ConocoPhillips Files 10-Q for Q2 2024

TL;DR

ConocoPhillips Q2 2024 10-Q filed. Operations normal.

AI Summary

ConocoPhillips reported its financial results for the period ending June 30, 2024. The company's filing indicates ongoing operations in the petroleum refining sector, with its principal executive offices located at 925 N. Eldridge Parkway in Houston, Texas. The filing covers the second quarter of 2024 and includes data related to its common stock and specific debentures.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational details of ConocoPhillips, a major player in the energy sector.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report and does not indicate any immediate or unusual risks.

Key Numbers

• 2024 Q2 — Reporting Period (Second quarter financial results)
• 12-31 2024 — Fiscal Year End (Company's fiscal year closing date)

Key Players & Entities

• ConocoPhillips (company) — Filer of the 10-Q
• 925 N. Eldridge Parkway, Houston, TX 77079 (location) — Business Address
• 20240630 (date) — Conformed Period of Report
• 20240801 (date) — Filed as of Date

FAQ

Filing Documents

• cop-20240630.htm (10-Q) — 1684KB
• cop-20240630x10qexx311.htm (EX-31.1) — 9KB
• cop-20240630x10qexx312.htm (EX-31.2) — 9KB
• cop-20240630x10qexx32.htm (EX-32) — 5KB
• cop-20240630_g1.jpg (GRAPHIC) — 162KB
• cop-20240630_g2.jpg (GRAPHIC) — 100KB
• 0001163165-24-000037.txt ( ) — 10016KB
• cop-20240630.xsd (EX-101.SCH) — 63KB
• cop-20240630_cal.xml (EX-101.CAL) — 91KB
• cop-20240630_def.xml (EX-101.DEF) — 333KB
• cop-20240630_lab.xml (EX-101.LAB) — 777KB
• cop-20240630_pre.xml (EX-101.PRE) — 558KB
• cop-20240630_htm.xml (XML) — 1499KB

—Financial Information

Part I—Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Income Statement 2 Consolidated Statement of Comprehensive Income 3 Consolidated Balance Sheet 4 Consolidated Statement of Cash Flows 5

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 6 Note 1 —Basis of Presentation 6 Note 2 —Inventories 6 Note 3 —Acquisitions and Dispositions 6 Note 4 —Investments and Long-Term Receivables 7 Note 5 —Debt 8 Note 6 —Changes in Equity 9 Note 7 —Guarantees 10 Note 8 —Contingencies, Commitments and Accrued Environmental Costs 11 Note 9 —Suspended Wells and Exploration Expenses 13 Note 10 —Derivative and Financial Instruments 14 Note 11 —Fair Value Measurement 18 Note 12 —Accumulated Other Comprehensive Income (Loss) 21 Note 13 —Cash Flow Information 21 Note 14 —Employee Benefit Plans 22 Note 15 —Related Party Transactions 22 Note 16 —Sales and Other Operating Revenues 23 Note 17 —Earnings Per Share 24 Note 18 —Segment Disclosures and Related Information 25 Note 19 —Income Taxes 26 Note 20 —Announced Acquisition of Marathon Oil Corporation 27 Note 21 —New Accounting Standards 27

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 28

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 50

Controls and Procedures

Item 4. Controls and Procedures 50

—Other Information

Part II—Other Information

Legal Proceedings

Item 1. Legal Proceedings 50

Risk Factors

Item 1A. Risk Factors 51

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 53

Other Information

Item 5. Other Information 53

Exhibit s

Item 6. Exhibit s 54 Signature 55 Commonly Used Abbreviations Table of Contents Commonly Used Abbreviations The following industry-specific, accounting and other terms, and abbreviations may be commonly used in this report. Currencies Accounting $ or USD U.S. dollar ARO asset retirement obligation CAD Canadian dollar ASC accounting standards codification EUR Euro ASU accounting standards update GBP NOK British pound Norwegian kroner DD&A depreciation, depletion and amortization FASB Financial Accounting Standards Board Units of Measurement BBL barrel FIFO first-in, first-out BCF billion cubic feet G&A general and administrative BOE barrel of oil equivalent GAAP generally accepted accounting principles MBD thousand barrels per day MCF thousand cubic feet LIFO last-in, first-out MM million NPNS normal purchase normal sale MMBOE million barrels of oil equivalent PP&E properties, plants and equipment MBOED thousand barrels of oil equivalent per day VIE variable interest entity MMBOED million barrels of oil equivalent per day MMBTU million British thermal units Miscellaneous MMCFD MTPA million cubic feet per day million tonnes per annum CERCLA Federal Comprehensive Environmental Response Compensation and Liability Act DEI diversity, equity and inclusion Industry EPA Environmental Protection Agency BLM Bureau of Land Management ESG environmental, social and governance CBM coalbed methane EU European Union CCS carbon capture and storage FERC Federal Energy Regulatory Commission E&P exploration and production FEED front-end engineering and design GHG greenhouse gas FID final investment decision HSE health, safety and environment FPS floating production system ICC International Chamber of Commerce FPSO floating production, storage and ICSID World Bank's International offloading Centre for Settlement of G&G geological and geophysical Investm

Financial Statements Table of Contents

Financial Statements Table of Contents

Financial Information

PART I. Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Income Statement ConocoPhillips Millions of Dollars Three Months Ended June 30 Six Months Ended June 30 2024 2023 2024 2023 Revenues and Other Income Sales and other operating revenues $ 13,620 12,351 27,468 27,162 Equity in earnings of affiliates 403 412 824 911 Gain (loss) on dispositions ( 5 ) ( 1 ) 88 92 Other income 118 122 232 236 Total Revenues and Other Income 14,136 12,884 28,612 28,401 Costs and Expenses Purchased commodities 4,858 4,616 10,192 10,754 Production and operating expenses 2,164 1,886 4,179 3,665 Selling, general and administrative expenses 164 205 342 364 Exploration expenses 102 83 214 221 Depreciation, depletion and amortization 2,334 2,010 4,545 3,952 Impairments 34 — 34 1 Taxes other than income taxes 536 512 1,091 1,088 Accretion on discounted liabilities 80 68 160 136 Interest and debt expense 198 179 403 367 Foreign currency transaction (gain) loss 9 ( 14 ) ( 9 ) ( 58 ) Other expenses ( 2 ) ( 23 ) ( 6 ) ( 13 ) Total Costs and Expenses 10,477 9,522 21,145 20,477 Income (loss) before income taxes 3,659 3,362 7,467 7,924 Income tax provision (benefit) 1,330 1,130 2,587 2,772 Net Income (Loss) $ 2,329 2,232 4,880 5,152 Net Income (Loss) Per Share of Common Stock (dollars) Basic $ 1.99 1.84 4.15 4.23 Diluted 1.98 1.84 4.14 4.22 Weighted-Average Common Shares Outstanding (in thousands) Basic 1,168,198 1,207,443 1,173,410 1,213,800 Diluted 1,170,299 1,210,342 1,175,595 1,216,743 See Notes to Consolidated Financial Statements. ConocoPhillips 2024 Q2 10-Q 2

Financial Statements

Financial Statements Table of Contents Consolidated Statement of Comprehensive Income ConocoPhillips Millions of Dollars Three Months Ended June 30 Six Months Ended June 30 2024 2023 2024 2023 Net Income (Loss) $ 2,329 2,232 4,880 5,152 Other comprehensive income (loss) Defined benefit plans Reclassification adjustment for amortization of prior service cost (credit) included in net income (loss) ( 10 ) ( 10 ) ( 19 ) ( 19 ) Net change ( 10 ) ( 10 ) ( 19 ) ( 19 ) Reclassification adjustment for amortization of net actuarial losses (gains) included in net income (loss) 16 19 32 42 Net change 16 19 32 42 Income taxes on defined benefit plans ( 2 ) ( 3 ) ( 4 ) ( 6 ) Defined benefit plans, net of tax 4 6 9 17 Unrealized holding gain (loss) on securities ( 1 ) ( 3 ) ( 5 ) 3 Reclassification adjustment for (gain) loss included in net income (loss) — ( 1 ) — ( 2 ) Income taxes on unrealized holding gain (loss) on securities — 1 1 — Unrealized holding gain (loss) on securities, net of tax ( 1 ) ( 3 ) ( 4 ) 1 Foreign currency translation adjustments, net of tax ( 73 ) 99 ( 303 ) 57 Unrealized gain (loss) on hedging activities 33 — 13 — Income taxes on unrealized gain (loss) on hedging activities ( 7 ) — ( 3 ) — Unrealized gain (loss) on hedging activities, net of tax 26 — 10 — Other Comprehensive Income (Loss), Net of Tax ( 44 ) 102 ( 288 ) 75 Comprehensive Income (Loss) $ 2,285 2,334 4,592 5,227 See Notes to Consolidated Financial Statements. 3 ConocoPhillips 2024 Q2 10-Q

Financial Statements Table of Contents

Financial Statements Table of Contents Consolidated Balance Sheet ConocoPhillips Millions of Dollars June 30 2024 December 31 2023 Assets Cash and cash equivalents $ 4,294 5,635 Short-term investments 1,723 971 Accounts and notes receivable (net of allowance of $ 4 and $ 3 , respectively) 5,285 5,461 Accounts and notes receivable—related parties 22 13 Inventories 1,447 1,398 Prepaid expenses and other current assets 963 852 Total Current Assets 13,734 14,330 Investments and long-term receivables 9,304 9,130 Net properties, plants and equipment (net of accumulated DD&A of $ 77,911 and $ 74,361 , respectively) 70,226 70,044 Other assets 2,730 2,420 Total Assets $ 95,994 95,924 Liabilities Accounts payable $ 5,065 5,083 Accounts payable—related parties 91 34 Short-term debt 1,312 1,074 Accrued income and other taxes 2,016 1,811 Employee benefit obligations 516 774 Other accruals 1,324 1,229 Total Current Liabilities 10,324 10,005 Long-term debt 17,040 17,863 Asset retirement obligations and accrued environmental costs 7,238 7,220 Deferred income taxes 8,927 8,813 Employee benefit obligations 990 1,009 Other liabilities and deferred credits 1,730 1,735 Total Liabilities 46,249 46,645 Equity Common stock ( 2,500,000,000 shares authorized at $ 0.01 par value) Issued (2024— 2,106,906,457 shares; 2023— 2,103,772,516 shares) Par value 21 21 Capital in excess of par 61,381 61,303 Treasury stock (at cost: 2024— 945,656,667 shares; 2023— 925,670,961 shares) ( 68,005 ) ( 65,640 ) Accumulated other comprehensive income (loss) ( 5,961 ) ( 5,673 ) Retained earnings 62,309 59,268 Total Equity 49,745 49,279 Total Liabilities and Equity $ 95,994 95,924 See Notes to Consolidated Financial Statements. ConocoPhillips 2024 Q2 10-Q 4

Financial Statements

Financial Statements Table of Contents Consolidated Statement of Cash Flows ConocoPhillips Millions of Dollars Six Months Ended June 30 2024 2023 Cash Flows From Operating Activities Net income (loss) $ 4,880 5,152 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 4,545 3,952 Impairments 34 1 Dry hole costs and leasehold impairments 48 102 Accretion on discounted liabilities 160 136 Deferred taxes 211 489 Distributions more (less) than income from equity affiliates 364 652 (Gain) loss on dispositions ( 88 ) ( 92 ) Other 10 ( 7 ) Working capital adjustments Decrease (increase) in accounts and notes receivable 148 2,246 Decrease (increase) in inventories ( 57 ) ( 23 ) Decrease (increase) in prepaid expenses and other current assets ( 147 ) 295 Increase (decrease) in accounts payable ( 183 ) ( 1,614 ) Increase (decrease) in taxes and other accruals ( 21 ) ( 2,032 ) Net Cash Provided by Operating Activities 9,904 9,257 Cash Flows From Investing Activities Capital expenditures and investments ( 5,885 ) ( 5,820 ) Working capital changes associated with investing activities 173 86 Acquisition of businesses, net of cash acquired 49 — Proceeds from asset dispositions 178 426 Net sales (purchases) of investments ( 794 ) 1,549 Other ( 13 ) ( 5 ) Net Cash Used in Investing Activities ( 6,292 ) ( 3,764 ) Cash Flows From Financing Activities Issuance of debt — 1,093 Repayment of debt ( 563 ) ( 1,200 ) Issuance of company common stock ( 57 ) ( 95 ) Repurchase of company common stock ( 2,346 ) ( 3,000 ) Dividends paid ( 1,839 ) ( 2,838 ) Other ( 63 ) ( 11 ) Net Cash Used in Financing Activities ( 4,868 ) ( 6,051 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 69 ) ( 162 ) Net Change in Cash, Cash Equivalents and Restricted Cash ( 1,325 ) ( 720 ) Cash, cash equivalents and restricted cas

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Note 1—Basis of Presentation The interim-period financial information presented in the financial statements included in this report is unaudited and, in the opinion of management, includes all known accruals and adjustments necessary for a fair presentation of the consolidated financial position of ConocoPhillips, its results of operations and cash flows for such periods. All such adjustments are of a normal and recurring nature unless otherwise disclosed. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes included in our 2023 Annual Report on Form 10-K. Note 2—Inventories Millions of Dollars June 30 2024 December 31 2023 Crude oil and natural gas $ 723 676 Materials and supplies 724 722 Total inventories $ 1,447 1,398 Inventories valued on the LIFO basis $ 409 401 Note 3—Acquisitions and Dispositions Marathon Oil Corporation Announced Acquisition For discussion regarding our announced acquisition of Marathon Oil Corporation (Marathon Oil), see Note 20 . Surmont Acquisition In October 2023, we completed our acquisition of the remaining 50 percent working interest in Surmont, an asset in our Canada segment, from TotalEnergies EP Canada Ltd. The final consideration for the all-cash transaction was $ 3.0 billion after customary adjustments (CAD $ 4.1 billion): Fair value of consideration Millions of Dollars Cash paid $ 2,635 Contingent consideration 320 Final Consideration $ 2,955 The contingent consideration arrangement requires additional consideration to be paid to TotalEnergies EP Canada Ltd. up to $ 0.4 billion CAD over a five-year term. The contingent payments represent $ 2 million for every dollar that WCS pricing exceeds $ 52 per barrel during the month, subject to certain production targets

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Table of Contents Oil and gas properties were valued using a discounted cash flow approach incorporating market participant and internally generated price assumptions, production profiles and operating and development cost assumptions. The fair values of other assets acquired and liabilities assumed, which included accounts receivable, accounts payable, and most other current assets and current liabilities, were determined to be equivalent to the carrying value due to their short-term nature. The total consideration of $ 3.0 billion was allocated to the identifiable assets and liabilities based on fair values as of the acquisition date of October 4, 2023. Recognized amounts of identifiable assets acquired and liabilities assumed Millions of Dollars Oil and gas properties $ 3,082 Asset retirement obligations ( 112 ) Other ( 15 ) Total identifiable net assets $ 2,955 With the completion of the transaction, we have acquired proved and unproved properties of approximately $ 2.9 billion and $ 0.2 billion, respectively. Supplemental Pro Forma (unaudited) The following table summarizes the unaudited supplemental pro forma financial information for the three- and six-month periods ended June 30, 2023, as if we had completed the acquisition on January 1, 2022. Millions of Dollars Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Supplemental Pro Forma (unaudited) As Reported Pro Forma Surmont Pro Forma Combined As Reported Pro Forma Surmont Pro Forma Combined Total Revenues and Other Income $ 12,884 689 13,573 28,401 1,292 29,693 Income (loss) before income taxes 3,362 159 3,521 7,924 229 8,153 Net Income (Loss) 2,232 121 2,353 5,152 174 5,326 Earnings per share ($ per share): Basic net income (loss) $ 1.84 1.94 4.23 4.37 Diluted net income (loss) 1.84 1.94 4.22 4.36 The unaudited supplemental pro forma financial information is presented for illustration purposes only and is not necessari

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements Table of Contents Port Arthur LNG (PALNG) In March 2023, we acquired a 30 percent direct equity investment in PALNG, a joint venture for the development of a large-scale LNG facility. At June 30, 2024, the carrying value of our equity method investment in PALNG was approximately $ 1.5 billion. Qatar LNG Projects Our equity method investments in Qatar include the following: QatarEnergy LNG N(3) (N3)— 30 percent owned joint venture with an affiliate of QatarEnergy ( 68.5 percent) and Mitsui & Co., Ltd. ( 1.5 percent)—produces and liquefies natural gas from Qatar's North Field, as well as exports LNG. QatarEnergy LNG NFE(4) (NFE4)— 25 percent owned joint venture with affiliates of QatarEnergy ( 70 percent) and China National Petroleum Corporation ( 5 percent)—participant in the North Field East LNG project. QatarEnergy LNG NFS(3) (NFS3)— 25 percent owned joint venture with an affiliate of QatarEnergy ( 75 percent)—participant in the North Field South LNG project. At June 30, 2024, the carrying value of our equity method investments in Qatar was approximately $ 1.2 billion. During the second quarter of 2024, we were notified that an affiliate of QatarEnergy transferred a 5 percent joint venture interest in NFE4 to an affiliate of China National Petroleum Corporation. As a result, we have concluded NFE4 is a VIE and we are not the primary beneficiary of the VIE because we do not have the power to direct the activities that most significantly impact economic performance of NFE4. Note 5—Debt Our debt balance at June 30, 2024 was $ 18.4 billion, compared with $ 18.9 billion at December 31, 2023 . In the first quarter of 2024, the company retired $ 461 million principal amount of our 2.125 % Notes at maturity. Our revolving credit facility provides a total borrowing capacity of $ 5.5 billion with an expiration date of February 2027. Our revolving credit facility may be used for direct bank borrowings, the issuance

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Table of Contents Note 6—Changes in Equity Millions of Dollars Common Stock Par Value Capital in Excess of Par Treasury Stock Accum. Other Comprehensive Income (Loss) Retained Earnings Total For the three months ended June 30, 2024 Balances at March 31, 2024 $ 21 61,300 ( 66,974 ) ( 5,917 ) 60,895 49,325 Net income (loss) 2,329 2,329 Other comprehensive income (loss) ( 44 ) ( 44 ) Dividends declared Ordinary ($ 0.58 per common share) ( 680 ) ( 680 ) Variable return of cash ($ 0.20 per common share) ( 235 ) ( 235 ) Repurchase of company common stock ( 1,021 ) ( 1,021 ) Excise tax on share repurchases ( 10 ) ( 10 ) Distributed under benefit plans 81 81 Balances at June 30, 2024 $ 21 61,381 ( 68,005 ) ( 5,961 ) 62,309 49,745 For the six months ended June 30, 2024 Balances at December 31, 2023 $ 21 61,303 ( 65,640 ) ( 5,673 ) 59,268 49,279 Net income (loss) 4,880 4,880 Other comprehensive income (loss) ( 288 ) ( 288 ) Dividends declared Ordinary ($ 1.16 per common share) ( 1,368 ) ( 1,368 ) Variable return of cash ($ 0.40 per common share) ( 471 ) ( 471 ) Repurchase of company common stock ( 2,346 ) ( 2,346 ) Excise tax on share repurchases ( 19 ) ( 19 ) Distributed under benefit plans 78 78 Balances at June 30, 2024 $ 21 61,381 ( 68,005 ) ( 5,961 ) 62,309 49,745 Millions of Dollars Common Stock Par Value Capital in Excess of Par Treasury Stock Accum. Other Comprehensive Income (Loss) Retained Earnings Total For the three months ended June 30, 2023 Balances at March 31, 2023 $ 21 61,100 ( 61,904 ) ( 6,027 ) 54,593 47,783 Net income (loss) 2,232 2,232 Other comprehensive income (loss) 102 102 Dividends declared Ordinary ($ 0.51 per common share) ( 620 ) ( 620 ) Variable return of cash ($ 0.60 per common share) ( 723 ) ( 723 ) Repurchase of company common stock ( 1,300 ) ( 1,300 ) Excise tax on share repurchases ( 13 ) ( 13 ) Distributed un

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements Table of Contents Note 7—Guarantees At June 30, 2024, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability, at inception, for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantee and expect future performance to be either immaterial or have only a remote chance of occurrence. APLNG Guarantees At June 30, 2024, we had multiple guarantees outstanding in connection with our 47.5 percent ownership interest in APLNG. The following is a description of the guarantees with values calculated utilizing June 2024 exchange rates: During the third quarter of 2016, we issued a guarantee to facilitate the withdrawal of our pro-rata portion of the funds in a project finance reserve account. We estimate the remaining term of this guarantee to be seven years . Our maximum exposure under this guarantee is approximately $ 210 million and may become payable if an enforcement action is commenced by the project finance lenders against APLNG. At June 30, 2024, the carrying value of this guarantee was approximately $ 14 million. In conjunction with our original purchase of an ownership interest in APLNG from Origin Energy Limited in October 2008, we agreed to reimburse Origin Energy Limited for our share of the existing contingent liability arising under guarantees of an existing obligation of APLNG to deliver natural gas under several sales agreements. The final guarantee expires in the fourth quarter of 2041. Our maximum potential liability fo

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