Our debt balance at September 30, 2021, was
$
19.7
15.4
billion at December 31, 2020.
On January 15, 2021, we completed the acquisition of Concho
in an all-stock transaction.
In the acquisition, we
assumed Concho’s publicly
traded debt, with an outstanding principal balance
of $
3.9
billion, which was recorded
at fair value of $
4.7
billion on the acquisition date.
Debt assumed consisted of the following:
●
3.75
% Notes due
2027
1,000
●
4.3
% Notes due
2028
1,000
●
2.4
% Notes due
2031
500
●
4.875
% Notes due
2047
800
●
4.85
% Notes due
2048
600
The adjustment to fair value of the senior
notes of approximately $
0.8
billion on the acquisition date will be
amortized as an adjustment to interest
expense over the remaining contractual
terms of the senior notes.
In the first quarter of 2021, we completed
a debt exchange offer
related to the debt assumed from
Concho.
Of the
approximately $
3.9
billion in aggregate principal amount
of Concho’s senior notes
offered in the exchange,
98
percent, or approximately
$
3.8
billion, were tendered and accepted.
The new debt issued by ConocoPhillips had
the same interest rates
and maturity dates as the Concho senior notes.
The portion not exchanged, approximately
$
67
million, remained outstanding across
five series of senior notes issued by Concho.
The debt exchange was
treated as a debt modification for
accounting purposes resulting in a portion
of the unamortized fair value
adjustment of the Concho senior notes allocated
to the new debt issued by ConocoPhillips on the settlement
date
of the exchange.
The new debt issued in the exchange is
fully and unconditionally guaranteed by
ConocoPhillips
Company.
We have a revolving
credit facility totaling $
6.0
billion with an expiration date
of
May 2023
facility may be used for direct
bank borrowings, the issuance of letters
of credit totaling up to $
500
support for our commercial paper program.
The revolving credit facility is broadly
syndicated among financial
institutions and does not contain any
material adverse change provisions
or any covenants requiring maintenance
of specified financial ratios or credit ratings.
The facility agreement contains
a cross-default provision
relating to
the failure to pay principal or
interest on other debt obligations
of $
200
million or more by ConocoPhillips, or any
of its consolidated subsidiaries.
The amount of the facility is not subject to redetermination
prior to its expiration
date.
Credit facility borrowings may
bear interest at a margin above
rates offered
by certain designated banks in the
London interbank market or
at a margin above the overnight federal
funds rate or prime rates
offered by certain
designated banks in the U.S.
The facility agreement calls for
commitment fees on available,
but unused, amounts.
The facility agreement also contains
early termination rights if our current directors
or their approved successors
cease to be a majority of the Board of Directors.
The revolving credit facility supports
our ability to issue up to $
6.0
billion of commercial paper.
Commercial paper
is generally limited to
maturities of 90 days
and is included in the short-term debt on our consolidated
balance
sheet. With no commercial paper outstanding
and
direct borrowings or letters
of credit, we had access to $
6.0
billion in available borrowing capacity
under our revolving credit facility at
September 30, 2021.
At December 31,
2020, we had $
300
million of commercial paper outstanding
and
direct borrowings or letters of credit
issued.
Following our September 20, 2021, announcement
regarding the Shell Permian
Acquisition,
the three rating
agencies reviewed their pre-announcement
ratings on our debt resulting in the
following:
●
Fitch affirmed its rating of our long-term debt as “A” with a “stable” outlook.
●
S&P affirmed its rating of our long-term debt of “A-” with a “stable” outlook.
●
Moody’s affirmed its rating of our senior long-term debt of “A3” and upgraded the outlook to “positive”
from “stable.”
We do not have any
ratings triggers on any of our
corporate debt that would
cause an automatic default, and
thereby impact our access to liquidity,
upon downgrade of our credit ratings.
If our credit ratings are downgraded
from their current levels, it could
increase the cost of corporate
debt available to us and restrict
our access to the
commercial paper markets.
If our credit rating were to deteriorate
to a level prohibiting us from accessing
the
commercial paper market, we
would still be able to access funds under our revolving
credit facility.
At September 30, 2021, we had $
283
million of certain variable rate
demand bonds (VRDBs) outstanding with
maturities ranging through 2035.
The VRDBs are redeemable at the option of the bondholders
on any business
day.
If they are ever redeemed, we have
the ability and intent to refinance on
a long-term basis, therefore, the
VRDBs are included in the “Long-term debt” line on our consolidated
balance sheet.