ConocoPhillips

Company Overview

Business Model: ConocoPhillips is an independent exploration and production (E&P) company focused on the exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, natural gas liquids (NGLs), and liquefied natural gas (LNG). The company manages a diverse, low cost of supply portfolio that includes unconventional plays in North America, conventional assets across various regions, LNG developments, and oil sands in Canada. Market Position: ConocoPhillips is positioned as one of the world’s leading E&P companies based on production and reserves. It is the largest crude oil producer in Alaska and holds approximately 84% of its proved reserves in OECD countries. The company is also the second-largest LNG liquefaction technology provider globally, with its Optimized Cascade® LNG liquefaction technology licensed for 28 LNG trains. Recent Strategic Developments:

• Completed the acquisition of Marathon Oil Corporation on November 22, 2024, for approximately $16.5 billion. This involved exchanging 0.255 shares of ConocoPhillips common stock for each Marathon Oil Corporation share, issuing approximately 143 million shares of ConocoPhillips common stock, and assuming $4.7 billion in Marathon Oil Corporation debt. The acquisition is expected to capture approximately $1 billion in synergies on a run rate basis within the first full year.
• Acquired additional working interest in the Kuparuk River Unit (approximately 5%) and Prudhoe Bay Unit (approximately 0.4%) in Alaska from Chevron U.S.A. Inc. and Union Oil Company of California for $296 million in the fourth quarter of 2024.
• Announced the Final Investment Decision (FID) for the Willow project in Alaska in December 2023, with first oil anticipated in 2029. The Nuna project in Alaska, sanctioned in 2023, achieved first oil in the fourth quarter of 2024.
• Achieved first production from the Eldfisk North development in Norway and Bohai Bay Phase 5 in China in 2024.
• Entered an 18-year agreement for regasification capacity at the Zeebrugge LNG terminal in Belgium (0.75 MTPA starting 2027) and a long-term LNG sales agreement for approximately 0.5 MTPA into Asia starting in 2027 in the third quarter of 2024.
• Communicated a disposition target of approximately $2 billion of assets following the Marathon Oil Corporation acquisition, with agreements signed to sell noncore Lower 48 assets for approximately $600 million, expected to close in the first half of 2025.
• Completed strategic debt transactions in the fourth quarter of 2024 to simplify the capital structure, extend weighted average maturity, and lower the weighted average coupon.
• Achieved the Oil and Gas Methane Partnership 2.0 Gold Standard designation in 2024. Geographic Footprint: ConocoPhillips manages operations and activities in 14 countries. Its producing operations are located in the U.S., Norway, Canada, Australia, Malaysia, Libya, China, Qatar, and Equatorial Guinea. The company's operations are managed through six segments: Alaska; Lower 48; Canada; Europe, Middle East and North Africa (EMENA); Asia Pacific; and Other International.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Margin: 16.2%

Investment in Growth:

• R&D Expenditure: $81 million (0.15% of revenue)
• Capital Expenditures: $12.1 billion in 2024, including $0.8 billion for equity investments in LNG projects (PALNG, NFE4, NFS3) and $0.4 billion for fourth-quarter acquisitions.
• Strategic Investments:
  • Marathon Oil Corporation acquisition valued at approximately $16.5 billion, including $4.7 billion of assumed debt and issuance of 143 million shares.
  • Acquisition of additional Alaska working interest for $296 million.
  • Acquisition of remaining 50% Surmont working interest in 2023 for $3.0 billion cash and $320 million contingent consideration.

Business Segment Analysis

Alaska

Financial Performance:

• Revenue: $6,553 million (-7.7% YoY)
• Net Income: $1,326 million
• Operating Margin: 20.2%
• Key Growth Drivers: New wells brought online at Western North Slope and Greater Kuparuk Area assets. Product Portfolio:
• Crude oil, natural gas, NGLs. ConocoPhillips is the largest crude oil producer in Alaska. Market Dynamics:
• Holds major ownership interests in Prudhoe Bay, Kuparuk, and Western North Slope asset areas.
• Approximately one million net undeveloped acres at year-end 2024. Prudhoe Bay is noted as the largest conventional oil field in North America. Operational Metrics:
• Average daily net production: 194 MBOED (173 MBD crude oil, 15 MBD NGL, 39 MMCFD natural gas).
• Contributed 14% of consolidated liquids production and 2% of consolidated natural gas production.
• Production from additional working interest in Kuparuk River Unit and Prudhoe Bay Unit averaged approximately 5 MBOED each month for November and December 2024.

Lower 48

Financial Performance:

• Revenue: $37,026 million (-3.2% YoY)
• Net Income: $5,175 million
• Operating Margin: 14.0%
• Key Growth Drivers: New wells brought online from development programs in Delaware Basin, Eagle Ford, Midland Basin, and Bakken; assets acquired from Marathon Oil Corporation. Product Portfolio:
• Crude oil, NGLs, natural gas from unconventional plays. Market Dynamics:
• This is the largest segment by production volume. The acquisition of Marathon Oil Corporation added low cost of supply, complementary acreage in the Delaware, Eagle Ford, and Bakken basins. Operational Metrics:
• Average daily net production: 1,152 MBOED (602 MBD crude oil, 279 MBD NGL, 1,625 MMCFD natural gas).
• Contributed 63% of consolidated liquids production and 74% of consolidated natural gas production.
• Production from Marathon Oil Corporation assets averaged approximately 334 MBOED in December 2024. Sub-segment Breakdown:
• Delaware Basin: 792,000 unconventional net acres. 166 operated wells drilled, 151 operated wells brought online in 2024.
• Eagle Ford: 484,000 unconventional net acres. 182 operated wells drilled, 154 operated wells brought online in 2024.
• Midland Basin: 265,000 unconventional net acres. 119 operated wells drilled, 111 operated wells brought online in 2024.
• Bakken: 790,000 unconventional net acres. 66 operated wells drilled, 83 operated wells brought online in 2024.

Canada

Financial Performance:

• Revenue: $3,514 million (+16.9% YoY)
• Net Income: $712 million
• Operating Margin: 20.3%
• Key Growth Drivers: Increased working interest in Surmont, new wells brought online in Montney and Surmont. Product Portfolio:
• Bitumen from oil sands, produced via Steam Assisted Gravity Drainage (SAGD).
• Liquids-rich natural gas from Montney. Market Dynamics:
• Held approximately 684,000 net acres in the Athabasca Region and 297,000 net acres in Montney at December 31, 2024. Operational Metrics:
• Average daily net production: 164 MBOED (17 MBD crude oil, 6 MBD NGL, 122 MBD bitumen, 115 MMCFD natural gas).
• Contributed 10% of consolidated liquids production and 5% of consolidated natural gas production.
• In 2024, 33 wells were drilled and 27 operated wells brought online in Montney.
• First production from Surmont Pad 104 is expected in 2026.

Europe, Middle East and North Africa (EMENA)

Financial Performance:

• Revenue: $5,788 million (-1.1% YoY)
• Net Income: $1,189 million
• Operating Margin: 20.5%
• Key Growth Drivers: New wells brought online and improved performance in Norway, assets acquired from Marathon Oil Corporation. Product Portfolio:
• Crude oil, NGLs, natural gas, LNG. Market Dynamics:
• Operations span the Norwegian North Sea, Norwegian Sea, Qatar, Libya, Equatorial Guinea, and U.K. commercial/terminalling activities. Operational Metrics:
• Average daily net production: 184 MBOED (118 MBD crude oil, 4 MBD NGL, 371 MMCFD natural gas).
• Contributed 9% of consolidated liquids production and 17% of consolidated natural gas production.
• Production from Equatorial Guinea averaged approximately 40 MBOED in December 2024. New product launches or major updates:
• The Eldfisk North development in Norway achieved first production in 2024.
• Awarded three new exploration licenses (PL1205, PL1207, PL1208) in the North Sea in 2024.
• Began a five-year LNG sales agreement in January 2024 for Alba Unit equity gas in Equatorial Guinea.

Asia Pacific

Financial Performance:

• Revenue: $1,847 million (-3.4% YoY)
• Net Income: $1,724 million
• Operating Margin: 93.3%
• Key Growth Drivers: Development activity at Bohai Bay in China. Product Portfolio:
• Crude oil, natural gas, LNG. Market Dynamics:
• Operations are located in China, Malaysia, Australia, and commercial operations in China, Singapore, and Japan. Operational Metrics:
• Average daily net production: 67 MBOED (59 MBD crude oil, 50 MMCFD natural gas).
• Contributed 4% of consolidated liquids production and 2% of consolidated natural gas production. New product launches or major updates:
• Bohai Bay Phase 5 in China achieved first production in the fourth quarter of 2024.
• Gumusut Phase 4 drilling in Malaysia was completed in 2024, with first oil anticipated early 2025.
• In January 2025, ConocoPhillips became the sole operator of the Kebabangan Cluster (KBBC) in Malaysia.

Other International

Financial Performance:

• Net Income: -$1 million (2024). Key Assets:
• Holds an 80% working interest in Middle Magdalena Basin Block VMM-3 (67,000 net acres) and VMM-2 Block (58,000 net acres) in Colombia. Contracts are currently in force majeure due to environmental licensing issues and a government ban on unconventional exploratory activities. Contingencies:
• An ICSID tribunal ordered Venezuela to pay ConocoPhillips $8.5 billion plus interest for expropriated projects, a decision upheld on January 22, 2025.
• ICC arbitrations resulted in awards against PDVSA and affiliates for $2 billion plus interest (Hamaca and Petrozuata) and $33 million plus interest (Corocoro). As of December 31, 2024, $787 million has been received for the first ICC award.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $5.5 billion in 2024. Since 2016, a total of 432.6 million shares have been repurchased at a cost of $34.3 billion.
• Dividend Payments: $3.6 billion in 2024, comprising ordinary dividends of $2.52 per common share and Variable Return of Capital (VROC) payments of $0.60 per common share.
• Future Capital Return Commitments: The company plans to return $10 billion of capital to shareholders in 2025. The first-quarter 2025 ordinary dividend was declared at $0.78 per share.
• Authorized Programs: In October 2024, the Board approved increasing the share repurchase authorization from $45 billion by the lesser of $20 billion or the number of shares issued in the Marathon Oil Corporation acquisition, not to exceed $65 billion in aggregate repurchases. $30.7 billion of repurchase authority remained as of December 31, 2024.

Balance Sheet Position:

• Cash and Equivalents: $5,607 million
• Total Debt: $24,324 million
• Net Cash Position: -$18,717 million
• Credit Rating: Fitch: “A” with “stable” outlook; S&P: “A-” with “stable” outlook; Moody's: "A2" with "stable" outlook.
• Debt Maturity Profile: Principal amounts of long-term debt maturing are $735 million in 2025, $704 million in 2026, $778 million in 2027, $664 million in 2028, and $997 million in 2029.

Cash Flow Generation:

• Operating Cash Flow: $20.1 billion
• Free Cash Flow: $8.0 billion

Operational Excellence

Production & Service Model: ConocoPhillips' operational model encompasses the exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, NGLs, and LNG. For bitumen production in its oil sands assets, the company utilizes the Steam Assisted Gravity Drainage (SAGD) method.

Supply Chain Architecture: Key Suppliers & Partners:

• Alaska Operators: Hilcorp (Greater Prudhoe Area operator).
• Norway Operators: Equinor (Heidrun, Aasta Hansteen, Troll, Visund fields operator), Aker BP (Alvheim Field operator).
• China Operator: CNOOC (Penglai operator).
• Malaysia Operators: Shell (Gumusut, Malikai operator), KPOC (Kebabangan operator), PTTEP (Siakap North-Petai operator).
• Australia LNG Partners: Origin Energy (Australia Pacific LNG upstream operator), Sinopec (Australia Pacific LNG partner), Kansai Electric Power Co., Inc. (Australia Pacific LNG customer).
• Qatar LNG Partners: QatarEnergy (QatarEnergy LNG N(3), QatarEnergy LNG NFE(4), QatarEnergy LNG NFS(3) partner), Mitsui & Co., Ltd. (QatarEnergy LNG N(3) partner).
• Equatorial Guinea Partners: Chevron Corporation (Alba Plant LLC, Atlantic Methanol Production Company LLC partner), Sociedad Nacional de Gas de Guinea Ecuatorial (SONAGAS) (Alba Plant LLC, EG LNG, Atlantic Methanol Production Company LLC partner), Marubeni Gas Development UK Limited (EG LNG partner).
• U.S. LNG Partner: Sempra PALNG Holdings, LLC (PALNG partner).

Facility Network:

• Manufacturing: Key production facilities include seven production facilities, two gas plants, and two seawater plants at Prudhoe Bay; three central production facilities and a seawater treatment plant at Kuparuk River; a central production facility at Colville River; two central processing facilities and a diluent recovery unit at Surmont; two 4.5 MTPA LNG trains at Australia Pacific LNG on Curtis Island; large offshore platforms and an FPSO at Penglai; a tension leg platform at Malikai; and the KBB platform. The company also operates and owns centralized processing facilities in Texas and New Mexico for its Lower 48 operations.
• Distribution: ConocoPhillips holds a 29.5% ownership in the Trans-Alaska Pipeline System (TAPS) and operates the Alpine, Kuparuk, and Oliktok pipelines. It manages marine transportation using five company-owned tankers. In Norway/U.K., it has a 35.1% ownership in the Norpipe Oil Pipeline System and operates a 40.25% owned crude oil stabilization and NGLs processing facility at Teesside, U.K. Gas pipelines include Polarled and SAGE.

Operational Metrics:

• Total company production: 1,987 MBOED in 2024, up from 1,826 MBOED in 2023 and 1,738 MBOED in 2022.
• Lower 48 production: 1,152 MBOED in 2024.
• Reserve replacement: 244% in 2024, with organic reserve replacement at 123%.
• Three-year reserve replacement (ended December 31, 2024): 183%, with organic reserve replacement at 131%.
• Approximately 88% of total Proved Undeveloped Reserves (PUDs) were under development or scheduled for development within five years at year-end 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: ConocoPhillips manages its global commodity portfolio, which includes natural gas, crude oil, bitumen, NGLs, LNG, and power, through its offices located in the U.S., Canada, Europe, and Asia.

Distribution Channels:

• Direct Sales: The company engages in direct sales to a diverse range of customers.
• Channel Partners: Utilizes channel partners such as QatarEnergy Marketing, Sinopec, and Kansai Electric Power Co., Inc. for the sale of LNG.

Customer Portfolio:

• Enterprise Customers: ConocoPhillips serves a broad client base, including local distribution companies, gas and power utilities, large industrial clients, and independent, integrated, and state-owned oil and gas companies, as well as marketing companies.
• Customer Concentration: Sales by the Lower 48 segment to a certain pipeline company accounted for approximately $6.7 billion, or 12%, of total consolidated sales and other operating revenues in 2024. No single customer accounted for 10% or more of total consolidated sales in 2022.

Geographic Revenue Distribution:

• U.S.: $43,480 million
• Canada: $3,405 million
• China: $939 million
• Equatorial Guinea: $66 million
• Libya: $1,703 million
• Malaysia: $908 million
• Norway: $2,405 million
• Singapore: $37 million
• U.K.: $1,796 million
• Other foreign countries: $6 million

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The energy industry is characterized by high competitiveness and is subject to significant volatility in commodity prices, which are influenced by global supply and demand dynamics.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Company Name : ConocoPhillips competes with a range of private, public, and state-owned companies.
• Performance Peer Group: The company identifies its performance peer group as APA Corporation, Chevron, Devon Energy, Diamondback Energy, EOG Resources, ExxonMobil, Hess, and Occidental Petroleum.

Competitive Response Strategy: ConocoPhillips maintains its competitive advantage through a multi-faceted approach that includes employing geological, geophysical, and engineering research and technology; leveraging extensive experience and expertise; utilizing specialized equipment and personnel; applying rigorous economic analysis in portfolio management; and safely operating its oil and gas producing properties.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Volatile Commodity Prices: Exposure to significant fluctuations in crude oil, natural gas, and NGL prices, as evidenced by WTI crude oil prices ranging from $87/barrel to $66/barrel in 2024.
• Resource Development & Reserve Replacement: Risks associated with the inability to successfully develop resources or replace declining reserves.
• Highly Competitive Industry: Operates within a highly competitive energy sector.
• GHG Emissions Intensity Targets: Risks related to achieving stated greenhouse gas (GHG) emissions intensity reduction targets.
• Imprecise Reserve Estimates: Reliance on reserve estimates that are inherently imprecise.
• Governmental Controls: Exposure to price controls, government-imposed limitations on production or exports, or the unavailability of adequate transportation facilities.
• Joint Venture Constraints: Constraints and risks in joint ventures where ConocoPhillips is not the operator or does not hold majority control.

Operational & Execution Risks

Operational Hazards:

• Industry-Specific Hazards: Operations are subject to inherent hazards such as explosions, fires, and product spills.
• External Disruptions: Vulnerability to severe weather events, global health crises, labor disputes, geopolitical tensions, armed hostilities, terrorist/piracy attacks, sabotage, civil unrest, or cyberattacks.

Financial & Regulatory Risks

Market & Financial Risks:

• Need for Additional Capital: Potential requirement for additional capital to fund operations or growth initiatives.
• Counterparty Credit Quality: Deterioration in the credit quality of commercial counterparties.
• Capital Return Program: The company's capital return program is subject to Board discretion and prevailing market conditions.
• Acquisition & Divestiture Risks: Risks associated with the successful integration of acquired assets and the execution of divestitures.
• Cybersecurity Threats: Exposure to cybersecurity threats that could disrupt operations or compromise data. Regulatory & Compliance Risks:
• Climate Change Litigation: Subject to lawsuits filed by governmental and other entities in several U.S. states/territories since 2017, seeking compensatory damages and equitable relief for alleged climate change impacts.
• Environmental Litigation (Louisiana SLCRMA): Involved in lawsuits filed by Louisiana parishes and the State of Louisiana under the State and Local Coastal Resources Management Act (SLCRMA) for alleged coastline contamination and erosion.
• Decommissioning Orders: Subject to regulatory orders, such as the BSEE order from October 2020 for OCS Lease P-0166 decommissioning.
• Securities Litigation: Involved in a federal securities class action filed in July 2021 against Concho, its officers, and ConocoPhillips as Concho’s successor.
• Commercial Disputes: Engaged in pending disputes with commercial counterparties regarding force majeure notices following Winter Storm Uri in 2021.

Geopolitical & External Risks

Geopolitical Exposure:

• Governmental Actions: Impact from actions of U.S., state, local, and foreign governments, including sanctions, tax policies, tariffs, legislation, and executive orders.
• International Market Factors: Exposure to changes in foreign governmental policies, disruptive geopolitical conditions (e.g., Middle East tensions), and currency rate fluctuations.
• Expropriation Risk: Historical precedent of expropriation of oil assets by the Venezuelan government.
• Trade & Sanctions: U.S. government authority to prevent or restrict business in foreign jurisdictions.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Unconventional Reservoirs: Technology programs are focused on improving recovery and efficiency in unconventional reservoirs.
• Legacy Field Recovery: Initiatives aim to increase recovery from mature fields.
• Exploration Efficiency: Efforts are directed at enhancing the effectiveness of exploration activities.
• Heavy Oil Production: Development of economic and lower-emission methods for heavy oil production.
• Sustainability Measures: Implementation of technologies to reduce environmental impact.
• Low Carbon Technologies: The Low Carbon Technologies organization supports emissions reductions, evaluates alternative energy sources, and prioritizes competitive investments in this area. Innovation Pipeline:
• Conducted Carbon Capture and Storage (CCS) and electrification studies.
• Initiated design enhancements for zero/low emission equipment.
• Installed methane monitoring/detection mechanisms and implemented operational changes to reduce flaring and methane venting since 2021.
• Evaluated carbon dioxide storage sites along the U.S. Gulf Coast, drilled two appraisal wells, and advanced engineering studies.
• Evaluated hydrogen opportunities in the U.S. and Asia Pacific, but suspended evaluation of a low-carbon ammonia production facility on the U.S. Gulf Coast in 2024 due to market pace.

Intellectual Property Portfolio:

• Patent Strategy: ConocoPhillips' Optimized Cascade® LNG liquefaction technology has been licensed for 28 LNG trains globally, indicating a strong intellectual property position in LNG technology.

Technology Partnerships:

• Strategic Alliances: Not explicitly detailed beyond licensing agreements.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors holds oversight responsibility for the Enterprise Risk Management (ERM) program, which includes cybersecurity risk management. The Audit and Finance Committee (AFC) supports the Board in this oversight, receiving cybersecurity reports multiple times a year.

Human Capital Strategy

Workforce Composition:

• Total Employees: ConocoPhillips employed approximately 11,800 people worldwide at year-end 2024.
• Geographic Distribution: The workforce is distributed with 67% in the U.S., 14% in Norway, 8% in Canada, 3% in Australia, 3% in the U.K., and 5% in other global locations.

Talent Management: Acquisition & Retention:

• Hiring Strategy (2024): The U.S. university hire acceptance rate was 75%, and the U.S. interns acceptance rate was 74%. Global hiring comprised 25% women and 75% men, while U.S. hiring included 41% U.S. Persons of Color (POC) and 59% U.S. White individuals.
• Retention Metrics: Total voluntary attrition was 4% in 2024.

Diversity & Development:

• Diversity Metrics (2024):
  • All Employees: Global Male (73%), Global Female (27%); U.S. White (67%), U.S. POC (33%).
  • All Leadership: Global Male (74%), Global Female (26%); U.S. White (75%), U.S. POC (25%).
  • Top Leadership: Global Male (74%), Global Female (26%); U.S. White (81%), U.S. POC (19%).
  • Junior Leadership: Global Male (74%), Global Female (26%); U.S. White (74%), U.S. POC (26%).

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: ConocoPhillips targets a reduction in Scope 1 and Scope 2 GHG emissions intensity by 50-60% by 2030 from a 2016 baseline, applicable to both gross operated and net equity emissions.
• Carbon Neutrality: The company is on schedule to achieve a target of zero routine flaring by the end of 2025 for its heritage ConocoPhillips assets.

Business Cyclicality & Seasonality

Demand Patterns:

• Economic Sensitivity: The energy industry, in which ConocoPhillips operates, is historically subject to significant volatility in commodity prices. These prices fluctuate in response to the global economy's supply and demand dynamics for energy.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental Regulations: ConocoPhillips is subject to numerous environmental laws and regulations, including the U.S. Federal Clean Air Act, Clean Water Act, CERCLA, RCRA, OPA90, EPCRA, and Safe Drinking Water Act.
• International Compliance: The company adheres to international regulations such as the EU Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), the EU Trading Directive (EU ETS), Alberta Technology Innovation and Emissions Reduction (TIER) regulation, British Columbia Output Based Pricing System (BC OBPS), EU methane emissions regulation, and the Australia Safeguard Mechanism.
• U.S. Climate Regulations: Compliance is required with U.S. EPA New Source Performance Standards (OOOOb) and Emissions Guidelines (OOOOc), the Methane Super Emitter Program, the Waste Emissions Charge (WEC) under the Inflation Reduction Act of 2022, and White House Council on Environmental Quality (CEQ) National Environmental Policy Act (NEPA Phase 2) implementation regulations.
• Compliance Costs (2024): Costs incurred for compliance included $20 million for EU ETS, $0.8 million for U.K. ETS, $4.5 million for Alberta TIER (after savings), an expected $1.5 million for BC OBPS for Montney, $1.7 million for carbon tax costs in Canada, and $37 million for Norwegian carbon legislation. Trade & Export Controls:
• Export Restrictions: In January 2024, the U.S. announced a temporary pause on new authorizations of certain LNG exports, which was subsequently lifted in January 2025.

Legal Proceedings:

• Climate Change Litigation: ConocoPhillips is a defendant in lawsuits filed by governmental and other entities in several U.S. states/territories since 2017, seeking compensatory damages and equitable relief for alleged climate change impacts.
• Louisiana SLCRMA: The company is involved in lawsuits filed by several Louisiana parishes and the State of Louisiana under Louisiana’s State and Local Coastal Resources Management Act (SLCRMA) for alleged coastline contamination and erosion.
• OCS Lease P-0166: In October 2020, the BSEE ordered ConocoPhillips and other prior owners of OCS Lease P-0166 to decommission lease facilities near Carpinteria, California.
• Concho Securities Class Action: A federal securities class action was filed in July 2021 against Concho, its officers, and ConocoPhillips as Concho’s successor.
• Winter Storm Uri: ConocoPhillips is involved in pending disputes with commercial counterparties regarding force majeure notices following Winter Storm Uri in 2021.
• Venezuela Arbitration: An ICSID tribunal ordered Venezuela to pay ConocoPhillips $8.5 billion plus interest for expropriated projects, a decision upheld on January 22, 2025. Additionally, ICC arbitrations resulted in awards against PDVSA and affiliates for $2 billion plus interest (Hamaca and Petrozuata) and $33 million plus interest (Corocoro). As of December 31, 2024, $787 million has been received for the first ICC award.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was 32.4% in 2024, 32.7% in 2023, and 33.8% in 2022.
• Geographic Tax Planning: As of December 31, 2024, $5,226 million of unremitted income was considered permanently reinvested in certain foreign subsidiaries and joint ventures. An estimated additional tax of $261 million would be incurred if this income were distributed.
• Tax Reform Impact: The Inflation Reduction Act of 2022, which introduced a 15% minimum tax on book income, a 1% excise tax on net stock repurchased, and lower carbon energy tax incentives, did not have a material impact on ConocoPhillips' consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework:

• Risk Transfer Mechanisms: As of December 31, 2024, direct bank letters of credit totaled $278 million. The company noted that if its credit rating were downgraded below investment grade at December 31, 2024, an additional $49 million in collateral would have been required.