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Notes to Consolidated Financial Statements
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Con
ocoPhillips
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Note 1Basis 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 and 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
2015 Annual Report on Form 10-K.
Effective November 1, 2015, the Other International and historically presented Europe segments were
restructured to align with changes to our internal organization structure. The Libya business was moved from the Other International segment to the historically presented Europe segment, which is now renamed Europe and North Africa. Certain
financial information has been revised for all prior periods presented to reflect the change in the composition of our operating segments. For additional information, see Note 19Segment Disclosures and Related Information.
Note 2Change in Accounting Principles
We adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2015-02, Amendments to the Consolidation Analysis, beginning January 1,
2016. The ASU amends existing requirements applicable to reporting entities that are required to evaluate whether certain legal entities, including variable interest entities (VIEs), should be consolidated. The adoption of this ASU did not have an
impact on our consolidated financial statements and disclosures. See Note 3Variable Interest Entities, for additional information on our significant VIE.
Note 3Variable Interest Entities
We hold variable interests in VIEs that have not
been consolidated because we are not considered the primary beneficiary. Information on our significant VIE follows:
Australia Pacific LNG
Pty Ltd (APLNG)
APLNG is considered a VIE, as it has entered into certain contractual arrangements that provide it with additional forms
of subordinated financial support. We are not the primary beneficiary of APLNG because we share with Origin Energy and China Petrochemical Corporation (Sinopec) the power to direct the key activities of APLNG that most significantly impact its
economic performance, which involve activities related to the production and commercialization of coalbed methane, as well as liquefied natural gas (LNG) processing and export marketing. As a result, we do not consolidate APLNG, and it is accounted
for as an equity method investment.
As of March 31, 2016, we have not provided any financial support to APLNG other than amounts
previously contractually required. Unless we elect otherwise, we have no requirement to provide liquidity or purchase the assets of APLNG. See Note 6Investments, Loans and Long-Term Receivables, and Note 11Guarantees, for additional
information.
5
Note 4Inventories
Inventories consisted of the following:
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Millions of Dollars
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|
|
|
March 31
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|
|
December 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Crude oil and natural gas
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|
$
|
392
|
|
|
|
406
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|
Materials and supplies
|
|
|
680
|
|
|
|
718
|
|
|
|
|
|
$
|
1,072
|
|
|
|
1,124
|
|
|
|
Inventories valued on the last-in, first-out (LIFO) basis totaled $271 million and $317 million at March 31, 2016
and December 31, 2015, respectively. The estimated excess of current replacement cost over LIFO cost of inventories was approximately $29 million and $6 million at March 31, 2016 and December 31, 2015, respectively.
Note 5Assets Held for Sale
On
April 22, 2016, we sold our interest in the Alaska Beluga River Unit natural gas field in the Cook Inlet for $134 million, net of settlement of gas imbalances and customary adjustments. At March 31, 2016, the net carrying value of our
Beluga River Unit interest, which is included in the Alaska segment, was $78 million, consisting primarily of $100 million of property, plant and equipment (PP&E) and $19 million of asset retirement obligations (ARO). Accordingly, $100 million
of PP&E was classified as held for sale and included in the Prepaid expenses and other current assets line on our consolidated balance sheet as of March 31, 2016.
Note 6Investments, Loans and Long-Term Receivables
APLNG
APLNGs $8.5 billion project finance facility consists of financing agreements executed by APLNG with the Export-Import Bank of the United States for
approximately $2.9 billion, the Export-Import Bank of China for approximately $2.7 billion, and a syndicate of Australian and international commercial banks for approximately $2.9 billion. At March 31, 2016, $8.4 billion had been drawn from the
facility. In connection with the execution of the project financing, we provided a completion guarantee for our pro-rata share of the project finance facility until the project achieves financial completion. See Note 11Guarantees, for
additional information.
APLNG is considered a VIE, as it has entered into certain contractual arrangements that provide it with additional
forms of subordinated financial support. See Note 3Variable Interest Entities, for additional information.
Following the fourth quarter
2015 impairment of our investment in APLNG, the outlook for crude oil and natural gas prices continued to deteriorate. As a result, the estimated fair value of our investment in APLNG declined to an amount below book value during the first quarter
of 2016. Based on a review of the facts and circumstances surrounding this decline in fair value, we concluded the impairment was not other than temporary under the guidance of FASB Accounting Standards Codification (ASC) Topic 323,
InvestmentsEquity Method and Joint Ventures. In reaching this conclusion, we primarily considered: (1) the volatility and uncertainty in commodity markets; (2) the intent and ability of ConocoPhillips to retain our
investment in APLNG; and (3) the short length of time book value has been less than market value since our impairment in the fourth quarter of 2015. Fair value has been estimated based on an internal discounted cash flow model using estimates
of future production, prices from futures exchanges and pricing service companies, costs, foreign currency rates, and a discount factor believed to be consistent with those used by principal market participants.
6
At March 31, 2016, the fair value of our investment in APLNG was estimated to be $9,878 million,
resulting in an unrecognized impairment of $437 million. We will continue to monitor the relationship between the book value and the fair value of APLNG. Should we determine in the future there has been a loss in the book value of our investment
that is other than temporary, we would record a noncash impairment of our equity investment, calculated as the total difference between book value and fair value as of the end of the reporting period.
At March 31, 2016, the book value of our equity method investment in APLNG was $10,315 million. The balance is included in the Investments and
long-term receivables line on our consolidated balance sheet.
FCCL
At March 31, 2016, the book value of our equity method investment in FCCL was $8,759 million, net of a $1,333 million reduction due to cumulative foreign currency translation effects. The balance is
included in the Investments and long-term receivables line on our consolidated balance sheet.
Loans and Long-Term Receivables
As part of our normal ongoing business operations and consistent with industry practice, we enter into numerous agreements with other
parties to pursue business opportunities. Included in such activity are loans made to certain affiliated and non-affiliated companies. At March 31, 2016, significant loans to affiliated companies included $750 million in project financing to
Qatar Liquefied Gas Company Limited (3) (QG3).
The long-term portion of these loans is included in the Loans and
advancesrelated parties line on our consolidated balance sheet, while the short-term portion is in Accounts and notes receivablerelated parties.
Note 7Suspended Wells
The capitalized cost of suspended wells at March 31,
2016, was $1,327 million, an increase of $67 million from $1,260 million at year-end 2015. No suspended wells were charged to dry hole expense during the first three months of 2016 relating to exploratory well costs capitalized for a period greater
than one year as of December 31, 2015.
Note 8Impairments
During the three-month periods of 2016 and 2015, we recognized the following before-tax impairment charges:
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Millions of Dollars
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Three Months Ended
March 31
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2016
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|
|
2015
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|
|
|
|
|
|
|
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Lower 48
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|
$
|
9
|
|
|
|
|
|
Europe and North Africa
|
|
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127
|
|
|
|
16
|
|
|
|
|
|
$
|
136
|
|
|
|
16
|
|
|
|
The first quarter of 2016 included impairments in our Europe and North Africa segment of $127 million, primarily as a
result of lower natural gas prices in the United Kingdom.
7
The charges discussed below are included in the Exploration expenses line on our consolidated
income statement and are not reflected in the table above.
In the first quarter of 2016, due to lack of commerciality of a recently drilled
well, we recorded a pre-tax impairment of $95 million for the associated carrying value of capitalized undeveloped leasehold costs of the Melmar prospect in deepwater Gulf of Mexico. Additionally, following our decision announced in 2015 not to
conduct further activity on certain Gulf of Mexico leases and the completion of an initial marketing effort, we recorded impairments of $73 million in our Lower 48 segment, primarily as a result of changes in the estimated market value.
Note 9Debt
On March 28,
2016, we reduced our revolving credit facility, expiring in June 2019, from $7.0 to $6.75 billion. We have two commercial paper programs supported by our $6.75 billion revolving credit facility: the ConocoPhillips $6.1 billion program, primarily a
funding source for short-term working capital needs, and the ConocoPhillips Qatar Funding Ltd. $900 million program, which is used to fund commitments relating to QG3. Commercial paper maturities are generally limited to 90 days.
At March 31, 2016 and December 31, 2015, we had no direct outstanding borrowings under the revolving credit facility, with no letters of credit
as of March 31, 2016 or December 31, 2015. Under the ConocoPhillips Qatar Funding Ltd. commercial paper program, $750 million of commercial paper was outstanding at March 31, 2016, compared with $803 million at December 31, 2015.
In April 2016, we repaid an additional $640 million of the outstanding commercial paper and expect the remaining commercial paper to be repaid in the second quarter of 2016. Since we had $750 million of commercial paper outstanding and had
issued no letters of credit, we had access to $6.0 billion in borrowing capacity under our revolving credit facility at March 31, 2016.
On March 3, 2016, we issued notes consisting of:
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The $1,250 million of 4.20% Notes due 2021.
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The $1,250 million of 4.95% Notes due 2026.
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The $500 million of 5.95% Notes due 2046.
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In addition, on March 18, 2016, we entered into a $1,600 million three-year senior unsecured term loan facility. Borrowings will accrue interest at a base rate or, for certain euro-denominated
borrowings, the London Interbank Offered Rate (LIBOR), in each case plus a margin that is set based on our corporate credit ratings. The applicable margin for loans bearing interest based on the base rate ranges from 0.50% to 1.00% and the
applicable margin for loans bearing interest based on LIBOR ranges from 1.50% to 2.00%. Based on our current corporate credit ratings, the applicable margin for loans accruing interest at the base rate is 0.50% and the applicable margin for loans
accruing interest at LIBOR is 1.50%.
The term loan facility contains customary covenants regarding, among other matters, material compliance
with laws and restrictions against certain consolidations, mergers and asset sales and creation of certain liens on our assets and consolidated subsidiaries. The term loan facility also contains financial covenants including a total debt to
capitalization ratio, excluding the impacts of certain noncash impairments and foreign currency translation adjustments as defined in the Term Loan Agreement, which may not exceed 65 percent. At March 31, 2016, we were in compliance with this
covenant.
The term loan facility includes customary events of default (subject to specified cure periods, materiality qualifiers and
exceptions), including the failure to pay any interest, principal or fees when due, the failure to perform or the violation of any covenant contained in the term loan facility, the making of materially inaccurate or false representations or
warranties, a default on certain material indebtedness, insolvency or bankruptcy, a change of control and the occurrence of material Employee Retirement Income Security Act of 1974 (ERISA) events and certain judgments against us or our material
subsidiaries.
8
We have the right at any time and from time to time to prepay the term loan, in whole or in part, without
premium or penalty upon notice to the Administrative Agent.
The net proceeds of the notes and term loan will be used for general corporate
purposes.
At March 31, 2016, we held $283 million of certain variable rate demand bonds (VRDBs) with maturities ranging through 2035.
The VRDBs are redeemable at the option of the bondholders on any business day. The VRDBs are included in the Long-term debt line on our consolidated balance sheet.
Note 10Noncontrolling Interests
Activity attributable to common stockholders
equity and noncontrolling interests for the first three months of 2016 and 2015 was as follows:
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|
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Millions of Dollars
|
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|
|
2016
|
|
|
2015
|
|
|
|
Common
Stockholders
Equity
|
|
|
Non-
Controlling
Interest
|
|
|
Total
Equity
|
|
|
Common
Stockholders
Equity
|
|
|
Non-
Controlling
Interest
|
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
$
|
39,762
|
|
|
|
320
|
|
|
|
40,082
|
|
|
|
51,911
|
|
|
|
362
|
|
|
|
52,273
|
|
Net income (loss)
|
|
|
(1,469
|
)
|
|
|
13
|
|
|
|
(1,456
|
)
|
|
|
272
|
|
|
|
14
|
|
|
|
286
|
|
Dividends
|
|
|
(313
|
)
|
|
|
|
|
|
|
(313
|
)
|
|
|
(910
|
)
|
|
|
|
|
|
|
(910
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)
|
Distributions to noncontrolling interests
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|
|
|
|
|
|
(16
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)
|
|
|
(16
|
)
|
|
|
|
|
|
|
(21
|
)
|
|
|
(21
|
)
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Other changes, net*
|
|
|
1,109
|
|
|
|
1
|
|
|
|
1,110
|
|
|
|
(2,621
|
)
|
|
|
1
|
|
|
|
(2,620
|
)
|
|
|
Balance at March 31
|
|
$
|
39,089
|
|
|
|
318
|
|
|
|
39,407
|
|
|
|
48,652
|
|
|
|
356
|
|
|
|
49,008
|
|
|
|
*Includes components of other comprehensive income (loss), which are disclosed separately in the Consolidated Statement of Comprehensive Income.
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|
Note 11Guarantees
At March 31, 2016, 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 March 31, 2016, we had outstanding multiple guarantees in
connection with our 37.5 percent ownership interest in APLNG. The following is a description of the guarantees with values calculated utilizing March 2016 exchange rates:
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We have guaranteed APLNGs performance with regard to a construction contract executed in connection with APLNGs issuance of the Train 1 and
Train 2 Notices to Proceed. We estimate the remaining term of this guarantee is two years. Our maximum potential amount of future payments related to this guarantee is approximately $90 million and would become payable if APLNG cancels the
applicable construction contract and does not perform with respect to the amounts owed to the contractor.
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9
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|
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We have issued a construction completion guarantee related to the third-party project financing secured by APLNG. Our maximum potential amount of
future payments under the guarantee is estimated to be $3.2 billion, which could be payable if the full debt financing capacity is utilized and completion of the project is not achieved. Our guarantee of the project financing will be released upon
meeting certain completion tests with milestones, which we estimate should occur beginning later in 2016. Our maximum exposure at March 31, 2016, is $3.2 billion based upon our pro-rata share of the facility used at that date. At March 31,
2016, the carrying value of this guarantee is approximately $114 million.
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In conjunction with our original purchase of an ownership interest in APLNG from Origin Energy in October 2008, we agreed to reimburse Origin Energy
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 with remaining terms of 1 to 26 years. Our maximum potential liability for future
payments, or cost of volume delivery, under these guarantees is estimated to be $1.1 billion ($1.9 billion in the event of intentional or reckless breach), and would become payable if APLNG fails to meet its obligations under these agreements
and the obligations cannot otherwise be mitigated. Future payments are considered unlikely, as the payments, or cost of volume delivery, would only be triggered if APLNG does not have enough natural gas to meet these sales commitments and if the
co-venturers do not make necessary equity contributions into APLNG.
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We have guaranteed the performance of APLNG with regard to certain other contracts executed in connection with the projects continued
development. The guarantees have remaining terms of up to 30 years or the life of the venture. Our maximum potential amount of future payments related to these guarantees is approximately $170 million and would become payable if APLNG does not
perform.
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Other Guarantees
We have other guarantees with maximum future potential payment amounts totaling approximately $530 million, which consist primarily of a guarantee of the residual value of a leased office building,
guarantees of the residual value of leased corporate aircraft, a guarantee for our portion of a joint ventures project finance reserve accounts, and a guarantee of minimum charter revenue for an LNG vessel. These guarantees have remaining
terms of up to eight years and would become payable if, upon sale, certain asset values are lower than guaranteed amounts, business conditions decline at guaranteed entities, or as a result of nonperformance of contractual terms by guaranteed
parties.
Indemnifications
Over the years, we have entered into agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to
qualifying indemnifications. These agreements include indemnifications for taxes, environmental liabilities, employee claims 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, 2016, was approximately $90 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 at March 31, 2016, were approximately $40 million of
environmental accruals for known contamination that are included in the Asset retirement obligations and accrued environmental costs line on our consolidated balance sheet. For additional information about environmental liabilities, see
Note 12Contingencies and Commitments.
On March 1, 2015, a supplier to one of the refineries included in Phillips 66 as part
of the separation of our Downstream businesses formally registered Phillips 66 as a party to the supply agreement, thereby triggering a guarantee we provided at the time of separation. Our maximum potential liability for future payments under this
guarantee, which would become payable if Phillips 66 does not perform its contractual obligations under the supply agreement, is approximately $1.6 billion. At March 31, 2016, the carrying value of this guarantee is
10
approximately $98 million and the remaining term is nine years. Because Phillips 66 has indemnified us for losses incurred under this guarantee, we have recorded an indemnification asset from
Phillips 66 of approximately $98 million. The recorded indemnification asset amount represents the estimated fair value of the guarantee; however, if we are required to perform under the guarantee, we would expect to recover from Phillips 66 any
amounts in excess of that value, provided Phillips 66 is a going concern.
Note 12Contingencies and Commitments
A number of lawsuits involving a variety of claims arising in the ordinary course of business have been made against ConocoPhillips. We also may be
required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for accounting
recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be
reasonably estimated but 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. With respect to income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.
Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current
accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential
exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to factors such as
the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other responsible parties. Estimated future costs related to tax and
legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.
Environmental
We are subject to international, federal, state and local environmental laws
and regulations. 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 other sites, we are usually only one of many companies cited at a particular site. Due to the joint and several liabilities, we
could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites at
which we are potentially responsible are still under investigation by the EPA or the agency concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate
remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in
estimating our potential liability, and we adjust our accruals accordingly.
11
As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these
environmental obligations are mitigated by indemnifications made by others for our benefit and some of the indemnifications are subject to dollar limits and time limits.
We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state and international sites. After an assessment of environmental exposures for
cleanup and other costs, we make accruals on an undiscounted basis (except those acquired in a purchase business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable
future costs will be incurred and these costs can be reasonably estimated. At March 31, 2016, our balance sheet included a total environmental accrual of $263 million, compared with $258 million at December 31, 2015, for remediation
activities in the United States and Canada. We expect to incur a substantial amount of these expenditures within the next 30 years. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.
Legal Proceedings
We are subject to
various lawsuits and claims including but not limited to matters involving oil and gas royalty and severance tax payments, gas measurement and valuation methods, contract disputes, environmental damages, personal injury, and property damage. Our
primary exposures for such matters relate to alleged royalty underpayments on certain federal, state and privately owned properties and claims of alleged environmental contamination from historic operations. We will continue to defend ourselves
vigorously in these matters.
Our legal organization applies its knowledge, experience and professional judgment to the specific
characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process
also enables us to track those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases,
our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.
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, 2016, we had performance obligations secured by letters of credit of $339 million (issued as direct bank letters of credit) related to various purchase commitments for materials, supplies,
commercial activities and services incident to the ordinary conduct of business.
In 2007, we announced we had been unable to reach agreement
with respect to our migration to an
empresa mixta
structure mandated by the Venezuelan governments Nationalization Decree. As a result, Venezuelas national oil company, Petróleos de Venezuela S.A. (PDVSA), or its
affiliates, directly assumed control over ConocoPhillips interests in the Petrozuata and Hamaca heavy oil ventures and the offshore Corocoro development project. In response to this expropriation, we filed a request for international
arbitration on November 2, 2007, with the World Banks International Centre for Settlement of Investment Disputes (ICSID). An arbitration hearing was held before an ICSID tribunal during the summer of 2010. On September 3, 2013, an
ICSID arbitration tribunal held that Venezuela unlawfully expropriated ConocoPhillips significant oil investments in June 2007. A separate arbitration phase is currently proceeding to determine the damages owed to ConocoPhillips for
Venezuelas actions. On October 10, 2014, we filed a separate arbitration under the rules of the International Chamber of Commerce against PDVSA for contractual compensation related to the Petrozuata and Hamaca heavy crude oil projects.
12
In 2008, Burlington Resources, Inc., a wholly owned subsidiary of ConocoPhillips, initiated arbitration
before ICSID against The Republic of Ecuador, as a result of the newly enacted Windfall Profits Tax Law and government-mandated renegotiation of our production sharing contracts. Despite a restraining order issued by the ICSID tribunal, Ecuador
confiscated the crude oil production of Burlington and its co-venturer and sold the seized crude oil. In 2009, Ecuador took over operations in Blocks 7 and 21, fully expropriating our assets. In June 2010, the ICSID tribunal concluded it has
jurisdiction to hear the expropriation claim. On April 24, 2012, Ecuador filed supplemental counterclaims asserting environmental damages, which we believe are not material. The ICSID tribunal issued a decision on liability on
December 14, 2012, in favor of Burlington, finding that Ecuadors seizure of Blocks 7 and 21 was an unlawful expropriation in violation of the Ecuador-U.S. Bilateral Investment Treaty. An additional arbitration phase to determine
the damages owed to ConocoPhillips for Ecuadors actions and to address Ecuadors counterclaims is complete. We are awaiting the tribunals award.
ConocoPhillips served a Notice of Arbitration on the Timor-Leste Minister of Finance in October 2012 for outstanding disputes related to a series of tax assessments. The arbitration hearing was conducted
in Singapore in June 2014 under the United Nations Commission on International Trade Laws (UNCITRAL) arbitration rules, pursuant to the terms of the Tax Stability Agreement with the Timor-Leste government. In January 2016, we settled three of
the four Timor-Leste tax disputes. In March 2016, we received a decision from the arbitration tribunal on the fourth Timor-Leste tax dispute item.
Note 13Derivative and Financial Instruments
Derivative Instruments
We use futures, forwards, swaps and options in various markets to meet our customer needs and capture market opportunities. Our commodity
business primarily consists of natural gas, crude oil, bitumen, LNG and natural gas liquids.
Our derivative instruments are held at fair
value on our consolidated balance sheet. Where these balances have the right of setoff, they are presented on a net basis. Related cash flows are recorded as operating activities on our consolidated statement of cash flows. On our consolidated
income statement, realized and unrealized gains and losses are recognized either on a gross basis if directly related to our physical business or a net basis if held for trading. Gains and losses related to contracts that meet and are designated
with the normal purchase normal sale exception are recognized upon settlement. We generally apply this exception to eligible crude contracts. We do not use hedge accounting for our commodity derivatives.
The following table presents the gross fair values of our commodity derivatives, excluding collateral, and the line items where they appear on our
consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
March 31
|
|
|
|
December 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$
|
479
|
|
|
|
768
|
|
Other assets
|
|
|
48
|
|
|
|
60
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Other accruals
|
|
|
480
|
|
|
|
754
|
|
Other liabilities and deferred credits
|
|
|
37
|
|
|
|
46
|
|
|
|
13
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
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues
|
|
$
|
(3
|
)
|
|
|
(16
|
)
|
Other income
|
|
|
1
|
|
|
|
(1
|
)
|
Purchased commodities
|
|
|
(1
|
)
|
|
|
44
|
|
|
|
The table below summarizes our material net exposures resulting from outstanding commodity derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
Open Position
Long/(Short)
|
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
|
|
|
|
Commodity
|
|
|
|
|
|
|
|
|
Natural gas and power (billions of cubic feet equivalent)
|
|
|
|
|
|
|
|
|
Fixed price
|
|
|
(14
|
)
|
|
|
(14
|
)
|
Basis
|
|
|
(1
|
)
|
|
|
(17
|
)
|
|
|
Foreign Currency Exchange Derivatives
We have foreign currency exchange rate risk resulting from international operations. Our foreign currency exchange derivative activity primarily relates to managing our cash-related and foreign currency
exchange rate exposures, such as firm commitments for capital programs or local currency tax payments, dividends, and cash returns from net investments in foreign affiliates. We do not elect hedge accounting on our foreign currency exchange
derivatives.
The following table presents the gross fair values of our foreign currency exchange derivatives, excluding collateral, and the
line items where they appear on our consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
|
47
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Other accruals
|
|
|
16
|
|
|
|
8
|
|
|
|
14
The losses from foreign currency exchange derivatives incurred and the line item where they appear on our
consolidated income statement were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended
March 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction (gains) losses
|
|
$
|
97
|
|
|
|
24
|
|
|
|
We had the following net notional position of
outstanding foreign currency exchange derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
In Millions
Notional Currency
|
|
|
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
|
|
|
|
|
|
|
Sell U.S. dollar, buy other currencies*
|
|
USD
|
|
|
3
|
|
|
|
347
|
|
Buy U.S. dollar, sell other currencies**
|
|
USD
|
|
|
10
|
|
|
|
20
|
|
Buy British pound, sell other currencies***
|
|
GBP
|
|
|
904
|
|
|
|
567
|
|
|
|
*Primarily Canadian dollar, Norwegian krone and British pound.
|
|
|
|
|
|
|
|
|
|
|
**Primarily Canadian dollar and Norwegian krone.
|
|
|
|
|
|
|
|
|
|
|
***Primarily Canadian dollar and euro.
|
|
|
|
|
|
|
|
|
|
|
Financial Instruments
We have certain financial instruments on our consolidated balance sheet related to interest-bearing time deposits and commercial paper. These held-to-maturity financial instruments are included in
Cash and cash equivalents on our consolidated balance sheet if the maturities at the time we made the investments were 90 days or less; otherwise, these investments are included in Short-term investments on our
consolidated balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Carrying Amount
|
|
|
|
Cash and Cash Equivalents
|
|
|
Short-Term Investments
|
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,016
|
|
|
|
528
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining maturities from 1 to 90 days
|
|
|
3,405
|
|
|
|
1,840
|
|
|
|
307
|
|
|
|
|
|
Commercial paper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining maturities from 1 to 90 days
|
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,866
|
|
|
|
2,368
|
|
|
|
307
|
|
|
|
|
|
|
|
Credit Risk
Financial instruments potentially exposed to concentrations of credit risk consist primarily of cash equivalents, short-term investments, over-the-counter (OTC) derivative contracts and trade receivables.
Our cash equivalents and short-term investments are placed in high-quality commercial paper, money market funds, government debt securities and time deposits with major international banks and financial institutions.
The credit risk from our OTC derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty
exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit
risk because
15
these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements until settled; however, we are exposed to the credit risk of those exchange brokers for
receivables arising from daily margin cash calls, as well as for cash deposited to meet initial margin requirements.
Our trade receivables
result primarily from our petroleum operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of 30 days or less, and we
continually monitor this exposure and the creditworthiness of the counterparties. We 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, such as transactions administered through the New York Mercantile Exchange.
The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position on
March 31, 2016 and December 31, 2015, was $136 million and $158 million, respectively. For these instruments, $1 million of collateral was posted as of March 31, 2016, and $2 million of collateral was posted as of
December 31, 2015. If our credit rating had been downgraded below investment grade on March 31, 2016, we would be required to post $130 million of additional collateral, either with cash or letters of credit.
Note 14Fair Value Measurement
We
carry a portion of our assets and liabilities at fair value that are measured at a reporting date using an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability) and disclosed according to the quality of
valuation inputs under the following hierarchy:
|
|
|
Level 1: Quoted prices (unadjusted) in an active market for identical assets or liabilities.
|
|
|
|
Level 2: Inputs other than quoted prices that are directly or indirectly observable.
|
|
|
|
Level 3: Unobservable inputs that are significant to the fair value of assets or liabilities.
|
The classification of an asset or liability is based on the lowest level of input significant to its fair value. Those that are initially classified as
Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is inconsequential to the overall fair value, or if corroborated market data becomes available. Assets and liabilities that are initially reported as
Level 2 are subsequently reported as Level 3 if corroborated market data is no longer available. Transfers occur at the end of the reporting period. There were no material transfers in or out of Level 1 during 2016 or 2015.
Recurring Fair Value Measurement
Financial assets and liabilities reported at fair value on a recurring basis primarily include commodity derivatives. Level 1 derivative assets and
liabilities primarily represent exchange-traded futures and options that are valued using unadjusted prices available from the underlying exchange. Level 2 derivative assets and liabilities primarily represent OTC swaps, options and forward purchase
and sale contracts that are valued using adjusted exchange prices, prices provided by brokers or pricing service companies that are all corroborated by market data. Level 3 derivative assets and liabilities consist of OTC swaps, options and forward
purchase and sale contracts where a significant portion of fair value is calculated from underlying market data that is not readily available. The derived value uses industry standard methodologies that may consider the historical
16
relationships among various commodities, modeled market prices, time value, volatility factors and other relevant economic measures. The use of these inputs results in managements best
estimate of fair value. Level 3 activity was not material for all periods presented.
The following table summarizes the fair value
hierarchy for gross financial assets and liabilities (i.e., unadjusted where the right of setoff exists for commodity derivatives accounted for at fair value on a recurring basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives
|
|
$
|
293
|
|
|
|
186
|
|
|
|
48
|
|
|
|
527
|
|
|
|
516
|
|
|
|
242
|
|
|
|
70
|
|
|
|
828
|
|
|
|
Total assets
|
|
$
|
293
|
|
|
|
186
|
|
|
|
48
|
|
|
|
527
|
|
|
|
516
|
|
|
|
242
|
|
|
|
70
|
|
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives
|
|
$
|
307
|
|
|
|
202
|
|
|
|
8
|
|
|
|
517
|
|
|
|
515
|
|
|
|
273
|
|
|
|
12
|
|
|
|
800
|
|
|
|
Total liabilities
|
|
$
|
307
|
|
|
|
202
|
|
|
|
8
|
|
|
|
517
|
|
|
|
515
|
|
|
|
273
|
|
|
|
12
|
|
|
|
800
|
|
|
|
The following table summarizes those commodity derivative balances subject to the right of setoff as presented on our
consolidated balance sheet. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of setoff exists.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Gross
Amounts
Recognized
|
|
|
Gross
Amounts
Offset
|
|
|
Net
Amounts
Presented
|
|
|
Cash
Collateral
|
|
|
Gross Amounts
without
Right of Setoff
|
|
|
Net
Amounts
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
527
|
|
|
|
349
|
|
|
|
178
|
|
|
|
|
|
|
|
5
|
|
|
|
173
|
|
Liabilities
|
|
|
517
|
|
|
|
349
|
|
|
|
168
|
|
|
|
7
|
|
|
|
9
|
|
|
|
152
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
828
|
|
|
|
600
|
|
|
|
228
|
|
|
|
|
|
|
|
8
|
|
|
|
220
|
|
Liabilities
|
|
|
800
|
|
|
|
600
|
|
|
|
200
|
|
|
|
1
|
|
|
|
11
|
|
|
|
188
|
|
|
|
At March 31, 2016 and December 31, 2015, we did not present any amounts gross on our consolidated balance sheet
where we had the right of setoff.
17
Non-Recurring Fair Value Measurement
The following table summarizes the fair value hierarchy by major category for assets accounted for at fair value on a non-recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
|
|
Fair Value
Measurements Using
|
|
|
|
Fair Value
|
|
|
Level 3
Inputs
|
|
|
Before-
Tax Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net PP&E (held for use)
|
|
$
|
217
|
|
|
|
217
|
|
|
|
129
|
|
|
|
Net PP&E held for use is comprised of various producing properties impaired to their individual fair values less
costs to sell. The fair values were determined by internal discounted cash flow models using estimates of future production, prices from futures exchanges and pricing service companies, costs, and a discount rate believed to be consistent with those
used by principal market participants.
Reported Fair Values of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:
|
|
|
Cash and cash equivalents and short-term investments: The carrying amount reported on the balance sheet approximates fair value.
|
|
|
|
Accounts and notes receivable (including long-term and related parties): The carrying amount reported on the balance sheet approximates fair value. The
valuation technique and methods used to estimate the fair value of the current portion of fixed-rate related party loans is consistent with Loans and advancesrelated parties.
|
|
|
|
Loans and advancesrelated parties: The carrying amount of floating-rate loans approximates fair value. The fair value of fixed-rate loan activity
is measured using market observable data and is categorized as Level 2 in the fair value hierarchy. See Note 6Investments, Loans and Long-Term Receivables, for additional information.
|
|
|
|
Accounts payable (including related parties) and floating-rate debt: The carrying amount of accounts payable and floating-rate debt reported on the
balance sheet approximates fair value.
|
|
|
|
Fixed-rate debt: The estimated fair value of fixed-rate debt is measured using prices available from a pricing service that is corroborated by market
data; therefore, these liabilities are categorized as Level 2 in the fair value hierarchy.
|
The following table
summarizes the net fair value of financial instruments (i.e., adjusted where the right of setoff exists for commodity derivatives):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
|
March 31
|
|
|
December 31
|
|
|
March 31
|
|
|
December 31
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives
|
|
$
|
178
|
|
|
|
228
|
|
|
|
178
|
|
|
|
228
|
|
Total loans and advancesrelated parties
|
|
|
753
|
|
|
|
808
|
|
|
|
753
|
|
|
|
808
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt, excluding capital leases
|
|
|
28,576
|
|
|
|
24,062
|
|
|
|
29,505
|
|
|
|
24,785
|
|
Commodity derivatives
|
|
|
161
|
|
|
|
199
|
|
|
|
161
|
|
|
|
199
|
|
|
|
18
Note 15Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) in the equity section of our consolidated balance sheet included:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Defined
Benefit Plans
|
|
|
Foreign
Currency
Translation
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
$
|
(443
|
)
|
|
|
(5,804
|
)
|
|
|
(6,247
|
)
|
Other comprehensive income (loss)
|
|
|
(82
|
)
|
|
|
1,183
|
|
|
|
1,101
|
|
|
|
March 31, 2016
|
|
$
|
(525
|
)
|
|
|
(4,621
|
)
|
|
|
(5,146
|
)
|
|
|
Foreign Currency Translation increased due to the weakening of the U.S. dollar relative to the Canadian dollar and Norwegian krone.
|
|
The following table summarizes reclassifications out of accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended
March 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Defined benefit plans
|
|
$
|
63
|
|
|
|
32
|
|
|
|
The above amounts are included in the computation of net periodic benefit cost and are presented net of tax expense of $36 million and $17 million for the three-month
periods ended March 31, 2016 and 2015, respectively. See Note 17Employee Benefit Plans, for additional information.
|
|
There were no items within accumulated other comprehensive income (loss) related to noncontrolling interests.
19
Note 16Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended
March 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
Cash Payments (Receipts)
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
244
|
|
|
|
197
|
|
Income taxes*
|
|
|
133
|
|
|
|
(253
|
)
|
|
|
*Net of $556 million in 2015 related to a refund received from the Internal Revenue Service for 2014 overpaid taxes.
|
|
In relation to certain working capital changes associated with investing activities, we reclassified $198 million of the
Decrease in accounts payable line within Cash Flows From Operating Activities to the Working capital changes associated with investing activities line within Cash Flows From Investing Activities for
the three months ended March 31, 2015. There was no impact to Cash and Cash Equivalents at End of Period.
Note
17Employee Benefit Plans
Pension and Postretirement Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
Three Months Ended
|
|
March 31
|
|
|
March 31
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
Intl.
|
|
|
U.S.
|
|
|
Intl.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
27
|
|
|
|
20
|
|
|
|
36
|
|
|
|
32
|
|
|
|
1
|
|
|
|
1
|
|
Interest cost
|
|
|
40
|
|
|
|
31
|
|
|
|
40
|
|
|
|
34
|
|
|
|
3
|
|
|
|
7
|
|
Expected return on plan assets
|
|
|
(43
|
)
|
|
|
(41
|
)
|
|
|
(54
|
)
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
Amortization of prior service cost (credit)
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
(1
|
)
|
Recognized net actuarial loss
|
|
|
19
|
|
|
|
7
|
|
|
|
28
|
|
|
|
21
|
|
|
|
|
|
|
|
1
|
|
Settlements
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
126
|
|
|
|
16
|
|
|
|
52
|
|
|
|
41
|
|
|
|
(5
|
)
|
|
|
8
|
|
|
|
20
During the first three months of 2016, we contributed $38 million to our domestic benefit plans and
$34 million to our international benefit plans. In 2016, we expect to contribute approximately $250 million to our domestic qualified and nonqualified pension and postretirement benefit plans and $130 million to our international qualified and
nonqualified pension and postretirement benefit plans.
During the three-month period ended March 31, 2016, we determined lump-sum
benefit payments will exceed the sum of service and interest costs for the fiscal year for the U.S. qualified pension plan and certain U.S. nonqualified supplemental retirement plans. As a result, we recognized a proportionate share of prior
actuarial losses from other comprehensive income (loss) as pension settlement expense of $82 million. In conjunction with the recognition of pension settlement expense, the fair market values of pension plan assets were updated, and the pension
benefit obligations of the U.S. qualified pension plan and a U.S. nonqualified supplemental retirement plan were remeasured. At the measurement date, the net pension liability increased by $231 million primarily as a result of a decrease in the
discount rate from 4.5 percent to 3.8 percent, resulting in a corresponding decrease to other comprehensive income (loss).
Severance
Accrual
The following table summarizes our severance accrual activity for the three-month period ended March 31, 2016:
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Balance at December 31, 2015
|
|
$
|
156
|
|
Accruals
|
|
|
5
|
|
Accrual reversals
|
|
|
(2
|
)
|
Benefit payments
|
|
|
(106
|
)
|
Foreign currency translation adjustments
|
|
|
3
|
|
|
|
Balance at March 31, 2016
|
|
$
|
56
|
|
|
|
Of the remaining balance at March 31, 2016, $20 million is classified as short-term.
Note 18Related Party Transactions
Our related parties primarily include equity method investments and certain trusts for the benefit of employees.
Significant transactions with our equity affiliates were:
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended
March 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Operating revenues and other income
|
|
$
|
27
|
|
|
|
25
|
|
Purchases
|
|
|
24
|
|
|
|
22
|
|
Operating expenses and selling, general and administrative expenses
|
|
|
16
|
|
|
|
18
|
|
Net interest income*
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
*We paid interest to, or received interest from various affiliates. See Note 6Investments, Loans and Long-Term Receivables, for additional information on loans
to affiliated companies.
|
|
21
Note 19Segment Disclosures and Related Information
We explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and natural gas liquids on a worldwide basis. We manage our operations
through six operating segments, which are primarily defined by geographic region: Alaska, Lower 48, Canada, Europe and North Africa, Asia Pacific and Middle East, and Other International.
Effective November 1, 2015, the Other International and historically presented Europe segments were restructured to align with changes to our internal organization structure. The Libya business was
moved from the Other International segment to the historically presented Europe segment, which is now renamed Europe and North Africa. Accordingly, results of operations for the Other International and Europe and North Africa segments have been
revised for all prior periods presented. There was no impact on our consolidated financial statements, and the impact on our segment presentation is immaterial.
Corporate and Other represents costs not directly associated with an operating segment, such as most interest expense, corporate overhead and certain technology activities, including licensing revenues.
Corporate assets include all cash and cash equivalents and short-term investments.
We evaluate performance and allocate resources based on
net income (loss) attributable to ConocoPhillips. Intersegment sales are at prices that approximate market.
22
Analysis of Results by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended
March 31
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
Sales and Other Operating Revenues
|
|
|
|
|
|
|
|
|
Alaska
|
|
$
|
778
|
|
|
|
1,050
|
|
|
|
Lower 48
|
|
|
2,145
|
|
|
|
3,139
|
|
Intersegment eliminations
|
|
|
(7
|
)
|
|
|
(22
|
)
|
|
|
Lower 48
|
|
|
2,138
|
|
|
|
3,117
|
|
|
|
Canada
|
|
|
425
|
|
|
|
703
|
|
Intersegment eliminations
|
|
|
(35
|
)
|
|
|
(110
|
)
|
|
|
Canada
|
|
|
390
|
|
|
|
593
|
|
|
|
Europe and North Africa
|
|
|
923
|
|
|
|
1,549
|
|
Asia Pacific and Middle East
|
|
|
837
|
|
|
|
1,388
|
|
Corporate and Other
|
|
|
55
|
|
|
|
19
|
|
|
|
Consolidated sales and other operating revenues
|
|
$
|
5,121
|
|
|
|
7,716
|
|
|
|
|
|
|
Net Income (Loss) Attributable to ConocoPhillips
|
|
|
|
|
|
|
|
|
Alaska
|
|
$
|
(2
|
)
|
|
|
145
|
|
Lower 48
|
|
|
(820
|
)
|
|
|
(405
|
)
|
Canada
|
|
|
(294
|
)
|
|
|
(158
|
)
|
Europe and North Africa
|
|
|
(51
|
)
|
|
|
636
|
|
Asia Pacific and Middle East
|
|
|
(5
|
)
|
|
|
395
|
|
Other International
|
|
|
(24
|
)
|
|
|
(92
|
)
|
Corporate and Other
|
|
|
(273
|
)
|
|
|
(249
|
)
|
|
|
Consolidated net income (loss) attributable to ConocoPhillips
|
|
$
|
(1,469
|
)
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
March 31
2016
|
|
|
December 31
2015
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
Alaska
|
|
$
|
12,682
|
|
|
|
12,555
|
|
Lower 48
|
|
|
25,615
|
|
|
|
26,932
|
|
Canada
|
|
|
18,414
|
|
|
|
17,221
|
|
Europe and North Africa
|
|
|
13,620
|
|
|
|
13,703
|
|
Asia Pacific and Middle East
|
|
|
22,007
|
|
|
|
22,318
|
|
Other International
|
|
|
326
|
|
|
|
282
|
|
Corporate and Other
|
|
|
7,170
|
|
|
|
4,473
|
|
|
|
Consolidated total assets
|
|
$
|
99,834
|
|
|
|
97,484
|
|
|
|
23
Note 20Income Taxes
Our effective tax rate for the first quarter of 2016 was 35 percent compared with 180 percent for the first quarter of 2015. The decrease in the effective tax rate was primarily due to the effect of
the 2015 U.K. tax law change discussed below, partially offset by losses in higher tax rate jurisdictions in the first quarter of 2016.
In
the United Kingdom, legislation was enacted on March 26, 2015, to decrease the overall U.K. upstream corporation tax rate from 62 percent to 50 percent effective January 1, 2015. As a result, a $555 million net tax benefit for
revaluing the U.K. deferred tax liability is reflected in the Income tax benefit line on our consolidated income statement.
Note 21New Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASU
No. 2014-09),
which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU supersedes the revenue recognition requirements in
FASB ASC Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to
depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. Additional disclosures will be required to describe the nature, amount, timing and
uncertainty of revenue and cash flows arising from customer contracts.
In August 2015, the FASB issued ASU No. 2015-14, Deferral
of the Effective Date, which defers the effective date of ASU No. 2014-09. The ASU is now effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted for interim and annual periods
beginning after December 15, 2016. Entities may choose to adopt the standard using either a full retrospective approach or a modified retrospective approach.
ASU No. 2014-09 was amended in March 2016 by the provisions of ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and in April 2016 by the
provisions of ASU No. 2016-10, Identifying Performance Obligations and Licensing. We are currently evaluating the impact of the adoption of ASU No. 2014-09, as amended, and continue to monitor proposals issued by the FASB to
clarify the ASU.
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU No. 2016-02), which establishes
comprehensive accounting and financial reporting requirements for leasing arrangements. This ASU supersedes the existing requirements in FASB ASC Topic 840, Leases, and requires lessees to recognize substantially all lease assets and
lease liabilities on the balance sheet. The provisions of ASU No. 2016-02 also modify the definition of a lease and outline requirements for recognition, measurement, presentation, and disclosure of leasing arrangements by both lessees and
lessors. The ASU is effective for interim and annual periods beginning after December 15, 2018, and early adoption of the standard is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain
optional practical expedients, and apply the provisions of ASU No. 2016-02 to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the impact
of the adoption of this ASU.
24
Supplementary InformationCondensed Consolidating Financial Information
We have various cross guarantees among ConocoPhillips, ConocoPhillips Company and ConocoPhillips Canada Funding Company I, with respect
to publicly held debt securities. ConocoPhillips Company is 100 percent owned by ConocoPhillips. ConocoPhillips Canada Funding Company I is an indirect, 100 percent owned subsidiary of ConocoPhillips Company. ConocoPhillips and ConocoPhillips
Company have fully and unconditionally guaranteed the payment obligations of ConocoPhillips Canada Funding Company I, with respect to its publicly held debt securities. Similarly, ConocoPhillips has fully and unconditionally guaranteed the payment
obligations of ConocoPhillips Company with respect to its publicly held debt securities. In addition, ConocoPhillips Company has fully and unconditionally guaranteed the payment obligations of ConocoPhillips with respect to its publicly held debt
securities. All guarantees are joint and several. The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:
|
|
|
ConocoPhillips, ConocoPhillips Company and ConocoPhillips Canada Funding Company I (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.
|
In February 2016, ConocoPhillips received a $2.3 billion return of capital from ConocoPhillips Company to settle certain accumulated intercompany
balances. The transaction had no impact on our consolidated financial statements.
This condensed consolidating financial information should
be read in conjunction with the accompanying consolidated financial statements and notes.
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended March 31, 2016
|
|
Income Statement
|
|
ConocoPhillips
|
|
|
ConocoPhillips
Company
|
|
|
ConocoPhillips
Canada
Funding
Company
I
|
|
|
All Other
Subsidiaries
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
|
|
Revenues and Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues
|
|
$
|
|
|
|
|
2,072
|
|
|
|
|
|
|
|
3,049
|
|
|
|
|
|
|
|
5,121
|
|
Equity in losses of affiliates
|
|
|
(1,427
|
)
|
|
|
(750
|
)
|
|
|
|
|
|
|
(444
|
)
|
|
|
2,472
|
|
|
|
(149
|
)
|
Gain on dispositions
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
23
|
|
Other income (loss)
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
20
|
|
Intercompany revenues
|
|
|
18
|
|
|
|
81
|
|
|
|
56
|
|
|
|
525
|
|
|
|
(680
|
)
|
|
|
|
|
|
|
Total Revenues and Other Income
|
|
|
(1,409
|
)
|
|
|
1,419
|
|
|
|
56
|
|
|
|
3,157
|
|
|
|
1,792
|
|
|
|
5,015
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased commodities
|
|
|
|
|
|
|
1,848
|
|
|
|
|
|
|
|
879
|
|
|
|
(502
|
)
|
|
|
2,225
|
|
Production and operating expenses
|
|
|
|
|
|
|
253
|
|
|
|
|
|
|
|
1,104
|
|
|
|
(3
|
)
|
|
|
1,354
|
|
Selling, general and administrative expenses
|
|
|
3
|
|
|
|
154
|
|
|
|
|
|
|
|
35
|
|
|
|
(6
|
)
|
|
|
186
|
|
Exploration expenses
|
|
|
|
|
|
|
431
|
|
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
505
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
257
|
|
|
|
|
|
|
|
1,990
|
|
|
|
|
|
|
|
2,247
|
|
Impairments
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
132
|
|
|
|
|
|
|
|
136
|
|
Taxes other than income taxes
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
123
|
|
|
|
|
|
|
|
180
|
|
Accretion on discounted liabilities
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
97
|
|
|
|
|
|
|
|
109
|
|
Interest and debt expense
|
|
|
124
|
|
|
|
134
|
|
|
|
55
|
|
|
|
137
|
|
|
|
(169
|
)
|
|
|
281
|
|
Foreign currency transaction (gains) losses
|
|
|
(44
|
)
|
|
|
2
|
|
|
|
312
|
|
|
|
(254
|
)
|
|
|
|
|
|
|
16
|
|
|
|
Total Costs and Expenses
|
|
|
83
|
|
|
|
3,152
|
|
|
|
367
|
|
|
|
4,317
|
|
|
|
(680
|
)
|
|
|
7,239
|
|
|
|
Loss before income taxes
|
|
|
(1,492
|
)
|
|
|
(1,733
|
)
|
|
|
(311
|
)
|
|
|
(1,160
|
)
|
|
|
2,472
|
|
|
|
(2,224
|
)
|
Income tax benefit
|
|
|
(23
|
)
|
|
|
(306
|
)
|
|
|
(18
|
)
|
|
|
(421
|
)
|
|
|
|
|
|
|
(768
|
)
|
|
|
Net loss
|
|
|
(1,469
|
)
|
|
|
(1,427
|
)
|
|
|
(293
|
)
|
|
|
(739
|
)
|
|
|
2,472
|
|
|
|
(1,456
|
)
|
Less: net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
(13
|
)
|
|
|
Net Loss Attributable to ConocoPhillips
|
|
$
|
(1,469
|
)
|
|
|
(1,427
|
)
|
|
|
(293
|
)
|
|
|
(752
|
)
|
|
|
2,472
|
|
|
|
(1,469
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) Attributable to ConocoPhillips
|
|
$
|
(368
|
)
|
|
|
(326
|
)
|
|
|
(47
|
)
|
|
|
445
|
|
|
|
(72
|
)
|
|
|
(368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement
|
|
Three Months Ended March 31, 2015
|
|
Revenues and Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues
|
|
$
|
|
|
|
|
2,933
|
|
|
|
|
|
|
|
4,783
|
|
|
|
|
|
|
|
7,716
|
|
Equity in earnings of affiliates
|
|
|
381
|
|
|
|
813
|
|
|
|
|
|
|
|
578
|
|
|
|
(1,567
|
)
|
|
|
205
|
|
Gain on dispositions
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
52
|
|
Other income
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
29
|
|
Intercompany revenues
|
|
|
19
|
|
|
|
98
|
|
|
|
64
|
|
|
|
843
|
|
|
|
(1,024
|
)
|
|
|
|
|
|
|
Total Revenues and Other Income
|
|
|
400
|
|
|
|
3,882
|
|
|
|
64
|
|
|
|
6,247
|
|
|
|
(2,591
|
)
|
|
|
8,002
|
|
|
|
|
|
|
|
|
|
|
Costs and E.xpenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased commodities
|
|
|
|
|
|
|
2,560
|
|
|
|
|
|
|
|
1,494
|
|
|
|
(817
|
)
|
|
|
3,237
|
|
Production and operating expenses
|
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
1,434
|
|
|
|
(32
|
)
|
|
|
1,802
|
|
Selling, general and administrative expenses
|
|
|
3
|
|
|
|
120
|
|
|
|
|
|
|
|
45
|
|
|
|
(9
|
)
|
|
|
159
|
|
Exploration expenses
|
|
|
|
|
|
|
200
|
|
|
|
|
|
|
|
282
|
|
|
|
|
|
|
|
482
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
259
|
|
|
|
|
|
|
|
1,872
|
|
|
|
|
|
|
|
2,131
|
|
Impairments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
16
|
|
Taxes other than income taxes
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
|
|
224
|
|
Accretion on discounted liabilities
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
107
|
|
|
|
|
|
|
|
121
|
|
Interest and debt expense
|
|
|
121
|
|
|
|
101
|
|
|
|
57
|
|
|
|
89
|
|
|
|
(166
|
)
|
|
|
202
|
|
Foreign currency transaction (gains) losses
|
|
|
63
|
|
|
|
(1
|
)
|
|
|
(378
|
)
|
|
|
300
|
|
|
|
|
|
|
|
(16
|
)
|
|
|
Total Costs and Expenses
|
|
|
187
|
|
|
|
3,722
|
|
|
|
(321
|
)
|
|
|
5,794
|
|
|
|
(1,024
|
)
|
|
|
8,358
|
|
|
|
Income (loss) before income taxes
|
|
|
213
|
|
|
|
160
|
|
|
|
385
|
|
|
|
453
|
|
|
|
(1,567
|
)
|
|
|
(356
|
)
|
Income tax provision (benefit)
|
|
|
(59
|
)
|
|
|
(221
|
)
|
|
|
11
|
|
|
|
(373
|
)
|
|
|
|
|
|
|
(642
|
)
|
|
|
Net income
|
|
|
272
|
|
|
|
381
|
|
|
|
374
|
|
|
|
826
|
|
|
|
(1,567
|
)
|
|
|
286
|
|
Less: net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
(14
|
)
|
|
|
Net Income Attributable to ConocoPhillips
|
|
$
|
272
|
|
|
|
381
|
|
|
|
374
|
|
|
|
812
|
|
|
|
(1,567
|
)
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) Attributable to ConocoPhillips
|
|
$
|
(2,415
|
)
|
|
|
(2,306
|
)
|
|
|
30
|
|
|
|
(1,874
|
)
|
|
|
4,150
|
|
|
|
(2,415
|
)
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
March 31, 2016
|
|
Balance Sheet
|
|
ConocoPhillips
|
|
|
ConocoPhillips
Company
|
|
|
ConocoPhillips
Canada
Funding
Company
I
|
|
|
All Other
Subsidiaries
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
|
947
|
|
|
|
16
|
|
|
|
3,903
|
|
|
|
|
|
|
|
4,866
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307
|
|
|
|
|
|
|
|
307
|
|
Accounts and notes receivable
|
|
|
4
|
|
|
|
1,920
|
|
|
|
21
|
|
|
|
4,164
|
|
|
|
(2,155
|
)
|
|
|
3,954
|
|
Inventories
|
|
|
|
|
|
|
93
|
|
|
|
|
|
|
|
979
|
|
|
|
|
|
|
|
1,072
|
|
Prepaid expenses and other current assets
|
|
|
2
|
|
|
|
208
|
|
|
|
171
|
|
|
|
545
|
|
|
|
(191
|
)
|
|
|
735
|
|
|
|
Total Current Assets
|
|
|
6
|
|
|
|
3,168
|
|
|
|
208
|
|
|
|
9,898
|
|
|
|
(2,346
|
)
|
|
|
10,934
|
|
Investments, loans and long-term receivables*
|
|
|
41,836
|
|
|
|
61,967
|
|
|
|
3,546
|
|
|
|
28,317
|
|
|
|
(113,860
|
)
|
|
|
21,806
|
|
Net properties, plants and equipment
|
|
|
|
|
|
|
7,701
|
|
|
|
|
|
|
|
58,299
|
|
|
|
|
|
|
|
66,000
|
|
Other assets
|
|
|
8
|
|
|
|
1,469
|
|
|
|
221
|
|
|
|
1,324
|
|
|
|
(1,928
|
)
|
|
|
1,094
|
|
|
|
Total Assets
|
|
$
|
41,850
|
|
|
|
74,305
|
|
|
|
3,975
|
|
|
|
97,838
|
|
|
|
(118,134
|
)
|
|
|
99,834
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
|
|
2,756
|
|
|
|
16
|
|
|
|
3,548
|
|
|
|
(2,155
|
)
|
|
|
4,165
|
|
Short-term debt
|
|
|
(10
|
)
|
|
|
(2
|
)
|
|
|
1,256
|
|
|
|
835
|
|
|
|
|
|
|
|
2,079
|
|
Accrued income and other taxes
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
669
|
|
|
|
|
|
|
|
701
|
|
Employee benefit obligations
|
|
|
|
|
|
|
357
|
|
|
|
|
|
|
|
144
|
|
|
|
|
|
|
|
501
|
|
Other accruals
|
|
|
102
|
|
|
|
481
|
|
|
|
83
|
|
|
|
903
|
|
|
|
(190
|
)
|
|
|
1,379
|
|
|
|
Total Current Liabilities
|
|
|
92
|
|
|
|
3,624
|
|
|
|
1,355
|
|
|
|
6,099
|
|
|
|
(2,345
|
)
|
|
|
8,825
|
|
Long-term debt
|
|
|
9,118
|
|
|
|
13,636
|
|
|
|
1,714
|
|
|
|
2,908
|
|
|
|
|
|
|
|
27,376
|
|
Asset retirement obligations and accrued environmental costs
|
|
|
|
|
|
|
1,114
|
|
|
|
|
|
|
|
8,763
|
|
|
|
|
|
|
|
9,877
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,661
|
|
|
|
(1,329
|
)
|
|
|
10,332
|
|
Employee benefit obligations
|
|
|
|
|
|
|
1,964
|
|
|
|
|
|
|
|
529
|
|
|
|
|
|
|
|
2,493
|
|
Other liabilities and deferred credits*
|
|
|
113
|
|
|
|
7,919
|
|
|
|
871
|
|
|
|
15,424
|
|
|
|
(22,803
|
)
|
|
|
1,524
|
|
|
|
Total Liabilities
|
|
|
9,323
|
|
|
|
28,257
|
|
|
|
3,940
|
|
|
|
45,384
|
|
|
|
(26,477
|
)
|
|
|
60,427
|
|
Retained earnings (losses)
|
|
|
28,109
|
|
|
|
15,940
|
|
|
|
(683
|
)
|
|
|
14,167
|
|
|
|
(22,901
|
)
|
|
|
34,632
|
|
Other common stockholders equity
|
|
|
4,418
|
|
|
|
30,108
|
|
|
|
718
|
|
|
|
37,969
|
|
|
|
(68,756
|
)
|
|
|
4,457
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
318
|
|
|
|
|
|
|
|
318
|
|
|
|
Total Liabilities and Stockholders Equity
|
|
$
|
41,850
|
|
|
|
74,305
|
|
|
|
3,975
|
|
|
|
97,838
|
|
|
|
(118,134
|
)
|
|
|
99,834
|
|
|
|
*Includes intercompany loans.
|
|
|
|
Balance Sheet
|
|
December 31, 2015
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
|
4
|
|
|
|
15
|
|
|
|
2,349
|
|
|
|
|
|
|
|
2,368
|
|
Accounts and notes receivable
|
|
|
21
|
|
|
|
2,905
|
|
|
|
21
|
|
|
|
7,228
|
|
|
|
(5,661
|
)
|
|
|
4,514
|
|
Inventories
|
|
|
|
|
|
|
142
|
|
|
|
|
|
|
|
982
|
|
|
|
|
|
|
|
1,124
|
|
Prepaid expenses and other current assets
|
|
|
2
|
|
|
|
206
|
|
|
|
252
|
|
|
|
589
|
|
|
|
(266
|
)
|
|
|
783
|
|
|
|
Total Current Assets
|
|
|
23
|
|
|
|
3,257
|
|
|
|
288
|
|
|
|
11,148
|
|
|
|
(5,927
|
)
|
|
|
8,789
|
|
Investments, loans and long-term receivables*
|
|
|
43,532
|
|
|
|
64,015
|
|
|
|
3,264
|
|
|
|
27,839
|
|
|
|
(117,464
|
)
|
|
|
21,186
|
|
Net properties, plants and equipment
|
|
|
|
|
|
|
8,110
|
|
|
|
|
|
|
|
58,336
|
|
|
|
|
|
|
|
66,446
|
|
Other assets
|
|
|
7
|
|
|
|
950
|
|
|
|
233
|
|
|
|
1,158
|
|
|
|
(1,285
|
)
|
|
|
1,063
|
|
|
|
Total Assets
|
|
$
|
43,562
|
|
|
|
76,332
|
|
|
|
3,785
|
|
|
|
98,481
|
|
|
|
(124,676
|
)
|
|
|
97,484
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
|
|
5,684
|
|
|
|
13
|
|
|
|
4,897
|
|
|
|
(5,661
|
)
|
|
|
4,933
|
|
Short-term debt
|
|
|
(9
|
)
|
|
|
1
|
|
|
|
1,255
|
|
|
|
180
|
|
|
|
|
|
|
|
1,427
|
|
Accrued income and other taxes
|
|
|
|
|
|
|
62
|
|
|
|
|
|
|
|
437
|
|
|
|
|
|
|
|
499
|
|
Employee benefit obligations
|
|
|
|
|
|
|
629
|
|
|
|
|
|
|
|
258
|
|
|
|
|
|
|
|
887
|
|
Other accruals
|
|
|
170
|
|
|
|
465
|
|
|
|
52
|
|
|
|
1,087
|
|
|
|
(264
|
)
|
|
|
1,510
|
|
|
|
Total Current Liabilities
|
|
|
161
|
|
|
|
6,841
|
|
|
|
1,320
|
|
|
|
6,859
|
|
|
|
(5,925
|
)
|
|
|
9,256
|
|
Long-term debt
|
|
|
7,518
|
|
|
|
10,660
|
|
|
|
1,716
|
|
|
|
3,559
|
|
|
|
|
|
|
|
23,453
|
|
Asset retirement obligations and accrued environmental costs
|
|
|
|
|
|
|
1,107
|
|
|
|
|
|
|
|
8,473
|
|
|
|
|
|
|
|
9,580
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,814
|
|
|
|
(815
|
)
|
|
|
10,999
|
|
Employee benefit obligations
|
|
|
|
|
|
|
1,760
|
|
|
|
|
|
|
|
526
|
|
|
|
|
|
|
|
2,286
|
|
Other liabilities and deferred credits*
|
|
|
2,681
|
|
|
|
7,291
|
|
|
|
667
|
|
|
|
15,181
|
|
|
|
(23,992
|
)
|
|
|
1,828
|
|
|
|
Total Liabilities
|
|
|
10,360
|
|
|
|
27,659
|
|
|
|
3,703
|
|
|
|
46,412
|
|
|
|
(30,732
|
)
|
|
|
57,402
|
|
Retained earnings (losses)
|
|
|
29,892
|
|
|
|
17,366
|
|
|
|
(389
|
)
|
|
|
15,177
|
|
|
|
(25,632
|
)
|
|
|
36,414
|
|
Other common stockholders equity
|
|
|
3,310
|
|
|
|
31,307
|
|
|
|
471
|
|
|
|
36,572
|
|
|
|
(68,312
|
)
|
|
|
3,348
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
320
|
|
|
|
|
|
|
|
320
|
|
|
|
Total Liabilities and Stockholders Equity
|
|
$
|
43,562
|
|
|
|
76,332
|
|
|
|
3,785
|
|
|
|
98,481
|
|
|
|
(124,676
|
)
|
|
|
97,484
|
|
|
|
*Includes intercompany loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
Three Months Ended March 31, 2016
|
|
Statement of Cash Flows
|
|
ConocoPhillips
|
|
|
ConocoPhillips
Company
|
|
|
ConocoPhillips
Canada
Funding
Company
I
|
|
|
All Other
Subsidiaries
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities
|
|
$
|
(153
|
)
|
|
|
(284
|
)
|
|
|
1
|
|
|
|
1,011
|
|
|
|
(154
|
)
|
|
|
421
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and investments
|
|
|
|
|
|
|
(504
|
)
|
|
|
|
|
|
|
(1,516
|
)
|
|
|
199
|
|
|
|
(1,821
|
)
|
Working capital changes associated with investing activities
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
(113
|
)
|
|
|
|
|
|
|
(134
|
)
|
Proceeds from asset dispositions
|
|
|
2,300
|
|
|
|
60
|
|
|
|
|
|
|
|
75
|
|
|
|
(2,300
|
)
|
|
|
135
|
|
Purchases of short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(302
|
)
|
|
|
|
|
|
|
(302
|
)
|
Long-term advances/loansrelated parties
|
|
|
|
|
|
|
(51
|
)
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
Collection of advances/loansrelated parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,198
|
|
|
|
(2,145
|
)
|
|
|
53
|
|
Intercompany cash management
|
|
|
(3,438
|
)
|
|
|
3,206
|
|
|
|
|
|
|
|
232
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
4
|
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
(1,138
|
)
|
|
|
2,698
|
|
|
|
|
|
|
|
570
|
|
|
|
(4,195
|
)
|
|
|
(2,065
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
|
|
1,600
|
|
|
|
2,994
|
|
|
|
|
|
|
|
51
|
|
|
|
(51
|
)
|
|
|
4,594
|
|
Repayment of debt
|
|
|
|
|
|
|
(2,145
|
)
|
|
|
|
|
|
|
(64
|
)
|
|
|
2,145
|
|
|
|
(64
|
)
|
Issuance of company common stock
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49
|
)
|
|
|
(42
|
)
|
Dividends paid
|
|
|
(313
|
)
|
|
|
|
|
|
|
|
|
|
|
(203
|
)
|
|
|
203
|
|
|
|
(313
|
)
|
Other
|
|
|
(3
|
)
|
|
|
(2,320
|
)
|
|
|
|
|
|
|
184
|
|
|
|
2,101
|
|
|
|
(38
|
)
|
|
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
1,291
|
|
|
|
(1,471
|
)
|
|
|
|
|
|
|
(32
|
)
|
|
|
4,349
|
|
|
|
4,137
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
|
|
|
|
943
|
|
|
|
1
|
|
|
|
1,554
|
|
|
|
|
|
|
|
2,498
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
4
|
|
|
|
15
|
|
|
|
2,349
|
|
|
|
|
|
|
|
2,368
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
|
|
|
|
947
|
|
|
|
16
|
|
|
|
3,903
|
|
|
|
|
|
|
|
4,866
|
|
|
|
|
|
Statement of Cash Flows
|
|
Three Months Ended March 31, 2015*
|
|
Cash Flows From Operating Activities
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
(131
|
)
|
|
|
(231
|
)
|
|
|
1
|
|
|
|
2,340
|
|
|
|
89
|
|
|
|
2,068
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and investments
|
|
|
|
|
|
|
(941
|
)
|
|
|
|
|
|
|
(2,759
|
)
|
|
|
368
|
|
|
|
(3,332
|
)
|
Working capital changes associated with investing activities
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
(258
|
)
|
|
|
|
|
|
|
(198
|
)
|
Proceeds from asset dispositions
|
|
|
|
|
|
|
88
|
|
|
|
|
|
|
|
88
|
|
|
|
(3
|
)
|
|
|
173
|
|
Net sales (purchases) of short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term advances/loansrelated parties
|
|
|
|
|
|
|
(72
|
)
|
|
|
|
|
|
|
(1,482
|
)
|
|
|
1,554
|
|
|
|
|
|
Collection of advances/loansrelated parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
52
|
|
Intercompany cash management
|
|
|
974
|
|
|
|
(1,085
|
)
|
|
|
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
(9
|
)
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
974
|
|
|
|
(1,957
|
)
|
|
|
|
|
|
|
(4,250
|
)
|
|
|
1,919
|
|
|
|
(3,314
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
|
|
|
|
|
|
1,482
|
|
|
|
|
|
|
|
72
|
|
|
|
(1,554
|
)
|
|
|
|
|
Repayment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57
|
)
|
|
|
|
|
|
|
(57
|
)
|
Issuance of company common stock
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
(34
|
)
|
Dividends paid
|
|
|
(910
|
)
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
11
|
|
|
|
(910
|
)
|
Other
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
346
|
|
|
|
(365
|
)
|
|
|
(18
|
)
|
|
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
(843
|
)
|
|
|
1,482
|
|
|
|
|
|
|
|
350
|
|
|
|
(2,008
|
)
|
|
|
(1,019
|
)
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
|
|
|
|
(706
|
)
|
|
|
1
|
|
|
|
(1,693
|
)
|
|
|
|
|
|
|
(2,398
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
770
|
|
|
|
7
|
|
|
|
4,285
|
|
|
|
|
|
|
|
5,062
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
|
|
|
|
64
|
|
|
|
8
|
|
|
|
2,592
|
|
|
|
|
|
|
|
2,664
|
|
|
|
*Certain amounts have been reclassified to conform to current-period presentation. See Note 16Cash Flow
Information, in the Notes to Consolidated Financial Statements.
|
|
28