Item 7A. QUANTITATIVE

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