ConocoPhillips 10-K 2019-12-31

2019

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

10-K

(Mark One)

[

X

]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF

1934

For the fiscal year ended

December 31, 2019

OR

[

]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF

1934

For the transition period from

to

Commission file number:

001-32395

ConocoPhillips

(Exact name of registrant as specified in its charter)

Delaware

01-0562944

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

925 N. Eldridge Parkway

Houston

,

TX

77079

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code:

-

293-1000

Securities registered pursuant to Section 12(b) of the

Act:

Title of each class

Trading symbols

Name of each exchange on which registered

Common Stock, $.01 Par Value

COP

New York Stock Exchange

7% Debentures due 2029

CUSIP—718507BK1

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the

Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer,

as defined in Rule 405 of the Securities Act.

[x]

Yes

[ ] No

Indicate by check mark if the registrant is not required to file reports

pursuant to Section 13 or Section 15(d) of the

Act.

[ ] Yes

[x]

No

Indicate by check mark whether the registrant (1) has filed all reports required

to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or

for such shorter period that the registrant was

required to file such reports), and (2) has been subject to such filing requirements for

the past 90 days. [x]

Yes

[ ] No

Indicate by check mark whether the registrant has submitted electronically

every Interactive Data File required to be

submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this

chapter) during the preceding 12 months (or for

such shorter period that the registrant was required to submit such files).

[x]

Yes

[ ] No

Indicate by check mark whether the registrant is a large accelerated filer,

an accelerated filer, a non-accelerated filer,

a

smaller reporting company,

or an emerging growth company.

See the definitions of “large accelerated filer,”

“accelerated filer,” “smaller reporting

company” and “emerging growth company” in Rule 12b-2 of the Exchange

Act.

Large accelerated filer

[x]

Accelerated filer [

]

Non-accelerated filer [

]

Smaller reporting company

[

]

Emerging growth company

[

]

If an emerging growth company,

indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting

standards provided pursuant to Section

13(a) of the Exchange Act. [

]

Indicate by check mark whether the registrant is a shell company (as defined

in Rule 12b-2 of the Act). [

] Yes

[x]

No

The aggregate market value of common stock held by non-affiliates of

the registrant on June 28, 2019, the last

business day of the registrant’s most recently

completed second fiscal quarter, based on

the closing price on that date

of $61.00, was $

67.7

billion.

The registrant had

1,081,132,415

shares of common stock outstanding at January 31, 2020.

Documents incorporated by reference:

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be

held on May 12, 2020 (Part III)

TABLE OF CONTENTS

Page

Commonly Used Abbreviations……………………………………………………………………….

Item

PART

I

1 and 2.

Business and Properties

......................................................................................................

Corporate Structure

........................................................................................................

Segment and Geographic Information

...........................................................................

Alaska

.......................................................................................................................

Lower 48

...................................................................................................................

Canada ......................................................................................................................

Europe and North Africa

...........................................................................................

Asia Pacific and Middle East

....................................................................................

Other International

....................................................................................................

Competition ...................................................................................................................

General

...........................................................................................................................

1A.

Risk Factors

........................................................................................................................

1B.

Unresolved Staff Comments

...............................................................................................

Legal Proceedings

...............................................................................................................

Mine Safety Disclosures

.....................................................................................................

Information About our Executive Officers

.........................................................................

PART

II

Market for Registrant’s Common Equity, Related Stockholder Matters and

Issuer Purchases of Equity Securities

............................................................................

Selected Financial Data ......................................................................................................

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

.....................................................................................................

7A.

Quantitative and Qualitative Disclosures

About Market Risk

............................................

Financial Statements and Supplementary

Data

...................................................................

Changes in and Disagreements with Accountants

on Accounting and

Financial Disclosure

.......................................................................................................

9A.

Controls and Procedures

.....................................................................................................

9B.

Other Information

...............................................................................................................

PART

III

Directors, Executive Officers and Corporate Governance

..................................................

Executive Compensation

....................................................................................................

Security Ownership of Certain Beneficial Owners

and Management and

Related Stockholder Matters

..........................................................................................

Certain Relationships and Related Transactions, and Director

Independence....................

Principal Accounting Fees and Services

.............................................................................

PART

IV

Exhibits, Financial Statement Schedules

............................................................................

Signatures ...........................................................................................................................

Commonly Used Abbreviations

The following industry-specific, accounting and

other terms, and abbreviations may be commonly

used in this

report.

Showing the first 8K of 64K characters. Open the full section

You

should carefully consider the following risk

factors in addition to the other information

included in this

Annual Report on Form 10-K.

These risk factors are not the only risks

we face.

Our business could also be

affected by additional risks and uncertainties not currently

known to us or that we currently consider to be

immaterial.

If any of these risks were to occur, our business, operating results and financial

condition, as well

as the value of an investment in our common

stock could be adversely affected.

Our operating results, our future rate of growth

and the carrying value of our assets are exposed

to the

effects of changing commodity prices.

Prices for crude oil, bitumen, natural gas, NGLs and

LNG can fluctuate widely.

Brent crude oil prices

averaged $64 per barrel in 2019, ranging from

a low of $53 per barrel in January to a high of almost

$75 per

barrel in April.

Given volatility in commodity price drivers

and the worldwide political and economic

environment generally, as well as increased uncertainty generated by recent (and

potential future) armed

hostilities in various oil-producing regions around the

globe, price trends may continue to be volatile.

Our

revenues, operating results and future rate of growth

are highly dependent on the prices

we receive for our

crude oil, bitumen, natural gas, NGLs and

LNG.

The factors influencing these prices are

beyond our control.

Lower crude oil, bitumen, natural gas, NGL and

LNG prices may have a material adverse effect on our

revenues, operating income, cash flows and liquidity, and may also affect the amount

of dividends we elect to

declare and pay on our common stock and the

amount of shares we elect to acquire as

part of the share

repurchase program and the timing of such acquisitions.

Lower prices may also limit the amount of reserves

we can produce economically, adversely affecting our proved reserves, reserve replacement

ratio and

accelerating the reduction in our existing reserve levels

as we continue production from upstream

fields.

Significant reductions in crude oil, bitumen, natural

gas, NGLs and LNG prices could also require

us to reduce

our capital expenditures, impair the carrying value

of our assets or discontinue the classification

of certain

assets as proved reserves.

In the past three years, we recognized several

impairments, which are described in

Note 9—Impairments and the “APLNG” section

of Note 6—Investments, Loans and Long-Term Receivables,

in the Notes to Consolidated Financial Statements.

If commodity prices remain low relative

to their historic

levels, and as we continue to optimize our investments

and exercise capital flexibility, it is reasonably likely

we will incur future impairments to long-lived assets

used in operations, investments in nonconsolidated

entities accounted for under the equity method and

unproved properties.

Although it is not reasonably

practicable to quantify the impact of any future

impairments at this time, our results of operations

could be

adversely affected as a result.

Our ability to declare and pay dividends and repurchase

shares is subject to certain considerations.

Dividends are authorized and determined by

our Board of Directors in its sole discretion

and depend upon a

number of factors, including:

●

Cash available for distribution.

●

Our results of operations and anticipated future

results of operations.

●

Our financial condition, especially in relation

to the anticipated future capital needs of our

properties.

●

The level of distributions paid by comparable companies.

●

Our operating expenses.

●

Other factors our Board of Directors deems

relevant.

We expect to continue to pay quarterly dividends to our stockholders; however, our Board of Directors may

reduce our dividend or cease declaring dividends

at any time, including if it determines that

our net cash

provided by operating activities,

after deducting capital expenditures and investments,

are not sufficient to pay

our desired levels of dividends to our stockholders

or to pay dividends to our stockholders at all.

Additionally, as of December 31, 2019, $5.4 billion of repurchase authority

remained of the $15 billion share

repurchase program our Board of Directors had

authorized.

In February, 2020, our Board of Directors

approved an increase to our repurchase authorization

from $15 billion to $25 billion, to support

our plan for

future share repurchases.

Our share repurchase program does not obligate

us to acquire a specific number of

shares during any period, and our decision to

commence, discontinue or resume repurchases

in any period will

depend on the same factors that our Board of

Directors may consider when declaring dividends,

among others.

Any downward revision in the amount of dividends

we pay to stockholders or the number of shares

we

purchase under our share repurchase program could

have an adverse effect on the market price of our common

stock.

We may need additional capital in the future, and it may not be available on acceptable

terms.

We have historically relied primarily upon cash generated by our operations to fund

our operations and

strategy; however, we have also relied from time to time on access to

the debt and equity capital markets for

funding.

There can be no assurance that additional debt

or equity financing will be available in the future

on

acceptable terms, or at all.

In addition, although we anticipate we

will be able to repay our existing

indebtedness when it matures or in accordance

with our stated plans, there can be no assurance

we will be able

to do so.

Our ability to obtain additional financing, or

refinance our existing indebtedness when it matures

or

in accordance with our plans, will be subject to a

number of factors, including market conditions,

our operating

performance, investor sentiment and our ability

to incur additional debt in compliance with agreements

governing our then-outstanding debt.

If we are unable to generate sufficient funds from

operations or raise

additional capital for any reason, our business could

be adversely affected.

In addition, we are regularly evaluated by the major

rating agencies based on a number of factors,

including

our financial strength and conditions affecting the oil

and gas industry generally.

We and other industry

companies have had their ratings reduced in the

past due to negative commodity price outlooks.

Any

downgrade in our credit rating or announcement

that our credit rating is under review for possible

downgrade

could increase the cost associated with any additional

indebtedness we incur.

Our business may be adversely affected by deterioration

in the credit quality of, or defaults under our

contracts with, third parties with whom we do

business.

The operation of our business requires us to engage

in transactions with numerous counterparties

operating in a

variety of industries, including other companies

operating in the oil and gas industry.

These counterparties

may default on their obligations to us as a result

of operational failures or a lack of liquidity, or for other

reasons, including bankruptcy.

Market speculation about the credit quality

of these counterparties, or their

ability to continue performing on their existing obligations,

may also exacerbate any operational difficulties

or

liquidity issues they are experiencing, particularly

as it relates to other companies in the oil and gas industry

as

a result of the volatility in commodity prices.

Any default by any of our counterparties may

result in our

inability to perform our obligations under agreements

we have made with third parties or may otherwise

adversely affect our business or results of operations.

In addition, our rights against any of our counterparties

as a result of a default may not be adequate to

compensate us for the resulting harm caused

or may not be

enforceable at all in some circumstances.

We may also be forced to incur additional costs as we attempt to

enforce any rights we have against a defaulting

counterparty, which could further adversely impact our results

of operations.

In particular, in August 2018, we entered into a settlement

agreement with Petróleos de Venezuela, S.A.

(PDVSA) providing for the payment of approximately

$2 billion over a five-year period in connection

with an

arbitration award issued by the International

Chamber of Commerce (ICC) Tribunal in favor of ConocoPhillips

on a contractual dispute arising from Venezuela’s expropriation of our interests in the Petrozuata and Hamaca

heavy oil ventures and other pre-expropriation

fiscal measures.

We collected approximately $0.8 billion of the

$2.0 billion settlement in 2018 and 2019.

PDVSA has defaulted on its remaining payment

obligations under

this agreement, we are therefore now forced to

incur additional costs as we seek to recover any

unpaid amounts

under the agreement.

Unless we successfully add to our existing proved

reserves, our future crude oil, bitumen,

natural gas and

NGL production will decline, resulting in an

adverse impact to our business.

The rate of production from upstream fields

generally declines as reserves are depleted.

If we do not conduct

successful exploration and development activities,

or, through engineering studies, optimize production

performance or identify additional or secondary

recovery reserves, our proved reserves

will decline materially

as we produce crude oil, bitumen, natural gas and

NGLs, and our business will experience reduced cash

flows

and results of operations.

Any cash conservation efforts we may undertake as a result

of commodity price

declines may further limit our ability to replace

depleted reserves.

The exploration and production of oil and gas

is a highly competitive industry.

The exploration and production of crude oil,

bitumen, natural gas and NGLs is a highly

competitive business.

We compete with private, public and state-owned companies in all facets of the

exploration and production

business, including to locate and obtain new

sources of supply and to produce oil, bitumen,

natural gas and

NGLs in an efficient, cost-effective manner.

Some of our competitors are larger and have greater

resources

than we do or may be willing to incur a higher

level of risk than we are willing to incur to obtain

potential

sources of supply.

If we are not successful in our competition

for new reserves, our financial condition and

results of operations may be adversely affected.

Any material change in the factors and assumptions

underlying our estimates of crude oil, bitumen,

natural

gas and NGL reserves could impair the quantity

and value of those reserves.

Our proved reserve information included in this annual

report represents management’s best estimates based

on assumptions, as of a specified date, of the volumes

to be recovered from underground accumulations of

crude oil, bitumen, natural gas and NGLs.

Such volumes cannot be directly measured

and the estimates and

underlying assumptions used by management are

subject to substantial risk and uncertainty.

Any material

changes in the factors and assumptions underlying

our estimates of these items could result

in a material

negative impact to the volume of reserves reported

or could cause us to incur impairment expenses

on property

associated with the production of those reserves.

Future reserve revisions could also result

from changes in,

among other things, governmental regulation.

We expect to continue to incur substantial capital expenditures and operating

costs as a result of our

compliance with existing and future environmental

laws and regulations.

Our business is subject to numerous laws and regulations

relating to the protection of the environment, which

are expected to continue to have an increasing

impact on our operations in the U.S. and in other

countries in

which we operate.

For a description of the most significant of these

environmental laws and regulations, see

the “Contingencies—Environmental” section

of Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

These laws and regulations continue to increase

in both number and

complexity and affect our operations with respect to, among

other things:

●

Permits required in connection with exploration,

drilling, production and other activities.The

discharge of pollutants into the environment.

●

Emissions into the atmosphere, such as nitrogen

oxides, sulfur dioxide, mercury and GHG emissions.

●

Carbon taxes.

●

The handling, use, storage, transportation, disposal

and cleanup of hazardous materials and hazardous

and nonhazardous wastes.

●

The dismantlement, abandonment and restoration

of our properties and facilities at the

end of their

useful lives.

●

Exploration and production activities in

certain areas, such as offshore environments, arctic fields,

oil

sands reservoirs and unconventional plays.

We have incurred and will continue to incur substantial capital, operating and maintenance,

and remediation

expenditures as a result of these laws and regulations.

Any failure by us to comply with existing

or future

laws, regulations and other requirements could result

in administrative or civil penalties, criminal

fines, other

enforcement actions or third-party litigation

against us.

To the extent these expenditures, as with all costs, are

not ultimately reflected in the prices of our products

and services, our business, financial

condition, results of

operations and cash flows in future periods could

be materially adversely affected.

Existing and future laws, regulations and initiatives

relating to global climate change, such as limitations

on GHG emissions, may impact or limit

our business plans, result in significant expenditures,

promote

alternative uses of energy or reduce demand

for our products.

Continuing political and social attention to the

issue of global climate change has resulted in

both existing and

pending international agreements and national,

regional or local legislation and regulatory

measures to limit

GHG emissions, such as cap and trade regimes, carbon

taxes, restrictive permitting, increased fuel efficiency

standards and incentives or mandates for renewable

energy.

For example, in December 2015, the U.S. joined

the international community at the 21st Conference

of the Parties of the United Nations Framework

Convention on Climate Change in Paris that

prepared an agreement requiring member countries

to review and

represent a progression in their intended GHG

emission reduction goals every five years

beginning in 2020.

While the U.S. announced its intention to withdraw

from the Paris Agreement, there is no guarantee

that the

commitments made by the U.S. will not be implemented,

in whole or in part, by U.S. state and local

governments or by major corporations headquartered

in the U.S.

In addition, our operations continue in

countries around the world which are party to,

and have not announced an intent to

withdraw from, the Paris

Agreement.

The implementation of current agreements and

regulatory measures, as well as any future

agreements or measures addressing climate

change and GHG emissions, may adversely

impact the demand for

our products, impose taxes on our products or operations

or require us to purchase emission credits

or reduce

emission of GHGs from our operations.

As a result, we may experience declines in commodity

prices or incur

substantial capital expenditures and compliance,

operating, maintenance and remediation costs,

any of which

may have an adverse effect on our business and results

of operations.

Additionally, increasing attention to global climate change has resulted in pressure

upon shareholders,

financial institutions and/or financial markets

to modify their relationships with oil and gas companies

and to

limit investments and/or funding to such companies,

which could increase our costs or otherwise

adversely

affect our business and results of operations.

Furthermore, increasing attention to global climate

change has resulted in an increased likelihood of

governmental investigations and private litigation,

which could increase our costs or otherwise adversely

affect

our business.

In 2017 and 2018, cities, counties, and

a state government in California, New

York, Washington,

Rhode Island and Maryland, as well as the Pacific

Coast Federation of Fishermen’s Association, Inc., filed

lawsuits against oil and gas companies, including

ConocoPhillips, seeking compensatory damages

and

equitable relief to abate alleged climate change impacts.

ConocoPhillips is vigorously defending against

these

lawsuits.

The ultimate outcome and impact to us

cannot be predicted with certainty, and we could incur

substantial legal costs associated with defending

these and similar lawsuits in the future.

In addition, although

we design and operate our business operations

to accommodate expected climatic

conditions, to the extent there are significant

changes in the earth’s climate, such as more severe or frequent

weather conditions in the markets where we operate

or the areas where our assets reside, we could incur

increased expenses, our operations could be adversely

impacted, and demand for our products could

fall.

For more information on legislation or precursors

for possible regulation relating to global climate

change that

affect or could affect our operations and a description of the company’s response, see the

“Contingencies—

Climate Change” section of Management’s Discussion and Analysis

of Financial Condition and Results of

Operations.

Domestic and worldwide political and economic

developments could damage our operations and materially

reduce our profitability and cash flows.

Actions of the U.S., state, local and foreign

governments, through sanctions, tax and other

legislation,

executive order and commercial restrictions,

could reduce our operating profitability both

in the U.S. and

abroad.

In certain locations, governments have imposed

or proposed restrictions on our operations;

special

taxes or tax assessments; and payment transparency

regulations that could require us to disclose

competitively

sensitive information or might cause us to violate

non-disclosure laws of other countries.

One area subject to significant political

and regulatory activity is the use of hydraulic

fracturing, an essential

completion technique that facilitates production

of oil and natural gas otherwise trapped in lower

permeability

rock formations.

A range of local, state, federal and national laws

and regulations currently govern or, in some

hydraulic fracturing operations, prohibit hydraulic

fracturing in some jurisdictions.

Although hydraulic

fracturing has been conducted for many decades,

a number of new laws, regulations and permitting

requirements are under consideration by the

U.S. EPA and others which could result in increased costs,

operating restrictions, operational delays or limit

the ability to develop oil and natural gas resources.

Certain

jurisdictions in which we operate, including state

and local governments in Colorado, have adopted

or are

considering regulations that could impose new

or more stringent permitting, disclosure

or other regulatory

requirements on hydraulic fracturing or other oil

and natural-gas operations, including subsurface

water

disposal.

In addition, certain interest groups have also

proposed ballot initiatives and constitutional

amendments designed to restrict oil and natural-gas

development generally and hydraulic fracturing

in

particular.

For example, in 2018, Colorado voters rejected

Proposition 112, a Colorado ballot initiative that

would have drastically limited the use of hydraulic

fracturing in Colorado.

In the event that ballot initiatives,

local or state restrictions or prohibitions are

adopted and result in more stringent limitations

on the production

and development of oil and natural gas in areas

where we conduct operations, we may incur significant

costs to

comply with such requirements or may experience

delays or curtailment in the permitting

or pursuit of

exploration, development or production activities.

Such compliance costs and delays, curtailments,

limitations

or prohibitions could have a material adverse

effect on our business, prospects, results of operations, financial

condition and liquidity.

The U.S. government can also prevent or restrict

us from doing business in foreign countries.

These

restrictions and those of foreign governments

have in the past limited our ability to

operate in, or gain access

to, opportunities in various countries.

Actions by host governments, such as the expropriation

of our oil assets

by the Venezuelan government, have affected operations significantly in the past and may continue to

do so in

the future.

Changes in domestic and international regulations

may affect our ability to collect payments such

as those pertaining to the settlement with PDVSA

or the ICSID Award against the Government of Venezuela;

or to obtain or maintain permits, including those

necessary for drilling and development of wells

in various

locations.

Local political and economic factors in international

markets could have a material adverse effect on us.

Approximately 50 percent of our hydrocarbon

production was derived from production outside

the U.S. in

2019, and 39 percent of our proved reserves, as

of December 31, 2019, were located outside

the U.S.

We are

subject to risks associated with operations in international

markets, including changes in foreign governmental

policies relating to crude oil, natural gas, bitumen,

NGLs or LNG pricing and taxation, other

political,

economic or diplomatic developments (including

the effect of international trade discussion and disputes),

changing political conditions and international

monetary and currency rate fluctuations.

In addition, some

countries where we operate lack a fully independent

judiciary system.

This, coupled with changes in foreign

law or policy, results in a lack of legal certainty that exposes our operations to

increased risks, including

increased difficulty in enforcing our agreements in those

jurisdictions and increased risks of adverse

actions by

local government authorities, such as expropriations.

Our business may be adversely affected by price controls,

government-imposed limitations on production

of

crude oil, bitumen, natural gas and NGLs, or the

unavailability of adequate gathering, processing,

compression, transportation, and pipeline

facilities and equipment for our production

of crude oil, bitumen,

natural gas and NGLs.

As discussed above, our operations are subject

to extensive governmental regulations.

From time to time,

regulatory agencies have imposed price controls

and limitations on production by restricting

the rate of flow of

crude oil, bitumen, natural gas and NGL wells

below actual production capacity.

Because legal requirements

are frequently changed and subject to interpretation,

we cannot predict whether future restrictions

on our

business may be enacted or become applicable to

us.

Our ability to sell and deliver the crude oil, bitumen,

natural gas, NGLs and LNG that we produce

also

depends on the availability, proximity, and capacity of gathering, processing, compression, transportation

and

pipeline facilities and equipment, as well as any necessary

diluents to prepare our crude oil, bitumen, natural

gas, NGLs and LNG for transport.

The facilities, equipment and diluents we rely

on may be temporarily

unavailable to us due to market conditions, extreme

weather events, regulatory reasons, mechanical

reasons or

other factors or conditions, many of which are

beyond our control.

In addition, in certain newer plays, the

capacity of necessary facilities, equipment and diluents

may not be sufficient to accommodate production

from

existing and new wells, and construction and permitting

delays, permitting costs and regulatory or other

constraints could limit or delay the construction,

manufacture or other acquisition of new facilities

and

equipment.

If any facilities, equipment or diluents, or

any of the transportation methods and channels

that we

rely on become unavailable for any period of time,

we may incur increased costs to transport

our crude oil,

bitumen, natural gas, NGLs and LNG for sale or

we may be forced to curtail our production

of crude oil,

bitumen, natural gas or NGLs.

Our investments in joint ventures decrease

our ability to manage risk.

We conduct many of our operations through joint ventures in which we may share

control with our joint

venture partners.

There is a risk our joint venture participants may

at any time have economic, business or

legal interests or goals that are inconsistent with

those of the joint venture or us, or our joint

venture partners

may be unable to meet their economic or other

obligations and we may be required to

fulfill those obligations

alone.

Failure by us, or an entity in which we have

a joint venture interest, to adequately manage

the risks

associated with any operations, acquisitions or

dispositions could have a material adverse effect on the

financial condition or results of operations of our

joint ventures and, in turn, our business and operations.

We may not be able to successfully complete any disposition we elect to pursue.

From time to time, we may seek to divest portions

of our business or investments that

are not important to our

ongoing strategic objectives.

Any dispositions we undertake may involve numerous

risks and uncertainties,

any of which could adversely affect our results of operations

or financial condition.

In particular, we may not

be able to successfully complete any disposition

on a timeline or on terms acceptable

to us, if at all, whether

due to market conditions, regulatory challenges

or other concerns.

In addition, the reinvestment of capital

from disposition proceeds may not ultimately

yield investment returns in line with our internal

or external

expectations.

Any dispositions we pursue may also result in

disruption to other parts of our business,

including through the diversion of resources

and management attention from our ongoing

business and other

strategic matters, or through the disruption

of relationships with our employees and key

vendors.

Further, in

connection with any disposition, we may enter into

transition services agreements or undertake

indemnity or

other obligations that may result in additional

expenses for us.

We may also be required under applicable

accounting rules to recognize impairments

associated with any disposition we pursue,

whether or not

completed.

As part of our disposition strategy, 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.

Consideration for the transaction included 208

million Cenovus Energy common shares.

We may not be able

to liquidate the shares issued to us by Cenovus

Energy at prices we deem acceptable, or at all.

Our operations present hazards and risks that

require significant and continuous oversight.

The scope and nature of our operations present

a variety of significant hazards and risks, including

operational

hazards and risks such as explosions, fires,

crude oil spills, severe weather, geological events, labor disputes,

armed hostilities, terrorist attacks, sabotage, civil

unrest or cyber attacks.

Our operations may also be

adversely affected by unavailability, interruptions or accidents involving services

or infrastructure required to

develop, produce, process or transport our production,

such as contract labor, drilling rigs, pipelines, railcars,

tankers, barges or other infrastructure.

Our operations are subject to the additional hazards

of pollution,

releases of toxic gas and other environmental hazards

and risks.

Offshore activities may pose incrementally

greater risks because of complex subsurface

conditions such as higher reservoir pressures,

water depths and

metocean conditions.

All such hazards could result in loss of human

life, significant property and equipment

damage, environmental pollution, impairment

of operations, substantial losses to us and damage to

our

reputation.

Further, our business and operations may be disrupted if

we do not respond, or are perceived not to

respond, in an appropriate manner to any of these hazards

and risks or any other major crisis or if

we are

unable to efficiently restore or replace affected operational

components and capacity.

Our technologies, systems and networks may be subject

to cyber attacks.

Our business, like others within the oil and gas

industry, has become increasingly dependent on digital

technologies, some of which are managed by third-party

service providers on whom we rely to

help us collect,

host or process information.

Among other activities, we rely on digital technology

to estimate oil and gas

reserves, process and record financial and operating

data, analyze seismic and drilling information

and

communicate with employees and third parties.

As a result, we face various cyber security

threats such as

attempts to gain unauthorized access to, or control

of, sensitive information about our operations

and our

employees, attempts to render our data or systems

(or those of third parties with whom we do

business)

corrupted or unusable, threats to the security

of our facilities and infrastructure as well

as those of third parties

with whom we do business and attempted cyber

terrorism.

In addition, computers control oil and gas production,

processing equipment and distribution

systems globally

and are necessary to deliver our production to market.

A disruption, failure or a cyber breach of these

operating systems, or of the networks and infrastructure

on which they rely, many of which are not owned or

operated by us, could damage critical production,

distribution or storage assets, delay or prevent delivery

to

markets or make it difficult or impossible to accurately

account for production and settle transactions.

Although we have experienced occasional breaches

of our cyber security, none of these breaches have had a

material effect on our business, operations or reputation.

As cyber attacks continue to evolve, we must

continually expend additional resources to continue

to modify or enhance our protective measures

or to

investigate and remediate any vulnerabilities

detected.

Our implementation of various procedures

and controls

to monitor and mitigate security threats

and to increase security for our information, facilities

and

infrastructure may result in increased costs.

Despite our ongoing investments in security

resources, talent and

business practices, we are unable to assure that

any security measures will be effective.

If our systems and infrastructure were to be breached,

damaged or disrupted, we could be subject to serious

negative consequences, including disruption of

our operations, damage to our reputation,

a loss of counterparty

trust, reimbursement or other costs, increased compliance

costs, significant litigation exposure and legal

liability or regulatory fines, penalties or intervention.

Any of these could materially and adversely affect our

business, results of operations or financial condition.

Although we have business continuity plans in

place, our

operations may be adversely affected by significant and

widespread disruption to our systems and

infrastructure that support our business.

While we continue to evolve and modify our

business continuity

plans, there can be no assurance that they will

be effective in avoiding disruption and business impacts.

Further, our insurance may not be adequate to compensate

us for all resulting losses, and the cost to obtain

adequate coverage may increase for us in the future.

None.

LEGAL PROCEEDINGS

The following is a description of reportable legal

proceedings, including those involving governmental

authorities under federal, state and local laws regulating

the discharge of materials into the environment

for

this reporting period.

The following proceedings include those

matters that arose during the fourth quarter of

2019, as well as matters previously reported in our

2018 Form 10-K and our first-, second- and third-quarter

2019 Form 10-Qs that were not resolved prior

to the fourth quarter of 2019.

Material developments to the

previously reported matters have been included

in the descriptions below.

While it is not possible to

accurately predict the final outcome of these pending

proceedings, if any one or more of such proceedings

were to be decided adversely to ConocoPhillips,

we expect there would be no material effect on our

consolidated financial position.

Nevertheless, such proceedings are reported pursuant

to SEC regulations.

On April 30, 2012, the separation of our downstream

business was completed, creating two independent

energy companies: ConocoPhillips and Phillips

In connection with the separation, we entered

into an

Indemnification and Release Agreement, which

provides for cross-indemnities between Phillips

66 and us and

established procedures for handling claims subject

to indemnification and related matters, such

as legal

proceedings.

We have included matters where we remain or have subsequently become

a party to a

proceeding relating to Phillips 66, in accordance

with SEC regulations.

We do not expect any of those matters

to result in a net claim against us.

Matters Previously Reported—Phillips 66

In May 2012, the Illinois Attorney General's

office filed and notified ConocoPhillips of a complaint with

respect to operations at the Phillips 66 WRB

Wood River Refinery alleging violations of the Illinois

groundwater standards and a third-party's

hazardous waste permit.

The complaint seeks remediation of area

groundwater; compliance with the hazardous waste

permit; enhanced pipeline and tank integrity measures;

additional spill reporting; and yet-to-be specified

amounts for fines and penalties.

Matters Previously Reported—ConocoPhillips

On June 28, 2018, the Texas Commission on Environmental Quality issued a Proposed

Agreed Order to

ConocoPhillips Company to resolve alleged violations

of the Texas Health & Safety Code and/or Commission

Rules occurring in 2015 through 2017 at a formerly

owned gas injection plant in Howard

County, Texas.

In

November of 2019, the company concluded

this matter by entering into an Agreed Order

with the agency and

paying an administrative penalty of $120,014.

MINE SAFETY DISCLOSURES

Not applicable.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Name

Position Held

Age*

Catherine A. Brooks

Vice President and Controller

William L. Bullock, Jr.

President, Asia Pacific & Middle East

Ellen R. DeSanctis

Senior Vice President, Corporate Relations

Matt J. Fox

Executive Vice President and Chief Operating Officer

Michael D. Hatfield

President, Alaska, Canada and Europe

Ryan M. Lance

Chairman of the Board of Directors and Chief Executive

Officer

Andrew D. Lundquist

Senior Vice President, Government Affairs

Dominic E. Macklon

President, Lower 48

Kelly B. Rose

Senior Vice President, Legal, General Counsel and Corporate Secretary

Don E. Wallette, Jr.

Executive Vice President and Chief Financial Officer

*On February 15, 2020.

There are no family relationships among any of the

officers named above.

Each officer of the company is

elected by the Board of Directors at its first

meeting after the Annual Meeting of Stockholders

and thereafter as

appropriate.

Each officer of the company holds office from the date of election

until the first meeting of the

directors held after the next Annual Meeting of

Stockholders or until a successor is elected.

The date of the

next annual meeting is May 12, 2020.

Set forth below is information about the executive

officers.

Catherine A. Brooks

was appointed Vice President and Controller as of January 1, 2019, having

previously

served as General Auditor since August 2018.

Prior to serving as General Auditor, she was Assistant

Controller from February 2016 to August 2018.

She became Manager, Finance & Performance Analysis in

April 2014 and served in that role until February

Ms. Brooks previously held the position

of Manager,

External Reporting from May 2010 to April

William L. Bullock, Jr.

was appointed President, Asia Pacific & Middle

East as of April 1, 2015, having

previously served as Vice President, Corporate Planning & Development

since May 2012.

Ellen R. DeSanctis

was appointed Senior Vice President, Corporate Relations as of January 1,

2019, having

previously served as Vice President, Investor Relations and Communications

since May 2012.

Prior to that,

she was employed by Petrohawk Energy Corp. where she

served as Senior Vice President, Corporate

Communications since 2010.

Matt J. Fox

was appointed Executive Vice President and Chief Operating Officer as of January 1,

2019,

having previously served as Executive Vice President, Strategy, Exploration and Technology since April 2016

and Executive Vice President, Exploration and Production, from 2012 to

Prior to that, he was employed

by Nexen, Inc., where he served as Executive

Vice President, International since 2010.

Michael D. Hatfield

was appointed President, Alaska, Canada and Europe

as of June 3, 2018, having

previously served as President, Canada since

October 2016.

Prior to that, he served as Vice President, Health,

Safety and Environment from December 2015

to October 2016.

Mr. Hatfield became Vice President, Cost

Optimization in March 2015 and served in that

role until December 2015.

Mr. Hatfield previously held the

position of Vice President, Rockies Business Unit from March 2013 to March

Ryan M. Lance

was appointed Chairman of the Board of Directors

and Chief Executive Officer in May 2012,

having previously served as Senior Vice President, Exploration and Production—International

since May

Andrew D. Lundquist

was appointed Senior Vice President,

Government Affairs in 2013.

Prior to that, he

served as managing partner of BlueWater Strategies LLC, since 2002.

Dominic E. Macklon

was appointed President, Lower 48 as of June

1, 2018, having previously served as Vice

President, Corporate Planning & Development since

January 2017.

Prior to that, he served as President, U.K.

from September 2015 to January 2017.

Mr. Macklon previously served as Senior Vice President, Oil Sands

from July 2012 to September 2015.

Kelly B. Rose

was appointed Senior Vice President, Legal, General Counsel and Corporate

Secretary in

September 2018.

Prior to that, she was a senior partner in the Houston

office of an international law firm,

Baker Botts L.L.P., where she counseled clients on corporate and securities matters.

She began her career at

the firm in 1991.

Don E. Wallette, Jr.

was appointed Executive Vice President and Chief Financial Officer on January

1, 2019,

having previously served as Executive Vice President, Finance, Commercial

and Chief Financial Officer since

April 2016 and as Executive Vice President, Commercial, Business Development

and Corporate Planning

from 2012 to 2016.

Prior to that, he served as President, Asia Pacific

from 2010 to 2012 and President,

Russia/Caspian from 2006 to 2010.

PART

II

MARKET FOR REGISTRANT’S COMMON

EQUITY, RELATED

STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ConocoPhillips’ common stock is traded on the

New York Stock Exchange, under the symbol “COP.”

Cash Dividends Per Share

Dividends

2019

2018

First

$

0.305

0.285

Second

0.305

0.285

Third

0.305

0.285

Fourth

0.420

0.305

Number of Stockholders of Record at January

31, 2020*

41,821

*In determining the number of stockholders, we consider clearing

agencies and security position listings as one stockholder for each

agency

listing.

The declaration of dividends is subject to the discretion

of our Board of Directors, and may be affected by

various factors, including our future earnings,

financial condition, capital requirements,

levels of indebtedness,

credit ratings and other considerations our Board of

Directors deems relevant.

Our Board of Directors has

adopted a quarterly dividend declaration policy providing

that the declaration of any dividends will be

determined quarterly by the Board of Directors

taking into account such factors as our

business model,

prevailing business conditions and our financial

results and capital requirements, without a predetermined

annual net income payout ratio.

On February 1, 2018, we announced that our Board

of Directors approved an increase in the

quarterly dividend

to $0.285 per share, compared with the previous

quarterly dividend of $0.265 per share.

On October 5, 2018, we announced that our Board

of Directors approved an increase in the

quarterly dividend

to $0.305 per share, compared with the previous

quarterly dividend of $0.285 per share.

On October 7, 2019, we announced that our Board

of Directors approved an increase in the quarterly

dividend

to $0.42 per share, compared with the previous

quarterly dividend of $0.305 per share.

Issuer Purchases of Equity Securities

Millions of Dollars

Approximate Dollar

Shares Purchased

Value

of Shares

Average

as Part of Publicly

that May Yet Be

Total Number of

Price Paid

Announced Plans

Purchased Under the

Period

Shares Purchased

Per Share

or Programs

Plans or Programs

October 1-31, 2019

4,844,970

$

55.54

4,844,970

$

5,855

November 1-30, 2019

4,020,276

58.20

4,020,276

5,621

December 1-31, 2019

3,943,490

62.31

3,943,490

5,375

12,808,736

$

58.46

12,808,736

*There were no repurchases of common stock from company employees in connection with the company's broad-based employee incentive plans.

In late 2016, we initiated our current share repurchase

program.

As of December 31, 2019, we had announced

a total authorization to repurchase $15 billion

of our common stock.

We repurchased $3 billion in 2017, $3

billion in 2018 and $3.5 billion in 2019.

Of the remaining authorization, we expect to

repurchase $3 billion in

In February 2020, we announced that the

Board of Directors approved an increase

to our repurchase

authorization from $15 billion to $25 billion,

to support our plan for future share repurchases.

Acquisitions for

the share repurchase program are made at management’s discretion,

at prevailing prices, subject to market

conditions and other factors.

Except as limited by applicable legal requirements,

repurchases may be

increased, decreased or discontinued at any time

without prior notice.

Shares of stock repurchased under the

plan are held as treasury shares.

See Risk Factors “Our ability to declare

and pay dividends and repurchase

shares is subject to certain considerations.”

Stock Performance Graph

The following graph shows the cumulative total

shareholder return (TSR) for ConocoPhillips’

common stock

in each of the five years from December 31, 2014,

to December 31, 2019.

The graph also compares the

cumulative total returns for the same five-year period

with the S&P 500 Index, the performance peer

group

used in the prior fiscal year (the “Prior Peer

Group”) and a new performance peer group for

the current fiscal

year (the “New Peer Group”).

The Prior Peer Group consists of BP, Chevron, ExxonMobil, Royal Dutch

Shell, Total, Apache, Devon, Marathon Oil Corporation and Occidental,

weighted according to the respective

peer’s stock market capitalization at the beginning

of each annual period.

For the purpose of aligning to

performance peers with similar complexities

and portfolios, the New Peer Group excludes

BP,

Royal Dutch

Shell, and Total, and includes Noble Energy, Hess, and EOG Resources.

For the 2018 Stock Performance

Graph, Anadarko was also presented within

the Prior Peer Group.

However, due to Anadarko’s acquisition by

Occidental completed in 2019, Anadarko’s performance has been excluded

from all five years of the Prior Peer

Group performance.

The comparison assumes $100 was invested

on December 31, 2014, in ConocoPhillips

stock, the S&P 500 Index and ConocoPhillips’

peer groups

and assumes that all dividends were reinvested.

The cumulative total returns of the peer group companies'

common stock do not include the cumulative

total

return of ConocoPhillips’ common stock.

The stock price performance included in this

graph is not

necessarily indicative of future stock price performance.

*Prior Peer Group: BP; Chevron; ExxonMobil; Royal Dutch Shell; Total; Apache; Devon, Marathon Oil Corporation; Occidental.

**New Peer Group: Chevron; ExxonMobil; Apache; Devon; EOG Resources; Hess; Marathon Oil Corporation;

Noble Energy; Occidental.

SELECTED FINANCIAL DATA

Millions of Dollars Except Per Share Amounts

2019

2018

2017

2016

2015

Sales and other operating revenues

$

32,567

36,417

29,106

23,693

29,564

Net income (loss)

7,257

6,305

(793)

(3,559)

(4,371)

Net income (loss) attributable to

ConocoPhillips

7,189

6,257

(855)

(3,615)

(4,428)

Per common share

Basic

6.43

5.36

(0.70)

(2.91)

(3.58)

Diluted

6.40

5.32

(0.70)

(2.91)

(3.58)

Total assets

70,514

69,980

73,362

89,772

97,484

Long-term debt

14,790

14,856

17,128

26,186

23,453

Cash dividends declared per common share

1.34

1.16

1.06

1.00

2.94

In 2019, we disposed of two ConocoPhillips U.K. subsidiaries

for proceeds of $2.2 billion after interest and

customary adjustments.

In 2017, we disposed of assets for consideration

of approximately $16 billion including

our 50 percent

nonoperated interest in the FCCL Partnership,

as well as the majority of our western Canada gas

assets, and

our interests in the San Juan Basin.

These factors

impact the comparability of historical

information.

See Management’s Discussion and Analysis of Financial Condition and

Results of Operations and the Notes to

Consolidated Financial Statements for a discussion

of factors that will enhance an understanding

of this data.

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Management’s

Discussion and Analysis is the company’s analysis of its financial performance and of

significant trends that may affect future performance.

It should be read in conjunction with the financial

statements and notes, and supplemental oil

and gas disclosures included elsewhere in this report.

It contains

forward-looking statements including, without limitation, statements

relating to the company’s

plans,

strategies, objectives, expectations and intentions

that are made pursuant to the “safe harbor” provisions of

the Private Securities Litigation Reform Act of

The words “anticipate,” “estimate,” “believe,”

“budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,”

“predict,” “seek,” “should,” “will,”

“would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,”

“outlook,” “effort,” “target”

and similar expressions identify forward-looking statements.

The company does not undertake to update,

revise or correct any of the forward-looking information unless required to do so under the federal securities

laws.

Readers are cautioned that such forward-looking statements should be read in conjunction with

the

company’s

disclosures under the heading: “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE

‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,”

beginning on page

70.

The terms “earnings” and “loss” as used in Management’s Discussion and Analysis refer to net income (loss)

attributable to ConocoPhillips.

BUSINESS ENVIRONMENT AND EXECUTIVE

OVERVIEW

ConocoPhillips is an independent E&P company

with operations and activities in 17 countries.

Our diverse,

low cost of supply portfolio includes resource-rich

unconventional plays in North America;

conventional

assets in North America, Europe, Asia and

Australia; LNG developments; oil sands in

Canada; and an

inventory of global conventional and unconventional

exploration prospects.

Headquartered in Houston, Texas,

at December 31, 2019, we employed approximately

10,400 people worldwide and had total

assets of

$71 billion.

Overview

Global oil prices continued

to be volatile in 2019.

Optimism about worldwide economic growth during

the

first quarter turned to pessimism in the second quarter

as trade disputes dampened growth forecasts.

At the

end of the second quarter, geopolitical tensions in the Middle East,

threatening the safe passage of supertankers

carrying crude oil through the Persian Gulf, revived

oil prices.

Worldwide economic growth concerns returned

in the third quarter to depress prices, only to be

reversed again by geopolitical tensions in the

Middle East, as

oilfield infrastructure in Saudi Arabia was attacked,

temporarily disrupting approximately

five percent of the

world’s oil supply.

Production was restored relatively quickly, and prices settled in the fourth

quarter.

Brent

crude averaged $64

per barrel in 2019, down nine percent

from the prior year.

Our business strategy

anticipates prices will remain volatile and is designed

to be resilient in lower price environments, while

retaining upside during periods of higher prices.

Portfolio diversification and optimization, a strong

balance

sheet and disciplined capital investment have positioned

our company to navigate through volatile energy

cycles.

Our value proposition principles, namely, to focus on financial returns, maintain

a strong balance sheet, deliver

compelling returns of capital,

and expand cash flow through disciplined capital

investments, are being

executed in accordance with our priorities for

allocating cash flows from the business.

These priorities are:

invest capital to sustain

production and pay our existing dividend;

grow our existing dividend; maintain debt at

a level we believe is sufficient to maintain a strong investment

grade credit rating through price cycles; allocate

greater than 30 percent of our net cash provided

by operating activities to share repurchases

and dividends;

and, invest capital in a disciplined fashion to grow

our cash from operations.

We believe our commitment to

our value proposition, as evidenced by the results

discussed below, positions us for success in an environment

of price uncertainty and ongoing volatility.

In 2019, we successfully delivered on our priorities.

We achieved production growth of five percent on a total

BOE basis compared with the prior year, with higher value oil

volumes growing eight percent.

Cash provided

by operating activities of $11.1 billion exceeded capital expenditures

and

investments of $6.6 billion.

After

repurchasing $3.5 billion of our common stock

and paying $1.5 billion of dividends to shareholders,

we ended

the year with cash, cash equivalents and restricted

cash totaling $5.4 billion and $3.0 billion

of short-term

investments.

In October, we announced an increase to our quarterly dividend

of 38 percent to $0.42 per share

and announced planned 2020 share buybacks of

$3 billion.

In February 2020, we announced 2020 operating

plan capital of $6.5 billion to $6.7 billion.

The plan includes

funding for ongoing development drilling

programs, major projects, exploration and appraisal

activities, as

well as base maintenance.

Capital spend is expected to be higher in the first

quarter largely from winter

construction and exploration and appraisal drilling

in Alaska.

This guidance does not include capital for

acquisitions.

Key Operating and Financial Summary

Significant items

during 2019 included the following:

●

Net cash provided by operating activities was $11.1 billion and exceeded capital

expenditures and

investments of $6.6 billion.

●

Repurchased $3.5 billion of shares and paid $1.5 billion in dividends,

representing 45 percent of net cash

provided by operating activities.

●

Increased the quarterly dividend by 38 percent to $0.42 per share

.

●

Achieved 100 percent total reserve replacement and 117

percent organic replacement.

●

Underlying production, which excludes Libya and the net volume impact

from closed dispositions and

acquisitions of 51 MBOED in 2019 and 47 MBOED in 2018, grew 5 percent

.

●

Increased production from the Lower 48 Big 3 unconventionals—Eagle

Ford, Bakken and Permian

Unconventional—by 22 percent year-over-year.

●

Executed successful Alaska appraisal program; conducted appraisal drilling

and commissioned

infrastructure at Montney in Canada.

●

Completed Lower 48, Alaska and Argentina acquisitions;

awarded a 20-year extension of the Indonesia

Corridor Block PSC, with new terms.

●

Generated $3 billion in disposition proceeds; entered into agreements to

sell Australia-West

assets for $1.4

billion and Niobrara for $0.4 billion, both subject to customary closing

adjustments, as well as regulatory

and other approvals.

●

Reduced asset retirement obligations and accrued environmental costs by $2.3

billion, primarily due to

closed and pending dispositions.

●

Ended the year with cash, cash equivalents and restricted cash totaling $

5.4 billion and short-term

investments of $3.0 billion.

●

Recognized a $296 million after-tax impairment related

to the sale of our Niobrara interests in the Lower

48 segment.

●

Discontinued exploration activities in the Central Louisiana Austin Chalk trend

and recognized $197

million after-tax in leasehold impairment and dry hole expenses.

Operationally, we remain focused on safely executing our operating plan and maintaining

capital and cost

discipline.

Production of 1,348 MBOED increased 5 percent

or 65 MBOED in 2019 compared with 2018.

Production, excluding Libya, of 1,305 MBOED

increased 5 percent or 63 MBOED.

Underlying production,

which excludes Libya and the net volume impact

from closed dispositions and acquisitions

of 51 MBOED in

2019 and 47 MBOED in 2018, is

Showing the first 8K of 131K characters. Open the full section

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

Financial Instrument Market Risk

We and certain of our subsidiaries hold and issue derivative contracts and financial

instruments that expose our

cash flows or earnings to changes in commodity

prices, foreign currency exchange rates

or interest rates.

We

may use financial and commodity-based derivative

contracts to manage the risks produced by changes

in the

prices of natural gas, crude oil and related products;

fluctuations in interest rates and foreign currency

exchange rates; or to capture market opportunities.

Our use of derivative instruments is governed

by an “Authority Limitations” document

approved by our Board

of Directors that prohibits the use of highly leveraged

derivatives or derivative instruments without

sufficient

liquidity.

The Authority Limitations document also establishes

the Value at Risk (VaR)

limits for the

company, and compliance with these limits is monitored daily.

The Executive Vice President and Chief

Financial Officer, who reports to the Chief Executive Officer, monitors commodity price risk

and risks

resulting from foreign currency exchange rates and

interest rates.

The Commercial organization manages our

commercial marketing, optimizes our commodity

flows and positions, and monitors risks.

Commodity Price Risk

Our Commercial organization uses futures, forwards, swaps

and options in various markets to accomplish

the

following objectives:

●

Meet customer needs.

Consistent with our policy to generally

remain exposed to market prices, we

use swap contracts to convert fixed-price sales

contracts, which are often requested by natural

gas

consumers, to floating market prices.

●

Enable us to use market knowledge to capture opportunities

such as moving physical commodities to

more profitable locations and storing commodities

to capture seasonal or time premiums.

We may use

derivatives to optimize these activities.

We use a VaR

model to estimate the loss in fair value that

could potentially result on a single day from the

effect of adverse changes in market conditions on the derivative

financial instruments and derivative

commodity instruments we hold or issue, including

commodity purchases and sales contracts

recorded on the

balance sheet at December 31, 2019,

as derivative instruments.

Using Monte Carlo simulation, a 95 percent

confidence level and a one-day holding period, the

VaR

for those instruments issued or held for

trading

purposes or held for purposes other than trading

at December 31, 2019 and 2018,

was immaterial to our

consolidated cash flows and net income attributable

to ConocoPhillips.

Interest Rate Risk

The following table provides information

about our debt instruments that are sensitive to

changes in U.S.

interest rates.

The table presents

principal cash flows and related weighted-average

interest rates by expected

maturity dates.

Weighted-average variable rates are based on effective rates at the reporting date.

The

carrying amount of our floating-rate debt approximates

its fair value.

The fair value of the fixed-rate debt is

measured using prices available from a pricing

service that is corroborated by market

data.

Millions of Dollars Except as Indicated

Debt

Fixed

Average

Floating

Average

Rate

Interest

Rate

Interest

Expected Maturity Date

Maturity

Rate

Maturity

Rate

Year

-End 2019

2020

$

-

-

%

$

-

-

%

2021

6.24

-

-

2022

2.54

2.81

2023

7.20

-

-

2024

3.52

-

-

Remaining years

12,143

6.25

1.65

Total

$

13,188

$

Fair value

$

17,325

$

Year

-End 2018

2019

$

-

%

$

-

-

%

2020

-

-

-

-

2021

9.13

-

-

2022

2.54

3.52

2023

7.20

-

-

Remaining years

12,599

6.16

1.78

Total

$

13,188

$

Fair value

$

15,364

$

Foreign Currency Exchange Risk

We have foreign currency exchange rate risk resulting from international operations.

We do not

comprehensively hedge the exposure to currency

exchange rate changes although we

may choose to selectively

hedge certain foreign currency exchange rate exposures,

such as firm commitments for capital projects

or local

currency tax payments, dividends and cash returns from

net investments in foreign affiliates to be remitted

within the coming year, and investments in equity securities.

At December 31, 2019 and 2018, we held foreign

currency exchange forwards hedging cross-border

commercial activity and foreign currency exchange

swaps and options for purposes of mitigating

our cash-

related exposures.

Although these forwards, swaps and options

hedge exposures to fluctuations in exchange

rates, we elected not to utilize hedge accounting.

As a result, the change in the fair value of these foreign

currency exchange derivatives is recorded directly

in earnings.

At December 31, 2019,

we had outstanding foreign currency exchange

forward contracts to sell $1.35 billion

CAD at $0.748 CAD against the U.S. dollar.

At December 31, 2018, we had outstanding foreign

currency

zero-cost collars buying the right to sell $1.25 billion

CAD at $0.707

CAD and selling the right to buy $1.25

billion CAD at $0.842 CAD against the U.S. dollar.

Based on the assumed volatility in the fair value

calculation, the net fair value of these foreign currency

contracts at December 31, 2019 and

December 31,

2018, was a before-tax loss of $28 million and a before-tax

gain of $6

million, respectively.

Based on an

adverse hypothetical 10 percent change in the

December 2019 and December 2018 exchange rate, this

would

result in an additional before-tax loss of $115 million and $17 million,

respectively.

The sensitivity analysis is

based on changing one assumption while holding

all other assumptions constant, which in practice

may be

unlikely to occur, as changes in some of the assumptions may be correlated.

The gross notional and fair value of these positions

at December 31, 2019 and 2018, were as follows:

In Millions

Foreign Currency Exchange Derivatives

Notional*

Fair Value**

2019

2018

2019

2018

Sell U.S. dollar, buy British pound

USD

-

-

(5)

Sell Canadian dollar, buy U.S. dollar

CAD

1,350

1,250

(28)

Buy Canadian dollar, sell U.S. dollar

CAD

-

-

Sell British pound, buy Norwegian krone

GBP

-

-

-

Sell British pound, buy euro

GBP

-

-

-

Buy British pound, sell euro

GBP

-

-

-

*Denominated in USD, CAD and GBP.

**Denominated in USD.

For additional information about our use of derivative

instruments, see Note 14—Derivative and Financial

Instruments, in the Notes to Consolidated Financial

Statements.

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

DATA

CONOCOPHILLIPS

INDEX TO FINANCIAL STATEMENTS

Page

Report of Management ............................................................................................................................

Reports of Independent Registered Public Accounting

Firm .................................................................

Consolidated Income Statement for the years ended

December 31, 2019,

2018 and 2017

....................

Consolidated Statement of Comprehensive Income

for the years ended

December 31, 2019, 2018 and 2017

..................................................................................................

Consolidated Balance Sheet at December 31, 2019

and 2018

................................................................

Consolidated Statement of Cash Flows for the years

ended December 31, 2019,

2018 and 2017

.........

Consolidated Statement of Changes in Equity for

the years ended

December 31, 2019, 2018 and 2017

..................................................................................................

Notes to Consolidated Financial Statements

............................................................................................

Supplementary Information

Oil and Gas Operations

..............................................................................................................

Selected Quarterly Financial Data

..............................................................................................

Condensed Consolidating Financial Information

.......................................................................

Report of Management

Management prepared, and is responsible for, the consolidated financial

statements and the other information

appearing in this annual report.

The consolidated financial statements present

fairly the company’s financial

position, results of operations and cash flows in

conformity with accounting principles

generally accepted in

the United States.

In preparing its consolidated financial statements,

the company includes amounts that are

based on estimates and judgments management believes

are reasonable under the circumstances.

The

company’s financial statements have been audited by Ernst & Young LLP,

an independent registered public

accounting firm appointed by the Audit and Finance

Committee of the Board of Directors and ratified

by

stockholders.

Management has made available to Ernst

& Young LLP all of the company’s financial records

and related data, as well as the minutes of stockholders’

and directors’ meetings.

Assessment of Internal Control Over Financial Reporting

Management is also responsible for establishing

and maintaining adequate internal control

over financial

reporting.

ConocoPhillips’ internal control system

was designed to provide reasonable assurance to

the

company’s management and directors regarding the preparation and fair

presentation of published financial

statements.

All internal control systems, no matter how

well designed, have inherent limitations.

Therefore, even those

systems determined to be effective can provide only reasonable

assurance with respect to financial statement

preparation and presentation.

Management assessed the effectiveness of the company’s internal control over financial

reporting as of

December 31, 2019.

In making this assessment, it used the criteria

set forth by the Committee of Sponsoring

Organizations of the Treadway Commission in

Internal Control—Integrated Framework (2013)

.

Based on our

assessment, we believe the company’s internal control over financial

reporting was effective as of

December 31, 2019.

Ernst & Young LLP has issued an audit report on the company’s internal control over financial reporting as of

December 31, 2019, and their report is included

herein.

/s/ Ryan M. Lance

/s/ Don E. Wallette, Jr.

Ryan M. Lance

Don E. Wallette, Jr.

Chairman and

Chief Executive Officer

Executive Vice President and

Chief Financial Officer

February 18, 2020

Report of Independent Registered Public Accounting

Firm

To the Stockholders and the Board of Directors of ConocoPhillips

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ConocoPhillips

(the Company) as of

December 31, 2019 and 2018, the related consolidated

income statement, consolidated statements

of

comprehensive income, changes in equity and

cash flows for each of the three years in

the period ended

December 31, 2019, and the related notes, condensed

consolidating financial information listed in

the Index at

in Item 15(a) (collectively referred to as the

“consolidated

financial statements”). In our opinion, the consolidated

financial statements present fairly, in all material

respects, the financial position of the Company

at December 31, 2019 and 2018, and the

results of its

operations and its cash flows for each of the three

years in the period ended December 31, 2019,

in conformity

with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting

Oversight Board

(United States) (PCAOB), the Company’s internal control over financial

reporting as of December 31, 2019,

based on criteria established in Internal Control–Integrated

Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework) and our report

dated February 18, 2020,

expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management. Our responsibility is to

express an opinion on the Company’s financial statements based on our audits.

We are a public accounting

firm registered with the PCAOB and are required

to be independent with respect to the Company

in

accordance with the U.S. federal securities

laws and the applicable rules and regulations of

the Securities and

Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards

require that we

plan and perform the audit to obtain reasonable

assurance about whether the financial statements

are free of

material misstatement, whether due to error

or fraud. Our audits included performing procedures

to assess the

risks of material misstatement of the financial

statements, whether due to error or fraud,

and performing

procedures that respond to those risks. Such procedures

included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial

statements. Our audits also included evaluating

the

accounting principles used and significant estimates

made by management, as well as evaluating the overall

presentation of the financial statements. We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are

matters arising from the current period

audit of the

consolidated financial statements that were communicated

or required to be communicated to the Audit

and

Finance Committee and that: (1) relate to

accounts or disclosures that are material to

the consolidated financial

statements and (2) involved our especially challenging,

subjective or complex judgments. The communication

of critical audit matters does not alter in any

way our opinion on the consolidated financial

statements, taken as

a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the

critical audit matters or on the accounts or disclosures

to which they relate.

Accounting for asset retirement obligations

for certain offshore properties

Description of

the Matter

At December 31, 2019, the asset retirement

obligation (“ARO”) balance totaled $6.2

billion. As further described in Note 10, the Company

records AROs in the period in

which they are incurred, typically when the asset

is installed at the production location.

The estimation of obligations related to certain

offshore assets requires significant

judgment given the magnitude of these removal

costs and higher estimation uncertainty

related to the removal plan and costs. Furthermore,

given certain of these assets are

nearing the end of their operations, the impact

of changes in these AROs may result in

a

material impact to earnings given the relatively

short remaining useful lives of the assets.

Auditing the Company’s AROs for the obligations identified above is complex

and

highly judgmental due to the significant estimation

required by management in

determining the obligations. In particular, the estimates were

sensitive to significant

subjective assumptions such as removal cost estimates

and end of field life, which are

affected by expectations about future market or economic

conditions.

How We

Addressed the

Matter in Our

Audit

We obtained an understanding, evaluated the design and tested the operating

effectiveness of the Company’s internal controls over its ARO estimation process,

including management’s review of the significant assumptions that

have a material effect

on the determination of the obligations. We also tested management’s controls over the

completeness and accuracy of the financial

data used in the valuation.

To test the AROs for the obligations identified above, our audit procedures included,

among others, assessing the significant assumptions

and inputs used in the valuation,

including removal cost estimates and end of

field life assumptions. For example, we

evaluated removal cost estimates by comparing

to settlements and recent removal

activities and costs. We also compared end of field life assumptions to production

forecasts.

We involved our internal specialists in testing the underlying removal cost

estimates.

Depreciation, depletion and amortization of

proved oil and gas properties

Description of

the Matter

At December 31, 2019, the net book value of

the Company’s properties, plants and

equipment was $42.3 billion, and depreciation,

depletion and amortization (DD&A)

expense was $6.1 billion for the year then ended.

As described in Note 1, DD&A of

properties, plants and equipment on producing

hydrocarbon properties and certain

pipeline and LNG assets (those which are expected

to have a declining utilization

pattern) are determined by the unit-of-production method

based on proved oil and gas

reserves, as estimated by the Company’s internal reservoir engineers. Proved

oil and gas

reserve estimates are based on geological and engineering

assessments of in-place

hydrocarbon volumes, the production plan, historical

extraction recovery and processing

yield factors, installed plant operating capacity

and approved operating limits. Significant

judgment is required by the Company’s internal reservoir engineers

in evaluating

geological and engineering data when estimating

proved oil and gas reserves. Estimating

reserves also requires the selection of inputs, including

oil and gas price assumptions,

future operating and capital costs assumptions

and tax rates by jurisdiction, among

others. Because of the complexity involved in

estimating oil and gas reserves,

management also used a third-party petroleum

engineering firm to perform a review of

the processes and controls used by the Company’s internal reservoir

engineers to

determine estimates of proved oil and gas reserves.

Auditing the Company’s DD&A calculation is complex because of the

use of the work of

the internal reservoir engineers and third-party petroleum

engineering firm and the

evaluation of management’s determination of the inputs described above

used by the

internal reservoir engineers in estimating

proved oil and gas reserves.

How We

Addressed the

Matter in Our

Audit

We obtained an understanding, evaluated the design and tested the operating

effectiveness of the Company’s internal controls over its process to calculate DD&A,

including management’s controls over the completeness and accuracy of the

financial

data provided to the internal reservoir engineers

for use in estimating proved oil and gas

reserves.

Our audit procedures included, among others,

evaluating the professional qualifications

and objectivity of the Company’s internal reservoir engineers primarily

responsible for

overseeing the preparation of the reserve estimates

and the third-party petroleum

engineering firm used to review the Company’s processes and controls.

In addition, in

assessing whether we can us

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CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure information required

to be disclosed in

reports we file or submit under the Securities

Exchange Act of 1934, as amended (the Act),

is recorded,

processed, summarized and reported within the

time periods specified in Securities and Exchange

Commission

rules and forms, and that such information is

accumulated and communicated to management,

including our

principal executive and principal financial

officers, as appropriate, to allow timely decisions regarding

required

disclosure.

As of December 31, 2019,

with the participation of our management, our

Chairman and Chief

Executive Officer (principal executive officer) and our Executive

Vice President and Chief Financial Officer

(principal financial

officer) carried out an evaluation, pursuant to Rule 13a-15(b)

of the Act, of

ConocoPhillips’ disclosure controls and procedures

(as defined in Rule 13a-15(e) of the Act).

Based upon that

evaluation, our Chairman and Chief Executive

Officer and our Executive Vice President and Chief Financial

Officer concluded our disclosure controls and procedures

were operating effectively as of December 31, 2019.

There have been no changes in our internal

control over financial reporting, as defined

in Rule 13a-15(f) of the

Act, in the period covered by this report that

have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial

Reporting

This report is included in Item 8 on page

76

and is incorporated herein by reference.

Report of Independent Registered Public Accounting

Firm

This report is included in Item 8 on page

80

and is incorporated herein by reference.

OTHER INFORMATION

None.

PART

III

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

Information regarding our executive officers appears in

Part I of this report on page 29.

Code of Business Ethics and Conduct for

Directors and Employees

We have a Code of Business Ethics and Conduct for Directors and Employees (Code

of Ethics), including our

principal executive officer, principal financial officer, principal accounting officer and persons performing

similar functions.

We have posted a copy of our Code of Ethics on the “Corporate Governance” section

of our

internet website at

www.conocophillips.com

(within the Investors>Corporate Governance

section)

.

Any

waivers of the Code of Ethics must be approved, in

advance, by our full Board of Directors.

Any amendments

to, or waivers from, the Code of Ethics that apply

to our executive officers and directors will be posted

on the

“Corporate Governance” section of our internet

website.

All other information required by Item 10 of

Part III will be included in our Proxy Statement

relating to our

2020 Annual Meeting of Stockholders, to be

filed pursuant to Regulation 14A on or before

April 30, 2020, and

is incorporated herein by reference.*

EXECUTIVE COMPENSATION

Information required by Item 11 of Part III will be included

in our Proxy Statement relating to our 2020

Annual Meeting of Stockholders, to be filed pursuant

to Regulation 14A on or before April 30,

2020, and is

incorporated herein by reference.*

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

Information required by Item 12 of Part III

will be included in our Proxy Statement relating

to our 2020

Annual Meeting of Stockholders, to be filed pursuant

to Regulation 14A on or before April 30,

2020, and is

incorporated herein by reference.*

CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

Information required by Item 13 of Part III

will be included in our Proxy Statement relating

to our 2020

Annual Meeting of Stockholders, to be filed pursuant

to Regulation 14A on or before April 30,

2020, and is

incorporated herein by reference.*

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by Item 14 of Part III

will be included in our Proxy Statement relating

to our 2020

Annual Meeting of Stockholders, to be filed pursuant

to Regulation 14A on or before April 30,

2020, and is

incorporated herein by reference.*

*Except for information or data specifically incorporated herein by reference under Items 10 through 14, other information

and data appearing

in our 2020 Proxy

Statement are not deemed to be a part of this Annual Report on Form 10-K

or deemed to be filed with the Commission as a

part of this report.

PART

IV

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

Financial Statements and Supplementary

Data

The financial statements and supplementary information

listed in the Index to Financial Statements,

which appears on page

75

, are filed as part of this annual report.

Financial Statement Schedules

Schedule II—Valuation and Qualifying Accounts, appears below.

All other schedules are omitted

because they are not required, not significant, not

applicable or the information is shown in another

schedule, the financial statements or the notes to

consolidated financial statements.

Exhibits

The exhibits listed in the Index to Exhibits, which

appears on pages

188

through 196, are filed as part

of this annual report.

SCHEDULE II—VALUATION

AND QUALIFYING ACCOUNTS (Consolidated)

ConocoPhillips

Millions of Dollars

Balance at

Charged to

Balance at

Description

January 1

Expense

Other

(a)

Deductions

December 31

2019

Deducted from asset accounts:

Allowance for doubtful accounts and notes receivable

$

-

(17)

(b)

Deferred tax asset valuation allowance

3,040

7,376

(26)

(176)

10,214

Included in other liabilities:

Restructuring accruals

(1)

-

(24)

(c)

2018

Deducted from asset accounts:

Allowance for doubtful accounts and notes receivable

$

-

(2)

(b)

Deferred tax asset valuation allowance

1,254

2,067

(8)

(273)

3,040

Included in other liabilities:

Restructuring accruals

(2)

(73)

(c)

2017

Deducted from asset accounts:

Allowance for doubtful accounts and notes receivable

$

-

(3)

(b)

Deferred tax asset valuation allowance

-

1,254

Included in other liabilities:

Restructuring accruals

(93)

(c)

(a)Represents acquisitions/dispositions/revisions and the effect of translating foreign financial statements.

(b)Amounts charged off less recoveries of amounts previously charged off.

(c)Benefit payments.

See Note 19

—

Income Taxes, in the Notes to Consolidated Financial Statements, for additional information related to our deferred

tax asset valuation allowance.

CONOCOPHILLIPS

INDEX TO EXHIBITS

Exhibit

Number

Description

2.1

Separation and Distribution Agreement Between ConocoPhillips and Phillips 66, dated April 26,

2012 (incorporated by reference to Exhibit 2.1 to the Current Report of ConocoPhillips on Form 8-

K filed on May 1, 2012; File No. 001-32395).

2.2†‡

Purchase and Sale Agreement, dated March 29, 2017, by and among ConocoPhillips Company,

ConocoPhillips Canada Resources Corp., ConocoPhillips Canada Energy Partnership,

ConocoPhillips Western Canada Partnership, ConocoPhillips Canada (BRC) Partnership,

ConocoPhillips Canada E&P ULC, and Cenovus Energy Inc. (incorporated by reference to

Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed

by ConocoPhillips on May 4, 2017).

2.3†‡

Asset Purchase and Sale Agreement Amending Agreement, dated as of May 16, 2017, by and

among ConocoPhillips Company, ConocoPhillips Canada Resources Corp., ConocoPhillips Canada

Energy Partnership, ConocoPhillips Western Canada Partnership, ConocoPhillips Canada (BRC)

Partnership, ConocoPhillips Canada E&P ULC, and Cenovus Energy Inc. (incorporated by

reference to Exhibit 2.2 to the Current Report of ConocoPhillips on Form 8-K filed on May 18,

2017; File No. 001-32395).

3.1

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the

Quarterly Report of ConocoPhillips on Form 10-Q for the quarterly period ended June 30, 2008;

File No. 001-32395).

3.2

Certificate of Designations of Series A Junior Participating Preferred Stock of ConocoPhillips

(incorporated by reference to Exhibit 3.2 to the Current Report of ConocoPhillips on Form 8-K filed

on August 30, 2002; File No. 000-49987).

3.3

Amended and Restated By-Laws of ConocoPhillips, as amended and restated as of October 9, 2015

(incorporated by reference to Exhibit 3.1 to the Current Report of ConocoPhillips on Form 8-K filed

on October 13, 2015; File No. 001-32395).

ConocoPhillips and its subsidiaries are parties

to several debt instruments under which the total

amount of securities authorized does not exceed

10 percent of the total assets of ConocoPhillips

and

its subsidiaries on a consolidated basis.

Pursuant to paragraph 4(iii)(A) of Item 601(b)

of

Regulation S-K, ConocoPhillips agrees to furnish

a copy of such instruments to the SEC upon

request.

4.1*

Description of Securities of the Registrant.

10.1

1986 Stock Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10.11 to the

Annual Report of ConocoPhillips on Form 10-K for the year ended December 31, 2002;

File No. 000-49987).

10.2

1990 Stock Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10.12 to the

Annual Report of ConocoPhillips on Form 10-K for the year ended December 31, 2002;

File No. 000-49987).

Exhibit

Number

Description

10.3

Annual Incentive Compensation Plan of Phillips Petroleum Company (incorporated by reference to

[Exhibit 10.13 to the Annual Report of ConocoPhillips on Form 10-K for the year ended](http://www.sec.gov/Archives/edgar/data/1163165/0000950129030

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