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Investments, Loans and Long-Term Receivables
 12 Months Ended
Dec. 31, 2019
Investments, Loans and Long-Term Receivables and Joint Venture Acquisition Obligation [Abstract]  
Investments, Loans and Long-Term Receivables
Note 6—Investments, Loans and Long-Term Receivables
Components of investments, loans and long-term
 
receivables at December 31 were:
Millions of Dollars
2019
2018
Equity investments
$
8,234
9,005
Loans and advances—related parties
219
335
Long-term receivables
243
238
Long-term investments in debt securities
133
-
Other investments
77
86
$
8,906
9,664
Equity Investments
Affiliated companies in which we had a significant
 
equity investment at December 31, 2019, included:
APLNG—
37.5
 
percent owned joint venture with Origin Energy (
37.5
 
percent) and Sinopec (
25
 
percent)—
to produce CBM from the Bowen and Surat basins in Queensland, Australia,
 
as well as process and export
LNG.
Qatar Liquefied Gas Company Limited (3) (QG3)—30 percent owned
 
joint venture with affiliates of Qatar
Petroleum (
68.5
 
percent) and Mitsui & Co., Ltd. (
1.5
 
percent)—produces and liquefies natural gas from
Qatar’s North Field, as well as exports LNG.
Summarized 100 percent earnings information
 
for equity method investments in affiliated companies,
combined, was as follows:
Millions of Dollars
2019
2018
2017
Revenues
$
11,310
11,654
11,554
Income (loss) before income taxes
3,726
3,660
(2,875)
Net income (loss)
3,085
3,244
(1,431)
Summarized 100 percent balance sheet information
 
for equity method investments in affiliated
 
companies,
 
combined, was as follows:
Millions of Dollars
2019
2018
Current assets
$
3,289
3,285
Noncurrent assets
38,905
41,563
Current liabilities
2,603
2,625
Noncurrent liabilities
22,168
23,874
Our share of income taxes incurred directly
 
by an equity method investee is reported in equity
 
in earnings of
affiliates, and as such is not included in income taxes
 
on our consolidated financial statements.
 
At December 31, 2019, retained earnings included
 
$
32
 
million related to the undistributed earnings
 
of
affiliated companies.
 
Dividends received from affiliates were $
1,378
 
million, $
1,226
 
million and $
605
 
million
in 2019, 2018 and 2017,
 
respectively.
 
 
APLNG
 
APLNG is focused on CBM production from the
 
Bowen and Surat basins in Queensland, Australia,
 
to supply
the domestic gas market and on LNG processing
 
and export sales.
 
Our investment in APLNG gives us access
to CBM resources in Australia and enhances our
 
LNG position.
 
The majority of APLNG LNG is sold under
two long-term sales and purchase agreements,
 
supplemented with sales of additional LNG
 
spot cargoes
targeting the Asia Pacific markets.
 
Origin Energy, an integrated Australian energy company, is the operator of
APLNG’s production and pipeline system, while we operate the LNG
 
facility.
 
APLNG executed project financing agreements
 
for an $
8.5
 
billion project finance facility in 2012.
 
The $8.5
billion project finance facility was initially composed
 
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 December 31, 2019, all amounts have been
 
drawn from the facility.
 
APLNG
made its first principal and interest repayment
 
in March 2017 and is scheduled to make
bi-annual
 
payments
until March 2029.
 
APLNG made a voluntary repayment of $
1.4
 
billion to the Export-Import Bank of China
 
in September 2018.
 
At the same time, APLNG obtained a United
 
States Private Placement (USPP) bond facility
 
of $
1.4
 
billion.
 
APLNG made its first interest payment related to
 
this facility in March 2019, and principal
 
payments are
scheduled to commence in September 2023,
 
with
bi-annual
 
payments due on the facility until September
 
2030.
 
During the first quarter of 2019, APLNG refinanced
 
$
3.2
 
billion of existing project finance debt through two
transactions.
 
As a result of the first transaction, APLNG
 
obtained a commercial bank facility of $
2.6
 
billion.
 
APLNG made its first principal and interest
 
repayment in September 2019 with
bi-annual
 
payments due on the
facility until March 2028.
 
Through the second transaction, APLNG obtained
 
a USPP bond facility of $
0.6
billion.
 
APLNG made its first interest payment in September
 
2019, and principal payments are scheduled
 
to
commence in September 2023, with
bi-annual
 
payments due on the facility until
 
September 2030.
 
In conjunction with the $3.2 billion debt obtained
 
during the first quarter of 2019 to refinance existing
 
project
finance debt, APLNG made voluntary repayments
 
of $
2.2
 
billion and $
1.0
 
billion to a syndicate of Australian
and international commercial banks and the Export-Import
 
Bank of China, respectively.
 
At December 31, 2019, a balance of $
6.7
 
billion was outstanding on the facilities.
 
See Note 12—Guarantees,
for additional information.
 
 
During the first half of 2017, the outlook for crude
 
oil prices deteriorated, and as a result of significantly
reduced price outlooks, the estimated fair
 
value of our investment in APLNG declined to
 
an amount below
carrying value.
 
Based on a review of the facts and circumstances
 
surrounding this decline in fair value, we
concluded in the second quarter of 2017 the impairment
 
was other than temporary under the guidance of
 
FASB
ASC Topic 323, “Investments—Equity Method and Joint Ventures,” and the recognition of an impairment of
our investment to fair value was necessary.
 
Accordingly, we recorded a noncash $
2,384
 
million, before- and
after-tax impairment in our second quarter 2017
 
results.
 
Fair value was estimated based on an internal
discounted cash flow model using estimated
 
future production, an outlook of future prices
 
from a combination
of exchanges (short-term) and pricing service
 
companies (long-term), costs, a market
 
outlook of foreign
exchange rates provided by a third party, and a discount rate believed to be
 
consistent with those used by
principal market participants.
 
The impairment was included in the “Impairments”
 
line on our consolidated
income statement.
 
At December 31, 2019, the carrying value of
 
our equity method investment in APLNG was $
7,228
 
million.
 
The historical cost basis of our
37.5
 
percent share of net assets on the books
 
of APLNG was $
6,751
 
million,
resulting in a basis difference of $
477
 
million on our books.
 
The basis difference, which is substantially all
associated with PP&E and subject to amortization,
 
has been allocated on a relative fair value basis
 
to
individual exploration and production license areas
 
owned by APLNG, some of which are not currently
 
in
production.
 
Any future additional payments are expected
 
to be allocated in a similar manner.
 
Each
exploration license area will periodically be reviewed
 
for any indicators of potential impairment,
 
which, if
required, would result in acceleration of basis
 
difference amortization.
 
As the joint venture produces natural
gas from each license, we amortize the basis
 
difference allocated to that license using the unit-of-production
method.
 
Included in net income (loss) attributable
 
to ConocoPhillips for 2019,
 
2018 and 2017 was after-tax
expense of $
36
 
million, $
44
 
million and $
100
 
million, respectively, representing the amortization of this basis
difference on currently producing licenses.
 
Distributions from APLNG commenced in
 
April 2018.
 
FCCL
FCCL Partnership, a Canadian upstream 50/50 general
 
partnership with Cenovus Energy Inc., produces
bitumen in the Athabasca oil sands in northeastern
 
Alberta and sells the bitumen blend.
 
Cenovus is the
operator and managing partner of FCCL.
 
 
On May 17, 2017, we completed the sale of our
 
50 percent nonoperated interest in the FCCL
 
Partnership, as
well as the majority of our western Canada gas
 
assets to Cenovus Energy.
 
Financial information presented
within this footnote includes our historical
 
interest up to the date of sale.
 
For additional information on the
Canada disposition and our investment in Cenovus
 
Energy, see Note 5—Asset Acquisitions and Dispositions
and Note 7—Investment in Cenovus Energy.
 
QG3
QG3 is a joint venture that owns an integrated
 
large-scale LNG project located in Qatar.
 
We provided project
financing, with a current outstanding balance
 
of $
335
 
million as described below under “Loans and
 
Long-
Term Receivables.”
 
At December 31, 2019, the book value of our equity
 
method investment in QG3,
excluding the project financing, was $
797
 
million.
 
We have terminal and pipeline use agreements with Golden
Pass LNG Terminal and affiliated Golden Pass Pipeline near Sabine Pass, Texas, intended to provide us with
terminal and pipeline capacity for the receipt,
 
storage and regasification of LNG purchased
 
from QG3.
 
We
previously held a 12.4 percent interest in Golden
 
Pass LNG Terminal and Golden Pass Pipeline, but we sold
those interests in the second quarter of 2019 while
 
retaining the basic use agreements.
 
Currently,
 
the LNG
from QG3 is being sold to markets outside of
 
the U.S.
 
For additional information, see Note 5—Asset
Acquisitions and Dispositions.
 
 
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
and long-term receivables to certain affiliated and non-affiliated
 
companies.
 
Loans are recorded when cash is
transferred or seller financing is provided to the
 
affiliated or non-affiliated company pursuant to a loan
agreement.
 
The loan balance will increase as interest is earned
 
on the outstanding loan balance and will
decrease as interest and principal payments are
 
received.
 
Interest is earned at the loan agreement’s stated
interest rate.
 
Loans and long-term receivables are assessed
 
for impairment when events indicate the loan
balance may not be fully recovered.
 
 
At December 31, 2019, significant loans to affiliated
 
companies include $335 million in project financing
 
to
QG3.
 
We own a
30
 
percent interest in QG3, for which we
 
use the equity method of accounting.
 
The other
participants in the project are affiliates of Qatar Petroleum
 
and Mitsui.
 
QG3 secured project financing of
$
4.0
 
billion in December 2005, consisting of $
1.3
 
billion of loans from export credit agencies
 
(ECA), $
1.5
billion from commercial banks, and $
1.2
 
billion from ConocoPhillips.
 
The ConocoPhillips loan facilities have
substantially the same terms as the ECA and commercial
 
bank facilities.
 
On December 15, 2011, QG3
achieved financial completion and all project loan facilities
 
became nonrecourse to the project participants.
 
Semi-annual
repayments began in January 2011 and will extend through July
 
2022.
 
The long-term portion of these loans is included
 
in the “Loans and advances—related parties”
 
line on our
consolidated balance sheet, while the short-term
 
portion is in “Accounts and notes receivable—related
 
parties.”