e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) |
[X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended |
March 31, 2010 |
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or |
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[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from |
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to |
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Commission file number: |
001-32395 |
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ConocoPhillips
(Exact name of registrant as specified in its charter)
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Delaware
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01-0562944 |
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(State or other jurisdiction of
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(I.R.S. Employer |
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incorporation or organization)
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Identification No.) |
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600 North Dairy Ashford, Houston, TX 77079
(Address of principal executive offices) (Zip Code)
281-293-1000
(Registrants telephone number, including area code)
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 [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes [x ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer [x]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes [ ] No [x]
The registrant had 1,488,318,070 shares of common stock, $.01 par value, outstanding at March 31,
2010.
CONOCOPHILLIPS
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
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Consolidated Income Statement
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ConocoPhillips |
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Millions of Dollars |
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Three Months Ended |
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March 31 |
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2010 |
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2009 |
(2) |
Revenues and Other Income |
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Sales and other operating revenues(1) |
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$ |
44,821 |
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30,741 |
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Equity in earnings of affiliates |
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868 |
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373 |
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Other income |
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73 |
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124 |
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Total Revenues and Other Income |
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45,762 |
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31,238 |
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Costs and Expenses |
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Purchased crude oil, natural gas and products |
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31,521 |
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19,759 |
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Production and operating expenses |
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2,527 |
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2,545 |
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Selling, general and administrative expenses |
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444 |
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475 |
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Exploration expenses |
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383 |
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225 |
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Depreciation, depletion and amortization |
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2,318 |
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2,230 |
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Impairments |
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91 |
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3 |
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Taxes other than income taxes(1) |
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4,037 |
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3,464 |
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Accretion on discounted liabilities |
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114 |
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104 |
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Interest and debt expense |
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301 |
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310 |
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Foreign currency transaction (gains) losses |
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36 |
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131 |
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Total Costs and Expenses |
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41,772 |
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29,246 |
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Income before income taxes |
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3,990 |
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1,992 |
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Provision for income taxes |
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1,878 |
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1,176 |
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Net income |
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2,112 |
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816 |
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Less: net income attributable to noncontrolling interests |
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(14 |
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(16 |
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Net Income Attributable to ConocoPhillips |
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$ |
2,098 |
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800 |
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Net Income Attributable to ConocoPhillips Per Share of
Common Stock (dollars) |
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Basic |
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$ |
1.41 |
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.54 |
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Diluted |
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1.40 |
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.54 |
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Dividends
Paid Per Share of Common Stock (dollars)(3) |
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$ |
.50 |
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.47 |
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Average Common Shares Outstanding (in thousands) |
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Basic |
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1,492,861 |
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1,485,890 |
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Diluted |
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1,503,565 |
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1,495,247 |
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(1)Includes excise taxes on petroleum products sales: |
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$ |
3,220 |
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3,060 |
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(2)Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information.
(3)A quarterly dividend of 55 cents per share was declared on
March 24, 2010, payable on June 1, 2010, to stockholders of record at
the close of business on May 24, 2010.
See Notes to Consolidated Financial Statements.
1
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Consolidated Balance Sheet |
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ConocoPhillips |
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Millions of Dollars |
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March 31 |
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December 31 |
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2010 |
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2009 |
* |
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Assets |
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Cash and cash equivalents |
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$ |
855 |
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542 |
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Accounts and notes receivable (net of allowance of $69 million in 2010
and $76 million in 2009) |
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10,968 |
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11,861 |
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Accounts and notes receivablerelated parties |
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1,662 |
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1,354 |
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Inventories |
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7,300 |
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4,940 |
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Prepaid expenses and other current assets |
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2,808 |
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2,470 |
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Total Current Assets |
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23,593 |
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21,167 |
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Investments and long-term receivables |
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36,764 |
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35,742 |
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Loans and advancesrelated parties |
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2,560 |
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2,352 |
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Net properties, plants and equipment |
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86,623 |
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87,708 |
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Goodwill |
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3,635 |
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3,638 |
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Intangibles |
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815 |
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823 |
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Other assets |
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820 |
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708 |
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Total Assets |
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$ |
154,810 |
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152,138 |
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Liabilities |
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Accounts payable |
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$ |
14,392 |
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14,168 |
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Accounts payablerelated parties |
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1,545 |
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1,317 |
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Short-term debt |
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2,763 |
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1,728 |
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Accrued income and other taxes |
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4,105 |
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3,402 |
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Employee benefit obligations |
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540 |
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846 |
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Other accruals |
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3,260 |
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2,234 |
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Total Current Liabilities |
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26,605 |
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23,695 |
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Long-term debt |
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26,225 |
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26,925 |
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Asset retirement obligations and accrued environmental costs |
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8,661 |
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8,713 |
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Joint venture acquisition obligationrelated party |
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4,839 |
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5,009 |
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Deferred income taxes |
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17,891 |
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17,956 |
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Employee benefit obligations |
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4,138 |
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4,130 |
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Other liabilities and deferred credits |
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3,034 |
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3,097 |
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Total Liabilities |
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91,393 |
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89,525 |
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Equity |
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Common stock (2,500,000,000 shares authorized at $.01 par value) |
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Issued (20101,735,391,399 shares; 20091,733,345,558 shares) |
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Par value |
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17 |
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17 |
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Capital in excess of par |
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43,742 |
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43,681 |
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Grantor trusts (at cost: 201038,726,514 shares; 200938,742,261 shares) |
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(666 |
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(667 |
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Treasury stock (at cost: 2010208,346,815 shares; 2009208,346,815 shares) |
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(16,211 |
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(16,211 |
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Accumulated other comprehensive income |
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3,275 |
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3,065 |
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Unearned employee compensation |
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(69 |
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(76 |
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Retained earnings |
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32,749 |
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32,214 |
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Total Common Stockholders Equity |
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62,837 |
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62,023 |
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Noncontrolling interests |
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580 |
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590 |
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Total Equity |
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63,417 |
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62,613 |
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Total Liabilities and Equity |
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$ |
154,810 |
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152,138 |
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*Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information.
See Notes to Consolidated Financial Statements.
2
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Consolidated Statement of Cash Flows
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ConocoPhillips |
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Millions of Dollars |
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Three Months Ended |
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March 31 |
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2010 |
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2009 |
* |
Cash Flows From Operating Activities |
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Net income |
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$ |
2,112 |
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|
816 |
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Adjustments to reconcile net income to net cash provided by operating activities |
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Depreciation, depletion and amortization |
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2,318 |
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2,230 |
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Impairments |
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91 |
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3 |
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Dry hole costs and leasehold impairments |
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133 |
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123 |
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Accretion on discounted liabilities |
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114 |
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104 |
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Deferred taxes |
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(35 |
) |
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(221 |
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Undistributed equity earnings |
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(503 |
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(280 |
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Gain on asset dispositions |
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(24 |
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(39 |
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Other |
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(187 |
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(2 |
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Working capital adjustments |
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Decrease (increase) in accounts and notes receivable |
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677 |
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1,860 |
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Decrease (increase) in inventories |
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(2,439 |
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(1,454 |
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Decrease (increase) in prepaid expenses and other current assets |
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(398 |
) |
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(201 |
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Increase (decrease) in accounts payable |
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396 |
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(529 |
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Increase (decrease) in taxes and other accruals |
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785 |
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(525 |
) |
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Net Cash Provided by Operating Activities |
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3,040 |
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1,885 |
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Cash Flows From Investing Activities |
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Capital expenditures and investments |
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(2,071 |
) |
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(2,906 |
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Proceeds from asset dispositions |
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132 |
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|
86 |
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Long-term advances/loansrelated parties |
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(248 |
) |
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(88 |
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Collection of advances/loansrelated parties |
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27 |
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11 |
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Other |
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3 |
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(29 |
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Net Cash Used in Investing Activities |
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(2,157 |
) |
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(2,926 |
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Cash Flows From Financing Activities |
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Issuance of debt |
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362 |
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6,033 |
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Repayment of debt |
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(15 |
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(4,102 |
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Issuance of company common stock |
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9 |
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(21 |
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Dividends paid on company common stock |
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(744 |
) |
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(696 |
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Other |
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(186 |
) |
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(203 |
) |
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Net Cash Provided by (Used in) Financing Activities |
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(574 |
) |
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1,011 |
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Effect of Exchange Rate Changes on Cash and Cash Equivalents |
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4 |
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77 |
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Net Change in Cash and Cash Equivalents |
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313 |
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47 |
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Cash and cash equivalents at beginning of period |
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|
542 |
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|
755 |
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Cash and Cash Equivalents at End of Period |
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$ |
855 |
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|
802 |
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*Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information.
See Notes to Consolidated Financial Statements.
3
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Notes to Consolidated Financial Statements
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ConocoPhillips |
Note 1Interim Financial Information
The interim-period financial information presented in the financial statements included in this
report is unaudited and includes all known accruals and adjustments, in the opinion of management,
necessary for a fair presentation of the consolidated financial position of ConocoPhillips and its
results of operations and cash flows for such periods. All such adjustments are of a normal and
recurring nature. To enhance your understanding of these interim financial statements, see the
consolidated financial statements and notes included in our 2009 Annual Report on Form 10-K.
Note 2Changes in Accounting Principles
LUKOIL Accounting
Effective January 1, 2010, we changed the method used to determine our equity-method share of
LUKOILs earnings. Prior to 2010, we estimated our LUKOIL equity earnings for the current quarter
based on current market indicators, publicly available LUKOIL information and other objective data.
This earnings estimation process was necessary because, historically, LUKOILs accounting cycle
close and preparation of U.S. generally accepted accounting principles (GAAP) financial statements occurred subsequent to our reporting
deadline, and for certain periods this timing gap exceeded 93 days. Although Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) Topic 323, InvestmentsEquity
Method and Joint Ventures, provides that when financial statements of an investee are not
sufficiently timely, then the investor should record its share of earnings or loss based on the
most recently available financial statements, SEC guidance indicates this timing gap should not
exceed 93 days. Recently, the timing gap has been reduced to less than 93 days for all reporting
periods. Accordingly, we believe it is now preferable to implement a change in accounting
principle to record our equity-method share of LUKOILs earnings on a one-quarter lag basis, rather
than using an earnings estimate for the current quarter. We believe the new method is preferable
as it improves reporting reliability, while maintaining an acceptable level of relevance.
This change in accounting principle to a one-quarter lag under ASC Topic 323 has been
applied retrospectively, by recasting prior period financial information. The following table
summarizes the line items affected on the consolidated income statement:
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Millions of Dollars |
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|
Three Months Ended March 31 |
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2010 |
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2009 |
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Computed |
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As |
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Effect |
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As |
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Effect |
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with |
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Reported |
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of |
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Originally |
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As |
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of |
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Estimate |
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with Lag |
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Change |
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Reported |
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Adjusted |
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Change |
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Equity in earnings of affiliates |
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$ |
751 |
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|
|
868 |
|
|
|
117 |
|
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|
415 |
|
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|
373 |
|
|
|
(42 |
) |
Provision for income taxes |
|
|
1,877 |
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|
1,878 |
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1 |
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|
1,178 |
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1,176 |
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(2 |
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Net Income |
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|
1,996 |
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|
2,112 |
|
|
|
116 |
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|
856 |
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|
816 |
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(40 |
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Net Income Attributable to
ConocoPhillips |
|
|
1,982 |
|
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|
2,098 |
|
|
|
116 |
|
|
|
840 |
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|
800 |
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(40 |
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Net Income Attributable to
ConocoPhillips Per Share of
Common Stock (dollars) |
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Basic |
|
$ |
1.33 |
|
|
|
1.41 |
|
|
|
0.08 |
|
|
|
0.57 |
|
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|
0.54 |
|
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|
(0.03 |
) |
Diluted |
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|
1.32 |
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|
1.40 |
|
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|
0.08 |
|
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|
0.56 |
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0.54 |
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(0.02 |
) |
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4
The following table summarizes the line items affected on the consolidated balance sheet:
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Millions of Dollars |
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|
March 31, 2010 |
|
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December 31, 2009 |
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Computed |
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As |
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Effect |
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As |
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|
|
|
|
|
Effect |
|
|
|
with |
|
|
Reported |
|
|
of |
|
|
Originally |
|
|
As |
|
|
of |
|
|
|
Estimate |
|
|
with Lag |
|
|
Change |
|
|
Reported |
|
|
Adjusted |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments and
long-term
receivables |
|
$ |
37,098 |
|
|
|
36,764 |
|
|
|
(334 |
) |
|
|
36,192 |
|
|
|
35,742 |
|
|
|
(450 |
) |
Deferred income taxes |
|
|
17,897 |
|
|
|
17,891 |
|
|
|
(6 |
) |
|
|
17,962 |
|
|
|
17,956 |
|
|
|
(6 |
) |
Retained earnings |
|
|
33,077 |
|
|
|
32,749 |
|
|
|
(328 |
) |
|
|
32,658 |
|
|
|
32,214 |
|
|
|
(444 |
) |
|
|
There was no cumulative impact to retained earnings as of January 1, 2009, as a result of the
accounting change. This was due to the impairment of our LUKOIL investment during 2008 to its fair
market value on December 31, 2008.
The following table summarizes the line items affected on the consolidated statement of cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
Computed |
|
|
As |
|
|
Effect |
|
|
As |
|
|
|
|
|
|
Effect |
|
|
|
with |
|
|
Reported |
|
|
of |
|
|
Originally |
|
|
As |
|
|
of |
|
|
|
Estimate |
|
|
with Lag |
|
|
Change |
|
|
Reported |
|
|
Adjusted |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,996 |
|
|
|
2,112 |
|
|
|
116 |
|
|
|
856 |
|
|
|
816 |
|
|
|
(40 |
) |
Deferred taxes |
|
|
(36 |
) |
|
|
(35 |
) |
|
|
1 |
|
|
|
(219 |
) |
|
|
(221 |
) |
|
|
(2 |
) |
Undistributed equity earnings |
|
|
(386 |
) |
|
|
(503 |
) |
|
|
(117 |
) |
|
|
(322 |
) |
|
|
(280 |
) |
|
|
42 |
|
|
|
Transfers of Financial Assets
In June 2009, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 166,
Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140, which was
codified into FASB ASC Topic 860, Transfers and Servicing. This Statement removes the concept of
a qualifying special purpose entity (SPE) and the exception for qualifying SPEs from the
consolidation guidance. Additionally, the Statement clarifies the requirements for financial asset
transfers eligible for sale accounting. This Statement was effective January 1, 2010, and did not
impact our consolidated financial statements.
Variable Interest Entities (VIEs)
Also in June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), to
address the effects of the elimination of the qualifying SPE concept in SFAS No. 166, and other
concerns about the application of key provisions of consolidation guidance for VIEs. This
Statement was codified into FASB ASC Topic 810, Consolidation. More specifically, Topic 810
requires a qualitative rather than a quantitative approach to determine the primary beneficiary of
a VIE, it amends certain guidance pertaining to the determination of the primary beneficiary when
related parties are involved, and it amends certain guidance for determining whether an entity is a
VIE. Additionally, this Statement requires continuous assessments of whether an enterprise is the
primary beneficiary of a VIE. This Statement was effective January 1, 2010, and its adoption did
not impact our consolidated financial statements, other than the required disclosures. For
additional information, see Note 3Variable Interest Entities (VIEs).
5
Note 3Variable Interest Entities (VIEs)
We hold significant variable interests in VIEs that have not been consolidated because we are not
considered the primary beneficiary. Information on these VIEs follows:
We have a 30 percent ownership interest with a 50 percent governance interest in the OOO
Naryanmarneftegaz (NMNG) joint venture to develop resources in the Timan-Pechora province of
Russia. The NMNG joint venture is a VIE because we and a related party, OAO LUKOIL, have
disproportionate interests. When related parties are involved in a VIE and neither party has the
power to direct the activities of the VIE without the consent of the other party, reasonable
judgment should take into account the relevant facts and circumstances for the determination of the
primary beneficiary. The activities of NMNG are more closely aligned with LUKOIL because they
share Russia as a home country, and LUKOIL conducts extensive exploration and production activities
in the same province. Additionally, there are no financial guarantees given by LUKOIL or us, and
LUKOIL owns 70 percent, versus our 30 percent direct interest. As a result, we have determined we
are not the primary beneficiary of NMNG, and we use the equity method of accounting for this
investment. The funding of NMNG has been provided with equity contributions, primarily for the
development of the Yuzhno Khylchuyu (YK) Field. At March 31, 2010, the book value of our
investment in the venture was $1,587 million.
Production from the NMNG joint venture fields is transported via pipeline to LUKOILs terminal at
Varandey Bay on the Barents Sea and then shipped via tanker to international markets. LUKOIL
completed an expansion of the terminals gross oil-throughput capacity from 30,000 barrels per day
to 240,000 barrels per day, and we participated in the design and financing of the expansion. The
terminal entity, Varandey Terminal Company, is a VIE because we and LUKOIL have disproportionate
interests. We had an obligation to fund, through loans, 30 percent of the terminals expansion
costs, but have no governance or direct ownership interest in the terminal. We determined we are
not the primary beneficiary for Varandey because LUKOIL has the power to direct the activities that
most influence Varandeys economic performance. We account for our loan to Varandey as a financial
asset. Principal repayments began in April 2009. The loan balance outstanding as of March 31,
2010, at current exchange rates, was $275 million.
We have an agreement with Freeport LNG Development, L.P. (Freeport LNG) to participate in a
liquefied natural gas (LNG) receiving terminal in Quintana, Texas. We have no ownership in
Freeport LNG; however, we own a 50 percent interest in Freeport LNG GP, Inc. (Freeport GP), which
serves as the general partner managing the venture. We entered into a credit agreement with
Freeport LNG, whereby we agreed to provide loan financing for the construction of the terminal. We
also entered into a long-term agreement with Freeport LNG to use 0.9 billion cubic feet per day of
regasification capacity. The terminal became operational in June 2008, and we began making
payments under the terminal use agreement. Freeport LNG began making loan repayments in September
2008, and the loan balance outstanding as of March 31, 2010, was $691 million. Freeport LNG is a
VIE because Freeport GP holds no equity in Freeport LNG, and the limited partners of Freeport LNG
do not have any substantive decision making ability. We are not the primary beneficiary because
the equity holders of Freeport GP are not related parties and have equally shared power. Neither
party has the power to direct the significant activities without the consent of the other party, in
which case neither party is considered to be the primary beneficiary. The loan to Freeport LNG is
accounted for as a financial asset, and our investment in Freeport GP is accounted for as an equity
investment.
6
Note 4Inventories
Inventories consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Crude oil and petroleum products |
|
$ |
6,305 |
|
|
|
3,955 |
|
Materials, supplies and other |
|
|
995 |
|
|
|
985 |
|
|
|
|
|
$ |
7,300 |
|
|
|
4,940 |
|
|
|
Inventories valued on the last-in, first-out (LIFO) basis totaled $6,110 million and $3,747 million
at March 31, 2010, and December 31, 2009, respectively. The excess of current replacement cost
over LIFO cost of inventories amounted to $5,752 million and $5,627 million at March 31, 2010, and
December 31, 2009, respectively.
Note 5Assets Held for Sale
At March 31, 2010, we classified $333 million of noncurrent assets, primarily investments in equity
affiliates, as held for sale and most of this amount is included in Prepaid expenses and other
current assets. We also classified $75 million of noncurrent deferred tax liabilities as current,
based on their held for sale status.
In April 2010, we entered into definitive agreements with subsidiaries of Sinopec International
Petroleum Exploration and Production Company to sell our 9.03 percent interest in the Syncrude
Canada Ltd. joint venture (Syncrude) for approximately $4.65 billion. The transaction is
anticipated to close in the third quarter of 2010, subject to Canadian and Chinese government
approvals. Syncrude met the held-for-sale criteria during the second quarter, and we expect it to
be reflected as held for sale in our June 30, 2010, balance sheet. The carrying value of our
Syncrude net assets at March 31, 2010, was $1,793 million. In addition, there is an associated net
deferred tax liability of $414 million.
Note 6Investments, Loans and Long-Term Receivables
LUKOIL
Our ownership interest in LUKOIL was 20 percent at March 31, 2010, based on 851 million shares
authorized and issued. For financial reporting under U.S. GAAP, treasury shares held by LUKOIL are not considered outstanding for determining our
equity method ownership interest in LUKOIL. Our ownership interest, based on estimated shares
outstanding, was 20.09 percent at March 31, 2010.
At March 31, 2010, the book value of our ordinary share investment in LUKOIL was $6,809 million.
Our 20 percent share of the net assets of LUKOIL was estimated to be $11,262 million. A majority
of this negative basis difference of $4,453 million is being amortized on a straight-line basis
over a 22-year useful life as an increase to equity earnings. On March 31, 2010, the closing price
of LUKOIL shares on the London Stock Exchange was $56.70 per share, making the total market value
of our LUKOIL investment $9,645 million. For additional information about accounting for our
LUKOIL investment, see Note 2Changes in Accounting Principles.
Loans to Related Parties
As part of our normal ongoing business operations and consistent with industry practice, we invest
and enter into numerous agreements with other parties to pursue business opportunities, which share
costs and apportion
7
risks among the parties as governed by the agreements. Included in such activity are loans made to
certain affiliated companies. Significant loans to affiliated companies at March 31, 2010,
included the following:
|
|
|
$691 million in loan financing to Freeport LNG Development, L.P. |
|
|
|
|
$275 million in loan financing at March 2010 exchange rates to Varandey Terminal
Company. |
|
|
|
|
$1,051 million in project financing and an additional $91 million of accrued interest to
Qatargas 3. |
|
|
|
|
$550 million in loan financing to WRB Refining LLC. |
The long-term portion of these loans are included in the Loans and advancesrelated parties line
on the consolidated balance sheet, while the short-term portion is in Accounts and notes
receivablerelated parties.
Other Investments
We have investments remeasured at fair value on a recurring basis to support certain nonqualified
deferred compensation plans. The fair value of these assets at March 31, 2010, was $329 million,
and substantially the entire value is categorized in Level 1 of the fair value hierarchy. These
investments are measured at fair value using a market approach based on quotations from national
securities exchanges.
Merey Sweeny, L.P. (MSLP) is a limited partnership that owns a 70,000 barrel-per-day delayed coker
and related facilities at the Sweeny Refinery used to produce fuel-grade petroleum coke. Prior to
August 28, 2009, MSLP was owned 50/50 by us and Petróleos de Venezuela S.A. (PDVSA). Under the
agreements that govern the relationships between the partners, certain defaults by PDVSA with
respect to supply of crude oil to the Sweeny Refinery gave us the right to acquire PDVSAs 50
percent ownership interest in MSLP. On August 28, 2009, we exercised that right. PDVSA recently
initiated arbitration in the International Chamber of Commerce challenging our actions. We
continue to use the equity method of accounting for our investment in MSLP.
Note 7Properties, Plants and Equipment
Our investment in properties, plants and equipment (PP&E), with the associated accumulated
depreciation, depletion and amortization (Accum. DD&A), was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31, 2010 |
|
|
December 31, 2009 |
|
|
|
Gross |
|
|
Accum. |
|
|
Net |
|
|
Gross |
|
|
Accum. |
|
|
Net |
|
|
|
PP&E |
|
|
DD&A |
|
|
PP&E |
|
|
PP&E |
|
|
DD&A |
|
|
PP&E |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P |
|
$ |
115,611 |
|
|
|
46,641 |
|
|
|
68,970 |
|
|
|
115,224 |
|
|
|
45,577 |
|
|
|
69,647 |
|
Midstream |
|
|
124 |
|
|
|
76 |
|
|
|
48 |
|
|
|
123 |
|
|
|
74 |
|
|
|
49 |
|
R&M |
|
|
22,835 |
|
|
|
6,838 |
|
|
|
15,997 |
|
|
|
23,047 |
|
|
|
6,714 |
|
|
|
16,333 |
|
LUKOIL Investment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Chemicals |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Emerging Businesses |
|
|
1,139 |
|
|
|
301 |
|
|
|
838 |
|
|
|
1,198 |
|
|
|
300 |
|
|
|
898 |
|
Corporate and Other |
|
|
1,657 |
|
|
|
887 |
|
|
|
770 |
|
|
|
1,650 |
|
|
|
869 |
|
|
|
781 |
|
|
|
|
|
$ |
141,366 |
|
|
|
54,743 |
|
|
|
86,623 |
|
|
|
141,242 |
|
|
|
53,534 |
|
|
|
87,708 |
|
|
|
Suspended Wells
Our capitalized cost of suspended wells at March 31, 2010, was $976 million, an increase of
$68 million from $908 million at year-end 2009. For the category of exploratory well costs
capitalized for a period greater than one year as of December 31, 2009, none was charged to dry
hole expense during the first three months of 2010.
8
Note 8Impairments
As a result of our decision to end our participation in the new refinery project in Yanbu
Industrial City, Saudi Arabia, we recorded a before-tax property impairment of $88 million in
international R&M to write-off capitalized project costs.
Note 9Debt
We have two commercial paper programs supported by our $7.85 billion revolving credit facilities:
the ConocoPhillips $6.35 billion program, primarily a funding source for short-term working capital
needs, and the ConocoPhillips Qatar Funding Ltd. $1.5 billion commercial paper program, which is
used to fund commitments relating to the Qatargas 3 Project. Commercial paper maturities are
generally limited to 90 days. At both March 31, 2010 and December 31, 2009, we had no direct
outstanding borrowings under our revolving credit facilities, but $40 million in letters of credit
had been issued. In addition, under the two commercial paper programs, there was $1,662 million of
commercial paper outstanding at March 31, 2010, compared with $1,300 million at December 31, 2009.
Since we had $1,662 million of commercial paper outstanding and had issued $40 million of letters
of credit, we had access to $6.1 billion in borrowing capacity under our revolving credit
facilities at March 31, 2010.
At March 31, 2010, we classified $1,113 million of short-term debt as long-term debt, based on our
ability and intent to refinance the obligation on a long-term basis under our revolving credit
facilities.
Note 10Joint Venture Acquisition Obligation
We are obligated to contribute $7.5 billion, plus interest, over a 10-year period that began in
2007, to FCCL Partnership. Quarterly principal and interest payments of $237 million began in the
second quarter of 2007 and will continue until the balance is paid. Of the principal obligation
amount, approximately $668 million was short-term and was included in the Accounts payablerelated
parties line on our March 31, 2010, consolidated balance sheet. The principal portion of these
payments, which totaled $162 million in the first three months of 2010, are included in the Other
line in the financing activities section of our consolidated statement of cash flows. Interest
accrues at a fixed annual rate of 5.3 percent on the unpaid principal balance. Fifty percent of
the quarterly interest payment is reflected as a capital contribution and is included in the
Capital expenditures and investments line on our consolidated statement of cash flows.
9
Note 11Noncontrolling Interests
Activity for the equity attributable to noncontrolling interests for the first three months of 2010
and 2009 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
2010 |
|
|
2009* |
|
|
|
Common |
|
|
Non- |
|
|
|
|
|
|
Common |
|
|
Non- |
|
|
|
|
|
|
Stockholders |
|
|
Controlling |
|
|
Total |
|
|
Stockholders |
|
|
Controlling |
|
|
Total |
|
|
|
Equity |
|
|
Interest |
|
|
Equity |
|
|
Equity |
|
|
Interest |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1 |
|
$ |
62,023 |
|
|
|
590 |
|
|
|
62,613 |
|
|
|
55,165 |
|
|
|
1,100 |
|
|
|
56,265 |
|
Net income |
|
|
2,098 |
|
|
|
14 |
|
|
|
2,112 |
|
|
|
800 |
|
|
|
16 |
|
|
|
816 |
|
Dividends |
|
|
(1,563 |
) |
|
|
- |
|
|
|
(1,563 |
) |
|
|
(696 |
) |
|
|
- |
|
|
|
(696 |
) |
Distributions to
noncontrolling
interests |
|
|
- |
|
|
|
(24 |
) |
|
|
(24 |
) |
|
|
- |
|
|
|
(17 |
) |
|
|
(17 |
) |
Other changes, net** |
|
|
279 |
|
|
|
- |
|
|
|
279 |
|
|
|
(214 |
) |
|
|
(1 |
) |
|
|
(215 |
) |
|
|
Balance at March 31 |
|
$ |
62,837 |
|
|
|
580 |
|
|
|
63,417 |
|
|
|
55,055 |
|
|
|
1,098 |
|
|
|
56,153 |
|
|
|
* Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information.
** Includes components of other comprehensive income, which are disclosed separately in Note 15Comprehensive Income.
Note 12Guarantees
At March 31, 2010, we were liable for certain contingent obligations under various contractual
arrangements as described below. We recognize a liability, at inception, for the fair value of our
obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of
the liability is noted below, we have not recognized a liability either because the guarantees were
issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In
addition, unless otherwise stated, we are not currently performing with any significance under the
guarantee and expect future performance to be either immaterial or have only a remote chance of
occurrence.
Construction Completion Guarantees
|
|
|
In December 2005, we issued a construction completion guarantee for 30 percent of the
$4 billion in loan facilities of Qatargas 3, which are being used to finance the construction
of an LNG train in Qatar. Of the $4 billion in loan facilities, we committed to provide
$1.2 billion. The maximum potential amount of future payments to third-party lenders under
the guarantee is estimated to be $850 million, which could become payable if the full debt
financing is utilized and completion of the Qatargas 3 Project is not achieved. The project
financing will be nonrecourse to ConocoPhillips upon certified completion, which is expected
in 2011. At March 31, 2010, the carrying value of the guarantee to third-party lenders was
$11 million. |
Guarantees of Joint Venture Debt
|
|
|
In June 2006, we issued a guarantee for our ownership percentage of $2 billion in credit
facilities of Rockies Express Pipeline LLC, operated by Kinder Morgan Energy Partners, L.P.
At March 31, 2010, the total carrying value of this guarantee was $11 million, and Rockies
Express had no amount outstanding under the credit facilities. In April 2010, the credit
facilities were reduced to $200 million and our guarantee was released. |
|
|
|
At March 31, 2010, we had guarantees outstanding for our portion of joint venture debt
obligations, which have terms of up to 16 years. The maximum potential amount of future
payments under the guarantees is approximately $80 million. Payment would be required if a
joint venture defaults on its debt obligations. |
10
Other Guarantees
|
|
|
In conjunction with our purchase of a 50 percent ownership interest in Australia Pacific
LNG (APLNG) from Origin Energy in October 2008, we agreed to participate, if and when
requested, in any parent company guarantees that were outstanding at the time we purchased
our interest in APLNG. These parent company guarantees cover the obligation of APLNG to
deliver natural gas under several sales agreements with remaining terms of 7 to 22 years.
Our maximum potential amount of future payments, or cost of volume delivery, under these
guarantees is estimated to be $1,475 million ($3,185 million in the event of intentional or
reckless breach) at March 2010 exchange rates based on our 50 percent share of the remaining
contracted volumes, which could become payable if APLNG fails to meet its obligations under
these agreements and the obligations cannot otherwise be mitigated. 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 partners do
not make necessary equity contributions into APLNG. |
|
|
|
We have other guarantees with maximum future potential payment amounts totaling $450
million, which consist primarily of guarantees to fund the short-term cash liquidity deficits
of certain joint ventures, a guarantee of minimum charter revenue for two LNG vessels, one
small construction completion guarantee, guarantees of the lease payment obligations of a
joint venture, and guarantees of the residual value of leased corporate aircraft. At March
31, 2010, the carrying value of these guarantees to third-party lenders was $1 million.
These guarantees generally extend up to 15 years or life of the venture. |
Indemnifications
Over the years, we have entered into various agreements to sell ownership interests in certain
corporations, joint ventures and assets that gave rise to qualifying indemnifications. Agreements
associated with these sales include indemnifications for taxes, environmental liabilities, permits
and licenses, employee claims, real estate indemnity against tenant defaults, and litigation. The
terms of these indemnifications vary greatly. The majority of these indemnifications are related
to environmental issues, the term is generally indefinite and the maximum amount of future payments
is generally unlimited. The carrying amount recorded for these indemnifications at March 31, 2010,
was $396 million. We amortize the indemnification liability over the relevant time period, if one
exists, based on the facts and circumstances surrounding each type of indemnity. In cases where
the indemnification term is indefinite, we will reverse the liability when we have information the
liability is essentially relieved or amortize the liability over an appropriate time period as the
fair value of our indemnification exposure declines. Although it is reasonably possible future
payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible
to make a reasonable estimate of the maximum potential amount of future payments. Included in the
recorded carrying amount were $249 million of environmental accruals for known contamination that
are included in asset retirement obligations and accrued environmental costs at March 31, 2010.
For additional information about environmental liabilities, see Note 13Contingencies and
Commitments.
Note 13Contingencies and Commitments
In the case of all known contingencies (other than those related to income taxes), we accrue a
liability when the loss is probable and the amount is reasonably estimable. If a range of amounts
can be reasonably estimated and no amount within the range is a better estimate than any other
amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential
insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance
or other third-party recoveries. In the case of income-tax-related contingencies, we use a
cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than
certain.
Based on currently available information, we believe it is remote that future costs related to
known contingent liability exposures will exceed current accruals by an amount that would have a
material adverse impact on our consolidated financial statements. As we learn new facts concerning
contingencies, we reassess our position
11
both with respect to accrued liabilities and other potential exposures. Estimates particularly
sensitive to future changes include contingent liabilities recorded for environmental remediation,
tax and legal matters. Estimated future environmental remediation costs are subject to change due
to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such
remedial actions that may be required, and the determination of our liability in proportion to that
of other responsible parties. Estimated future costs related to tax and legal matters are subject
to change as events evolve and as additional information becomes available during the
administrative and litigation processes.
Environmental
We are subject to federal, state and local environmental laws and regulations. These may result in
obligations to remove or mitigate the effects on the environment of the placement, storage,
disposal or release of certain chemical, mineral and petroleum substances at various sites. When
we prepare our consolidated financial statements, we record accruals for environmental liabilities
based on managements best estimates, using all information that is available at the time. We
measure estimates and base liabilities on currently available facts, existing technology, and
presently enacted laws and regulations, taking into account stakeholder and business
considerations. When measuring environmental liabilities, we also consider our prior experience in
remediation of contaminated sites, other companies cleanup experience, and data released by the
U.S. Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims
in our determination of environmental liabilities, and we accrue them in the period they are both
probable and reasonably estimable.
Although liability of those potentially responsible for environmental remediation costs is
generally joint and several for federal sites and frequently so for state sites, we are usually
only one of many companies cited at a particular site. Due to the joint and several liabilities,
we could be responsible for all cleanup costs related to any site at which we have been designated
as a potentially responsible party. If we were solely responsible, the costs, in some cases, could
be material to our results of operations, capital resources or liquidity, or to those of one of our
segments. However, settlements and costs incurred in matters that previously have been resolved
have not been material to our results of operations or financial condition. 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 state
agencies 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 have not
recorded accruals for any potential contingent liabilities that we expect to be funded by the prior
owners under these indemnifications.
We are currently participating in environmental assessments and cleanups at numerous federal
Superfund and comparable state 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. At March 31, 2010, our balance sheet included a total environmental
accrual of $979 million, compared with $1,017 million at December 31, 2009. We expect to incur a
substantial amount of these expenditures within the next 30 years. We have not reduced these
accruals for possible insurance recoveries. In the future, we may be involved in additional
environmental assessments, cleanups and proceedings.
Legal Proceedings
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
12
individual cases. This process also enables us to track those cases that have been scheduled for
trial, as well as the pace of settlement discussions in individual matters. 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 believes there is a remote likelihood
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.
Other Contingencies
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 March 31, 2010, we had performance
obligations secured by letters of credit of $1,850 million (of which $40 million was issued under
the provisions of our revolving credit facility, and the remainder was issued as direct bank
letters of credit) related to various purchase commitments for materials, supplies, services and
items of permanent investment incident to the ordinary conduct of business.
Long-Term Throughput Agreements and Take-or-Pay Agreements
We have certain throughput agreements and take-or-pay agreements to support financing arrangements.
The agreements typically provide for natural gas or crude oil transportation to be used in the
ordinary course of the companys business. The aggregate amounts of estimated payments under these
various agreements are: 2010$125 million; 2011$125 million; 2012$122 million; 2013$120 million;
2014$121 million; and 2015 and after$308 million. Total payments under the agreements were
$114 million in 2009, $119 million in 2008 and $103 million in 2007.
Note 14Financial Instruments and Derivative Contracts
Derivative Instruments
We use financial and commodity-based derivative contracts to manage exposures to fluctuations in
foreign currency exchange rates, commodity prices, and interest rates, or to capture market
opportunities. Since we are not currently using hedge accounting, all gains and losses, realized
or unrealized, from derivative contracts have been recognized in the consolidated income statement.
Gains and losses from derivative contracts held for trading not directly related to our physical
business, whether realized or unrealized, have been reported net in other income.
Purchase and sales contracts for commodities that are readily convertible to cash (e.g., crude oil,
natural gas and gasoline) are recorded on the balance sheet as derivatives unless the contracts are
for quantities we expect to use or sell over a reasonable period in the normal course of business
(i.e., contracts eligible for the normal purchases and normal sales exception). We record most of
our contracts to buy or sell natural gas and the majority of our contracts to sell power as
derivatives, but we do apply the normal purchases and normal sales exception to certain long-term
contracts to sell our natural gas production. We generally apply this normal purchases and normal
sales exception to eligible crude oil and refined product commodity purchase and sales contracts;
however, we may elect not to apply this exception (e.g., when another derivative instrument will be
used to mitigate the risk of the purchase or sale contract but hedge accounting will not be
applied, in which case both the purchase or sales contract and the derivative contract mitigating
the resulting risk will be recorded on the balance sheet at fair value).
We value our exchange-cleared derivatives using closing prices provided by the exchange as of the
balance sheet date, and these are classified as Level 1 in the fair value hierarchy.
Over-the-counter (OTC) financial swaps and physical commodity forward purchase and sale contracts
are generally valued using quotations provided by brokers and price index developers such as Platts
and Oil Price Information Service. These quotes are corroborated with market data and are
classified as Level 2. In certain less liquid markets or for longer-term contracts, forward prices
are not as readily available. In these circumstances, OTC swaps and physical commodity purchase
and sale contracts are valued using internally developed methodologies that consider historical
relationships among various commodities that result in managements best estimate of fair value.
13
These contracts are classified as Level 3. A contract that is initially classified as Level 3 due
to absence or insufficient corroboration of broker quotes over a material portion of the contract
will transfer to Level 2 when the portion of the trade having no quotes or insufficient
corroboration becomes an insignificant portion of the contract. A contract would also transfer to
Level 2 if we began using a corroborated broker quote that has become available. Conversely, if a
corroborated broker quote ceases to be available or used by us, the contract would transfer from
Level 2 to Level 3. There were no transfers in or out of Level 1.
Exchange-cleared financial options are valued using exchange closing prices and are classified as
Level 1. Financial OTC and physical commodity options are valued using industry-standard models
that consider various assumptions, including quoted forward prices for commodities, time value,
volatility factors, and contractual prices for the underlying instruments, as well as other
relevant economic measures. The degree to which these inputs are observable in the forward markets
determines whether the options are classified as Level 2 or 3.
We use a mid-market pricing convention (the mid-point between bid and ask prices). When
appropriate, valuations are adjusted to reflect credit considerations, generally based on available
market evidence.
The fair value hierarchy for our derivative assets and liabilities accounted for at fair value on a
recurring basis was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31, 2010 |
|
|
December 31, 2009 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives |
|
$ |
2,596 |
|
|
|
1,744 |
|
|
|
75 |
|
|
|
4,415 |
|
|
|
1,710 |
|
|
|
1,659 |
|
|
|
61 |
|
|
|
3,430 |
|
Foreign exchange derivatives |
|
|
- |
|
|
|
30 |
|
|
|
- |
|
|
|
30 |
|
|
|
- |
|
|
|
45 |
|
|
|
- |
|
|
|
45 |
|
|
|
Total assets |
|
|
2,596 |
|
|
|
1,774 |
|
|
|
75 |
|
|
|
4,445 |
|
|
|
1,710 |
|
|
|
1,704 |
|
|
|
61 |
|
|
|
3,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives |
|
|
(2,903 |
) |
|
|
(1,541 |
) |
|
|
(15 |
) |
|
|
(4,459 |
) |
|
|
(1,797 |
) |
|
|
(1,496 |
) |
|
|
(24 |
) |
|
|
(3,317 |
) |
Foreign exchange
derivatives |
|
|
- |
|
|
|
(36 |
) |
|
|
- |
|
|
|
(36 |
) |
|
|
- |
|
|
|
(47 |
) |
|
|
- |
|
|
|
(47 |
) |
|
|
Total liabilities |
|
|
(2,903 |
) |
|
|
(1,577 |
) |
|
|
(15 |
) |
|
|
(4,495 |
) |
|
|
(1,797 |
) |
|
|
(1,543 |
) |
|
|
(24 |
) |
|
|
(3,364 |
) |
|
|
Net assets (liabilities) |
|
$ |
(307 |
) |
|
|
197 |
|
|
|
60 |
|
|
|
(50 |
) |
|
|
(87 |
) |
|
|
161 |
|
|
|
37 |
|
|
|
111 |
|
|
|
The derivative values above are based on analysis of each contract as the fundamental unit of
account; therefore, derivative assets and liabilities with the same counterparty are not reflected
net where the legal right of offset exists. Gains or losses from contracts in one level may be
offset by gains or losses on contracts in another level or by changes in values of physical
contracts or positions that are not reflected in the table above.
14
The fair value of net commodity derivatives classified as Level 3 in the fair value hierarchy
changed as follows during the first quarters of 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
37 |
|
|
|
40 |
|
Total gains (losses), realized and unrealized |
|
|
|
|
|
|
|
|
Included in earnings |
|
|
32 |
|
|
|
26 |
|
Included in other comprehensive income |
|
|
- |
|
|
|
- |
|
Purchases, issuances and settlements |
|
|
(3 |
) |
|
|
(10 |
) |
Transfers into Level 3 |
|
|
- |
|
|
|
57 |
|
Transfers out of Level 3 |
|
|
(6 |
) |
|
|
(17 |
) |
|
|
Ending balance |
|
$ |
60 |
|
|
|
96 |
|
|
|
The amounts of Level 3 gains (losses) included in earnings were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
Purchased |
|
|
|
|
|
|
|
|
|
|
Purchased |
|
|
|
|
|
|
Other |
|
|
Crude Oil, |
|
|
|
|
|
|
Other |
|
|
Crude Oil, |
|
|
|
|
|
|
Operating |
|
|
Natural Gas |
|
|
|
|
|
|
Operating |
|
|
Natural Gas |
|
|
|
|
|
|
Revenues |
|
|
and Products |
|
|
Total |
|
|
Revenues |
|
|
and Products |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains
(losses) included
in earnings |
|
$ |
44 |
|
|
|
(12 |
) |
|
|
32 |
|
|
|
27 |
|
|
|
(1 |
) |
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
unrealized gains
(losses) relating
to assets held at
March 31 |
|
$ |
49 |
|
|
|
- |
|
|
|
49 |
|
|
|
36 |
|
|
|
- |
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
unrealized gains
(losses) relating
to liabilities held
at
March 31 |
|
$ |
(8 |
) |
|
|
(11 |
) |
|
|
(19 |
) |
|
|
(10 |
) |
|
|
- |
|
|
|
(10 |
) |
|
|
Commodity Derivative ContractsWe operate in the worldwide crude oil, refined product, natural gas,
natural gas liquids and electric power markets and are exposed to fluctuations in the prices for
these commodities. These fluctuations can affect our revenues, as well as the cost of operating,
investing and financing activities. Generally, our policy is to remain exposed to the market
prices of commodities; however, we use futures, forwards, swaps and options in various markets to
balance physical systems, meet customer needs, manage price exposures on specific transactions, and
do a limited, immaterial amount of trading not directly related to our physical business. These
activities may move our risk profile away from market average prices.
15
The fair value of commodity derivative assets and liabilities and the line items where they appear
on our consolidated balance sheet were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
$ |
3,974 |
|
|
|
3,084 |
|
Other assets |
|
|
449 |
|
|
|
359 |
|
Liabilities |
|
|
|
|
|
|
|
|
Other accruals |
|
|
4,032 |
|
|
|
3,006 |
|
Other liabilities and deferred credits |
|
|
435 |
|
|
|
324 |
|
|
|
Hedge accounting has not been used for any items in the table. The
amounts shown are presented gross (i.e., without netting assets and
liabilities with the same counterparty where the right of offset and
intent to net exist).
The gains (losses) from commodity derivatives incurred, and the line items where they appear
on our consolidated income statement were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
482 |
|
|
|
573 |
|
Other income |
|
|
(10 |
) |
|
|
8 |
|
Purchased crude oil, natural gas and products |
|
|
(507 |
) |
|
|
(512 |
) |
|
|
Hedge accounting has not been used for any items in the table.
The table below summarizes our material net exposures resulting from outstanding commodity
derivative contracts. These financial and physical derivative contracts are primarily used to
manage price exposure on our underlying operations. The underlying exposures may be from
non-derivative positions such as inventory volumes or firm natural gas transport contracts.
Financial derivative contracts may also offset physical derivative contracts, such as forward sales
contracts.
|
|
|
|
|
|
|
|
|
|
|
Open Position |
|
|
|
Long/(Short) |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
Commodity |
|
|
|
|
|
|
|
|
Crude oil, refined products and natural gas liquids (millions of barrels) |
|
|
(36 |
) |
|
|
(16 |
) |
Natural gas and power (billions of cubic feet) |
|
|
|
|
|
|
|
|
Fixed price |
|
|
(96 |
) |
|
|
(60 |
) |
Basis |
|
|
163 |
|
|
|
154 |
|
|
|
16
Currency Exchange Rate Derivative ContractsWe have foreign currency exchange rate risk resulting
from international operations. We do not comprehensively hedge the exposure to movements in
currency exchange rates, 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.
The fair value of foreign currency derivative assets and liabilities, and the line items where they
appear on our consolidated balance sheet were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
$ |
29 |
|
|
|
38 |
|
Other assets |
|
|
1 |
|
|
|
7 |
|
Liabilities |
|
|
|
|
|
|
|
|
Other accruals |
|
|
31 |
|
|
|
40 |
|
Other liabilities and deferred credits |
|
|
5 |
|
|
|
7 |
|
|
|
Hedge accounting has not been used for any items in the table. The amounts shown are presented gross.
Gains and losses from foreign currency derivatives, and the line item where they appear on
our consolidated income statement were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction (gains) losses |
|
$ |
46 |
|
|
|
(6 |
) |
|
|
Hedge accounting has not been used for any items in the table.
We had the following net position of outstanding foreign currency swap contracts, entered
into primarily to hedge price exposure in our international operations.
|
|
|
|
|
|
|
|
|
|
|
In Millions |
|
|
|
Notional Currency* |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
Foreign Currency Swaps |
|
|
|
|
|
|
|
|
Sell U.S. dollar, buy other currencies** |
|
USD |
2,354 |
|
|
|
3,211 |
|
Buy British pound, sell euro |
|
EUR |
253 |
|
|
|
267 |
|
|
|
*Denominated in U.S. dollars (USD) and euros (EUR).
**Primarily euro, Canadian dollar, Norwegian krone and British pound.
Credit Risk
Financial instruments potentially exposed to concentrations of credit risk consist primarily of
cash equivalents, over-the-counter derivative contracts and trade receivables. Our cash
equivalents are placed in high-quality commercial paper, money market funds and time deposits with
major international banks and financial institutions.
The credit risk from our over-the-counter derivative contracts, such as forwards and swaps, derives
from the counterparty to the transaction, typically a major bank or financial institution.
Individual counterparty
17
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
contracts, but futures have a negligible credit risk because they are traded on the New York
Mercantile Exchange or the ICE Futures.
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 do not generally require
collateral to limit the exposure to loss; however, we will sometimes use letters of credit,
prepayments, and 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 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.
The aggregate fair value of all derivative instruments with such credit-risk-related contingent
features that were in a liability position on March 31, 2010, and December 31, 2009, was $444
million and $381 million, respectively, for which no collateral was posted in the normal course of
business in 2010 and 2009. If our credit rating were lowered one level from its A rating (per
Standard and Poors) on March 31, 2010, we would be required to post no additional collateral to
our counterparties. If we were downgraded below investment grade, we would be required to post
$444 million of additional collateral, either with cash or letters of credit.
Fair Values of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:
|
|
|
Cash and cash equivalents: The carrying amount reported on the balance sheet
approximates fair value. |
|
|
|
|
Accounts and notes receivable: The carrying amount reported on the balance sheet
approximates fair value. |
|
|
|
|
Investment in LUKOIL shares: See Note 6Investments, Loans and Long-Term Receivables,
for a discussion of the carrying value and fair value of our investment in LUKOIL shares. |
|
|
|
|
Debt: The carrying amount of our floating-rate debt approximates fair value. The fair
value of the fixed-rate debt is estimated based on quoted market prices. |
|
|
|
|
Fixed-rate 5.3 percent joint venture acquisition obligation: Fair value is estimated
based on the net present value of the future cash flows, discounted at a March 31 effective
yield rate of 2.65 percent, based on yields of U.S. Treasury securities of similar average
duration adjusted for our average credit risk spread and the amortizing nature of the
obligation principal. See Note 10Joint Venture Acquisition Obligation, for additional
information. |
|
|
|
|
Swaps: Fair value is estimated based on forward market prices and approximates the exit
price at period end. When forward market prices are not available, they are estimated
using the forward prices of a similar commodity with adjustments for differences in quality
or location. |
|
|
|
|
Futures: Fair values are based on quoted market prices obtained from the New York
Mercantile Exchange, the ICE Futures, or other traded exchanges. |
|
|
|
|
Forward-exchange contracts: Fair value is estimated by comparing the contract rate to
the forward rate in effect on March 31, 2010, and approximates the exit price at that date. |
18
Certain of our commodity derivative and financial instruments were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Carrying Amount |
|
|
Fair Value |
|
|
|
March 31 |
|
|
December 31 |
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency derivatives |
|
$ |
30 |
|
|
|
45 |
|
|
|
30 |
|
|
|
45 |
|
Commodity derivatives |
|
|
1,120 |
|
|
|
823 |
|
|
|
1,120 |
|
|
|
823 |
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt, excluding capital leases |
|
|
28,958 |
|
|
|
28,622 |
|
|
|
30,951 |
|
|
|
30,565 |
|
Joint venture acquisition obligation |
|
|
5,507 |
|
|
|
5,669 |
|
|
|
6,074 |
|
|
|
6,276 |
|
Foreign currency derivatives |
|
|
36 |
|
|
|
47 |
|
|
|
36 |
|
|
|
47 |
|
Commodity derivatives |
|
|
842 |
|
|
|
632 |
|
|
|
842 |
|
|
|
632 |
|
|
|
The amounts shown for derivatives in the preceding table are presented net (i.e., assets and
liabilities with the same counterparty are netted where the right of offset and intent to net
exist). In addition, the March 31, 2010, commodity derivative assets and liabilities appear net of
$82 million of obligations to return cash collateral and $404 million of rights to reclaim cash
collateral, respectively. The December 31, 2009, commodity derivative assets and liabilities
appear net of $70 million of obligations to return cash collateral and $148 million of rights to
reclaim cash collateral, respectively. No collateral was deposited or held for the foreign
currency derivatives.
Note 15Comprehensive Income
ConocoPhillips comprehensive income was as follows:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2,112 |
|
|
|
816 |
|
After-tax changes in: |
|
|
|
|
|
|
|
|
Defined benefit plans |
|
|
|
|
|
|
|
|
Net prior service cost |
|
|
2 |
|
|
|
3 |
|
Net actuarial gain |
|
|
35 |
|
|
|
34 |
|
Nonsponsored plans |
|
|
2 |
|
|
|
(1 |
) |
Foreign currency translation adjustments |
|
|
171 |
|
|
|
(278 |
) |
Hedging activities |
|
|
- |
|
|
|
(1 |
) |
|
|
Comprehensive income |
|
|
2,322 |
|
|
|
573 |
|
Less: comprehensive income attributable to noncontrolling interests |
|
|
(14 |
) |
|
|
(16 |
) |
|
|
Comprehensive income attributable to ConocoPhillips |
|
$ |
2,308 |
|
|
|
557 |
|
|
|
19
Accumulated other comprehensive income in the equity section of the balance sheet included:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Defined benefit plans |
|
$ |
(1,465 |
) |
|
|
(1,504 |
) |
Foreign currency translation adjustments |
|
|
4,747 |
|
|
|
4,576 |
|
Deferred net hedging loss |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
Accumulated other comprehensive income |
|
$ |
3,275 |
|
|
|
3,065 |
|
|
|
None of the items within accumulated other comprehensive income relate to noncontrolling interests.
Note 16Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
Cash Payments |
|
|
|
|
|
|
|
|
Interest |
|
$ |
322 |
|
|
|
95 |
|
Income taxes |
|
|
1,596 |
|
|
|
1,346 |
|
|
|
On March 24, 2010, we declared a
quarterly dividend of 55 cents per share, payable June 1, 2010, to stockholders of record at the
close of business on May 24, 2010. This noncash financing activity increased dividends payable and
decreased retained earnings $819 million.
Note 17Employee Benefit Plans
Pension and Postretirement Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Pension Benefits |
|
|
Other Benefits |
|
Three Months Ended |
|
March 31 |
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
U.S. |
|
|
Intl. |
|
|
U.S. |
|
|
Intl. |
|
|
|
|
|
|
|
|
|
Components of Net Periodic Benefit Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
57 |
|
|
|
23 |
|
|
|
48 |
|
|
|
20 |
|
|
|
3 |
|
|
|
2 |
|
Interest cost |
|
|
65 |
|
|
|
43 |
|
|
|
69 |
|
|
|
33 |
|
|
|
11 |
|
|
|
12 |
|
Expected return on plan assets |
|
|
(56 |
) |
|
|
(38 |
) |
|
|
(46 |
) |
|
|
(29 |
) |
|
|
- |
|
|
|
- |
|
Amortization of prior service cost |
|
|
2 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
1 |
|
|
|
2 |
|
Recognized net actuarial loss (gain) |
|
|
42 |
|
|
|
14 |
|
|
|
47 |
|
|
|
8 |
|
|
|
(2 |
) |
|
|
(4 |
) |
|
|
Net periodic benefit cost |
|
$ |
110 |
|
|
|
42 |
|
|
|
121 |
|
|
|
32 |
|
|
|
13 |
|
|
|
12 |
|
|
|
During the first three months of 2010, we contributed $16 million to our domestic benefit plans and
$53 million to our international benefit plans.
20
Note 18Related Party Transactions
Significant transactions with related parties were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
$ |
1,934 |
|
|
|
1,473 |
|
Purchases (b) |
|
|
3,439 |
|
|
|
2,482 |
|
Operating expenses and selling, general and administrative expenses (c) |
|
|
81 |
|
|
|
85 |
|
Net interest expense (d) |
|
|
19 |
|
|
|
19 |
|
|
|
(a) |
|
We sold natural gas to DCP Midstream, LLC and crude oil to the Malaysian Refining Company
Sdn. Bhd. (MRC), among others, for processing and marketing. Natural gas liquids, solvents
and petrochemical feedstocks were sold to Chevron Phillips Chemical Company LLC (CPChem), gas
oil and hydrogen feedstocks were sold to Excel Paralubes and refined products were sold
primarily to CFJ Properties and LUKOIL. Natural gas, crude oil, blendstock and other
intermediate products were sold to WRB Refining LLC. In addition, we charged several of our
affiliates, including CPChem and MSLP, for the use of common facilities, such as steam
generators, waste and water treaters, and warehouse facilities. |
|
(b) |
|
We purchased refined products from WRB. We purchased natural gas and natural gas liquids
from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from
various affiliates. We purchased crude oil from LUKOIL and refined products from MRC. We
also paid fees to various pipeline equity companies for transporting finished refined products
and natural gas, as well as a price upgrade to MSLP for heavy crude processing. We purchased
base oils and fuel products from Excel Paralubes for use in our refinery and specialty
businesses. |
|
(c) |
|
We paid processing fees to various affiliates. Additionally, we paid transportation fees to
pipeline equity companies. |
|
(d) |
|
We paid and/or received interest to/from various affiliates, including FCCL Partnership. See
Note 6Investments, Loans and Long-Term Receivables, for additional information on loans to
affiliated companies. |
Note 19Segment Disclosures and Related Information
We have organized our reporting structure based on the grouping of similar products and services,
resulting in six operating segments:
|
1) |
|
E&PThis segment primarily explores for, produces, transports and markets crude oil,
bitumen, natural gas and natural gas liquids on a worldwide basis. |
|
|
2) |
|
MidstreamThis segment gathers, processes and markets natural gas produced by
ConocoPhillips and others, and fractionates and markets natural gas liquids, predominantly
in the United States and Trinidad. The Midstream segment primarily consists of our 50
percent equity investment in DCP Midstream, LLC. |
|
|
3) |
|
R&MThis segment purchases, refines, markets and transports crude oil and petroleum
products, mainly in the United States, Europe and Asia. |
21
|
4) |
|
LUKOIL InvestmentThis segment represents our investment in the ordinary shares of OAO
LUKOIL, an international, integrated oil and gas company headquartered in Russia. At March
31, 2010, our ownership interest was 20 percent based on issued shares, and 20.09 percent
based on estimated shares outstanding. |
|
|
5) |
|
ChemicalsThis segment manufactures and markets petrochemicals and plastics on a
worldwide basis. The Chemicals segment consists of our 50 percent equity investment in
Chevron Phillips Chemical Company LLC. |
|
|
6) |
|
Emerging BusinessesThis segment represents our investment in new technologies or
businesses outside our normal scope of operations. |
Corporate and Other includes general corporate overhead, most interest expense and various other
corporate activities. Corporate assets include all cash and cash equivalents.
We evaluate performance and allocate resources based on net income attributable to ConocoPhillips.
Intersegment sales are at prices that approximate market.
22
Analysis of Results by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
2009 |
|
Sales and Other Operating Revenues |
|
|
|
|
|
|
|
|
E&P |
|
|
|
|
|
|
|
|
United States |
|
$ |
8,192 |
|
|
|
6,096 |
|
International |
|
|
7,460 |
|
|
|
6,651 |
|
Intersegment eliminationsU.S. |
|
|
(1,375 |
) |
|
|
(859 |
) |
Intersegment eliminationsinternational |
|
|
(1,896 |
) |
|
|
(1,388 |
) |
|
|
E&P |
|
|
12,381 |
|
|
|
10,500 |
|
|
|
Midstream |
|
|
|
|
|
|
|
|
Total sales |
|
|
2,078 |
|
|
|
922 |
|
Intersegment eliminations |
|
|
(116 |
) |
|
|
(48 |
) |
|
|
Midstream |
|
|
1,962 |
|
|
|
874 |
|
|
|
R&M |
|
|
|
|
|
|
|
|
United States |
|
|
21,713 |
|
|
|
13,000 |
|
International |
|
|
8,913 |
|
|
|
6,464 |
|
Intersegment eliminationsU.S. |
|
|
(198 |
) |
|
|
(117 |
) |
Intersegment eliminationsinternational |
|
|
(13 |
) |
|
|
(8 |
) |
|
|
R&M |
|
|
30,415 |
|
|
|
19,339 |
|
|
|
LUKOIL Investment |
|
|
- |
|
|
|
- |
|
Chemicals |
|
|
3 |
|
|
|
3 |
|
|
|
Emerging Businesses |
|
|
|
|
|
|
|
|
Total sales |
|
|
215 |
|
|
|
154 |
|
Intersegment eliminations |
|
|
(159 |
) |
|
|
(137 |
) |
|
|
Emerging Businesses |
|
|
56 |
|
|
|
17 |
|
|
|
Corporate and Other |
|
|
4 |
|
|
|
8 |
|
|
|
Consolidated sales and other operating revenues |
|
$ |
44,821 |
|
|
|
30,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to ConocoPhillips |
|
|
|
|
|
|
|
|
E&P |
|
|
|
|
|
|
|
|
United States |
|
$ |
757 |
|
|
|
173 |
|
International |
|
|
1,075 |
|
|
|
527 |
|
|
|
Total E&P |
|
|
1,832 |
|
|
|
700 |
|
|
|
Midstream |
|
|
77 |
|
|
|
123 |
|
|
|
R&M |
|
|
|
|
|
|
|
|
United States |
|
|
12 |
|
|
|
98 |
|
International |
|
|
(16 |
) |
|
|
107 |
|
|
|
Total R&M |
|
|
(4 |
) |
|
|
205 |
|
|
|
LUKOIL Investment |
|
|
387 |
|
|
|
8 |
* |
Chemicals |
|
|
110 |
|
|
|
23 |
|
Emerging Businesses |
|
|
6 |
|
|
|
- |
|
Corporate and Other |
|
|
(310 |
) |
|
|
(259 |
) |
|
|
Net income attributable to ConocoPhillips |
|
$ |
2,098 |
|
|
|
800 |
|
|
|
*LUKOIL Investment recast to reflect a change in accounting principle. See
Note 2Changes in Accounting Principles, for more information.
23
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
2009 |
|
Total Assets |
|
|
|
|
|
|
|
|
E&P |
|
|
|
|
|
|
|
|
United States |
|
$ |
35,754 |
|
|
|
36,122 |
|
International |
|
|
64,118 |
|
|
|
64,831 |
|
|
|
Total E&P |
|
|
99,872 |
|
|
|
100,953 |
|
|
|
Midstream |
|
|
1,732 |
|
|
|
2,054 |
|
|
|
R&M |
|
|
|
|
|
|
|
|
United States |
|
|
27,294 |
|
|
|
24,963 |
|
International |
|
|
9,451 |
|
|
|
8,446 |
|
Goodwill |
|
|
3,635 |
|
|
|
3,638 |
|
|
|
Total R&M |
|
|
40,380 |
|
|
|
37,047 |
|
|
|
LUKOIL Investment |
|
|
6,809 |
|
|
|
6,416 |
* |
Chemicals |
|
|
2,583 |
|
|
|
2,451 |
|
Emerging Businesses |
|
|
1,019 |
|
|
|
1,069 |
|
Corporate and Other |
|
|
2,415 |
|
|
|
2,148 |
|
|
|
Consolidated total assets |
|
$ |
154,810 |
|
|
|
152,138 |
|
|
|
*LUKOIL Investment recast to reflect a change in
accounting principle. See Note 2Changes in Accounting
Principles, for more information.
Note 20Income Taxes
Our effective tax rates for the first quarters of 2010 and 2009 were 47 percent and 59 percent,
respectively. The change in the effective tax rate for the first quarter of 2010, versus the same
period of 2009, was primarily due to a higher proportion of income in higher tax rate jurisdictions
in 2009. The effective tax rate in excess of the domestic federal statutory rate of 35 percent was
primarily due to foreign taxes.
24
Schedule Of Condensed Financial Statements
Supplementary InformationCondensed Consolidating Financial Information
We have various cross guarantees among ConocoPhillips, ConocoPhillips Company, ConocoPhillips
Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada
Funding Company II, with respect to publicly held debt securities. ConocoPhillips Company is
wholly owned by ConocoPhillips. ConocoPhillips Australia Funding Company is an indirect, wholly
owned subsidiary of ConocoPhillips Company. ConocoPhillips Canada Funding Company I and
ConocoPhillips Canada Funding Company II are indirect, wholly owned subsidiaries of ConocoPhillips.
ConocoPhillips and ConocoPhillips Company have fully and unconditionally guaranteed the payment
obligations of ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I,
and ConocoPhillips Canada Funding Company II, with respect to their publicly held debt securities.
Similarly, ConocoPhillips has fully and unconditionally guaranteed the payment obligations of
ConocoPhillips Company with respect to its publicly held debt securities. In addition,
ConocoPhillips Company has fully and unconditionally guaranteed the payment obligations of
ConocoPhillips with respect to its publicly held debt securities. All guarantees are joint and
several. The following condensed consolidating financial information presents the results of
operations, financial position and cash flows for:
|
|
|
ConocoPhillips, ConocoPhillips Company, ConocoPhillips Australia Funding Company,
ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II (in
each case, reflecting investments in subsidiaries utilizing the equity method of
accounting). |
|
|
|
|
All other nonguarantor subsidiaries of ConocoPhillips. |
|
|
|
|
The consolidating adjustments necessary to present ConocoPhillips results on a
consolidated basis. |
This condensed consolidating financial information should be read in conjunction with the
accompanying consolidated financial statements and notes.
To facilitate the restructuring of certain legal entities within the Canada operating unit,
ConocoPhillips Canada Funding Company I (CFC I) entered into a transaction with another wholly
owned subsidiary of ConocoPhillips (included in the All Other Subsidiaries column) whereby it
acquired an investment in certain preferred shares of a Canadian legal entity within the
ConocoPhillips group, in exchange for a non-interest-bearing demand note payable. The value
ascribed to the preferred shares and note payable represented the redemption price for both. This
noncash transaction was effective December 31, 2009. As a result, the balance sheet of CFC I
reflects a short-term investment of $2,973 million and a corresponding amount in short-term debt.
In January 2010, the preferred shares acquired under the above transaction were resold to the
original holder at the same value as the original purchase price, as satisfaction of the obligation
under the demand note payable. As these transactions were completed between wholly owned
subsidiaries of ConocoPhillips, there is no impact on the consolidated results in either period.
Certain amounts in 2009 have been recast to reflect a change in accounting principle. See Note
2Changes in Accounting Principles, in the Notes to Consolidated Financial Statements, for more
information.
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
Canada |
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
Funding |
|
|
Funding |
|
|
Funding |
|
|
All Other |
|
|
Consolidating |
|
|
Total |
|
Income Statement |
|
ConocoPhillips |
|
|
Company |
|
|
Company |
|
|
Company I |
|
|
Company II |
|
|
Subsidiaries |
|
|
Adjustments |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and Other Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
- |
|
|
|
27,922 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16,899 |
|
|
|
- |
|
|
|
44,821 |
|
Equity in earnings of affiliates |
|
|
2,232 |
|
|
|
2,400 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
678 |
|
|
|
(4,442 |
) |
|
|
868 |
|
Other income (loss) |
|
|
- |
|
|
|
86 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13 |
) |
|
|
- |
|
|
|
73 |
|
Intercompany revenues |
|
|
1 |
|
|
|
267 |
|
|
|
11 |
|
|
|
21 |
|
|
|
13 |
|
|
|
5,470 |
|
|
|
(5,783 |
) |
|
|
- |
|
|
|
Total Revenues and Other Income |
|
|
2,233 |
|
|
|
30,675 |
|
|
|
11 |
|
|
|
21 |
|
|
|
13 |
|
|
|
23,034 |
|
|
|
(10,225 |
) |
|
|
45,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased crude oil, natural gas and products |
|
|
- |
|
|
|
25,127 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,951 |
|
|
|
(5,557 |
) |
|
|
31,521 |
|
Production and operating expenses |
|
|
- |
|
|
|
1,105 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,450 |
|
|
|
(28 |
) |
|
|
2,527 |
|
Selling, general and administrative expenses |
|
|
4 |
|
|
|
322 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
125 |
|
|
|
(7 |
) |
|
|
444 |
|
Exploration expenses |
|
|
- |
|
|
|
172 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
211 |
|
|
|
- |
|
|
|
383 |
|
Depreciation, depletion and amortization |
|
|
- |
|
|
|
419 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,899 |
|
|
|
- |
|
|
|
2,318 |
|
Impairments |
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
88 |
|
|
|
- |
|
|
|
91 |
|
Taxes other than income taxes |
|
|
- |
|
|
|
1,209 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,828 |
|
|
|
- |
|
|
|
4,037 |
|
Accretion on discounted liabilities |
|
|
- |
|
|
|
15 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
99 |
|
|
|
- |
|
|
|
114 |
|
Interest and debt expense |
|
|
203 |
|
|
|
13 |
|
|
|
10 |
|
|
|
19 |
|
|
|
13 |
|
|
|
234 |
|
|
|
(191 |
) |
|
|
301 |
|
Foreign currency transaction (gains) losses |
|
|
- |
|
|
|
30 |
|
|
|
- |
|
|
|
31 |
|
|
|
49 |
|
|
|
(74 |
) |
|
|
- |
|
|
|
36 |
|
|
|
Total Costs and Expenses |
|
|
207 |
|
|
|
28,415 |
|
|
|
10 |
|
|
|
50 |
|
|
|
62 |
|
|
|
18,811 |
|
|
|
(5,783 |
) |
|
|
41,772 |
|
|
|
Income before income taxes |
|
|
2,026 |
|
|
|
2,260 |
|
|
|
1 |
|
|
|
(29 |
) |
|
|
(49 |
) |
|
|
4,223 |
|
|
|
(4,442 |
) |
|
|
3,990 |
|
Provision for income taxes |
|
|
(72 |
) |
|
|
28 |
|
|
|
- |
|
|
|
3 |
|
|
|
(5 |
) |
|
|
1,924 |
|
|
|
- |
|
|
|
1,878 |
|
|
|
Net income |
|
|
2,098 |
|
|
|
2,232 |
|
|
|
1 |
|
|
|
(32 |
) |
|
|
(44 |
) |
|
|
2,299 |
|
|
|
(4,442 |
) |
|
|
2,112 |
|
Less: net income attributable to
noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(14 |
) |
|
|
- |
|
|
|
(14 |
) |
|
|
Net Income Attributable to ConocoPhillips |
|
$ |
2,098 |
|
|
|
2,232 |
|
|
|
1 |
|
|
|
(32 |
) |
|
|
(44 |
) |
|
|
2,285 |
|
|
|
(4,442 |
) |
|
|
2,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended March 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
Canada |
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
Funding |
|
|
Funding |
|
|
Funding |
|
|
All Other |
|
|
Consolidating |
|
|
Total |
|
Income Statement |
|
ConocoPhillips |
|
|
Company |
|
|
Company |
|
|
Company I |
|
|
Company II |
|
|
Subsidiaries |
|
|
Adjustments |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and Other Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
- |
|
|
|
17,534 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,207 |
|
|
|
- |
|
|
|
30,741 |
|
Equity in earnings of affiliates |
|
|
889 |
|
|
|
915 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
239 |
|
|
|
(1,670 |
) |
|
|
373 |
|
Other income (loss) |
|
|
(2 |
) |
|
|
203 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(77 |
) |
|
|
- |
|
|
|
124 |
|
Intercompany revenues |
|
|
1 |
|
|
|
382 |
|
|
|
17 |
|
|
|
18 |
|
|
|
11 |
|
|
|
3,504 |
|
|
|
(3,933 |
) |
|
|
- |
|
|
|
Total Revenues and Other Income |
|
|
888 |
|
|
|
19,034 |
|
|
|
17 |
|
|
|
18 |
|
|
|
11 |
|
|
|
16,873 |
|
|
|
(5,603 |
) |
|
|
31,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased crude oil, natural gas and products |
|
|
- |
|
|
|
14,841 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,587 |
|
|
|
(3,669 |
) |
|
|
19,759 |
|
Production and operating expenses |
|
|
2 |
|
|
|
1,094 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,475 |
|
|
|
(26 |
) |
|
|
2,545 |
|
Selling, general and administrative expenses |
|
|
3 |
|
|
|
323 |
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
157 |
|
|
|
(10 |
) |
|
|
475 |
|
Exploration expenses |
|
|
- |
|
|
|
65 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160 |
|
|
|
- |
|
|
|
225 |
|
Depreciation, depletion and amortization |
|
|
- |
|
|
|
425 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,805 |
|
|
|
- |
|
|
|
2,230 |
|
Impairments |
|
|
- |
|
|
|
(5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
|
3 |
|
Taxes other than income taxes |
|
|
- |
|
|
|
1,155 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,327 |
|
|
|
(18 |
) |
|
|
3,464 |
|
Accretion on discounted liabilities |
|
|
- |
|
|
|
18 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
86 |
|
|
|
- |
|
|
|
104 |
|
Interest and debt expense |
|
|
130 |
|
|
|
69 |
|
|
|
15 |
|
|
|
19 |
|
|
|
13 |
|
|
|
274 |
|
|
|
(210 |
) |
|
|
310 |
|
Foreign currency transaction (gains) losses |
|
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
(38 |
) |
|
|
(7 |
) |
|
|
169 |
|
|
|
- |
|
|
|
131 |
|
|
|
Total Costs and Expenses |
|
|
135 |
|
|
|
17,992 |
|
|
|
15 |
|
|
|
(18 |
) |
|
|
7 |
|
|
|
15,048 |
|
|
|
(3,933 |
) |
|
|
29,246 |
|
|
|
Income before income taxes |
|
|
753 |
|
|
|
1,042 |
|
|
|
2 |
|
|
|
36 |
|
|
|
4 |
|
|
|
1,825 |
|
|
|
(1,670 |
) |
|
|
1,992 |
|
Provision for income taxes |
|
|
(47 |
) |
|
|
153 |
|
|
|
1 |
|
|
|
1 |
|
|
|
(4 |
) |
|
|
1,072 |
|
|
|
- |
|
|
|
1,176 |
|
|
|
Net income |
|
|
800 |
|
|
|
889 |
|
|
|
1 |
|
|
|
35 |
|
|
|
8 |
|
|
|
753 |
|
|
|
(1,670 |
) |
|
|
816 |
|
Less: net income attributable to
noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(16 |
) |
|
|
- |
|
|
|
(16 |
) |
|
|
Net Income Attributable to ConocoPhillips |
|
$ |
800 |
|
|
|
889 |
|
|
|
1 |
|
|
|
35 |
|
|
|
8 |
|
|
|
737 |
|
|
|
(1,670 |
) |
|
|
800 |
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
Canada |
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
Funding |
|
|
Funding |
|
|
Funding |
|
|
All Other |
|
|
Consolidating |
|
|
Total |
|
Balance Sheet |
|
ConocoPhillips |
|
|
Company |
|
|
Company |
|
|
Company I |
|
|
Company II |
|
|
Subsidiaries |
|
|
Adjustments |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
- |
|
|
|
165 |
|
|
|
- |
|
|
|
18 |
|
|
|
1 |
|
|
|
671 |
|
|
|
- |
|
|
|
855 |
|
Accounts and notes receivable |
|
|
27 |
|
|
|
6,087 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,584 |
|
|
|
(5,068 |
) |
|
|
12,630 |
|
Inventories |
|
|
- |
|
|
|
4,286 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,014 |
|
|
|
- |
|
|
|
7,300 |
|
Short-term investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
|
12 |
|
|
|
910 |
|
|
|
- |
|
|
|
2 |
|
|
|
1 |
|
|
|
2,180 |
|
|
|
(297 |
) |
|
|
2,808 |
|
|
|
Total Current Assets |
|
|
39 |
|
|
|
11,448 |
|
|
|
- |
|
|
|
20 |
|
|
|
2 |
|
|
|
17,449 |
|
|
|
(5,365 |
) |
|
|
23,593 |
|
Investments, loans and long-term receivables* |
|
|
73,210 |
|
|
|
94,333 |
|
|
|
770 |
|
|
|
1,442 |
|
|
|
977 |
|
|
|
48,216 |
|
|
|
(179,624 |
) |
|
|
39,324 |
|
Net properties, plants and equipment |
|
|
- |
|
|
|
19,571 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
67,052 |
|
|
|
- |
|
|
|
86,623 |
|
Goodwill |
|
|
- |
|
|
|
3,635 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,635 |
|
Intangibles |
|
|
- |
|
|
|
766 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
49 |
|
|
|
- |
|
|
|
815 |
|
Other assets |
|
|
53 |
|
|
|
283 |
|
|
|
1 |
|
|
|
3 |
|
|
|
4 |
|
|
|
658 |
|
|
|
(182 |
) |
|
|
820 |
|
|
|
Total Assets |
|
$ |
73,302 |
|
|
|
130,036 |
|
|
|
771 |
|
|
|
1,465 |
|
|
|
983 |
|
|
|
133,424 |
|
|
|
(185,171 |
) |
|
|
154,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
- |
|
|
|
9,953 |
|
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
|
|
11,047 |
|
|
|
(5,068 |
) |
|
|
15,937 |
|
Short-term debt |
|
|
544 |
|
|
|
1,614 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
605 |
|
|
|
- |
|
|
|
2,763 |
|
Accrued income and other taxes |
|
|
- |
|
|
|
257 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
3,849 |
|
|
|
- |
|
|
|
4,105 |
|
Employee benefit obligations |
|
|
- |
|
|
|
395 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
145 |
|
|
|
- |
|
|
|
540 |
|
Other accruals |
|
|
972 |
|
|
|
622 |
|
|
|
19 |
|
|
|
32 |
|
|
|
22 |
|
|
|
1,596 |
|
|
|
(3 |
) |
|
|
3,260 |
|
|
|
Total Current Liabilities |
|
|
1,516 |
|
|
|
12,841 |
|
|
|
19 |
|
|
|
34 |
|
|
|
24 |
|
|
|
17,242 |
|
|
|
(5,071 |
) |
|
|
26,605 |
|
Long-term debt |
|
|
12,563 |
|
|
|
3,710 |
|
|
|
749 |
|
|
|
1,250 |
|
|
|
849 |
|
|
|
7,104 |
|
|
|
- |
|
|
|
26,225 |
|
Asset retirement obligations and accrued
environmental costs |
|
|
- |
|
|
|
1,395 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,266 |
|
|
|
- |
|
|
|
8,661 |
|
Joint venture acquisition obligation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,839 |
|
|
|
- |
|
|
|
4,839 |
|
Deferred income taxes |
|
|
(4 |
) |
|
|
3,056 |
|
|
|
- |
|
|
|
14 |
|
|
|
5 |
|
|
|
14,820 |
|
|
|
- |
|
|
|
17,891 |
|
Employee benefit obligations |
|
|
- |
|
|
|
3,107 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,031 |
|
|
|
- |
|
|
|
4,138 |
|
Other liabilities and deferred credits* |
|
|
3,182 |
|
|
|
28,415 |
|
|
|
- |
|
|
|
97 |
|
|
|
85 |
|
|
|
17,489 |
|
|
|
(46,234 |
) |
|
|
3,034 |
|
|
|
Total Liabilities |
|
|
17,257 |
|
|
|
52,524 |
|
|
|
768 |
|
|
|
1,395 |
|
|
|
963 |
|
|
|
69,791 |
|
|
|
(51,305 |
) |
|
|
91,393 |
|
Retained earnings |
|
|
26,249 |
|
|
|
11,839 |
|
|
|
1 |
|
|
|
(81 |
) |
|
|
(74 |
) |
|
|
11,672 |
|
|
|
(16,857 |
) |
|
|
32,749 |
|
Other common stockholders equity |
|
|
29,796 |
|
|
|
65,673 |
|
|
|
2 |
|
|
|
151 |
|
|
|
94 |
|
|
|
51,381 |
|
|
|
(117,009 |
) |
|
|
30,088 |
|
Noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
580 |
|
|
|
- |
|
|
|
580 |
|
|
|
Total Liabilities and Stockholders Equity |
|
$ |
73,302 |
|
|
|
130,036 |
|
|
|
771 |
|
|
|
1,465 |
|
|
|
983 |
|
|
|
133,424 |
|
|
|
(185,171 |
) |
|
|
154,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet |
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
- |
|
|
|
122 |
|
|
|
- |
|
|
|
18 |
|
|
|
1 |
|
|
|
554 |
|
|
|
(153 |
) |
|
|
542 |
|
Accounts and notes receivable |
|
|
26 |
|
|
|
6,495 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,712 |
|
|
|
(7,018 |
) |
|
|
13,215 |
|
Inventories |
|
|
- |
|
|
|
2,911 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,029 |
|
|
|
- |
|
|
|
4,940 |
|
Short-term investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,973 |
|
|
|
- |
|
|
|
- |
|
|
|
(2,973 |
) |
|
|
- |
|
Prepaid expenses and other current assets |
|
|
13 |
|
|
|
835 |
|
|
|
- |
|
|
|
4 |
|
|
|
3 |
|
|
|
1,621 |
|
|
|
(6 |
) |
|
|
2,470 |
|
|
|
Total Current Assets |
|
|
39 |
|
|
|
10,363 |
|
|
|
- |
|
|
|
2,995 |
|
|
|
4 |
|
|
|
17,916 |
|
|
|
(10,150 |
) |
|
|
21,167 |
|
Investments, loans and long-term receivables* |
|
|
70,769 |
|
|
|
91,643 |
|
|
|
759 |
|
|
|
1,376 |
|
|
|
933 |
|
|
|
47,886 |
|
|
|
(175,272 |
) |
|
|
38,094 |
|
Net properties, plants and equipment |
|
|
- |
|
|
|
19,838 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
67,870 |
|
|
|
- |
|
|
|
87,708 |
|
Goodwill |
|
|
- |
|
|
|
3,638 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,638 |
|
Intangibles |
|
|
- |
|
|
|
770 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
53 |
|
|
|
- |
|
|
|
823 |
|
Other assets |
|
|
55 |
|
|
|
240 |
|
|
|
1 |
|
|
|
3 |
|
|
|
4 |
|
|
|
509 |
|
|
|
(104 |
) |
|
|
708 |
|
|
|
Total Assets |
|
$ |
70,863 |
|
|
|
126,492 |
|
|
|
760 |
|
|
|
4,374 |
|
|
|
941 |
|
|
|
134,234 |
|
|
|
(185,526 |
) |
|
|
152,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
7 |
|
|
|
11,590 |
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
10,904 |
|
|
|
(7,018 |
) |
|
|
15,485 |
|
Short-term debt |
|
|
235 |
|
|
|
1,286 |
|
|
|
- |
|
|
|
2,973 |
|
|
|
- |
|
|
|
207 |
|
|
|
(2,973 |
) |
|
|
1,728 |
|
Accrued income and other taxes |
|
|
- |
|
|
|
298 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
3,105 |
|
|
|
- |
|
|
|
3,402 |
|
Employee benefit obligations |
|
|
- |
|
|
|
588 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
258 |
|
|
|
- |
|
|
|
846 |
|
Other accruals |
|
|
262 |
|
|
|
643 |
|
|
|
9 |
|
|
|
15 |
|
|
|
10 |
|
|
|
1,301 |
|
|
|
(6 |
) |
|
|
2,234 |
|
|
|
Total Current Liabilities |
|
|
504 |
|
|
|
14,405 |
|
|
|
9 |
|
|
|
2,988 |
|
|
|
11 |
|
|
|
15,775 |
|
|
|
(9,997 |
) |
|
|
23,695 |
|
Long-term debt |
|
|
12,561 |
|
|
|
4,053 |
|
|
|
749 |
|
|
|
1,250 |
|
|
|
849 |
|
|
|
7,463 |
|
|
|
- |
|
|
|
26,925 |
|
Asset retirement obligations and accrued
environmental costs |
|
|
- |
|
|
|
1,406 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,307 |
|
|
|
- |
|
|
|
8,713 |
|
Joint venture acquisition obligation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,009 |
|
|
|
- |
|
|
|
5,009 |
|
Deferred income taxes |
|
|
(4 |
) |
|
|
2,785 |
|
|
|
- |
|
|
|
10 |
|
|
|
10 |
|
|
|
15,155 |
|
|
|
- |
|
|
|
17,956 |
|
Employee benefit obligations |
|
|
- |
|
|
|
2,960 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,170 |
|
|
|
- |
|
|
|
4,130 |
|
Other liabilities and deferred credits* |
|
|
2,560 |
|
|
|
25,819 |
|
|
|
- |
|
|
|
68 |
|
|
|
37 |
|
|
|
17,296 |
|
|
|
(42,683 |
) |
|
|
3,097 |
|
|
|
Total Liabilities |
|
|
15,621 |
|
|
|
51,428 |
|
|
|
758 |
|
|
|
4,316 |
|
|
|
907 |
|
|
|
69,175 |
|
|
|
(52,680 |
) |
|
|
89,525 |
|
Retained earnings |
|
|
25,714 |
|
|
|
9,607 |
|
|
|
- |
|
|
|
(49 |
) |
|
|
(30 |
) |
|
|
10,240 |
|
|
|
(13,268 |
) |
|
|
32,214 |
|
Other common stockholders equity |
|
|
29,528 |
|
|
|
65,457 |
|
|
|
2 |
|
|
|
107 |
|
|
|
64 |
|
|
|
54,229 |
|
|
|
(119,578 |
) |
|
|
29,809 |
|
Noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
590 |
|
|
|
- |
|
|
|
590 |
|
|
|
Total Liabilities and Stockholders Equity |
|
$ |
70,863 |
|
|
|
126,492 |
|
|
|
760 |
|
|
|
4,374 |
|
|
|
941 |
|
|
|
134,234 |
|
|
|
(185,526 |
) |
|
|
152,138 |
|
|
|
*Includes intercompany loans.
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
Canada |
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
Funding |
|
|
Funding |
|
|
Funding |
|
|
All Other |
|
|
Consolidating |
|
|
Total |
|
Statement of Cash Flows |
|
ConocoPhillips |
|
|
Company |
|
|
Company |
|
|
Company I |
|
|
Company II |
|
|
Subsidiaries |
|
|
Adjustments |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities |
|
$ |
427 |
|
|
|
667 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,647 |
|
|
|
(701 |
) |
|
|
3,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and investments |
|
|
- |
|
|
|
(299 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,843 |
) |
|
|
71 |
|
|
|
(2,071 |
) |
Proceeds from asset dispositions |
|
|
- |
|
|
|
108 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
124 |
|
|
|
(100 |
) |
|
|
132 |
|
Long-term advances/loansrelated parties |
|
|
- |
|
|
|
(281 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(53 |
) |
|
|
86 |
|
|
|
(248 |
) |
Collection of advances/loansrelated parties |
|
|
- |
|
|
|
16 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
168 |
|
|
|
(157 |
) |
|
|
27 |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
3 |
|
|
|
Net Cash Used in Investing Activities |
|
|
- |
|
|
|
(456 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,601 |
) |
|
|
(100 |
) |
|
|
(2,157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
|
309 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
139 |
|
|
|
(86 |
) |
|
|
362 |
|
Repayment of debt |
|
|
- |
|
|
|
(170 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
|
|
157 |
|
|
|
(15 |
) |
Issuance of company common stock |
|
|
9 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9 |
|
Dividends paid on common stock |
|
|
(744 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(853 |
) |
|
|
853 |
|
|
|
(744 |
) |
Other |
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(215 |
) |
|
|
30 |
|
|
|
(186 |
) |
|
|
Net Cash Provided by (Used in) Financing Activities |
|
|
(427 |
) |
|
|
(170 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(931 |
) |
|
|
954 |
|
|
|
(574 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes
on Cash and Cash Equivalents |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents |
|
|
- |
|
|
|
43 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
117 |
|
|
|
153 |
|
|
|
313 |
|
Cash and cash equivalents at beginning of period |
|
|
- |
|
|
|
122 |
|
|
|
- |
|
|
|
18 |
|
|
|
1 |
|
|
|
554 |
|
|
|
(153 |
) |
|
|
542 |
|
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
- |
|
|
|
165 |
|
|
|
- |
|
|
|
18 |
|
|
|
1 |
|
|
|
671 |
|
|
|
- |
|
|
|
855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended March 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
ConocoPhillips |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
Canada |
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ConocoPhillips |
|
|
Funding |
|
|
Funding |
|
|
Funding |
|
|
All Other |
|
|
Consolidating |
|
|
Total |
|
Statement of Cash Flows |
|
ConocoPhillips |
|
|
Company |
|
|
Company |
|
|
Company I |
|
|
Company II |
|
|
Subsidiaries |
|
|
Adjustments |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities |
|
$ |
(4,130 |
) |
|
|
2,661 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
4,087 |
|
|
|
(732 |
) |
|
|
1,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and investments |
|
|
- |
|
|
|
(834 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,111 |
) |
|
|
39 |
|
|
|
(2,906 |
) |
Proceeds from asset dispositions |
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
82 |
|
|
|
- |
|
|
|
86 |
|
Long-term advances/loansrelated parties |
|
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(95 |
) |
|
|
- |
|
|
|
(88 |
) |
Collection of advances/loansrelated parties |
|
|
- |
|
|
|
71 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,454 |
|
|
|
(1,514 |
) |
|
|
11 |
|
Other |
|
|
- |
|
|
|
(44 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15 |
|
|
|
- |
|
|
|
(29 |
) |
|
|
Net Cash Used in Investing Activities |
|
|
- |
|
|
|
(796 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(655 |
) |
|
|
(1,475 |
) |
|
|
(2,926 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
|
5,946 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
87 |
|
|
|
- |
|
|
|
6,033 |
|
Repayment of debt |
|
|
(1,067 |
) |
|
|
(1,750 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,799 |
) |
|
|
1,514 |
|
|
|
(4,102 |
) |
Issuance of company common stock |
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Dividends paid on common stock |
|
|
(696 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(746 |
) |
|
|
746 |
|
|
|
(696 |
) |
Other |
|
|
(32 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(132 |
) |
|
|
(39 |
) |
|
|
(203 |
) |
|
|
Net Cash Provided by (Used in) Financing Activities |
|
|
4,130 |
|
|
|
(1,750 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,590 |
) |
|
|
2,221 |
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes
on Cash and Cash Equivalents |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
77 |
|
|
|
- |
|
|
|
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents |
|
|
- |
|
|
|
115 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
(81 |
) |
|
|
14 |
|
|
|
47 |
|
Cash and cash equivalents at beginning of period |
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
|
10 |
|
|
|
1 |
|
|
|
750 |
|
|
|
(14 |
) |
|
|
755 |
|
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
- |
|
|
|
123 |
|
|
|
- |
|
|
|
9 |
|
|
|
1 |
|
|
|
669 |
|
|
|
- |
|
|
|
802 |
|
|
|
28
|
|
|
Item 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS |
Managements Discussion and Analysis contains 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 forecast, intend, believe, expect, plan, schedule, target,
should, goal, may, anticipate, estimate, and similar expressions identify forward-looking
statements. We do not undertake to update, revise or correct any of the forward-looking
information. Readers are cautioned that such forward-looking statements should be read in
conjunction with the 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
46.
The terms earnings and loss as used in Managements Discussion and Analysis refer to net income
(loss) attributable to ConocoPhillips.
BUSINESS ENVIRONMENT AND EXECUTIVE OVERVIEW
ConocoPhillips is an international, integrated energy company. We are the third-largest integrated
energy company in the United States, based on market capitalization. At March 31, 2010, we had
approximately 29,900 employees worldwide and total assets of $155 billion.
Earnings in the first quarter of 2010 were positively impacted by an increase in crude oil prices.
Crude oil prices steadily trended upward during 2009 and into the first quarter of 2010, as
expectations of a global economic recovery stimulated the resumption of global oil demand growth.
Industry crude oil prices for West Texas Intermediate averaged $78.67 per barrel in the first
quarter of 2010, or $2.61 higher than the fourth quarter of 2009, and $35.70 per barrel higher than
the first quarter of 2009.
Henry Hub natural gas prices averaged $5.30 per million British thermal units in the first quarter
of 2010, or $1.14 higher compared with the fourth quarter of 2009, and $0.39 higher than first
quarter 2009. The improvement in natural gas prices resulted from increased demand from
colder-than-normal temperatures across the U.S., moving storage levels from five year highs to
closer to the five year average. However, the current, robust level of domestic natural gas
production has constrained the improvement in natural gas prices.
As a result, our Exploration and Production (E&P) segment had earnings of $1,832 million in the
first quarter of 2010. This compares with E&P earnings of $1,201 million in the fourth quarter of
2009 and $700 million in the first quarter of 2009.
Global refining margins began to improve in the first quarter of 2010. The N.W. Europe benchmark
was $9.25 per barrel in the first quarter of 2010, or $1.11 higher than the fourth quarter of 2009,
and $1.56 lower than the first quarter of 2009. Although domestic refining margins also improved,
U.S. demand remained lackluster, despite evidence of economic recovery. Weak demand led domestic
refiners to reduce runs in order to bring supply more in line with demand. The U.S. benchmark
3:2:1 crack spread was $7.68 per barrel in the first quarter of 2010, or $1.73 higher than the
fourth quarter of 2009, and $3.20 lower than the first quarter of 2009.
Our Refining and Marketing (R&M) segment reported a loss of $4 million in the first quarter of
2010, compared with a loss of $215 million in the fourth quarter of 2009 and earnings of
$205 million in the first quarter of 2009.
29
RESULTS OF OPERATIONS
Unless otherwise indicated, discussion of results for the three-month period ended March 31, 2010,
is based on a comparison with the corresponding period of 2009.
Consolidated Results
A summary of net income (loss) attributable to ConocoPhillips by business segment follows:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Exploration and Production (E&P) |
|
$ |
1,832 |
|
|
|
700 |
|
Midstream |
|
|
77 |
|
|
|
123 |
|
Refining and Marketing (R&M) |
|
|
(4 |
) |
|
|
205 |
|
LUKOIL Investment |
|
|
387 |
|
|
|
8 |
* |
Chemicals |
|
|
110 |
|
|
|
23 |
|
Emerging Businesses |
|
|
6 |
|
|
|
- |
|
Corporate and Other |
|
|
(310 |
) |
|
|
(259 |
) |
|
|
Net income attributable to ConocoPhillips |
|
$ |
2,098 |
|
|
|
800 |
|
|
|
*LUKOIL Investment recast to reflect a change in accounting principle. See
Note 2Changes in Accounting Principles, for more information.
Earnings for ConocoPhillips were $2,098 million in the first quarter of 2010, compared with
$800 million in the first quarter of 2009. The improvement was primarily the result of:
|
|
|
Substantially higher prices for crude oil and natural gas liquids in our E&P segment.
Commodity price benefits were somewhat counteracted by increased production taxes. |
|
|
|
Significantly improved earnings from our LUKOIL Investment segment, primarily resulting
from increased equity earnings. Equity earnings were not recorded in the first quarter of
2009, since our LUKOIL investment was written down to fair value at December 31, 2008. |
These items were partially offset by lower global refining margins in our R&M segment.
See the Segment Results section for additional information on our segment results.
Income Statement Analysis
Sales and other operating revenues increased 46 percent in the first quarter of 2010, while
purchased crude oil, natural gas and products increased 60 percent in the same period.
Both increases were mainly the result of significantly higher prices for petroleum products and
crude oil and natural gas liquids.
30
Equity in earnings of affiliates increased from $373 million in the first quarter of 2009
to $868 million in the first quarter of 2010, which primarily resulted from:
|
|
|
Improved earnings from LUKOIL. Equity earnings from LUKOIL were not recorded in the
first quarter of 2009, since our LUKOIL investment was written down to fair value at
December 31, 2008. |
|
|
|
Improved earnings from FCCL Partnership due to significantly higher commodity prices and
volumes. |
|
|
|
Improved earnings from CPChem due to higher margins in the olefins and polyolefins
business line, as well as the specialties, aromatics and styrenics business line. |
The increase in equity earnings was somewhat offset by:
|
|
|
Lower results from WRB Refining LLC primarily due to lower refining margins. |
|
|
|
Lower results from DCP Midstream. The first quarter of 2009 included the recognition of
an $88 million after-tax deferred gain. This decrease in earnings was partially offset by
higher NGL prices and margins. |
Exploration expenses increased 70 percent in the first quarter of 2010, primarily as a
result of the Shah project cancellation.
Taxes other than income taxes increased 17 percent during the first quarter of 2010,
primarily due to higher production taxes as a result of higher crude oil prices and higher excise
taxes on petroleum product sales.
31
Segment Results
E&P
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
Millions of Dollars |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to ConocoPhillips |
|
|
|
|
|
|
|
|
Alaska |
|
$ |
517 |
|
|
|
244 |
|
Lower 48 |
|
|
240 |
|
|
|
(71 |
) |
|
|
United States |
|
|
757 |
|
|
|
173 |
|
International |
|
|
1,075 |
|
|
|
527 |
|
|
|
|
|
$ |
1,832 |
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars Per Unit |
|
Average Sales Prices |
|
|
|
|
|
|
|
|
Crude oil and natural gas liquids (per barrel) |
|
|
|
|
|
|
|
|
United States |
|
$ |
70.40 |
|
|
|
37.68 |
|
International |
|
|
73.08 |
|
|
|
42.67 |
|
Total consolidated operations |
|
|
71.89 |
|
|
|
40.39 |
|
Equity affiliates |
|
|
71.30 |
|
|
|
39.92 |
|
Total E&P |
|
|
71.86 |
|
|
|
40.37 |
|
Synthetic oil (per barrel) |
|
|
|
|
|
|
|
|
International |
|
|
78.67 |
|
|
|
45.69 |
|
Bitumen (per barrel) |
|
|
|
|
|
|
|
|
International |
|
|
59.18 |
|
|
|
21.10 |
|
Equity affiliates |
|
|
56.15 |
|
|
|
24.64 |
|
Total E&P |
|
|
56.57 |
|
|
|
24.04 |
|
Natural gas (per thousand cubic feet) |
|
|
|
|
|
|
|
|
United States |
|
|
5.21 |
|
|
|
3.82 |
|
International |
|
|
5.71 |
|
|
|
5.87 |
|
Total consolidated operations |
|
|
5.51 |
|
|
|
4.98 |
|
Equity affiliates |
|
|
2.67 |
|
|
|
2.10 |
|
Total E&P |
|
|
5.45 |
|
|
|
4.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
Worldwide Exploration Expenses |
|
|
|
|
|
|
|
|
General and administrative; geological and geophysical; and lease rentals |
|
$ |
250 |
|
|
|
102 |
|
Leasehold impairment |
|
|
40 |
|
|
|
43 |
|
Dry holes |
|
|
93 |
|
|
|
80 |
|
|
|
|
|
$ |
383 |
|
|
|
225 |
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
Thousands of Barrels Daily |
|
Operating Statistics |
|
|
|
|
|
|
|
|
Crude oil and Natural gas liquids produced |
|
|
|
|
|
|
|
|
Alaska |
|
|
247 |
|
|
|
275 |
|
Lower 48 |
|
|
156 |
|
|
|
163 |
|
|
|
United States |
|
|
403 |
|
|
|
438 |
|
Canada |
|
|
41 |
|
|
|
40 |
|
Europe |
|
|
235 |
|
|
|
259 |
|
Asia Pacific/Middle East |
|
|
144 |
|
|
|
140 |
|
Africa |
|
|
78 |
|
|
|
78 |
|
Other areas |
|
|
- |
|
|
|
8 |
|
|
|
Total consolidated operations |
|
|
901 |
|
|
|
963 |
|
Equity affiliates |
|
|
|
|
|
|
|
|
Russia |
|
|
57 |
|
|
|
49 |
|
|
|
|
|
|
958 |
|
|
|
1,012 |
|
|
|
|
|
|
|
|
|
|
|
|
Synthetic oil produced |
|
|
|
|
|
|
|
|
Consolidated operationsCanada |
|
|
22 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
Bitumen produced |
|
|
|
|
|
|
|
|
Consolidated operationsCanada |
|
|
8 |
|
|
|
7 |
|
Equity affiliatesCanada |
|
|
52 |
|
|
|
35 |
|
|
|
|
|
|
60 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Cubic Feet Daily |
|
Natural gas produced* |
|
|
|
|
|
|
|
|
Alaska |
|
|
94 |
|
|
|
92 |
|
Lower 48 |
|
|
1,705 |
|
|
|
2,027 |
|
|
|
United States |
|
|
1,799 |
|
|
|
2,119 |
|
Canada |
|
|
1,021 |
|
|
|
1,066 |
|
Europe |
|
|
961 |
|
|
|
1,001 |
|
Asia Pacific/Middle East |
|
|
716 |
|
|
|
713 |
|
Africa |
|
|
138 |
|
|
|
112 |
|
|
|
Total consolidated operations |
|
|
4,635 |
|
|
|
5,011 |
|
Equity affiliates |
|
|
|
|
|
|
|
|
Asia Pacific/Middle East |
|
|
91 |
|
|
|
76 |
|
|
|
|
|
|
4,726 |
|
|
|
5,087 |
|
|
|
*Represents quantities available for sale. Excludes gas equivalent of natural gas liquids included above.
Equity affiliate statistics exclude our share of LUKOIL, which is reported in the LUKOIL Investment segment.
33
The E&P segment explores for, produces, transports and markets crude oil, bitumen, natural
gas and natural gas liquids on a worldwide basis. At March 31, 2010, our E&P operations were
producing in the United States, Norway, the United Kingdom, Canada, Australia, offshore Timor-Leste
in the Timor Sea, Indonesia, China, Vietnam, Libya, Nigeria, Algeria, and Russia. Total E&P
production on a barrel-of-equivalent (BOE) basis averaged 1,828,000 BOE per day in the first
quarter of 2010, compared with 1,925,000 BOE in the first quarter of 2009.
Earnings from the E&P segment increased from $700 million in the first quarter of 2009 to $1,832
million in the first quarter of 2010. The increase was primarily due to substantially higher crude
oil, natural gas liquids and bitumen prices, higher natural gas prices and foreign currency gains.
These increases were partially offset by higher production and export taxes, as a result of higher
prices, and lower domestic crude oil and natural gas volumes. See the Business Environment and
Executive Overview section for additional information on industry crude oil and natural gas
prices.
U.S. E&P
Our U.S. E&P operations reported earnings of $757 million in the first three months of 2010,
compared with earnings of $173 million for the same period in 2009. Higher crude oil, natural gas
and natural gas liquids prices were partially offset by higher production taxes and lower crude oil
and natural gas volumes.
U.S. E&P production averaged 703,000 BOE per day in the first quarter of 2010, a decrease of 11
percent from 791,000 BOE in the first quarter of 2009. The decrease is primarily due to field
decline and unplanned downtime.
International E&P
International E&P earnings were $1,075 million in the first three months of 2010, compared with
earnings of $527 million for the same period in 2009. Higher crude oil, natural gas liquids and
bitumen prices, in addition to foreign currency gains, were partially offset by higher export and
petroleum taxes, as a result of higher prices, and the $83 million after-tax write-off of project
costs resulting from our decision to cease participation in the Shah Gas Field Project in Abu
Dhabi.
International E&P production averaged 1,125,000 BOE per day in the first quarter of 2010, compared
with 1,134,000 BOE in the first quarter of 2009. The decrease primarily resulted from field
decline and the impact of higher prices on production sharing arrangements, which slightly more
than offset production from new developments in China, Canada and Russia.
34
Midstream
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
Millions of Dollars |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to ConocoPhillips* |
|
$ |
77 |
|
|
|
123 |
|
|
|
*Includes DCP Midstream-related earnings: |
|
$ |
53 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
Dollars Per Barrel |
|
Average Sales Prices |
|
|
|
|
|
|
|
|
U.S. natural gas liquids* |
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
48.93 |
|
|
|
26.04 |
|
Equity affiliates |
|
|
45.65 |
|
|
|
23.86 |
|
|
|
*Based on index prices from the Mont Belvieu and Conway market hubs that are weighted by natural gas liquids component and location mix.
|
|
|
|
|
|
|
|
|
|
|
Thousands of Barrels Daily |
|
Operating Statistics |
|
|
|
|
|
|
|
|
Natural gas liquids extracted* |
|
|
186 |
|
|
|
172 |
|
Natural gas liquids fractionated** |
|
|
159 |
|
|
|
160 |
|
|
|
*Includes our share of equity affiliates, except LUKOIL, which is reported in the LUKOIL Investment segment.
**Excludes DCP Midstream.
The Midstream segment purchases raw natural gas from producers and gathers natural gas
through an extensive network of pipeline gathering systems. The natural gas is then processed to
extract natural gas liquids from the raw gas stream. The remaining residue gas is marketed to
electrical utilities, industrial users, and gas marketing companies. Most of the natural gas
liquids are fractionatedseparated into individual components like ethane, butane and propaneand
marketed as chemical feedstock, fuel or blendstock. The Midstream segment consists of our 50
percent equity investment in DCP Midstream, LLC, as well as our other natural gas gathering and
processing operations, and natural gas liquids fractionation, trading and marketing businesses,
primarily in the United States and Trinidad.
Earnings from the Midstream segment decreased 37 percent in the first quarter of 2010, compared
with the same period in 2009. The first quarter of 2009 included the recognition of an $88 million
after-tax benefit, which resulted from a DCP Midstream subsidiary converting subordinated units to
common units. This decrease was partially offset by higher NGL prices and margins experienced by
equity affiliates DCP Midstream and Phoenix Park Gas Processors Limited.
35
R&M
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
Millions of Dollars |
|
Net Income (Loss) Attributable to ConocoPhillips |
|
|
|
|
|
|
|
|
United States |
|
$ |
12 |
|
|
|
98 |
|
International |
|
|
(16 |
) |
|
|
107 |
|
|
|
|
|
$ |
(4 |
) |
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars Per Gallon |
|
U.S. Average Wholesale Prices* |
|
|
|
|
|
|
|
|
Gasoline |
|
$ |
2.17 |
|
|
|
1.39 |
|
Distillates |
|
|
2.14 |
|
|
|
1.40 |
|
|
|
*Excludes excise taxes.
|
|
|
|
|
|
|
|
|
|
|
Thousands of Barrels Daily |
|
Operating Statistics |
|
|
|
|
|
|
|
|
Refining operations* |
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
Crude oil capacity |
|
|
1,986 |
|
|
|
1,986 |
|
Crude oil runs |
|
|
1,742 |
|
|
|
1,589 |
|
Capacity utilization (percent) |
|
|
88 |
% |
|
|
80 |
|
Refinery production |
|
|
1,901 |
|
|
|
1,716 |
|
International |
|
|
|
|
|
|
|
|
Crude oil capacity |
|
|
671 |
|
|
|
671 |
|
Crude oil runs |
|
|
324 |
|
|
|
567 |
|
Capacity utilization (percent) |
|
|
48 |
% |
|
|
85 |
|
Refinery production |
|
|
337 |
|
|
|
576 |
|
Worldwide |
|
|
|
|
|
|
|
|
Crude oil capacity |
|
|
2,657 |
|
|
|
2,657 |
|
Crude oil runs |
|
|
2,066 |
|
|
|
2,156 |
|
Capacity utilization (percent) |
|
|
78 |
% |
|
|
81 |
|
Refinery production |
|
|
2,238 |
|
|
|
2,292 |
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum products sales volumes |
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
Gasoline |
|
|
1,092 |
|
|
|
1,037 |
|
Distillates |
|
|
807 |
|
|
|
749 |
|
Other products |
|
|
366 |
|
|
|
328 |
|
|
|
|
|
|
2,265 |
|
|
|
2,114 |
|
International |
|
|
544 |
|
|
|
609 |
|
|
|
|
|
|
2,809 |
|
|
|
2,723 |
|
|
|
*Includes our share of equity affiliates, except LUKOIL, which is reported in the LUKOIL Investment segment.
36
The R&M segments operations encompass refining crude oil and other feedstocks into
petroleum products (such as gasoline, distillates and aviation fuels); buying, selling and
transporting crude oil; and buying, transporting, distributing and marketing petroleum products.
R&M has operations mainly in the United States, Europe and the Asia Pacific Region.
Our R&M segment reported a loss of $4 million during the first quarter of 2010, compared with
earnings of $205 million in the corresponding quarter of 2009. The decrease was primarily due to
lower domestic and international refining and marketing margins, lower international refining and
marketing volumes and negative foreign currency impacts. In addition,
we recorded an impairment of $25 million after tax in the first quarter of 2010, which resulted from our decision
to end participation in the Yanbu Refinery Project. These decreases were partially offset by lower
domestic operating expenses and improved U.S. refining and marketing volumes. See the Business
Environment and Executive Overview section for additional information on industry refining
margins.
U.S. R&M
In the first quarter of 2010, our U.S. R&M operations reported a decrease in earnings of 88
percent, compared with the same period in 2009. The decrease primarily resulted from lower
refining and marketing margins, which was partially offset by lower operating expenses and higher
refining and marketing volumes.
Our U.S. refining capacity utilization rate was 88 percent in the first quarter of 2010, compared
with 80 percent in the first quarter of 2009. The increase was primarily due to lower turnaround
activity in the first quarter of 2010.
International R&M
Results from our international R&M operations decreased $123 million in the first quarter of 2010.
The decrease was primarily due to lower refining and marketing volumes and margins, negative
foreign currency impacts and the $25 million after-tax Yanbu project impairment.
Our international refining capacity utilization rate was 48 percent in the first quarter of 2010,
compared with 85 percent in the first quarter of 2009. The current year rate reflects increased
run reductions in response to market conditions and higher turnaround activity.
LUKOIL Investment
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
* |
|
|
|
|
|
|
|
|
|
Net Income Attributable to ConocoPhillips |
|
$ |
387 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Statistics |
|
|
|
|
|
|
|
|
Crude oil production (thousands of barrels daily) |
|
|
391 |
|
|
|
394 |
|
Natural gas production (millions of cubic feet daily) |
|
|
312 |
|
|
|
334 |
|
Refinery crude oil processed (thousands of barrels daily) |
|
|
246 |
|
|
|
225 |
|
|
|
*Recast to reflect a change in accounting principle. See Note 2Changes in Accounting Principles, for more information.
This segment represents our investment in the ordinary shares of OAO LUKOIL, an
international, integrated oil and gas company headquartered in Russia, which we account for under
the equity method. As of March 31, 2010, our ownership interest in LUKOIL was 20 percent based on
authorized and issued shares. Our ownership interest based on estimated shares outstanding, used
for equity method accounting, was 20.09 percent at that date.
37
Effective January 1, 2010, we changed the method used to determine our equity-method share of
LUKOILs earnings. Prior to 2010, we estimated our LUKOIL equity earnings for the current quarter
based on current market indicators, publicly available LUKOIL information and other objective data.
We now record our equity-method share of LUKOILs actual earnings on a one-quarter lag basis,
rather than using an earnings estimate for the current quarter. This change in accounting
principle has been applied retrospectively, by recasting prior period financial information. The
performance metrics are also reported on a one-quarter lag basis. See Note 2Changes in Accounting
Principles, in the Notes to Consolidated Financial Statements, for more information.
In addition to our equity share of LUKOILs earnings, segment results include the amortization of
the basis difference between our equity interest in the net assets of LUKOIL and the book value of
our investment. The segment also includes the costs associated with our employees seconded to
LUKOIL.
LUKOIL earnings were $387 million in the first quarter of 2010, compared with $8 million in the
first quarter of 2009. Equity earnings from LUKOIL were not recorded in the first quarter of 2009,
since our LUKOIL investment was written down in the fourth quarter of 2008 to its fair value at
December 31, 2008.
Chemicals
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to ConocoPhillips |
|
$110 |
|
|
23 |
|
|
|
The Chemicals segment consists of our 50 percent interest in Chevron Phillips Chemical Company LLC
(CPChem), which we account for under the equity method. CPChem uses natural gas liquids and other
feedstocks to produce petrochemicals. These products are then marketed and sold, or used as
feedstocks to produce plastics and commodity chemicals.
Earnings from the Chemicals segment increased $87 million in the first quarter of 2010, compared
with the first quarter of 2009, primarily as a result of higher margins in the olefins and
polyolefins business line, as well as the specialties, aromatics and styrenics business line. The
increase was partially offset by higher operating costs.
38
Emerging Businesses
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
Net Income (Loss) Attributable to ConocoPhillips |
|
|
|
|
|
|
|
|
Power |
|
$ |
29 |
|
|
|
24 |
|
Other |
|
|
(23 |
) |
|
|
(24 |
) |
|
|
|
|
$ |
6 |
|
|
|
- |
|
|
|
The Emerging Businesses segment represents our investment in new technologies or businesses outside
our normal scope of operations. Activities within this segment are currently focused on power
generation and innovation of new technologies, such as those related to conventional and
nonconventional hydrocarbon recovery (including heavy oil), refining, alternative energy, biofuels,
and the environment.
The Emerging Businesses segment had earnings of $6 million in the first quarter of 2010. The
improvement in earnings was mainly due to higher domestic power generation results, which was
partially offset by lower international power generation results.
Corporate and Other
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
Net Loss Attributable to ConocoPhillips |
|
|
|
|
|
|
|
|
Net interest |
|
$ |
(222 |
) |
|
|
(190 |
) |
Corporate general and administrative expenses |
|
|
(36 |
) |
|
|
(41 |
) |
Other |
|
|
(52 |
) |
|
|
(28 |
) |
|
|
|
|
$ |
(310 |
) |
|
|
(259 |
) |
|
|
Net interest consists of interest and financing expense, net of interest income and capitalized
interest, as well as premiums incurred on the early retirement of debt. Net interest increased 17
percent in the first quarter of 2010, primarily due to a net decrease in interest income.
Corporate general and administrative expenses decreased 12 percent in the first quarter of 2010, as
a result of lower overhead costs. The category Other includes certain foreign currency
transaction gains and losses, environmental costs associated with sites no longer in operation, and
other costs not directly associated with an operating segment. Changes in the Other category
primarily reflect higher foreign currency transaction losses in the first quarter of 2010, compared
with the same period of 2009.
39
CAPITAL RESOURCES AND LIQUIDITY
Financial Indicators
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
March 31 |
|
|
December 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Short-term debt |
|
$ |
2,763 |
|
|
|
1,728 |
|
Total debt* |
|
$ |
28,988 |
|
|
|
28,653 |
|
Total equity |
|
$ |
63,417 |
|
|
|
62,613 |
|
Percent of total debt to capital** |
|
|
31 |
% |
|
|
31 |
|
Percent of floating-rate debt to total debt |
|
|
10 |
% |
|
|
9 |
|
|
|
*Total debt includes short-term and long-term debt, as shown on our consolidated balance sheet.
**Capital includes total debt and total equity.
To meet our short- and long-term liquidity requirements, we look to a variety of funding
sources. Cash generated from operating activities is the primary source of funding. During the
first quarter of 2010, available cash was used to support our ongoing capital expenditures and
investments program, provide loan financing to certain equity affiliates, pay dividends, and meet
the funding requirements to FCCL Partnership. Total dividends paid on our common stock during the
first quarter were $744 million. During the first quarter of 2010, cash and cash equivalents
increased $313 million to $855 million.
In addition to cash flows from operating activities and proceeds from asset sales, we rely on our
commercial paper and credit facility programs, and our shelf registration statement to support our
short- and long-term liquidity requirements. We believe current cash and short-term investment
balances and cash generated by operations, together with access to external sources of funds as
described below in the Significant Sources of Capital section, will be sufficient to meet our
funding requirements in the near- and long-term, including our capital spending program, dividend
payments, required debt payments and the funding requirements to FCCL.
Significant Sources of Capital
Operating Activities
During the first quarter of 2010, cash of $3,040 million was provided by operating activities, a
61 percent increase from cash from operations of $1,885 million in the corresponding period of
2009. The improvement was primarily due to higher commodity prices, partially offset by a
discretionary inventory build.
While the stability of our cash flows from operating activities benefits from geographic diversity
and the effects of upstream and downstream integration, our short- and long-term operating cash
flows are highly dependent upon prices for crude oil, natural gas and natural gas liquids, as well
as refining and marketing margins. During the first three months of 2010, crude oil and natural
gas prices were higher than in the same period of 2009. Prices and margins in our industry are
typically 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.
The level of our production volumes of crude oil, natural gas and natural gas liquids also impacts
our cash flows. These production levels are impacted by such factors as acquisitions and
dispositions of fields, field production decline rates, new technologies, operating efficiency,
weather conditions, 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 historically this variability has not been as significant
as that caused by commodity prices.
40
In addition, the level and quality of output from our refineries impacts our cash flows. The
output at our refineries is impacted by such factors as operating efficiency, maintenance
turnarounds, market conditions, feedstock availability and weather conditions. We actively manage
the operations of our refineries and, typically, any variability in their operations has not been
as significant to cash flows as that caused by refining margins.
Asset Sales
Proceeds from asset sales during the first quarter of 2010 were $132 million, compared with
$86 million in the same period of 2009. We plan to raise approximately $10 billion from asset
dispositions over the next two years. Proceeds will be targeted toward debt reduction and share
repurchases.
In April 2010, we entered into definitive agreements with subsidiaries of Sinopec International
Petroleum Exploration and Production Company to sell our 9.03 percent interest in the Syncrude
Canada Ltd. joint venture (Syncrude) for approximately $4.65 billion. The transaction is
anticipated to close in the third quarter of 2010, subject to Canadian and Chinese government
approvals.
On March 24, 2010, we announced plans to sell up to half of our interest in LUKOIL over a two-year
period. The sale of LUKOIL shares began in April and 4,644,000 shares have been sold, with total
proceeds of $274 million, through April 30, 2010.
Commercial Paper and Credit Facilities
At March 31, 2010, we had two revolving credit facilities totaling $7.85 billion, consisting of a
$7.35 billion facility expiring in September 2012 and a $500 million facility expiring in July
2012. Our revolving credit facilities may be used as direct bank borrowings, as support for
issuances of letters of credit totaling up to $750 million, or as support for our commercial paper
programs. The revolving credit facilities are broadly syndicated among financial institutions and
do not contain any material adverse change provisions or any covenants requiring maintenance of
specified financial ratios or ratings. The facility agreements contain 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 by any of its consolidated subsidiaries.
Credit facility borrowings may bear interest at a margin above rates offered by certain designated
banks in the London interbank market or at a margin above the overnight federal funds rate or prime
rates offered by certain designated banks in the United States. The agreements call for commitment
fees on available, but unused, amounts. The agreements also contain early termination rights if
our current directors or their approved successors cease to be a majority of the Board of
Directors.
Our primary funding source for short-term working capital needs is the ConocoPhillips $6.35 billion
commercial paper program. Commercial paper maturities are generally limited to 90 days. We also
have the ConocoPhillips Qatar Funding Ltd. $1.5 billion commercial paper program, which is used to
fund commitments relating to the Qatargas 3 Project. At March 31, 2010, and December 31, 2009, we
had no direct borrowings under the revolving credit facilities, but $40 million in letters of
credit had been issued at both periods. In addition, under the two ConocoPhillips commercial paper
programs, $1,662 million of commercial paper was outstanding at March 31, 2010, compared with
$1,300 million at December 31, 2009. Since we had $1,662 million of commercial paper outstanding
and had issued $40 million of letters of credit, we had access to $6.1 billion in borrowing
capacity under our revolving credit facilities at March 31, 2010.
Shelf Registration
We have a universal shelf registration statement on file with the U.S. Securities and Exchange
Commission (SEC) under which we, as a well-known seasoned issuer, have the ability to issue and
sell an indeterminate amount of various types of debt and equity securities.
41
Off-Balance Sheet Arrangements
As part of our normal ongoing business operations and consistent with normal industry practice, we
enter into numerous agreements with other parties to pursue business opportunities, which share
costs and apportion risks among the parties as governed by the agreements. At March 31, 2010, we
were liable for certain contingent obligations under the following contractual arrangements:
|
|
|
Qatargas 3: We own a 30 percent interest in Qatargas 3, an integrated project to
produce and liquefy natural gas from Qatars North Field. The other participants in the
project are affiliates of Qatar Petroleum (68.5 percent) and Mitsui & Co., Ltd.
(1.5 percent). Our interest is held through a jointly owned company, Qatar Liquefied Gas
Company Limited (3), for which we use the equity method of accounting. Qatargas 3 secured
project financing of $4 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 have substantially the same terms as
the ECA and commercial bank facilities. Prior to project completion certification, all
loans, including the ConocoPhillips loan facilities, are guaranteed by the participants,
based on their respective ownership interests. Accordingly, our maximum exposure to this
financing structure is $1.2 billion. Upon completion certification, currently expected in
2011, all project loan facilities, including the ConocoPhillips loan facilities, will
become nonrecourse to the project participants. At March 31, 2010, Qatargas 3 had
approximately $3.8 billion outstanding under all the loan facilities, of which
ConocoPhillips provided $1.1 billion, and an additional $91 million of accrued interest. |
|
|
|
|
Rockies Express Pipeline: In June 2006, we issued a guarantee for our ownership
percentage of $2 billion in credit facilities issued to Rockies Express Pipeline LLC,
operated by Kinder Morgan Energy Partners, L.P. Rockies Express completed construction of
a natural gas pipeline across a portion of the United States in November 2009. At March
31, 2010, Rockies Express had no amount outstanding under the credit facilities. In April
2010, the credit facilities were reduced to $200 million and our guarantee was released. |
For additional information about guarantees, see Note 12Guarantees, in the Notes to Consolidated
Financial Statements, which is incorporated herein by reference.
Capital Requirements
For information about our capital expenditures and investments, see the Capital Spending section.
Our debt balance at March 31, 2010, was $29.0 billion, an increase of $0.3 billion from the balance
at December 31, 2009.
We are obligated to contribute $7.5 billion, plus interest, over a 10-year period that began in
2007, to FCCL. Quarterly principal and interest payments of $237 million began in the second
quarter of 2007 and will continue until the balance is paid. Of the principal obligation amount,
approximately $668 million was short-term and was included in the Accounts payablerelated
parties line on our March 31, 2010, consolidated balance sheet. The principal portion of these
payments, which totaled $162 million in the first three months of 2010, are included in the Other
line in the financing activities section of our consolidated statement of cash flows. Interest
accrues at a fixed annual rate of 5.3 percent on the unpaid principal balance. Fifty percent of
the quarterly interest payment is reflected as a capital contribution and is included in the
Capital expenditures and investments line on our consolidated statement of cash flows.
We have provided loan financing to WRB Refining LLC, to assist it in meeting its operating and
capital spending requirements. At March 31, 2010, $550 million of such financing was outstanding
and was classified as long term.
In February 2010, we announced a quarterly dividend of 50 cents per share. The dividend was paid
March 1, 2010, to stockholders of record at the close of business February 22, 2010. Additionally,
in March 2010, we
42
announced a quarterly dividend for the second quarter of 55 cents per share. This dividend is
payable June 1, 2010, to shareholders of record at the close of business May 24, 2010.
On March 24, 2010, we announced plans to purchase up to $5 billion of our common stock over the
next two years. Repurchase of shares began in April and totaled 4,455,000 shares at a cost of
$254 million, through April 30, 2010.
Capital Spending
Capital Expenditures and Investments
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2010 |
|
|
2009 |
|
E&P |
|
|
|
|
|
|
|
|
United StatesAlaska |
|
$ |
183 |
|
|
|
254 |
|
United StatesLower 48 |
|
|
279 |
|
|
|
751 |
|
International |
|
|
1,388 |
|
|
|
1,371 |
|
|
|
|
|
|
1,850 |
|
|
|
2,376 |
|
|
|
Midstream |
|
|
- |
|
|
|
1 |
|
|
|
R&M |
|
|
|
|
|
|
|
|
United States |
|
|
124 |
|
|
|
408 |
|
International |
|
|
68 |
|
|
|
88 |
|
|
|
|
|
|
192 |
|
|
|
496 |
|
|
|
LUKOIL Investment |
|
|
- |
|
|
|
- |
|
Chemicals |
|
|
- |
|
|
|
- |
|
Emerging Businesses |
|
|
1 |
|
|
|
17 |
|
Corporate and Other |
|
|
28 |
|
|
|
16 |
|
|
|
|
|
$ |
2,071 |
|
|
|
2,906 |
|
|
|
United States |
|
$ |
614 |
|
|
|
1,430 |
|
International |
|
|
1,457 |
|
|
|
1,476 |
|
|
|
|
|
$ |
2,071 |
|
|
|
2,906 |
|
|
|
E&P
Capital spending for E&P during the first three months of 2010 totaled $1.9 billion. The
expenditures supported key exploration and development projects including:
|
|
|
Oil and natural gas developments in the Lower 48, including San Juan and Permian Basins,
Bakken and Barnett trends, and exploration activities in the deepwater Gulf of Mexico and
Eagle Ford shale position in Texas. |
|
|
|
Alaska activities related to the Prudhoe Bay and Kuparuk Fields, as well as the Alpine
Field and satellites on the Western North Slope. |
|
|
|
Oil sands projects and ongoing natural gas projects in Canada. |
|
|
|
Further development of coalbed methane projects associated with the APLNG joint venture
in Australia. |
|
|
|
Qatargas 3 Project in Qatar. |
|
|
|
In Asia Pacific, Bohai Bay in China, Bayu Undan in the Timor Sea, new fields offshore
Malaysia and the Darwin LNG facility in Australia. |
|
|
|
In the North Sea, the Ekofisk Area, Greater Britannia Fields and development of the
Jasmine discovery in the J Block. |
43
|
|
|
The Kashagan Field in the Caspian Sea. |
|
|
|
Onshore developments in Nigeria and Algeria. |
|
|
|
Exploration activities in Australias Browse Basin, Kazakhstans Block N and offshore
eastern Canada. |
R&M
Capital spending for R&M during the first three months of 2010 totaled $192 million and included
projects related to sustaining and improving the existing business with a focus on safety,
regulatory compliance and reliability.
Contingencies
Legal and Tax Matters
We accrue a liability for known contingencies (other than those related to income taxes) when a
loss is probable and the amounts can be reasonably estimated. If a range of amounts can be
reasonably estimated and no amount within the range is a better estimate than any other amount,
then the minimum of the range is accrued. In the case of income-tax-related contingencies, we use
a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less
than certain. Based on currently available information, we believe it is remote that future costs
related to known contingent liability exposures will exceed current accruals by an amount that
would have a material adverse impact on our consolidated financial statements.
Environmental
We are subject to the same numerous international, federal, state and local environmental laws and
regulations as other companies in the petroleum exploration and production, refining, and crude oil
and refined product marketing and transportation businesses. For a discussion of the most
significant of these environmental laws and regulations, including those with associated
remediation obligations, see the Environmental section in Managements Discussion and Analysis of
Financial Condition and Results of Operations on pages 58, 59 and 60 of our 2009 Annual Report on
Form 10-K.
We, from time to time, receive requests for information or notices of potential liability from the
Environmental Protection Agency (EPA) and state environmental agencies alleging that we are a
potentially responsible party under the Federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) or an equivalent state statute. On occasion, we also have been made a
party to cost recovery litigation by those agencies or by private parties. These requests, notices
and lawsuits assert potential liability for remediation costs at various sites that typically are
not owned by us, but allegedly contain wastes attributable to our past operations. As of
December 31, 2009, we reported we had been notified of potential liability under CERCLA and
comparable state laws at 65 sites around the United States. During the quarter ended March 31,
2010, we were notified of two new sites, resulting in 67 unresolved sites with potential liability.
At March 31, 2010, our balance sheet included a total environmental accrual of $979 million,
compared with $1,017 million at December 31, 2009. 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 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 on our results of operations or financial position as a
result of compliance with current environmental laws and regulations.
Climate Change
There has been a broad range of proposed or promulgated state, national and international laws
focusing on greenhouse gas (GHG) reduction. These proposed or promulgated laws apply or could
apply in countries where we have interests or may have interests in the future. Laws in this field
continue to evolve, and while it is not possible to accurately estimate either a timetable for
implementation or our future compliance costs relating to implementation, such laws, if enacted,
could have a material impact on our results of operations and
44
financial condition. Examples from 2010 of legislation and precursors for possible regulation that
do or could affect our operations include the EPAs 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 EPAs and U.S. Department of
Transportations joint promulgation of a Final Rule on April 1, 2010, that trigger 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 to determine the extent of climate change.
Both of the above referenced announcements are subject to pending legal challenges, and we continue
to monitor these legal proceedings and other regulatory actions for potential impacts on our
operations. For other examples of legislation or precursors for possible regulation that does or
could affect our operations, see the Climate Change section in Managements Discussion and
Analysis of Financial Condition and Results of Operations on pages 60 and 61 of our 2009 Annual
Report on Form 10-K.
OUTLOOK
In a February 2008 lease sale conducted by the U.S. Department of Interior (DOI) under the Outer
Continental Shelf (OCS) Lands Act, we successfully bid, and were awarded 10-year primary term
leases on 98 blocks in the Chukchi Sea, for total bid payments of $506 million. Various special
interest groups have brought two separate lawsuits challenging (1) the DOIs entire OCS leasing
program, and (2) the Chukchi Sea lease sale conducted by the DOI under that program. In the first
suit, the Court ordered the DOI to reconsider one aspect of its OCS leasing program. The draft
revised program was issued on March 31, 2010, and affirmed the 2008 Chukchi Sea lease sale as part
of the 2007-2012 program, but removed any future lease sales for the Alaska OCS in that program.
The draft revised program is subject to public comment until May 3, 2010, after which the DOI will
submit the final program to the court and the parties will petition the court for resolution. A
final court decision is expected later this year. In the second suit, briefs have been filed by
all parties, and a decision is expected later in 2010. We continue to progress plans for drilling
an exploration well on our Chukchi Sea leases no earlier than 2012.
45
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. You can identify our
forward-looking statements by the words anticipate, estimate, believe, continue, could,
intend, may, plan, potential, predict, should, will, expect, objective,
projection, forecast, goal, guidance, outlook, effort, target 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, including the following:
|
|
|
Fluctuations in crude oil, natural gas and natural gas liquids prices, refining and
marketing margins and margins for our chemicals business. |
|
|
|
Potential failures or delays in achieving expected reserve or production levels from
existing and future oil and gas development projects due to operating hazards, drilling
risks and the inherent uncertainties in predicting oil and gas reserves and oil and gas
reservoir performance. |
|
|
|
Unsuccessful exploratory drilling activities or the inability to obtain access to
exploratory acreage. |
|
|
|
Failure of new products and services to achieve market acceptance. |
|
|
|
Unexpected changes in costs or technical requirements for constructing, modifying or
operating facilities for exploration and production, manufacturing, refining or
transportation projects. |
|
|
|
Unexpected technological or commercial difficulties in manufacturing, refining or
transporting our products, including synthetic crude oil and chemicals products. |
|
|
|
Lack of, or disruptions in, adequate and reliable transportation for our crude oil,
natural gas, natural gas liquids, LNG and refined products. |
|
|
|
Inability to timely obtain or maintain permits, including those necessary for
construction of LNG terminals or regasification facilities, or refinery projects; comply
with government regulations; or make capital expenditures required to maintain compliance. |
|
|
|
Failure to complete definitive agreements and feasibility studies for, and to timely
complete construction of, announced and future exploration and production, LNG, refinery
and transportation projects. |
|
|
|
Potential disruption or interruption of our operations due to accidents, extraordinary
weather events, civil unrest, political events or terrorism. |
|
|
|
International monetary conditions and exchange controls. |
|
|
|
Substantial investment or reduced demand for products as a result of existing or future
environmental rules and regulations. |
|
|
|
Liability for remedial actions, including removal and reclamation obligations, under
environmental regulations. |
|
|
|
Liability resulting from litigation. |
|
|
|
General domestic and international economic and political developments, including armed
hostilities; expropriation of assets; changes in governmental policies relating to crude
oil, natural gas, natural gas liquids or refined product pricing, regulation or taxation;
other political, economic or diplomatic developments; and international monetary
fluctuations. |
|
|
|
Changes in tax and other laws, regulations (including alternative energy mandates), or
royalty rules applicable to our business. |
46
|
|
|
Limited access to capital or significantly higher cost of capital related to uncertainty in
the domestic or international financial markets. |
|
|
|
Delays in, or our inability to implement, our recently announced asset disposition plan. |
|
|
|
Inability to obtain economical financing for projects, construction or modification of
facilities and general corporate purposes. |
|
|
|
The operation and financing of our midstream and chemicals joint ventures. |
|
|
|
The factors generally described in Item 1ARisk Factors in our 2009 Annual Report on
Form 10-K. |
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about market risks for the three months ended March 31, 2010, does not differ
materially
from that discussed under Item 7A in our 2009 Annual Report on Form 10-K.
Item 4. CONTROLS AND PROCEDURES
As of March 31, 2010, with the participation of our management, our Chairman and Chief Executive
Officer (principal executive officer) and our Senior Vice President, Finance and Chief Financial
Officer (principal financial officer) carried out an evaluation, pursuant to Rule 13a-15(b) of the
Securities Exchange Act of 1934, as amended (the Act), of the effectiveness of the design and
operation 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 Senior Vice
President, Finance and Chief Financial Officer concluded that our disclosure controls and
procedures were operating effectively as of March 31, 2010.
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.
47
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The following is a description of reportable legal proceedings including those involving
governmental authorities under federal, state and local laws regulating the discharge of materials
into the environment for this reporting period. The following proceedings include those matters
that arose during the first quarter of 2010 and any material developments with respect to matters
previously reported in ConocoPhillips 2009 Annual Report on Form 10-K. Material developments to
the previously reported matters have been included in the descriptions below. While it is not
possible to accurately predict the final outcome of these pending proceedings, if any one or more
of such proceedings was decided adversely to ConocoPhillips, we expect there would be no material
effect on our consolidated financial position. Nevertheless, such proceedings are reported
pursuant to the U.S. Securities and Exchange Commissions (SEC) regulations.
Our U.S. refineries are implementing two separate consent decrees regarding alleged violations of
the Federal Clean Air Act with the U.S. Environmental Protection Agency (EPA), six states and one
local air pollution agency. Some of the requirements and limitations contained in the decrees
provide for stipulated penalties for violations. Stipulated penalties under the decrees are not
automatic, but must be requested by one of the agency signatories. As part of periodic reports
under the decrees or other reports required by permits or regulations, we occasionally report
matters that could be subject to a request for stipulated penalties. If a specific request for
stipulated penalties meeting the reporting threshold set forth in SEC rules is made pursuant to
these decrees based on a given reported exceedance, we will separately report that matter and the
amount of the proposed penalty.
New Matters
On February 26, 2009, we received a demand from the South Coast Air Quality Management District
(SCAQMD) to settle seven Notices of Violation for alleged violations of air pollution control
regulations at the Los Angeles Refinery. The amount of the settlement demand is $159,000. We are
working with SCAQMD to resolve this matter.
Matters Previously Reported
On December 17, 2009, the San Francisco Regional Water Quality Control Boards enforcement staff
(SFRWQCB) issued an Administrative Civil Liability Complaint alleging 18 exceedances of the Rodeo
facilitys stormwater permit that occurred during 2008 and 2009. The Complaint seeks a penalty of
$490,000. Since that time, SFRWQCB and ConocoPhillips have agreed to include 14 additional
exceedances that occurred in 2009 as part of the overall settlement. The SFRWQCB issued an initial
penalty demand of $800,000 for all 32 exceedances, and we are working with the SFRWQCB to resolve
this matter.
ConocoPhillips Pipe Line Company (CPPL) received a Notice of Probable Violation and Proposed Civil
Penalty (NOPV) from the U.S. Department of Transportations Pipeline and Hazardous Materials Safety
Administration (DOT) dated March 30, 2009. The NOPV alleges CPPL violated certain operation and
safety regulations regarding the control room response to a release on January 8, 2008, near Denver
City, Texas. DOT issued a penalty of $200,000 for the alleged violations, which CPPL paid on April
22, 2010.
48
Item 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in Item 1A of our 2009 Annual
Report on Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars |
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Approximate Dollar |
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased |
|
|
Value of Shares |
|
|
|
|
|
|
|
|
|
|
|
as Part of Publicly |
|
|
that May Yet Be |
|
|
|
Total Number of |
|
|
Average Price |
|
|
Announced Plans |
|
|
Purchased Under the |
|
Period |
|
Shares Purchased |
* |
|
Paid per Share |
|
|
or Programs |
|
|
Plans or Programs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1-31, 2010 |
|
|
1,234 |
|
|
$ |
48.33 |
|
|
|
- |
|
|
|
- |
|
February 1-28,
2010 |
|
|
1,664 |
|
|
|
49.62 |
|
|
|
- |
|
|
|
- |
|
March 1-31, 2010 |
|
|
7,009 |
|
|
|
51.05 |
|
|
|
- |
|
|
|
- |
|
|
|
Total |
|
|
9,907 |
|
|
$ |
50.47 |
|
|
|
- |
|
|
|
|
|
|
|
*Represents the repurchase of common shares from company employees in connection with the companys broad-based employee
incentive plans.
On March 24, 2010, we announced plans to purchase up to $5 billion of our common stock over
the next two years. Repurchase of shares began in April and totaled 4,455,000 shares at a cost of
$254 million, through April 30, 2010.
Acquisitions for the share repurchase program are made at
managements discretion, at prevailing prices, subject
to market conditions and other factors. 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.
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Item 6. EXHIBITS
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12 |
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Computation of Ratio of Earnings to Fixed Charges. |
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18 |
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Preferability Letter Regarding Change in Accounting Principle. |
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31.1 |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934. |
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31.2 |
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934. |
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32 |
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Certifications pursuant to 18 U.S.C. Section 1350. |
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101.INS |
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XBRL Instance Document. |
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101.SCH |
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XBRL Schema Document. |
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101.CAL |
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XBRL Calculation Linkbase Document. |
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101.LAB |
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XBRL Labels Linkbase Document. |
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101.PRE |
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XBRL Presentation Linkbase Document. |
50
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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CONOCOPHILLIPS
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/s/ Glenda M. Schwarz
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Glenda M. Schwarz |
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Vice President and Controller
(Chief Accounting and Duly Authorized Officer) |
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May 4, 2010
51