
—
—
—
—
59
425
484
—
881
881
25
244
1,150
—
—
—
51
433
484
—
—
—
5
21
26
3
—
3
32
427
462
—
—
—
12
282
294
—
104
104
3
4
111
—
—
—
—
—
—
—
—
—
2
24
26
—
—
—
—
—
—
—
—
—
4
18
22
—
—
—
—
—
—
—
—
—
2
—
2
—
—
—
—
—
—
255
353
608
1,623
7,490
9,721
—
881
881
25
244
1,150
— 11,266
— 16,102
— 27,368
1,053
40
4,440
—
40 32,861
—
—
—
—
—
—
9
—
9
38
—
47
—
—
—
—
—
—
—
—
—
5
21
26
404
191
595
805
3,501
4,901
—
—
—
12
282
294
ConocoPhillips 2022 10-K 154
Supplementary Data
Capitalized Costs
At December 31
2022
Consolidated operations
Proved property
Unproved property
Accumulated depreciation,
depletion and amortization
Equity affiliates
Proved property
Unproved property
Accumulated depreciation,
depletion and amortization
2021
Consolidated operations
Proved property
Unproved property
Accumulated depreciation,
depletion and amortization
Equity affiliates
Proved property
Unproved property
Accumulated depreciation,
depletion and amortization
Table of Contents
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia
Pacific/
Middle
East
Africa
Other
Areas
Total
$ 24,041 62,756 86,797
7,487 13,716 10,534
1,075
— 119,609
589
5,145
5,734
1,291
100
93
98
9
7,325
24,630 67,901 92,531
8,778 13,816 10,627
1,173
9 126,934
11,906 31,455 43,361
2,927
9,774
7,970
$ 12,724 36,446 49,170
5,851
4,042
2,657
458
715
9 64,499
— 62,435
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 10,823
—
2,162
— 12,985
—
—
8,400
4,585
—
—
—
—
—
— 10,823
—
2,162
— 12,985
—
—
8,400
4,585
$ 22,750 58,561 81,311
7,380 14,514 12,226
1,402
7,704
9,106
1,517
155
92
966
114
— 116,397
9 10,993
24,152 66,265 90,417
8,897 14,669 12,318
1,080
9 127,390
11,945 29,975 41,920
2,749 10,166
9,240
$ 12,207 36,290 48,497
6,148
4,503
3,078
422
658
9 64,506
— 62,884
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 10,357
—
2,162
— 12,519
—
—
8,539
3,980
—
—
—
—
—
— 10,357
—
2,162
— 12,519
—
—
8,539
3,980
155 ConocoPhillips 2022 10-K
Supplementary Data
Table of Contents
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserve Quantities
In accordance with SEC and FASB requirements, amounts were computed using 12-month average prices (adjusted only for
existing contractual terms) and end-of-year costs, appropriate statutory tax rates and a prescribed 10 percent discount factor.
Twelve-month average prices are calculated as the unweighted arithmetic average of the first-day-of-the-month price for
each month within the 12-month period prior to the end of the reporting period. For all years, continuation of year-end
economic conditions was assumed. The calculations were based on estimates of proved reserves, which are revised over time
as new data becomes available. Probable or possible reserves, which may become proved in the future, were not considered.
The calculations also require assumptions as to the timing of future production of proved reserves and the timing and amount
of future development costs, including dismantlement, and future production costs, including taxes other than income taxes.
While due care was taken in its preparation, we do not represent that this data is the fair value of our oil and gas properties,
or a fair estimate of the present value of cash flows to be obtained from their development and production.
Discounted Future Net Cash Flows
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia
Pacific/
Middle
East
Africa
Total
$ 94,332 195,605 289,937 13,768 44,942 13,458 27,067 389,172
2022
Consolidated operations
Future cash inflows
Less:
Future production costs
Future development costs
47,979 63,987 111,966
5,722
7,559
5,582
1,085 131,914
8,501 21,379 29,880
960
4,378
1,159
531 36,908
Future income tax provisions
8,882 23,136 32,018
863 25,416
1,780 23,615 83,692
Future net cash flows
28,970 87,103 116,073
6,223
7,589
4,937
1,836 136,658
10 percent annual discount
13,733 31,191 44,924
1,936
1,827
1,505
746 50,938
Discounted future net cash flows
$ 15,237 55,912 71,149
4,287
5,762
3,432
1,090 85,720
Equity affiliates
Future cash inflows
Less:
Future production costs
Future development costs
Future income tax provisions
Future net cash flows
10 percent annual discount
Discounted future net cash flows
$
Total company
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 87,644
— 87,644
—
—
—
—
—
—
— 51,912
— 51,912
—
—
2,685
8,988
—
—
2,685
8,988
— 24,059
— 24,059
— 10,787
— 10,787
— 13,272
— 13,272
Discounted future net cash flows
$ 15,237 55,912 71,149
4,287
5,762 16,704
1,090 98,992
ConocoPhillips 2022 10-K 156
Supplementary Data
Table of Contents
Millions of Dollars
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia
Pacific/
Middle
East
Africa
Total
$ 65,910 125,197 191,107 10,847 21,670 11,583 15,778 250,985
2021
Consolidated operations
Future cash inflows
Less:
Future production costs
Future development costs
34,444 43,034 77,478
4,960
6,090
4,987
801 94,316
8,033 13,386 21,419
923
3,960
1,314
413 28,029
Future income tax provisions
5,310 13,167 18,477
117
8,345
1,542 13,506 41,987
Future net cash flows
10 percent annual discount
18,123 55,610 73,733
4,847
3,275
3,740
1,058 86,653
7,963 22,290 30,253
1,639
696
930
440 33,958
Discounted future net cash flows
$ 10,160 33,320 43,480
3,208
2,579
2,810
618 52,695
Equity affiliates
Future cash inflows
Less:
Future production costs
Future development costs
Future income tax provisions
Future net cash flows
10 percent annual discount
Discounted future net cash flows
$
Total company
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 27,851
— 27,851
—
—
—
—
—
—
— 15,491
— 15,491
—
—
—
—
—
1,649
3,071
7,640
2,640
5,000
—
—
—
—
—
1,649
3,071
7,640
2,640
5,000
Discounted future net cash flows
$ 10,160 33,320 43,480
3,208
2,579
7,810
618 57,695
157 ConocoPhillips 2022 10-K
Supplementary Data
Table of Contents
2020
Consolidated operations
Future cash inflows
Less:
Future production costs
Future development costs
Future income tax provisions
Future net cash flows
10 percent annual discount
Alaska
Lower
48
Total
U.S.
Canada
Europe
Asia Pacific/
Middle East
Africa
Total
Millions of Dollars
$ 30,145 31,533 61,678
4,198
9,857
7,940
9,997 93,670
22,905 17,582 40,487
4,316
4,770
3,838
1,277 54,688
7,932 12,799 20,731
750
3,688
1,289
461 26,919
—
(692)
376
776
376
—
267
1,075
7,571
9,289
84
(868)
1,132
1,738
688
2,774
(1,501)
(820)
(2,321)
(396)
117
406
294
(1,900)
Discounted future net cash flows
$
809
1,596
2,405
(472)
1,015
1,332
394
4,674
Equity affiliates
Future cash inflows
Less:
Future production costs
Future development costs
Future income tax provisions
Future net cash flows
10 percent annual discount
Discounted future net cash flows
$
Total company
$
—
—
—
—
—
17,284
— 17,284
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,239
— 10,239
1,186
1,728
4,131
1,269
2,862
—
—
—
—
—
1,186
1,728
4,131
1,269
2,862
Discounted future net cash flows
$
809 $ 1,596 $ 2,405 $
(472) $ 1,015 $
4,194 $
394 $ 7,536
*Undiscounted future net cash flows related to the proved oil and gas reserves disclosed for Canada for the year ending December 31, 2020, are negative due
to the inclusion of asset retirement costs and certain indirect costs in the calculation of the standardized measure of discounted future net cash flows. These
costs are not required to be included in the economic limit test for proved developed reserves as defined in Regulation S-X Rule 4-10. Future net cash flows for
Canada were also impacted by lower 12-month average pricing for bitumen and crude oil in 2020. Commodity prices have since improved in the current
environment.
ConocoPhillips 2022 10-K 158
Supplementary Data
Table of Contents
Sources of Change in Discounted Future Net Cash Flows
Consolidated Operations
Millions of Dollars
Equity Affiliates
Total Company
2022
2021
2020
2022
2021
2020
2022
2021
2020
$ 52,695 $ 4,674 27,372 $ 5,000
2,862
7,170 $ 57,695
7,536 34,542
Discounted future net cash flows
at the beginning of the year
Changes during the year
Revenues less production costs
for the year
(33,532) (20,000)
(5,198)
(3,245)
(1,389)
(897)
(36,777) (21,389)
(6,095)
61,902
50,956 (34,307)
8,184
3,822
(4,769)
70,086
54,778 (39,076)
Development costs for the year
6,687
4,396
3,593
7,882
10,420
887
1,472
272
(44)
91
22
192
9,354
10,376
909
6,959
4,487
3,785
(4,088)
(33)
754
189
(104)
(205)
(3,899)
(137)
549
3,353
17,833
1
1,282
—
(3)
4,635
17,833
(2)
(3,847)
(468)
(302)
—
—
—
(3,847)
(468)
(302)
Net change in prices, and
production costs
Extensions, discoveries and
improved recovery, less
estimated future costs
Changes in estimated future
development costs
Purchases of reserves in place,
less estimated future costs
Sales of reserves in place, less
estimated future costs
Revisions of previous quantity
estimates
Accretion of discount
7,021
964
3,984
616
13,080
2,985
(2,299)
2,193
178
344
(42)
15,273
3,163
(2,341)
804
7,637
1,308
4,788
Net change in income taxes
(25,433) (19,032) 10,189
(2,691)
(760)
590
(28,124) (19,792) 10,779
Total changes
33,025
48,021 (22,698)
8,272
2,138
(4,308)
41,297
50,159 (27,006)
Discounted future net cash flows
at year end
$ 85,720 $ 52,695
4,674 $ 13,272
5,000
2,862 $ 98,992
57,695
7,536
•
•
•
•
•
The net change in prices and production costs is the beginning-of-year reserve-production forecast multiplied by the
net annual change in the per-unit sales price and production cost, discounted at 10 percent.
Purchases and sales of reserves in place, along with extensions, discoveries and improved recovery, are calculated
using production forecasts of the applicable reserve quantities for the year multiplied by the 12-month average sales
prices, less future estimated costs, discounted at 10 percent.
Revisions of previous quantity estimates are calculated using production forecast changes for the year, including
changes in the timing of production, multiplied by the 12-month average sales prices, less future estimated costs,
discounted at 10 percent.
The accretion of discount is 10 percent of the prior year’s discounted future cash inflows, less future production and
development costs.
The net change in income taxes is the annual change in the discounted future income tax provisions.
159 ConocoPhillips 2022 10-K
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Table of Contents
None.
Item 9A. 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 Securities and Exchange Commission rules and forms, and that such
information is accumulated and communicated to management, including our principal executive and principal financial
officers, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2022, with the
participation of our management, our Chairman and Chief Executive Officer (principal executive officer) and our Executive
Vice President and Chief Financial Officer (principal financial officer) carried out an evaluation, pursuant to Rule 13a-15(b)
of the Act, of ConocoPhillips’ disclosure controls and procedures (as 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 as of December 31, 2022.
There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, in the
period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
This report is included in Item 8 on page 69 and is incorporated herein by reference.
Report of Independent Registered Public Accounting Firm
This report is included in Item 8 on page 70 and is incorporated herein by reference.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
ConocoPhillips 2022 10-K 160
Table of Contents
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding our executive officers appears in Part I of this report on page 28.
Code of Business Ethics and Conduct for Directors and Employees
We have a Code of Business Ethics and Conduct for Directors and Employees (Code of Ethics), including our principal
executive officer, principal financial officer, principal accounting officer and persons performing similar functions. We
have posted a copy of our Code of Ethics on the “Corporate Governance” section of our internet website at
www.conocophillips.com (within the Investors>Corporate Governance section). Any waivers of the Code of Ethics must be
approved, in advance, by our full Board of Directors. Any amendments to, or waivers from, the Code of Ethics that apply
to our executive officers and directors will be posted on the “Corporate Governance” section of our internet website.
All other information required by Item 10 of Part III will be included in our Proxy Statement relating to our 2023 Annual
Meeting of Stockholders, to be filed pursuant to Regulation 14A on or before April 30, 2023, and is incorporated herein by
reference.*
Item 11. Executive Compensation
Information required by Item 11 of Part III will be included in our Proxy Statement relating to our 2023 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A on or before April 30, 2023, and is incorporated herein by
reference.*
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Information required by Item 12 of Part III will be included in our Proxy Statement relating to our 2023 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A on or before April 30, 2023, and is incorporated herein by
reference.*
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by Item 13 of Part III will be included in our Proxy Statement relating to our 2023 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A on or before April 30, 2023, and is incorporated herein by
reference.*
Item 14. Principal Accounting Fees and Services
Information required by Item 14 of Part III will be included in our Proxy Statement relating to our 2023 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A on or before April 30, 2023, and is incorporated herein by
reference.*
_________________________
* Except for information or data specifically incorporated herein by reference under Items 10 through 14, other information and data appearing in our
2023 Proxy Statement are not deemed to be a part of this Annual Report on Form 10-K or deemed to be filed with the Commission as a part of this
report.
161 ConocoPhillips 2022 10-K
Table of Contents
Part IV
Item 15. Exhibits, Financial Statement Schedules
(a) 1. Financial Statements and Supplementary Data
The financial statements and supplementary information listed in the Index to Financial Statements, which
appears on page 68, are filed as part of this annual report.
2. Financial Statement Schedules
All financial statement schedules are omitted because they are not required, not significant, not applicable or
the information is shown in another schedule, the financial statements or the notes to consolidated financial
statements.
3. Exhibits
The exhibits listed in the Index to Exhibits, which appears on pages 163 through 167, are filed as part of this
annual report.
ConocoPhillips 2022 10-K 162
ConocoPhillips
Index to Exhibits
Exhibit
No.
2.1
2.2†‡
2.3†‡
2.4
3.1
3.2
3.3
3.4
Description
Separation and Distribution Agreement Between ConocoPhillips and
Phillips 66, dated April 26, 2012.
Purchase and Sale Agreement, dated March 29, 2017, by and among
ConocoPhillips Company, ConocoPhillips Canada Resources Corp.,
ConocoPhillips Canada Energy Partnership, ConocoPhillips Western
Canada Partnership, ConocoPhillips Canada (BRC) Partnership,
ConocoPhillips Canada E&P ULC, and Cenovus Energy Inc.
Asset Purchase and Sale Agreement Amending Agreement, dated as of
May 16, 2017, by and among ConocoPhillips Company, ConocoPhillips
Canada Resources Corp., ConocoPhillips Canada Energy Partnership,
ConocoPhillips Western Canada Partnership, ConocoPhillips Canada (BRC)
Partnership, ConocoPhillips Canada E&P ULC, and Cenovus Energy Inc.
Agreement and Plan of Merger, dated as of October 18, 2020, among
ConocoPhillips, Falcon Merger Sub Corp. and Concho Resources Inc.
Amended and Restated Certificate of Incorporation.
Certificate of Designations of Series A Junior Participating Preferred Stock
of ConocoPhillips.
Amended and Restated By-Laws of ConocoPhillips, as amended and
restated as of October 9, 2015.
Restated Certificate of Incorporation of ConocoPhillips Company, dated
February 6, 2019.
ConocoPhillips and its subsidiaries are parties to several debt instruments
under which the total amount of securities authorized does not exceed
10 percent of the total assets of ConocoPhillips and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, ConocoPhillips agrees to furnish a copy of such
instruments to the SEC upon request.
Table of Contents
Incorporated by Reference
Exhibit
Form
File No.
2.1
8-K
001-32395
2.1
10-Q
001-32395
2.2
8-K
001-32395
2.1
3.1
3.2
3.1
3.4
8-K
001-32395
10-Q
001-32395
8-K
000-49987
8-K
001-32395
10-K
001-32395
4.1
Description of Securities of the Registrant.
4.1
10-K
001-32395
10.1
10.2
10.3
10.4
Indemnification and Release Agreement between ConocoPhillips and
Phillips 66, dated April 26, 2012.
10.1
8-K
001-32395
Intellectual Property Assignment and License Agreement between
ConocoPhillips and Phillips 66, dated April 26, 2012.
10.2
8-K
001-32395
Tax Sharing Agreement between ConocoPhillips and Phillips 66, dated
April 26, 2012.
10.3
8-K
001-32395
Employee Matters Agreement between ConocoPhillips and Phillips 66,
dated April 12, 2012.
10.4
8-K
001-32395
10.5.1
Rabbi Trust Agreement dated December 17, 1999.
10.11
10-K
001-14521
10.5.2
Amendment to Rabbi Trust Agreement dated February 25, 2002.
10.39.1
10-K
000-49987
10.6.1
10.6.2
Phillips Petroleum Company Grantor Trust Agreement, dated June 1,
1998.
10.17.3
10-K
001-32395
First Amendment to the Trust Agreement under the Phillips Petroleum
Company Grantor Trust Agreement, dated May 3, 1999.
10.17.4
10-K
001-32395
163 ConocoPhillips 2022 10-K
Table of Contents
10.6.3
10.6.4
10.6.5
10.6.6
10.7.1
10.7.2
10.8
10.9
Second Amendment to the Trust Agreement under the Phillips Petroleum
Company Grantor Trust Agreement, dated January 15, 2002.
10.17.5
10-K
001-32395
Third Amendment to the Trust Agreement under the Phillips Petroleum
Company Grantor Trust Agreement, dated October 5, 2006.
10.17.6
10-K
001-32395
Fourth Amendment to the Trust Agreement under the
ConocoPhillips Company Grantor Trust Agreement, dated May 1, 2012.
10.17.7
10-K
001-32395
Fifth Amendment to the Trust Agreement under the ConocoPhillips
Company Grantor Trust Agreement, dated May 20, 2015.
10.17.8
10-K
001-32395
Successor Trustee Agreement of the Deferred Compensation Trust
Agreement for Non-Employee Directors of ConocoPhillips dated July 31,
2020.
10.1
10-Q
001-32395
First Amendment to the Successor Trust Agreement of the Deferred
Compensation Trust Agreement for Non-Employee Directors of
ConocoPhillips, dated August 4, 2020.
1986 Stock Plan of Phillips Petroleum Company.
1990 Stock Plan of Phillips Petroleum Company.
10.2
10-Q
001-32395
10.11
10-K
004-49987
10.12
10-K
004-49987
10.10
Omnibus Securities Plan of Phillips Petroleum Company.
10.19
10-K
004-49987
10.11
2002 Omnibus Securities Plan of Phillips Petroleum Company.
10.26
10-K
000-49987
10.12.1
2004 Omnibus Stock and Performance Incentive Plan of ConocoPhillips.
10.12.2
Form of Performance Share Unit Award Agreement under the
Performance Share Program under the 2004 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips.
Schedule
14A
Proxy
000-49987
10.27
10-K
001-32395
10.13
Omnibus Amendments to certain ConocoPhillips employee benefit plans,
adopted December 7, 2007.
10.30
10-K
001-32395
10.14
2009 Omnibus Stock and Performance Incentive Plan of ConocoPhillips.
10.15.1
2011 Omnibus Stock and Performance Incentive Plan of ConocoPhillips.
Form of Stock Option Award Agreement under the Stock Option and
Stock Appreciation Rights Program under the 2011 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips, effective February 9, 2012.
Schedule
14A
Schedule
14A
Proxy
001-32395
Proxy
001-32395
10
10-Q
001-32395
Form of Performance Share Unit Agreement under the Restricted Stock
Program under the 2011 Omnibus Stock and Performance Incentive Plan
of ConocoPhillips, dated February 5, 2013.
10.26.6
10-K
001-32395
Form of Stock Option Award Agreement under the Stock Option and
Stock Appreciation Rights Program under the 2011 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips, dated February 5, 2013.
10.26.9
10-K
001-32395
Form of Key Employee Award Agreement, as part of the ConocoPhillips
Stock Option Program granted under the 2011 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips, dated February 18, 2014.
Form of Performance Period IX Award Agreement, as part of the
ConocoPhillips Performance Share Program granted under the 2011
Omnibus Stock and Performance Incentive Plan of ConocoPhillips, dated
February 18, 2014.
Form of Performance Period X Award Agreement, as part of the
ConocoPhillips Performance Share Program granted under the 2011
Omnibus Stock and Performance Incentive Plan of ConocoPhillips, dated
February 18, 2014.
10.1
10-Q
001-32395
10.3
10-Q
001-32395
10.5
10-Q
001-32395
ConocoPhillips 2022 10-K 164
10.15.2
10.15.3
10.15.4
10.15.5
10.15.6
10.15.7
Table of Contents
10.15.8
Form of Inducement Grant Award Agreement under the 2011 Omnibus
Stock and Performance Incentive Plan of ConocoPhillips, dated March 31,
2014.
10.11
10-Q
001-32395
10.16.1
2014 Omnibus Stock and Performance Incentive Plan of ConocoPhillips.
10.1
8-K
001-32395
10.16.2
Form of Key Employee Award Agreement, as part of the ConocoPhillips
Stock Option Program granted under the 2014 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips, dated February 16, 2016.
10.26.12
10-K
001-32395
10.16.3
10.16.4
10.16.5
10.16.6
10.16.7
10.16.8
10.16.9
Form of Performance Share Unit Award Terms and Conditions for
Performance Period 18, as part of the ConocoPhillips Performance Share
Program granted under the 2014 Omnibus Stock and Performance
Incentive Plan of ConocoPhillips, dated February 13, 2018.
Form of Key Employee Award Terms and Conditions, as part of the
ConocoPhillips Stock Option Program granted under the 2014 Omnibus
Stock and Performance Incentive Plan of ConocoPhillips, dated February
14, 2017.
Form of Key Employee Award Terms and Conditions as part of the
ConocoPhillips Restricted Stock Unit Program granted under the 2014
Omnibus Stock and Performance Incentive Plan of ConocoPhillips, dated
February 14, 2019.
Form of Key Employee Award Terms and Conditions, as part of the
ConocoPhillips Targeted Variable Long Term Incentive Program, granted
under the 2014 Omnibus Stock and Performance Incentive Plan of
ConocoPhillips, dated September 23, 2019.
10.26.24
10-K
001-32395
10.1
10-Q
001-32395
10.27.16
10-K
001-32395
10.1
10-Q
001-32395
Form of Retention Award Terms and Conditions, as part of the Restricted
Stock Unit Award, granted under the 2014 Omnibus Stock and
Performance Incentive Plan of ConocoPhillips.
10.1
10-Q
001-32395
Form of Inducement Grant Award Agreement under the 2014 Omnibus
Stock and Performance Incentive Plan of ConocoPhillips, dated January
15, 2021.
Form of Key Employee Award Terms and Conditions, as part of the
ConocoPhillips Targeted Variable Long Term Incentive Program, granted
under the 2014 Omnibus Stock and Performance Incentive Plan of
ConocoPhillips dated August 1, 2022.
10.3
10-Q
001-32395
10.1
10-Q
001-32395
10.16.10
Form of Executive Restricted Stock Unit Award Terms and Conditions, as
part of the ConocoPhillips Executive Restricted Stock Unit Program,
granted under the 2014 Omnibus Stock and Performance Incentive Plan
of ConocoPhillips, dated February 11, 2020.
10.1
10-Q
001-32395
10.17
Amended and Restated ConocoPhillips Key Employee Supplemental
Retirement Plan, dated January 1, 2020.
10.10.1
10-K
001-32395
10.18.1
Amended and Restated Defined Contribution Make-Up Plan of
ConocoPhillips—Title I, dated January 1, 2020.
10.11.1
10-K
001-32395
10.18.2
Amended and Restated Defined Contribution Make-Up Plan of
ConocoPhillips—Title II, dated January 1, 2020.
10.11.2
10-K
001-32395
10.19
Company Retirement Contribution Make-Up Plan of ConocoPhillips,
dated December 28, 2018.
10.39
10-K
001-32395
10.20.1
Amended and Restated Key Employee Deferred Compensation Plan of
ConocoPhillips—Title I, dated January 1, 2020.
10.19.1
10-K
001-32395
10.20.2
Amended and Restated Key Employee Deferred Compensation Plan of
ConocoPhillips—Title II, dated January 1, 2020.
10.19.2
10-K
001-32395
10.20.3*
First Amendment to the Key Employee Deferred Compensation Plan of
ConocoPhillips—Title II.
165 ConocoPhillips 2022 10-K
Table of Contents
10.20.4*
Second Amendment to the Key Employee Deferred Compensation Plan of
ConocoPhillips—Title II.
10.21.1
Amendment and Restatement of ConocoPhillips Key Employee Change in
Control Severance Plan, effective January 1, 2014.
10.21
10-K
001-32395
10.21.2
Amendment and Restatement of ConocoPhillips Key Employee Change in
Control Severance Plan, effective December 2, 2021.
10.20.1
10-K
001-32395
10.22
Form of Non-Employee Director Restricted Stock Units Terms and
Conditions, as part of the Deferred Compensation Plan for Non-Employee
Directors of ConocoPhillips, dated January 15, 2016.
10.3
10-Q
001-32395
10.23
Deferred Compensation Plan for Non-Employee Directors of
ConocoPhillips.
10.17
10-K
001-32395
10.24.1
ConocoPhillips Directors’ Charitable Gift Program.
10.40
10-K
000-49987
10.24.2
First and Second Amendments to the ConocoPhillips Directors’ Charitable
Gift Program.
10
10-Q
001-32395
10.25
Amended and Restated 409A Annex to Nonqualified Deferred
Compensation Arrangements of ConocoPhillips, dated January 1, 2020.
10.27
10-K
001-32395
10.26
ConocoPhillips Clawback Policy dated October 3, 2012.
10.3
10-Q
001-32395
10.27
10.28
10.29
Amendment and Restatement of ConocoPhillips Executive Severance
Plan, dated December 2, 2021.
10.47
10-K
001-32395
Amendment and Restatement of the Burlington Resources Inc.
Management Supplemental Benefits Plan, dated April 19, 2012.
10.9
10-Q
001-32395
Purchase and Sale Agreement, dated as of September 20, 2021, by and
between Shell Enterprises LLC and ConocoPhillips.
10.1
10-Q
001-32395
10.30
Compensation Resolutions regarding Matthew J. Fox, dated April 8, 2021.
10.1
10-Q
001-32395
10.31
Form of Aircraft Time Sharing Agreement by and between certain
executives and ConocoPhillips dated June 21, 2021.
10.2
10-Q
001-32395
10.32
Letter agreement with Timothy A. Leach, dated April 28, 2022.
10.1
10-Q
001-32395
ConocoPhillips 2022 10-K 166
Table of Contents
21*
22*
List of Subsidiaries of ConocoPhillips.
Subsidiary Guarantors of Guaranteed Securities.
23.1*
Consent of Ernst & Young LLP.
23.2*
Consent of DeGolyer and MacNaughton.
31.1*
31.2*
32*
99*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934.
Certifications pursuant to 18 U.S.C. Section 1350.
Report of DeGolyer and MacNaughton.
101.INS* Inline XBRL Instance Document.
101.SCH* Inline XBRL Schema Document.
101.CAL* Inline XBRL Calculation Linkbase Document.
101.DEF* Inline XBRL Definition Linkbase Document.
101.LAB* Inline XBRL Labels Linkbase Document.
101.PRE* Inline XBRL Presentation Linkbase Document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
† The schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. ConocoPhillips agrees to furnish a copy of any schedule
omitted from this exhibit to the SEC upon request.
‡ ConocoPhillips has previously been granted confidential treatment for certain portions of this exhibit pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
167 ConocoPhillips 2022 10-K
Signature
Pursuant to the requirements of Section 13 or 15(d) 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.
Table of Contents
February 16, 2023
CONOCOPHILLIPS
/s/ Ryan M. Lance
Ryan M. Lance
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed, as of February 16,
2023, on behalf of the registrant by the following officers in the capacity indicated and by a majority of directors.
Signature
/s/ Ryan M. Lance
Ryan M. Lance
/s/ William L. Bullock, Jr.
William L. Bullock, Jr.
/s/ Christopher P. Delk
Christopher P. Delk
Title
Chairman of the Board of Directors
and Chief Executive Officer
(Principal executive officer)
Executive Vice President and
Chief Financial Officer
(Principal financial officer)
Vice President, Controller
and General Tax Counsel
(Principal accounting officer)
ConocoPhillips 2022 10-K 168
Table of Contents
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
/s/ Dennis V. Arriola
Dennis V. Arriola
/s/ Caroline M. Devine
Caroline M. Devine
/s/ Gay Huey Evans
Gay Huey Evans
/s/ Jody Freeman
Jody Freeman
/s/ Jeffrey A. Joerres
Jeffrey A. Joerres
/s/ Timothy A. Leach
Timothy A. Leach
/s/ William H. McRaven
William H. McRaven
/s/ Sharmila Mulligan
Sharmila Mulligan
/s/ Eric D. Mullins
Eric D. Mullins
/s/ Arjun N. Murti
Arjun N. Murti
/s/ Robert A. Niblock
Robert A. Niblock
/s/ David T. Seaton
David T. Seaton
/s/ R.A. Walker
R.A. Walker
169 ConocoPhillips 2022 10-K
(cid:100)(cid:346)(cid:349)(cid:400)(cid:3)(cid:87)(cid:258)(cid:336)(cid:286)(cid:3)(cid:47)(cid:374)(cid:410)(cid:286)(cid:374)(cid:415)(cid:381)(cid:374)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:62)(cid:286)(cid:332)(cid:3)(cid:17)(cid:367)(cid:258)(cid:374)(cid:364)(cid:856)
(cid:100)(cid:346)(cid:349)(cid:400)(cid:3)(cid:87)(cid:258)(cid:336)(cid:286)(cid:3)(cid:47)(cid:374)(cid:410)(cid:286)(cid:374)(cid:415)(cid:381)(cid:374)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:62)(cid:286)(cid:332)(cid:3)(cid:17)(cid:367)(cid:258)(cid:374)(cid:364)(cid:856)
Non-GAAP Financial Measures
Use of Non-GAAP Financial Information
This annual report includes non-GAAP terms to help facilitate comparisons of company operating performance
across periods and with peer companies. The company believes that the non-GAAP measures included, when
viewed in combination with the company’s results prepared in accordance with GAAP, provide a more complete
understanding of the factors and trends affecting the company’s business and performance. The board of
directors and management also use these non-GAAP measures to analyze operating performance across
periods when overseeing and managing the company’s business. Reconciliations of any non-GAAP measures
presented in the annual report to the nearest corresponding GAAP measures are included both in the annual
report and on our website at www.conocophillips.com/nongaap.
Cash From Operations
Cash provided by operating activities excluding the impact from operating working capital. The company
believes this measure is meaningful, as it provides insight into the cash flows generated by operating activities
across periods by excluding the timing effects associated with operating working capital changes.
Net Debt
Net debt includes total balance sheet debt less cash, cash equivalents and short-term investments. The
company believes this non-GAAP measure is useful to investors as it provides a measure to compare debt less
cash, cash equivalents and short-term investments across periods on a consistent basis.
Return On Capital Employed
Calculated as a ratio, the numerator of which is net income, and the denominator of which is average total
equity plus average total debt. The net income is adjusted for after-tax interest expense, for the purposes
of measuring efficiency of debt capital used in operations; net income is also adjusted for nonoperational
or special items impacts to allow for comparability in the long-term view across periods. Return on capital
employed (ROCE) is a measure of the profitability of the company’s capital employed in its business operations
compared with that of its peers. The company believes ROCE is a good indicator of long-term company and
management performance as it relates to capital efficiency, both absolute and relative to the company’s
primary peer group.
RECONCILIATION OF RETURN ON CAPITAL EMPLOYED (ROCE)
$ Millions, except as indicated
Numerator
Net Income Attributable to ConocoPhillips
Adjustment to exclude special items
Net income attributable to noncontrolling interests
After-tax interest expense
ROCE earnings
Denominator
Average total equity¹
Average total debt²
Average capital employed
ROCE (percent)
¹ Average total equity is the average of beginning total equity and ending total equity by quarter.
2 Average total debt is the average of beginning long-term debt and short-term debt and ending long-term debt and short-term debt by quarter.
2022
18,680
(1,340)
–
641
17,981
48,801
17,742
66,543
27%
RECONCILIATION OF TOTAL DEBT TO NET DEBT
$ Millions, except as indicated
Total Debt
Less:
Cash and cash equivalents¹
Short-term investments
Net Debt
¹ Includes restricted cash of $0.7B in 2012 and $0.2B in 2022.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO CASH FROM OPERATIONS
$ Millions, except as indicated
Net Cash Provided by Operating Activities
Adjustments:
Net operating working capital changes
Cash From Operations
Other Terms
2012
21,725
4,366
–
17,359
2012
13,922
(1,239)
15,161
2022
16,643
6,694
2,785
7,164
2022
28,314
(234)
28,548
Reserve Replacement Ratio
Reserve replacement is defined by the company as a ratio representing the change in proved reserves, net of
production, divided by current year production. The company believes that reserve replacement is useful to
investors to help understand how changes in proved reserves, net of production, compare with the company’s
current year production, inclusive of acquisitions and dispositions.
Returns of Capital
The total of the ordinary dividend, share repurchases and variable return of cash (VROC). Also referred to
as distributions.
Board
Board
of Directors
of Directors
(As of Feb. 16, 2023)
(As of Feb. 16, 2023)
Dennis V. Arriola
Dennis V. Arriola
Former Chief Executive Officer,
Former Chief Executive Officer,
Avangrid, Inc.
Avangrid, Inc.
Caroline Maury Devine
Caroline Maury Devine
Former President and Managing
Former President and Managing
Director of a Norwegian affiliate
Director of a Norwegian affiliate
of ExxonMobil
of ExxonMobil
Jody Freeman
Jody Freeman
Archibald Cox Professor of Law,
Archibald Cox Professor of Law,
Harvard Law School
Harvard Law School
Gay Huey Evans CBE
Gay Huey Evans CBE
Chairman, London Metal Exchange
Chairman, London Metal Exchange
Jeffrey A. Joerres
Jeffrey A. Joerres
Former Executive Chairman
Former Executive Chairman
and Chief Executive Officer,
and Chief Executive Officer,
ManpowerGroup Inc.
ManpowerGroup Inc.
William H. McRaven
William H. McRaven
Retired U.S. Navy Four-Star Admiral
Retired U.S. Navy Four-Star Admiral
(SEAL)
(SEAL)
Sharmila Mulligan
Sharmila Mulligan
Former Chief Strategy Officer,
Former Chief Strategy Officer,
Alteryx
Alteryx
Eric D. Mullins
Eric D. Mullins
Chairman and Chief Executive Officer,
Chairman and Chief Executive Officer,
Lime Rock Resources
Lime Rock Resources
Arjun N. Murti
Arjun N. Murti
Partner, Veriten LLC
Partner, Veriten LLC
Robert A. Niblock
Robert A. Niblock
Former Chairman, President
Former Chairman, President
and Chief Executive Officer,
and Chief Executive Officer,
Lowe’s Companies, Inc.
Lowe’s Companies, Inc.
Ryan M. Lance
Ryan M. Lance
Chairman and Chief Executive Officer,
Chairman and Chief Executive Officer,
ConocoPhillips
ConocoPhillips
Timothy A. Leach
Timothy A. Leach
Advisor to the Chief Executive Officer,
Advisor to the Chief Executive Officer,
ConocoPhillips
ConocoPhillips
David T. Seaton
David T. Seaton
Former Chairman and Chief Executive
Former Chairman and Chief Executive
Officer, Fluor Corporation
Officer, Fluor Corporation
R.A. Walker
R.A. Walker
Former Chairman and Chief Executive
Former Chairman and Chief Executive
Officer, Anadarko Petroleum
Officer, Anadarko Petroleum
Corporation
Corporation
Executive
Executive
Leadership Team
Leadership Team
(As of Feb. 16, 2023)
(As of Feb. 16, 2023)
Ryan M. Lance
Ryan M. Lance
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer
William L. Bullock, Jr.
William L. Bullock, Jr.
Executive Vice President
Executive Vice President
and Chief Financial Officer
and Chief Financial Officer
Timothy A. Leach
Timothy A. Leach
Advisor to the Chief Executive Officer
Advisor to the Chief Executive Officer
Andrew D. Lundquist
Andrew D. Lundquist
Senior Vice President,
Senior Vice President,
Government Affairs
Government Affairs
Dominic E. Macklon
Dominic E. Macklon
Executive Vice President, Strategy,
Executive Vice President, Strategy,
Sustainability and Technology
Sustainability and Technology
Andrew M. O’Brien
Andrew M. O’Brien
Senior Vice President,
Senior Vice President,
Global Operations
Global Operations
Nicholas G. Olds
Nicholas G. Olds
Executive Vice President,
Executive Vice President,
Lower 48
Lower 48
Kelly B. Rose
Kelly B. Rose
Senior Vice President,
Senior Vice President,
Legal and General Counsel
Legal and General Counsel
Heather G. Sirdashney
Heather G. Sirdashney
Senior Vice President,
Senior Vice President,
Human Resources and Real Estate
Human Resources and Real Estate
and Facilities Services
and Facilities Services
Explore
Explore
ConocoPhillips
ConocoPhillips
Fact Sheets
Fact Sheets
Published annually to
Published annually to
provide detailed operational
provide detailed operational
updates for each of the
updates for each of the
company’s six segments.
company’s six segments.
conocophillips.com/factsheets
conocophillips.com/factsheets
Sustainability Report
Sustainability Report
Published annually to provide
Published annually to provide
details on priority reporting issues
details on priority reporting issues
for the company, a letter from
for the company, a letter from
our CEO and key environmental,
our CEO and key environmental,
social and governance metrics.
social and governance metrics.
conocophillips.com/reports
conocophillips.com/reports
Plan for the Net-Zero Energy
Plan for the Net-Zero Energy
Transition Progress Report
Transition Progress Report
Outlines our approach and
Outlines our approach and
progress to address risks
progress to address risks
specific to the energy transition.
specific to the energy transition.
conocophillips.com/reports
conocophillips.com/reports
Managing Climate-Related
Managing Climate-Related
Risks Report
Risks Report
Published annually to provide
Published annually to provide
details on the company’s
details on the company’s
governance framework,
governance framework,
risk management approach,
risk management approach,
strategy, key metrics and targets
strategy, key metrics and targets
for climate-related issues.
for climate-related issues.
conocophillips.com/reports
conocophillips.com/reports
Human Capital
Human Capital
Management Report
Management Report
Published annually to provide
Published annually to provide
details of the actions the
details of the actions the
company is taking to inspire a
company is taking to inspire a
compelling culture, attract and
compelling culture, attract and
retain great people and meet our
retain great people and meet our
commitments to all stakeholders.
commitments to all stakeholders.
conocophillips.com/hcmreport
conocophillips.com/hcmreport
Upcoming and Past
Upcoming and Past
Investor Presentations
Investor Presentations
Provides notice of future
Provides notice of future
presentations and archived
presentations and archived
presentations dating back
presentations dating back
one year, including webcast
one year, including webcast
replays, transcripts, slides
replays, transcripts, slides
and other information.
and other information.
conocophillips.com/investors
conocophillips.com/investors
Certain disclosures in this annual report may be considered “forward-looking” statements. These are made pursuant to “safe harbor” provisions of the Private Securities Litigation
Certain disclosures in this annual report may be considered “forward-looking” statements. These are made pursuant to “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. The “Cautionary Statement” in the Management’s Discussion and Analysis in ConocoPhillips’ 2022 Form 10-K should be read in conjunction with such statements.
Reform Act of 1995. The “Cautionary Statement” in the Management’s Discussion and Analysis in ConocoPhillips’ 2022 Form 10-K should be read in conjunction with such statements.
“ConocoPhillips,” “the company,” “we,” “us” and “our” are used interchangeably in this report to refer to the businesses of ConocoPhillips and its
“ConocoPhillips,” “the company,” “we,” “us” and “our” are used interchangeably in this report to refer to the businesses of ConocoPhillips and its
consolidated subsidiaries.
consolidated subsidiaries.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and
possible reserves. We use the terms “resource” and “resources” in this annual report, which the SEC’s guidelines prohibit us from including in filings
possible reserves. We use the terms “resource” and “resources” in this annual report, which the SEC’s guidelines prohibit us from including in filings
with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC.
with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC.
Copies are available from the SEC and on the ConocoPhillips website.
Copies are available from the SEC and on the ConocoPhillips website.
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