Acquisitions and Dispositions	6 Months Ended
Jun. 30, 2021
Acquisitions and Dispositions [Abstract]
Acquisitions and Dispositions	Note 3—Acquisitions and Dispositions Acquisition of Concho Resources Inc. (Concho) We completed our acquisition of Concho on January 15, 2021 and as defined under the terms of the transaction agreement, each share of Concho common stock was exchanged for 1.46 shares of ConocoPhillips common stock, for total consideration of $ 13.1 billion. Total Consideration Number of shares of Concho common stock issued and outstanding (in thousands)* 194,243 Number of shares of Concho stock awards outstanding (in thousands)* 1,599 Number of shares exchanged 195,842 Exchange ratio 1.46 Additional shares of ConocoPhillips common stock issued as consideration (in thousands) 285,929 Average price per share of ConocoPhillips common stock** $ 45.9025 Total Consideration (Millions) $ 13,125 Outstanding as of January 15, 2021. *Based on the ConocoPhillips average stock price on January 15, 2021. The transaction was accounted for as a business combination under FASB ASC 805 using the acquisition method, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date as we identify new information about facts and circumstances that existed as of the acquisition date to consider. Oil and gas properties were valued using a discounted cash flow approach incorporating market participant and internally generated price assumptions; production profiles; and operating and development cost assumptions. Debt assumed in the acquisition was valued based on observable market prices. The fair values determined for accounts receivables, accounts payable, and most other current assets and current liabilities were equivalent to the carrying value due to their short-term nature. The total consideration of $ 13.1 billion was allocated to the identifiable assets and liabilities based on their fair values as of January 15, 2021. Assets Acquired Millions of Dollars Cash and cash equivalents $ 382 Accounts receivable, net 742 Inventories 45 Prepaid expenses and other current assets 37 Investments and long-term receivables 333 Net properties, plants and equipment 18,971 Other assets 62 Total assets acquired $ 20,572 Liabilities Assumed Accounts payable $ 638 Accrued income and other taxes 49 Employee benefit obligations 4 Other accruals 510 Long-term debt 4,696 Asset retirement obligations and accrued environmental costs 310 Deferred income taxes 1,123 Other liabilities and deferred credits 117 Total liabilities assumed $ 7,447 Net assets acquired $ 13,125 With the completion of the Concho transaction, we acquired proved and unproved properties of approximately $ 11.8 billion and $ 6.9 billion, respectively. We recognized approximately $ 157 million of transaction-related costs that were expensed in the first quarter of 2021. These non-recurring costs related primarily to fees paid to advisors and the settlement of share-based awards for certain Concho employees based on the terms of the Merger Agreement. In the first quarter of 2021, we commenced a restructuring program, the scope of which included combining the operations of the two companies. For the three- and six-month periods ending June 30, 2021, we recognized non-recurring restructuring costs mainly for employee severance and related incremental pension benefit costs of approximately $ 23 million and $ 157 million, respectively. The impact from these transaction and restructuring costs to the lines of our consolidated income statement for the six-month period ending June 30, 2021, are below: Millions of Dollars Transaction Cost Restructuring Cost Total Cost Production and operating expenses $ 70 70 Selling, general and administration expenses 135 52 187 Exploration expenses 18 4 22 Taxes other than income taxes 4 2 6 Other expenses - 29 29 $ 157 157 314 On February 8, 2021, we completed a debt exchange offer related to the debt assumed from Concho. As a result of the debt exchange, we recognized an additional income tax related restructuring charge of $ 75 million. From the acquisition date through June 30, 2021, “Total Revenues and Other Income” and “Net Income (Loss) Attributable to ConocoPhillips” associated with the acquired Concho business were approximately $ 2,637 million and $ 828 million, respectively. The results associated with the Concho business include a before- and after-tax loss of $ 305 million and $ 233 million, respectively, on the acquired derivative contracts. The before- tax loss is recorded within “Total Revenues and Other Income” on our consolidated income statement. The following summarizes the unaudited supplemental pro forma financial information as if we had completed the acquisition of Concho on January 1, 2020: Millions of Dollars Supplemental Pro Forma (unaudited) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Total revenues and other income $ 4,065 11,365 Net loss (229) (619) Net loss attributable to ConocoPhillips (247) (665) $ per share Earnings per share: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Basic net loss $ (0.18) (0.49) Diluted net loss (0.18) (0.49) The unaudited supplemental pro forma financial information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been completed on January 1, 2020, nor is it necessarily indicative of future operating results of the combined entity. The unaudited pro forma financial information for the three- and six-month periods ending June 30, 2020 is a result of combining the consolidated income statement of ConocoPhillips with the results of Concho. The pro forma results do not include transaction-related costs, nor any cost savings anticipated as a result of the transaction. The pro forma results include adjustments to reverse impairment expense of $ 10.5 billion and $ 1.9 billion recorded by Concho in the six-month period ending June 30, 2020, related to oil and gas properties and goodwill, respectively. Other adjustments made relate primarily to DD&A, which is based on the unit-of- production method, resulting from the purchase price allocated to properties, plants and equipment. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected. Assets Sold In 2020, we completed the sale of our Australia-West asset and operations. The sales agreement entitled us to a $ 200 million payment upon a final investment decision (FID) of the Barossa development project. On March 30, 2021, FID was announced and as such, we recognized a $ 200 million gain on disposition in the first quarter of 2021. The purchaser failed to pay the FID bonus when due. We have commenced an arbitration proceeding against the purchaser to enforce our contractual right to the $ 200 million, plus interest accruing from the due date. Results of operations related to this transaction are reflected in our Asia Pacific segment. In 2017, we completed the sale of our 50 percent nonoperated interest in the Foster Creek Christina Lake (FCCL) Partnership, as well as the majority of our western Canada gas assets to Cenovus Energy (CVE). Consideration for the transaction included a five-year, uncapped contingent payment. The contingent payment, calculated on a quarterly basis, is $6 million CAD for every $1 CAD by which the WCS quarterly average crude price exceeds $52 CAD per barrel . For the three- and six-months ended June 30, 2021, we recorded contingent payments of $ 68 million and $ 94 million, respectively. No contingent payments were recorded in 2020. Contingent payments are recorded as gain on dispositions on our consolidated income statement and reflected in our Canada segment. Planned Dispositions In July 2021, we entered into divestiture agreements to sell our interests in certain noncore assets in our Lower 48 segment. Proceeds from these agreements total approximately $ 0.2 billion before customary adjustments. The transactions are expected to close in the third quarter of 2021.

Note 3—Acquisitions and Dispositions

Acquisition of

Concho Resources Inc.

(Concho)

We completed our acquisition of Concho on

January 15, 2021

and as defined under the terms of the

transaction

agreement, each share of Concho common stock

was exchanged for

1.46

shares of ConocoPhillips common

stock, for total consideration of $

13.1

billion.

Total Consideration

Number of shares of Concho common stock

issued and outstanding (in thousands)*

194,243

Number of shares of Concho stock awards outstanding

(in thousands)*

1,599

Number of shares exchanged

195,842

Exchange ratio

1.46

Additional shares of ConocoPhillips common stock

issued as consideration (in thousands)

285,929

Average price per share of ConocoPhillips common stock**

45.9025

Total Consideration (Millions)

13,125

*Outstanding as of January 15, 2021.

**Based on the ConocoPhillips average stock price on January

15, 2021.

The transaction was accounted for as a business

combination under FASB ASC 805 using the acquisition

method, which requires assets acquired and liabilities

assumed to be measured at their acquisition date fair

values.

Fair value measurements were made for acquired

assets and liabilities, and adjustments to those

measurements may be made in subsequent periods,

up to one year from the acquisition date as

we identify new

information about facts and circumstances that existed

as of the acquisition date to consider.

Oil and gas

properties were valued using a discounted cash

flow approach incorporating market participant

and internally

generated price assumptions;

production profiles;

and operating and development cost assumptions.

Debt

assumed in the acquisition was valued based on

observable market prices.

The fair values determined for

accounts receivables, accounts payable, and most

other current assets and current liabilities

were equivalent to

the carrying value due to their short-term

nature.

The total consideration of $

13.1

billion was allocated to the

identifiable assets and liabilities based on their

fair values as of January 15, 2021.

Assets Acquired

Millions of Dollars

Cash and cash equivalents

382

Accounts receivable, net

742

Inventories

Prepaid expenses and other current assets

Investments and long-term receivables

333

Net properties, plants and equipment

18,971

Other assets

Total assets acquired

20,572

Liabilities Assumed

Accounts payable

638

Accrued income and other taxes

Employee benefit obligations

Other accruals

510

Long-term debt

4,696

Asset retirement obligations and accrued environmental

costs

310

Deferred income taxes

1,123

Other liabilities and deferred credits

117

Total liabilities assumed

7,447

Net assets acquired

13,125

With the completion of the Concho transaction, we acquired proved

and unproved properties of approximately

11.8

billion and $

6.9

billion, respectively.

We recognized approximately $

157

million of transaction-related costs that

were expensed in the first quarter

of 2021.

These non-recurring costs related primarily

to fees paid to advisors and the settlement of

share-based

awards for certain Concho employees based

on the terms of the Merger Agreement.

In the first quarter of 2021, we commenced a restructuring

program,

the scope of which included combining

the operations of the two companies.

For the three-

and six-month periods ending June 30, 2021,

recognized non-recurring restructuring costs mainly

for employee severance and related incremental pension

benefit costs of approximately $

million and $

157

million, respectively.

Millions of Dollars

Transaction Cost

Restructuring Cost

Total Cost

Production and operating expenses

Selling, general and administration expenses

135

187

Exploration expenses

Taxes other than income taxes

Other expenses

157

314

From the acquisition date through June 30, 2021,

“Total Revenues and Other Income” and “Net Income (Loss)

Attributable to ConocoPhillips” associated with the

acquired Concho business were approximately

2,637

million and $

828

million, respectively.

The results associated with the Concho business

include a before- and

after-tax loss of $

305

million and $

233

million, respectively, on the acquired derivative contracts.

The before-

tax loss is recorded within “Total Revenues and Other Income” on our consolidated

income statement.

Millions of Dollars

Supplemental Pro Forma (unaudited)

Three Months Ended

June 30, 2020

Six Months Ended

June 30, 2020

Total revenues and other income

4,065

11,365

Net loss

(229)

(619)

Net loss attributable to ConocoPhillips

(247)

(665)

$ per share

Earnings per share:

Three Months Ended

June 30, 2020

Six Months Ended

June 30, 2020

Basic net loss

(0.18)

(0.49)

Diluted net loss

(0.18)

(0.49)

The unaudited supplemental pro forma financial

information is presented for illustration purposes

only and is

not necessarily indicative of the operating results

that would have occurred had the transaction been

completed

on January 1, 2020, nor is it necessarily indicative

of future operating results of the combined entity.

The

unaudited pro forma financial information

for the three-

and six-month periods ending June 30, 2020 is a result

of combining the consolidated income statement

of ConocoPhillips with the results of Concho.

The pro forma

results do not include transaction-related costs,

nor any cost savings anticipated as a result

of the transaction.

The pro forma results include adjustments to

reverse impairment expense of $

10.5

billion and $

1.9

billion

recorded by Concho in the six-month period ending

June 30, 2020, related to oil and gas properties

and

goodwill, respectively.

Other adjustments made relate primarily to

DD&A, which is based on the unit-of-

production method, resulting from the purchase

price allocated to properties, plants and equipment.

believe the estimates and assumptions are reasonable,

and the relative effects of the transaction are properly

reflected.

Assets Sold

In 2020, we completed the sale of our Australia-West asset and operations.

The sales agreement entitled us to

a $

200

million payment upon a final investment

decision (FID) of the Barossa development

project.

On March

30, 2021, FID was announced and as such,

we recognized a $

200

million gain on disposition in the first

quarter

of 2021.

The purchaser failed to pay the FID bonus when

due.

We have commenced an arbitration proceeding

against the purchaser to enforce our contractual right

to the $

200

million, plus interest accruing from the due

date.

Results of operations related to this transaction

are reflected in our Asia Pacific segment.

In 2017, we completed the sale of our

percent nonoperated interest in the Foster Creek

Christina Lake

(FCCL) Partnership, as well as the majority of

our western Canada gas assets to Cenovus Energy (CVE).

Consideration for the transaction included a five-year, uncapped contingent payment. The contingent payment,

calculated on a quarterly basis, is $6 million CAD for every $1 CAD by which the WCS quarterly average

crude price exceeds $52 CAD per barrel

. For the three- and six-months ended June

30, 2021, we recorded

contingent payments of $

million and $

million, respectively.

contingent payments were recorded in

2020.

Contingent payments are recorded as gain on dispositions

on our consolidated income statement and

reflected in our Canada segment.

Planned Dispositions

In July 2021, we entered into divestiture agreements

to sell our interests in certain noncore assets

in our Lower

48 segment.

Proceeds from these agreements total approximately

0.2

billion before customary adjustments.

The transactions are expected to close in the third

quarter of 2021.