ConocoPhillips Reshapes Portfolio with Marathon Oil Buy, Asset Sales

Ticker: COP · Form: 10-Q · Filed: Aug 7, 2025 · CIK: 1163165

Conocophillips 10-Q Filing Summary
FieldDetail
CompanyConocophillips (COP)
Form Type10-Q
Filed DateAug 7, 2025
Risk Levelmedium
Pages16
Reading Time19 min
Sentimentbullish

Sentiment: bullish

Topics: Oil & Gas, Acquisition, Divestiture, LNG, Energy Sector, Portfolio Optimization, Lower 48

Related Tickers: COP, MRO

TL;DR

**COP is making big moves, buying Marathon Oil and selling off non-core assets to double down on its Lower 48 and LNG game – bullish for long-term value.**

AI Summary

CONOCOPHILLIPS reported significant strategic shifts in its Q2 2025 10-Q filing, primarily driven by the acquisition of Marathon Oil Corporation and several asset divestitures. The acquisition of Marathon Oil, valued at approximately $22.5 billion, is expected to close in Q4 2024, enhancing COP's Lower 48 portfolio. Concurrently, COP divested certain non-core assets in the Lower 48 for $0.4 billion in Q1 2025 and sold Ursa Europa Fields and Ursa Oil Pipeline Company LLC for $1.0 billion in Q2 2025. A further divestiture of Lower 48 assets in the Anadarko Basin is anticipated in Q4 2025. These moves aim to streamline operations and focus on high-value assets. The company also highlighted its involvement in major LNG projects, including Australia Pacific APLNG, Port Arthur LNG, and several QatarEnergy LNG projects, signaling a strategic emphasis on natural gas. While specific revenue and net income figures for Q2 2025 were not detailed in the provided text, the focus on portfolio optimization and major acquisitions/divestitures indicates a period of significant capital reallocation and strategic repositioning.

Why It Matters

This aggressive portfolio restructuring by CONOCOPHILLIPS signals a clear strategy to consolidate its position in the Lower 48 and expand its LNG footprint, directly impacting investors through potential long-term value creation and increased exposure to natural gas markets. The acquisition of Marathon Oil Corporation, a significant competitor, will alter the competitive landscape in the U.S. oil and gas sector, potentially leading to greater market concentration. Employees of both companies face integration challenges and potential workforce adjustments. For customers, these changes could influence future supply dynamics and pricing, particularly in the Lower 48 and global LNG markets. The broader market will watch how this consolidation affects overall energy production and investment trends.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant integration challenges associated with the $22.5 billion acquisition of Marathon Oil Corporation, which is expected to close in Q4 2024. Additionally, the company is undergoing multiple asset divestitures, including the sale of Ursa Europa Fields for $1.0 billion in Q2 2025 and anticipated sales in the Anadarko Basin in Q4 2025, which introduce execution risks and potential for value leakage if not managed effectively.

Analyst Insight

Investors should monitor the successful integration of Marathon Oil and the proceeds from the ongoing asset divestitures. This strategic repositioning could unlock significant value, but execution is key. Consider holding COP shares, but be prepared for potential short-term volatility related to these large-scale transactions.

Key Numbers

Key Players & Entities

FAQ

What was the primary strategic move for CONOCOPHILLIPS in Q2 2025?

The primary strategic move for CONOCOPHILLIPS was the ongoing process of acquiring Marathon Oil Corporation for approximately $22.5 billion, expected to close in Q4 2024, and several asset divestitures, including the sale of Ursa Europa Fields for $1.0 billion in Q2 2025.

How much did CONOCOPHILLIPS pay for Marathon Oil Corporation?

CONOCOPHILLIPS is acquiring Marathon Oil Corporation for approximately $22.5 billion, a significant investment aimed at enhancing its Lower 48 portfolio.

What assets did CONOCOPHILLIPS divest in Q1 and Q2 2025?

In Q1 2025, CONOCOPHILLIPS divested certain non-core assets in the Lower 48 for $0.4 billion. In Q2 2025, it sold Ursa Europa Fields and Ursa Oil Pipeline Company LLC for $1.0 billion.

When is the Marathon Oil Corporation acquisition expected to close?

The acquisition of Marathon Oil Corporation by CONOCOPHILLIPS is expected to close in Q4 2024, subject to regulatory approvals.

What is CONOCOPHILLIPS' strategy regarding its Lower 48 assets?

CONOCOPHILLIPS' strategy for its Lower 48 assets involves both expansion through the Marathon Oil acquisition and optimization through divestitures of non-core assets, such as the anticipated sale in the Anadarko Basin in Q4 2025.

Which LNG projects is CONOCOPHILLIPS involved in?

CONOCOPHILLIPS is involved in several key LNG projects, including Australia Pacific APLNG, Port Arthur LNG, QatarEnergy LNG N3, QatarEnergy LNG NFE4, and QatarEnergy LNG NFS3.

What are the potential risks associated with CONOCOPHILLIPS' recent activities?

Potential risks include the successful integration of Marathon Oil Corporation, managing the complexities of multiple asset divestitures, and ensuring that these strategic moves ultimately enhance shareholder value as intended.

How will the Marathon Oil acquisition impact CONOCOPHILLIPS' competitive position?

The Marathon Oil acquisition is expected to significantly strengthen CONOCOPHILLIPS' competitive position, particularly in the Lower 48, by expanding its asset base and operational scale.

Are there any future asset sales planned by CONOCOPHILLIPS?

Yes, CONOCOPHILLIPS anticipates a further divestiture of Lower 48 assets in the Anadarko Basin, expected to occur in Q4 2025.

What is the significance of CONOCOPHILLIPS' involvement with QatarEnergy?

CONOCOPHILLIPS' involvement with QatarEnergy in multiple LNG projects, such as QatarEnergy LNG N3, NFE4, and NFS3, signifies a strategic focus on expanding its global natural gas and LNG portfolio.

Risk Factors

Industry Context

The oil and gas industry is undergoing a significant transformation driven by energy transition demands and volatile commodity prices. Major players like ConocoPhillips are navigating this landscape by optimizing their asset portfolios, focusing on lower-cost production, and investing in natural gas and LNG projects. The competitive environment necessitates strategic acquisitions and divestitures to maintain market position and shareholder value.

Regulatory Implications

ConocoPhillips faces increasing regulatory scrutiny related to environmental, social, and governance (ESG) factors. Compliance with evolving climate change policies, emissions standards, and environmental protection laws is critical. The company's investments in LNG and its operational footprint require careful management to meet regulatory requirements and mitigate potential liabilities.

What Investors Should Do

  1. Monitor the integration progress of the Marathon Oil acquisition.
  2. Analyze the impact of ongoing divestitures on the company's asset base and cash flow.
  3. Evaluate the company's exposure to LNG market dynamics and project execution.
  4. Assess the company's debt management strategy in light of the Marathon Oil acquisition.

Key Dates

Glossary

Lower 48
Refers to the 48 contiguous states of the United States, excluding Alaska and Hawaii. (Key operational and strategic focus area for ConocoPhillips, particularly with the acquisition of Marathon Oil and ongoing asset management.)
LNG
Liquefied Natural Gas, natural gas that has been cooled down to liquid form for transport and storage. (ConocoPhillips has significant investments in major LNG projects, highlighting a strategic emphasis on natural gas as a key energy source.)
Divestiture
The act of selling or disposing of an asset or subsidiary. (ConocoPhillips is actively engaged in divestitures of non-core assets to streamline operations and focus on high-value opportunities.)
Acquisition
The act of purchasing or taking over another company or asset. (The acquisition of Marathon Oil Corporation is a major strategic move to enhance ConocoPhillips's portfolio.)
Portfolio Optimization
The process of strategically managing a company's assets to maximize value and efficiency. (ConocoPhillips's recent divestitures and acquisitions are part of a broader strategy for portfolio optimization.)

Year-Over-Year Comparison

While specific comparative financial figures for Q2 2025 are not detailed in the provided text, the filing indicates a period of significant strategic activity compared to previous periods. The company is actively reallocating capital through a major acquisition ($22.5B Marathon Oil) and multiple divestitures ($0.4B non-core Lower 48, $1.0B Ursa Europa). This suggests a proactive approach to portfolio optimization and a shift towards natural gas and LNG, potentially impacting future revenue streams and operational focus.

Filing Stats: 4,670 words · 19 min read · ~16 pages · Grade level 15.2 · Accepted 2025-08-07 07:34:05

Filing Documents

—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 9 Note 5 —Debt 9 Note 6 —Suspended Wells and Exploration Expenses 10 Note 7 —Changes in Equity 11 Note 8 —Guarantees 12 Note 9 —Contingencies, Commitments and Accrued Environmental Costs 13 Note 10 —Derivative and Financial Instruments 16 Note 11 —Fair Value Measurement 20 Note 12 —Accumulated Other Comprehensive Income (Loss) 22 Note 13 —Cash Flow Information 23 Note 14 —Employee Benefit Plans 23 Note 15 —Related Party Transactions 24 Note 16 —Sales and Other Operating Revenues 25 Note 17 —Earnings Per Share 26 Note 18 —Segment Disclosures and Related Information 26 Note 19 —Income Taxes 32 Note 20 —New Accounting Standards 32

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 33

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 55

Controls and Procedures

Item 4. Controls and Procedures 55

—Other Information

Part II—Other Information

Legal Proceedings

Item 1. Legal Proceedings 55

Risk Factors

Item 1A. Risk Factors 55

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56

Other Information

Item 5. Other Information 56

Exhibit s

Item 6. Exhibit s 57 Signature 58 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 EPS earnings per share Units of Measurement FASB Financial Accounting Standards Board BBL barrel BCF billion cubic feet FIFO first-in, first-out BOE barrel of oil equivalent G&A general and administrative MBD thousand barrels per day GAAP generally accepted accounting principles MCF thousand cubic feet MM million LIFO last-in, first-out MMBOE million barrels of oil equivalent NPNS normal purchase normal sale MBOED thousand barrels of oil equivalent per PP&E properties, plants and equipment day VIE variable interest entity MMBOED million barrels of oil equivalent per day MMBTU million British thermal units MMCFD million cubic feet per day Miscellaneous MTPA million tonnes per annum CERCLA Federal Comprehensive Environmental Response Industry Compensation and Liability Act BLM Bureau of Land Management EPA Environmental Protection Agency CBM coalbed methane ESG environmental, social and governance CCS carbon capture and storage EU European Union E&P exploration and production FERC Federal Energy Regulatory Commission FEED front-end engineering and design FID final investment decision GHG greenhouse gas FPS floating production system HSE health, safety and environment FPSO floating production, storage and ICC International Chamber of Commerce offloading ICSID World Bank's International G&G geological and geophysical Centre for Settlement of JOA joint operati

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 2025 2024 2025 2024 Revenues and Other Income Sales and other operating revenues $ 14,004 13,620 30,521 27,468 Equity in earnings of affiliates 315 403 707 824 Gain (loss) on dispositions 317 ( 5 ) 396 88 Other income 104 118 217 232 Total Revenues and Other Income 14,740 14,136 31,841 28,612 Costs and Expenses Purchased commodities 5,085 4,858 11,273 10,192 Production and operating expenses 2,572 2,164 5,078 4,179 Selling, general and administrative expenses 250 164 441 342 Exploration expenses 81 102 198 214 Depreciation, depletion and amortization 2,838 2,334 5,584 4,545 Impairments 1 34 2 34 Taxes other than income taxes 572 536 1,123 1,091 Accretion on discounted liabilities 95 80 189 160 Interest and debt expense 232 198 437 403 Foreign currency transaction (gain) loss ( 3 ) 9 27 ( 9 ) Other expenses — ( 2 ) 6 ( 6 ) Total Costs and Expenses 11,723 10,477 24,358 21,145 Income (loss) before income taxes 3,017 3,659 7,483 7,467 Income tax provision (benefit) 1,046 1,330 2,663 2,587 Net Income (Loss) $ 1,971 2,329 4,820 4,880 Net Income (Loss) Per Share of Common Stock (dollars) Basic $ 1.56 1.99 3.80 4.15 Diluted 1.56 1.98 3.79 4.14 Weighted-Average Common Shares Outstanding (in thousands) Basic 1,257,512 1,168,198 1,265,387 1,173,410 Diluted 1,258,998 1,170,299 1,266,815 1,175,595 See Notes to Consolidated Financial Statements. ConocoPhillips 2025 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 2025 2024 2025 2024 Net Income (Loss) $ 1,971 2,329 4,820 4,880 Other comprehensive income (loss), net of tax: Defined benefit plans 6 4 13 9 Unrealized holding gain (loss) on securities 2 ( 1 ) 4 ( 4 ) Foreign currency translation adjustments 484 ( 73 ) 554 ( 303 ) Unrealized gain (loss) on hedging activities — 26 — 10 Other Comprehensive Income (Loss), Net of Tax 492 ( 44 ) 571 ( 288 ) Comprehensive Income (Loss) $ 2,463 2,285 5,391 4,592 See Notes to Consolidated Financial Statements. 3 ConocoPhillips 2025 Q2 10-Q

Financial Statements Table of Contents

Financial Statements Table of Contents Consolidated Balance Sheet ConocoPhillips Millions of Dollars June 30 2025 December 31 2024 Assets Cash and cash equivalents $ 4,901 5,607 Short-term investments 439 507 Accounts and notes receivable (net of allowance of $ 6 and $ 7 , respectively) 5,701 6,695 Inventories 1,897 1,809 Prepaid expenses and other current assets 1,001 1,029 Total Current Assets 13,939 15,647 Investments and long-term receivables 10,361 9,869 Net properties, plants and equipment (net of accumulated DD&A of $ 86,487 and $ 81,072 , respectively) 95,242 94,356 Other assets 3,057 2,908 Total Assets $ 122,599 122,780 Liabilities Accounts payable $ 6,517 6,044 Short-term debt 414 1,035 Accrued income and other taxes 1,742 2,460 Employee benefit obligations 710 1,087 Other accruals 1,603 1,498 Total Current Liabilities 10,986 12,124 Long-term debt 23,115 23,289 Asset retirement obligations and accrued environmental costs 8,225 8,089 Deferred income taxes 11,766 11,426 Employee benefit obligations 999 1,022 Other liabilities and deferred credits 1,936 2,034 Total Liabilities 57,027 57,984 Equity Common stock ( 2,500,000,000 shares authorized at $ 0.01 par value) Issued (2025— 2,252,479,047 shares; 2024— 2,250,672,734 shares) Par value 23 23 Capital in excess of par 77,643 77,529 Treasury stock (at cost: 2025— 1,003,536,736 shares; 2024— 974,806,010 shares) ( 73,899 ) ( 71,152 ) Accumulated other comprehensive income (loss) ( 5,902 ) ( 6,473 ) Retained earnings 67,707 64,869 Total Equity 65,572 64,796 Total Liabilities and Equity $ 122,599 122,780 See Notes to Consolidated Financial Statements. ConocoPhillips 2025 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 2025 2024 Cash Flows From Operating Activities Net income (loss) $ 4,820 4,880 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 5,584 4,545 Impairments 2 34 Dry hole costs and leasehold impairments 85 48 Accretion on discounted liabilities 189 160 Deferred taxes 78 211 Distributions more (less) than income from equity affiliates ( 112 ) 364 (Gain) loss on dispositions ( 396 ) ( 88 ) Other ( 62 ) 10 Working capital adjustments Decrease (increase) in accounts and notes receivable 973 148 Decrease (increase) in inventories ( 84 ) ( 57 ) Decrease (increase) in prepaid expenses and other current assets ( 229 ) ( 147 ) Increase (decrease) in accounts payable ( 27 ) ( 183 ) Increase (decrease) in taxes and other accruals ( 1,221 ) ( 21 ) Net Cash Provided by Operating Activities 9,600 9,904 Cash Flows From Investing Activities Capital expenditures and investments ( 6,664 ) ( 5,885 ) Working capital changes associated with investing activities 551 173 Acquisition of businesses, net of cash acquired — 49 Proceeds from asset dispositions 1,341 178 Net sales (purchases) of investments ( 8 ) ( 794 ) Other ( 27 ) ( 13 ) Net Cash Used in Investing Activities ( 4,807 ) ( 6,292 ) Cash Flows From Financing Activities Repayment of debt ( 806 ) ( 563 ) Issuance of company common stock ( 55 ) ( 57 ) Repurchase of company common stock ( 2,722 ) ( 2,346 ) Dividends paid ( 1,982 ) ( 1,839 ) Other ( 55 ) ( 63 ) Net Cash Used in Financing Activities ( 5,620 ) ( 4,868 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash 148 ( 69 ) Net Change in Cash, Cash Equivalents and Restricted Cash ( 679 ) ( 1,325 ) Cash, cash equivalents and restricted cash at beginning of period

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 2024 Annual Report on Form 10-K. Certain prior year financial statement line items have been reclassified to conform to the current year presentation. Note 2—Inventories Millions of Dollars June 30 2025 December 31 2024 Crude oil and natural gas $ 1,013 907 Materials and supplies 884 902 Total inventories $ 1,897 1,809 Inventories valued on the LIFO basis $ 588 578 Note 3—Acquisitions and Dispositions Acquisition of Marathon Oil Corporation (Marathon Oil) In November 2024, we completed our acquisition of Marathon Oil, an independent oil and gas exploration and production company with operations across the Lower 48 and in Equatorial Guinea. At close, the transaction was valued at $ 16.5 billion, which primarily represented 0.255 shares of ConocoPhillips common stock exchanged for each outstanding share of Marathon Oil common stock. Total Fair Value Millions of Dollars Value of ConocoPhillips common stock issued* $ 15,972 Cash transferred at close** 451 Value attributable to Marathon Oil share-based awards 67 Other liabilities incurred*** 17 Total Fair Value (Millions) $ 16,507 *Represents the fair value of approximately 143 million shares of ConocoPhillips common stock issued to

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. Debt assumed in the acquisition was valued based on observable market prices. The fair values of 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 acquisition, valued at $ 16.5 billion, was allocated to the identifiable assets and liabilities based on their estimated fair values as of the acquisition date of November 22, 2024. Assets Acquired Millions of Dollars Cash and cash equivalents $ 385 Accounts receivable, net 982 Inventories 339 Investments and long-term receivables 562 Net properties, plants and equipment 24,203 Other assets 201 Total assets acquired $ 26,672 Liabilities Assumed Accounts payable $ 1,183 Accrued income and other taxes 201 Employee benefit obligations 187 Long-term debt 4,719 Asset retirement obligations 781 Deferred income taxes 2,488 Other liabilities 606 Total liabilities assumed $ 10,165 Net assets acquired $ 16,507 With the completion of the transaction, we acquired proved properties of approximately $ 13 billion, with $ 12 billion in Lower 48 and $ 1 billion in Equatorial Guinea, and unproved properties of approximately $ 11 billion in Lower 48. We have recognized approximately $ 585 million pre-tax of transaction-related costs to date, inclusive of $ 17 million and $ 40 million in the three- and six-month periods of 2025, respectively. These non-recurring costs related primarily to employee severance and related benefits, fees paid to advisors and the settlement of share-based awards for certain Marathon Oil employees based on the terms of the Merger Agreement. 7 ConocoPhillips 2025 Q2 10-Q

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements Table of Contents 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, 2024, as if we had completed the acquisition on January 1, 2023. Millions of Dollars Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 As reported Pro Forma Marathon Oil Pro Forma Combined As reported Pro Forma Marathon Oil Pro Forma Combined Supplemental Pro Forma (unaudited) Total Revenues and Other Income $ 14,136 1,707 15,843 $ 28,612 3,258 31,870 Net Income (Loss) 2,329 450 2,779 4,880 794 5,674 Earnings per share: Basic net income (loss) $ 1.99 2.11 $ 4.15 4.30 Diluted net income (loss) 1.98 2.11 4.14 4.29 The unaudited supplemental pro forma financial information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been completed on January 1, 2023, nor is it necessarily indicative of future operating results of the combined entity. The pro forma results do not include cost savings anticipated as a result of the transaction. The pro forma results include adjustments which relate primarily to DD&A, which is based on the unit-of-production method, resulting from the purchase price allocated to oil and gas properties as well as adjustments for tax impacts. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected. Assets Sold In the first quarter of 2025, we sold our interests in certain noncore assets in the Lower 48 segment for net proceeds of $ 581 million and recognized a $ 64 million before-tax and $ 49 million after-tax gain. At the time of disposition, our interest in these assets had a net carrying value of $ 517 million, comprised primarily of $ 553 million of PP&E and $ 36 million of liabilities, primarily related to noncurrent

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Table of Contents Note 4—Investments and Long-Term Receivables Australia Pacific LNG Pty Ltd. (APLNG) In Australia, we hold a 47.5 percent shareholding interest in APLNG. At June 30, 2025, the outstanding balance of APLNG's debt was $ 3.7 billion under various previously entered facilities. The last principal and interest payment on these facilities is due in September 2030. See Note 8 . At June 30, 2025, the carrying value of our equity method investment in APLNG was approximately $ 5.2 billion. Port Arthur LNG (PALNG) We hold a 30 percent direct equity investment in PALNG, a joint venture for the development of a large-scale LNG facility. At June 30, 2025, the carrying value of our equity method investment in PALNG was approximately $ 1.6 billion. Qatar LNG Our equity method investments in Qatar include the following: QatarEnergy LNG N(3) (N3)— 30 percent owned joint venture with affiliates of QatarEnergy ( 68.5 percent) and Mitsui & Co., Ltd. ( 1.5 percent)—produces and liquefies natural gas from Qatar's North Field, as well as exports LNG. 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, 2025, the carrying value of our equity method investments in Qatar was approximately $ 1.5 billion. Note 5—Debt Our debt bal ance at June 30, 2025 was $ 23.5 billion, compared with $ 24.3 billion at December 31, 2024 . In May 2025, the company retired $ 0.2 billion principal amount of our 3.35 % Notes at maturity. In the first quarter of 2025, the company retired a total of $ 0.5 billion principal amount of debt at maturity, consisting of $ 0.4 billion of our 2.4 % Notes and $ 0.1 billion o

Notes to Consolidated Financial Statements Table of Contents

Notes to Consolidated Financial Statements Table of Contents We do not have any ratings triggers on any of our corporate debt that would cause an automatic default and thereby impact our access to liquidity upon downgrade of our credit ratings. If our credit ratings are downgraded from their current levels, it could increase the cost of corporate debt available to us and restrict our access to the commercial paper markets. If our credit ratings were to deteriorate to a level prohibiting us from accessing the commercial paper market, we would still be able to access funds under our revolving credit facility. At June 30, 2025, we had $ 283 million of certain variable rate demand bonds (VRDBs) outstanding with maturities ranging through 2035. The VRDBs are redeemable at the option of the bondholders on any business day. If they are ever redeemed, we have the ability and intent to refinance on a long-term basis; therefore, the VRDBs are included in the "Long-term debt" line on our consolidated balance sheet. Note 6—Suspended Wells and Exploration Expenses The capitalized cost of suspended wells at June 30, 2025 was $ 209 million, an increase of $ 13 million from December 31, 2024. In the second quarter of 2025, the second Slagugle appraisal well in PL891 in the Norwegian Sea was drilled and the presence of hydrocarbons was confirmed, resulting in a $ 77 million increase to our suspended wells costs. We also divested certain Lower 48 offshore interests in partner-operated assets, which included $ 31 million of suspended wells costs. See Note 3 . In the first quarter of 2025, we recognized dry hole expenses of $ 36 million related to certain previously suspended wells that were capitalized for a period greater than one year in our Asia Pacific segment . ConocoPhillips 2025 Q2 10-Q 10

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Table of Contents Note 7—Changes in Equity Millions of Dollars Common Stock Par Value Capital in Excess of Par Treasury Stock Accum. Other Comprehensive Income (Loss) Retained Earnings Total For the three months ended June 30, 2025 Balances at March 31, 2025 $ 23 77,554 ( 72,666 ) ( 6,394 ) 66,721 65,238 Net income (loss) 1,971 1,971 Other comprehensive income (loss) 492 492 Dividends declared Ordinary ($ 0.78 per common share) ( 984 ) ( 984 ) Repurchase of company common stock ( 1,222 ) ( 1,222 ) Excise tax on share repurchases ( 12 ) ( 12 ) Distributed under benefit plans 89 89 Other 1 ( 1 ) — Balances at June 30, 2025 $ 23 77,643 ( 73,899 ) ( 5,902 ) 67,707 65,572 For the six months ended June 30, 2025 Balances at December 31, 2024 $ 23 77,529 ( 71,152 ) ( 6,473 ) 64,869 64,796 Net income (loss) 4,820 4,820 Other comprehensive income (loss) 571 571 Dividends declared Ordinary ($ 1.56 per common share) ( 1,982 ) ( 1,982 ) Repurchase of company common stock ( 2,722 ) ( 2,722 ) Excise tax on share repurchases ( 25 ) ( 25 ) Distributed under benefit plans 114 114 Balances at June 30, 2025 $ 23 77,643 ( 73,899 ) ( 5,902 ) 67,707 65,572 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 en

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