filings.toolsCover and table of contents
78K characters. Original on sec.gov · Markdown
Cover and table of contents
2020
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, 2020
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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. [
x
]
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 30, 2020, the last business day of the
registrant’s most recently completed second fiscal quarter, based on the closing price on that date of $42.02, was $
45.1
billion.
The registrant had
1,354,734,727
shares of common stock outstanding at January 31, 2021.
Documents incorporated by reference:
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 11, 2021 (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, Middle East and North Africa
.....................................................................
Asia Pacific
...............................................................................................................
Other International
....................................................................................................
Competition ...................................................................................................................
Human Capital Management .........................................................................................
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
............................................................................
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.
Currencies
Accounting
$ or USD
U.S. dollar
ARO
asset retirement obligation
CAD
Canadian dollar
ASC
accounting standards codification
EUR
Euro
ASU
accounting standards update
GBP
British pound
DD&A
depreciation, depletion and
amortization
Units of Measurement
FASB
Financial Accounting Standards
BBL
barrel
Board
BCF
billion cubic feet
FIFO
first-in, first-out
BOE
barrels of oil equivalent
G&A
general and administrative
MBD
thousands of barrels per day
GAAP
generally accepted accounting
MCF
thousand cubic feet
principles
MBOD
thousand barrels of oil per day
LIFO
last-in, first-out
MM
million
NPNS
normal purchase normal sale
MMBOE
million barrels of oil equivalent
PP&E
properties, plants and equipment
MMBOD
million barrels of oil per day
SAB
staff accounting bulletin
MBOED
thousands of barrels of oil
VIE
variable interest entity
equivalent per day
MMBOED
millions of barrels of oil
equivalent per day
Miscellaneous
MMBTU
million British thermal units
EPA
Environmental Protection Agency
MMCFD
million cubic feet per day
ESG
Environmental, Social and
Corporate Governance
EU
European Union
Industry
FERC
Federal Energy Regulatory
CBM
coalbed methane
Commission
E&P
exploration and production
GHG
greenhouse gas
FEED
front-end engineering and design
HSE
health, safety and environment
FPS
floating production system
ICC
International Chamber of
FPSO
floating production, storage and
Commerce
offloading
ICSID
World Bank’s
International
G&G
geological and geophysical
Centre for Settlement of
JOA
joint operating agreement
Investment Disputes
LNG
liquefied natural gas
IRS
Internal Revenue Service
NGLs
natural gas liquids
OTC
over-the-counter
OPEC
Organization of Petroleum
NYSE
New York Stock Exchange
Exporting Countries
SEC
U.S. Securities and Exchange
PSC
production sharing contract
Commission
PUDs
proved undeveloped reserves
TSR
total shareholder return
SAGD
steam-assisted gravity drainage
U.K.
United Kingdom
WCS
Western Canada Select
U.S.
United States of America
WTI
West Texas
Intermediate
PART
I
Unless otherwise indicated, “the company,” “we,” “our,” “us” and “ConocoPhillips” are used in this
report to
refer to the businesses of ConocoPhillips and its
consolidated subsidiaries.
Items 1 and 2—Business and
Properties, contain forward-looking statements
including, without limitation, statements
relating to our plans,
strategies, objectives, expectations and intentions
that are made pursuant to the “safe harbor”
provisions of the
Private Securities Litigation Reform Act of 1995.
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 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 headings “Risk Factors” beginning on page
23 and “CAUTIONARY STATEMENT
FOR THE
PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS
OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995,” beginning on page
Items 1 and 2.
BUSINESS AND PROPERTIES
CORPORATE STRUCTURE
ConocoPhillips is an independent E&P company
headquartered in Houston, Texas with operations and
activities in 15 countries.
Our diverse, low cost of supply portfolio includes
resource-rich unconventional
plays in North America; conventional assets
in North America, Europe, and Asia; LNG developments;
oil
sands assets in Canada; and an inventory of
global conventional and unconventional exploration
prospects.
On
December 31, 2020, we employed approximately
9,700 people worldwide and had total
assets of $63 billion.
ConocoPhillips was incorporated in the state
of Delaware on November 16, 2001, in connection
with, and in
anticipation of, the merger between Conoco Inc. and Phillips
Petroleum Company.
The merger between
Conoco and Phillips was consummated on
August 30, 2002.
On January 15, 2021, we completed the acquisition
of Concho Resources Inc. (Concho), an independent
oil
and gas exploration and production company
with operations in New Mexico and West Texas focused on the
Permian Basin.
For additional information related to this
transaction, see Note 25—Acquisition of Concho
Resources Inc.,
in the Notes to Consolidated Financial Statements.
SEGMENT AND GEOGRAPHIC INFORMATION
We manage our operations through six operating segments, defined by geographic
region: Alaska; Lower 48;
Canada; Europe, Middle East and North Africa;
Asia Pacific;
and Other International.
Effective with the third
quarter of 2020, we restructured our segments
to align with changes to our internal organization.
The Middle
East business was realigned from the Asia Pacific
and Middle East segment to the Europe and North
Africa segment.
The segments have been renamed the Asia
Pacific segment and the Europe, Middle East
and
North Africa segment.
We have revised segment information disclosures and segment performance metrics
presented within our results of operations for the current
and prior years.
For operating segment and
geographic information, see Note 24—Segment
Disclosures and Related Information, in the Notes
to
Consolidated Financial Statements.
We explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and NGLs on
a worldwide
basis.
At December 31, 2020, our operations were
producing in the U.S., Norway, Canada, Australia,
Indonesia, Malaysia, Libya, China and Qatar.
The information listed below appears in the “Oil
and Gas Operations” disclosures following
the Notes to
Consolidated Financial Statements and is incorporated
herein by reference:
●
Proved worldwide crude oil, NGLs, natural gas
and bitumen reserves.
●
Net production of crude oil, NGLs, natural gas
and bitumen.
●
Average sales prices of crude oil, NGLs, natural gas and bitumen.
●
Average production costs per BOE.
●
Net wells completed, wells in progress and productive
wells.
●
Developed and undeveloped acreage.
The following table is a summary of the proved
reserves information included in the “Oil
and Gas Operations”
disclosures following the Notes to Consolidated
Financial Statements.
Approximately 80 percent of our
proved reserves are in countries that belong to the
Organization for Economic Cooperation and Development.
Natural gas reserves are converted to BOE based
on a 6:1 ratio: six MCF of natural gas converts
to one BOE.
See Management’s Discussion and Analysis of Financial Condition and
Results of Operations for a discussion
of factors that will enhance the understanding of the
following summary reserves table.
Millions of Barrels of Oil Equivalent
Net Proved Reserves at December 31
2020
2019
2018
Crude oil
Consolidated operations
2,051
2,562
2,533
Equity affiliates
Total Crude Oil
2,119
2,635
2,611
Natural gas liquids
Consolidated operations
Equity affiliates
Total Natural Gas Liquids
Natural gas
Consolidated operations
1,011
1,209
1,265
Equity affiliates
Total Natural Gas
1,632
1,945
2,025
Bitumen
Consolidated operations
Total Bitumen
Total consolidated operations
3,734
4,414
4,383
Total equity affiliates
Total company
4,459
5,262
5,263
Total production, including Libya, of 1,127 MBOED decreased 221 MBOED or 16
percent in 2020 compared
with 2019, primarily due to:
●
Normal field decline.
●
The divestiture of our U.K. assets in the third
quarter of 2019 and our Australia-West assets in the
second quarter of 2020.
●
Production curtailments of approximately 80 MBOED,
primarily from North American operated
assets and Malaysia.
●
Lower production in Libya due to the forced shutdown
of the Es Sider export terminal and other
eastern export terminals after a period of civil unrest.
The decrease in production during 2020 was partly
offset by:
●
New wells online in the Lower 48, Canada,
Norway, Alaska and China.
Production excluding Libya for 2020 was 1,118 MBOED.
Adjusting for estimated curtailments
of
approximately 80 MBOED; closed acquisitions
and dispositions;
and excluding Libya, production for 2020
would have been 1,176 MBOED, a decrease of 15
MBOED compared with 2019 production.
This decrease
was primarily due to normal field decline, partly
offset by new wells online in the Lower 48, Canada,
Norway,
Alaska and China.
Production from Libya averaged
9 MBOED as it was in force majeure during
a significant
portion of the year.
Our worldwide annual average realized price decreased
34 percent from $48.78 per BOE in 2019
to $32.15 per
BOE in 2020 primarily due to lower realized crude
oil, natural gas and bitumen prices.
Our worldwide annual
average crude oil price decreased 35 percent, from
$60.99 per barrel in 2019
to $39.54 per barrel in 2020.
Our
worldwide annual average natural gas price decreased
32 percent, from $5.03 per MCF in 2019 to $3.41
per
MCF in 2020.
Average annual bitumen prices decreased 75 percent, from $31.72 per barrel in 2019 to
$8.02
per barrel in 2020.
ALASKA
The Alaska segment primarily explores for, produces, transports
and markets crude oil, natural gas and NGLs.
We are the largest crude oil producer in Alaska and have major ownership interests in
two of North America’s
largest oil fields located on Alaska’s North Slope: Prudhoe Bay and Kuparuk.
We also have a 100 percent
interest in the Alpine Field, located on the Western North Slope.
Additionally, we are one of Alaska’s largest
owners of state, federal and fee exploration leases,
with approximately 1.3 million net undeveloped
acres at
year-end 2020.
Alaska operations contributed 28 percent
of our consolidated liquids production and 1 percent
of our consolidated natural gas production.
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Greater Prudhoe Area
36.1
%
Hilcorp
Greater Kuparuk Area
89.2-94.7
ConocoPhillips
-
Western North Slope
100.0
ConocoPhillips
-
Total Alaska
Greater Prudhoe Area
The Greater Prudhoe Area includes the Prudhoe
Bay Field and five satellite fields, as well as the
Greater Point
McIntyre Area fields.
Prudhoe Bay, the largest oil field on Alaska’s North Slope, is the site of a large
waterflood and enhanced oil recovery operation,
as well as a gas plant which processes
natural gas to recover
NGLs before reinjection into the reservoir.
Prudhoe Bay’s satellites are Aurora, Borealis, Polaris, Midnight
Sun and Orion, while the Point McIntyre,
Niakuk, Raven, Lisburne and North Prudhoe Bay
State fields are
part of the Greater Point McIntyre Area.
In 2020, development activity included both rotary
and coiled-tubing drilling through April,
resulting in ten
wells drilled and brought online.
In response to the oil price collapse, the second
half of 2020 saw a reduction
in rig activity.
Average net production increased from 81
MBOED in 2019 to 84 MBOED in 2020.
Greater Kuparuk Area
We operate the Greater Kuparuk Area, which consists of the Kuparuk Field and four
satellite fields: Tarn,
Tabasco, Meltwater and West Sak.
Kuparuk is located 40 miles west of the Prudhoe
Bay Field.
Field
installations include three central production facilities
which separate oil, natural gas and water, as well as a
seawater treatment plant.
Development drilling at Kuparuk consists of
rotary-drilled wells and horizontal
multi-laterals from existing well bores utilizing
coiled-tubing drilling.
We operated both a rotary and a coiled-tubing drilling rig in the first half of
2020, resulting in seven operated
wells drilled and brought online in 2020.
In response to the oil price collapse, the second
half of 2020 saw a
reduction in rig activity.
Average net production decreased from 86 MBOED in 2019 to 74 MBOED in
Western North Slope
On the Western North Slope, we operate the Colville River Unit, which includes the
Alpine Field and three
satellite fields: Nanuq, Fiord and Qannik.
The Alpine Field is located 34 miles west of
the Kuparuk Field.
In
2020, an extended-reach drilling rig was delivered
to the Alpine CD2 drillsite.
This rig is North America’s
largest mobile land rig and is expected to commence
drilling operations in 2021.
The Greater Mooses Tooth Unit is the first unit established entirely within the
NPR-A.
In 2017, we began
construction in the unit with two drill sites;
Greater Mooses Tooth #1 (GMT-1) and Greater Mooses Tooth
#2
(GMT-2).
GMT-1 achieved first oil in 2018 and completed drilling in 2019.
In 2020, the second of three
construction seasons for GMT-2 was completed and drilling operations are expected to commence
in 2021
with first oil later in the year.
We operated both a rotary and a coiled-tubing drilling rig in the Western North Slope during 2020, resulting in
five operated wells drilled and brought online.
In response to the oil price collapse, the
second half of 2020
saw a reduction in rig activity.
Average net production decreased from 51 MBOED in 2019 to 40 MBOED in
Production Curtailments
In response to the oil price collapse that began in
early 2020,
we curtailed operated production—in the Greater
Kuparuk Area and Western North Slope—by 8 MBOED in 2020.
For more information related to the 2020
industry downturn and our response, please see Item
- Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Alaska North Slope Gas
In 2016, we, along with affiliates of Exxon Mobil Corporation,
BP p.l.c. and Alaska Gasline Development
Corporation (AGDC), a state-owned corporation,
completed preliminary FEED technical
work for a potential
LNG project which would liquefy and export natural
gas from Alaska’s North Slope and deliver it to market.
In 2016, we, along with the affiliates of ExxonMobil and
BP,
indicated our intention not to progress into
the
next phase of the project due to changes in
the economic environment, however, AGDC decided to continue
on
its own, focusing primarily on permitting efforts.
Currently, AGDC is in the process of seeking new sponsors
for the project.
Given current market conditions, we no longer believe
the project will advance and since there
is no current market,
we recorded a before-tax impairment of $841 million
for the entire associated carrying
value of capitalized undeveloped leasehold costs
and an equity method investment related
to our Alaska North
Slope Gas asset.
We remain willing to sell our Alaska North Slope Gas to interested parties on a competitive
basis if a market materializes in the future.
For additional information related to this
impairment, See Note
7—Suspended Wells and Exploration Expenses, in the Notes to Consolidated Financial
Statements.
Exploration
Appraisal of the Willow Discovery in the Bear Tooth Unit in the National Petroleum Reserve-Alaska (NPR-A)
continued with the drilling of two of four planned
appraisal wells before the early cancellation
of the 2020
program as part of our COVID-19 response.
The reduced 2020 appraisal program consisted
of drilling a
horizontal well in the eastern portion of the field,
informing the reservoir’s connectivity,
and a vertical well in
the field’s southern extent, reducing the original oil in place uncertainty.
The initial development plan for the
Willow Discovery, approved in the fourth quarter, does not include the Cassin Discovery from 2013; therefore,
we recognized dry hole expense for two previously
suspended Cassin wells in 2020.
In 2020, exploration of the Harpoon Complex—Harpoon,
Lower Harpoon and West Harpoon—commenced.
One exploration well of a planned three-well program
was drilled before the early cancellation
of our 2020
winter drilling season in response to COVID-19.
The well was expensed as a dry hole after
evaluations
confirmed the well intersected sub-commercial
volumes of hydrocarbons
in the upper Harpoon interval which
will not be developed.
Future exploration plans include returning
to the Harpoon Complex to explore the
remaining potential.
In late 2018, we commenced appraisal of the
Putu Discovery with a long-reach well from
existing Alpine CD4
infrastructure.
In 2019 and 2020 the long reach CD4 appraisal
and supporting injector well finished drilling
and testing. Production and injectivity tests
confirmed development and waterflood feasibility
of the reservoir.
The project transitioned from appraisal to development
in early 2020.
Development planning is ongoing.
A 3-D
seismic survey was completed in 2020 over
a 234-mile area on state and federal
lands.
We are currently
evaluating this seismic data for future exploration
opportunities.
Transportation
We transport the petroleum liquids produced on the North Slope to Valdez, Alaska through an 800-mile
pipeline that is part of Trans-Alaska Pipeline System (TAPS).
We have a 29.5
percent ownership interest in
TAPS, and we also have ownership interests in and operate the Alpine, Kuparuk and
Oliktok pipelines on the
North Slope.
Our wholly owned subsidiary, Polar Tankers, Inc., manages the marine transportation of our North Slope
production, using five company-owned, double-hulled
tankers,
and charters third-party vessels as necessary.
The tankers deliver oil from Valdez, Alaska,
primarily to refineries on the west coast of
the U.S.
LOWER 48
On January 15,
2021, we completed the acquisition of Concho.
This transaction significantly increases our
Permian position by adding complementary acreage
across the Delaware and Midland basins.
The production
and acreage figures and the property descriptions
below do not reflect this recently closed acquisition.
For
additional information related to this acquisition,
see Note 25—Acquisition of Concho Resources
Inc., in the
Notes to Consolidated Financial Statements.
The Lower 48 segment consists of operations located
in the contiguous U.S. and the Gulf of Mexico.
Organized into the Gulf Coast and Great Plains business
units, at year-end 2020 we held 10.1 million net
onshore and offshore acres, with a portfolio of low cost of
supply, shorter cycle time, resource-rich
unconventional plays, and conventional production
from legacy assets.
Based on 2020 production volumes,
the Lower 48 is the company’s largest segment and contributed 40 percent of our
consolidated liquids
production and 44 percent of our consolidated
natural gas production.
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Eagle Ford
Various
%
Various
Gulf of Mexico
Various
Various
Gulf Coast—Other
Various
Various
-
Total Gulf Coast
Bakken
Various
Various
Permian Unconventional
Various
Various
Permian Conventional
Various
Various
Anadarko Basin
Various
Various
Wyoming/Uinta
Various
Various
-
-
Niobrara*
Various
Various
-
Total Great Plains
Total Lower 48
*Disposed in March 2020.
See Note 4
—
Acquisitions and Dispositions in the Notes to Consolidated
Financial Statements for additional
information.
Onshore
At December 31, 2020, we held 10.1 million
net acres of onshore conventional and unconventional
acreage in
the Lower 48, the majority of which is either held
by production or owned by the company.
Our
unconventional holdings total approximately
1.3 million net acres in the following areas:
●
610,000 net acres in the Bakken, located in
North Dakota and eastern Montana.
●
200,000 net acres in the Eagle Ford, located in South
Texas.
●
170,000 net acres in the Permian, located in West Texas and southeastern New Mexico.
●
300,000 net acres in other areas with unconventional
potential.
In response to the oil price collapse that began
in early 2020, we curtailed production
in the Lower 48 by
approximately 55 MBOED in 2020.
For more information related to the 2020 industry
downturn and our
response, please see Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of
Operations.
These production curtailments contributed to
lower production in 2020 compared with
2019 from
our three focus areas:
●
Eagle Ford—We operated five rigs on average in the Eagle Ford during 2020,
resulting in 154
operated wells drilled and 71 operated wells brought
online.
Production decreased 14 percent in 2020
compared with 2019, averaging 186 MBOED and
216 MBOED, respectively.
●
Bakken—We operated an average of two rigs during the year in the Bakken and participated
in
additional development activities operated by co-venturers.
We continued our pad drilling with 57
operated wells drilled during the year and 29
operated wells brought online.
Production decreased 20
percent in 2020 compared with 2019, averaging
78 MBOED and 97 MBOED, respectively.
●
Permian Basin—The Permian Basin is a combination
of legacy conventional and unconventional
assets.
We operated one rig during the full year and another rig during parts of the year
in the Permian
Basin, resulting in 16 operated wells drilled and
16 operated wells brought online.
Production
decreased 1 percent in 2020 compared with 2019,
averaging 85 MBOED and 86 MBOED,
respectively.
Gulf of Mexico
At year-end 2020,
our portfolio of producing properties in
the Gulf of Mexico totaled approximately 60,000
net acres.
A majority of the production consists
of three fields operated by co-venturers:
●
15.9 percent interest in the unitized Ursa Field
located in the Mississippi Canyon Area.
●
15.9 percent interest in the Princess Field, a northern
subsalt extension of the Ursa Field.
●
12.4 percent interest in the unitized K2 Field,
comprised of seven blocks in the Green Canyon
Area.
Dispositions
In the first quarter of 2020, we completed the sale
of our Waddell Ranch interests in the Permian Basin and our
Niobrara interests.
Production from these dispositions was immaterial
to the Lower 48 segment in 2020.
For
additional information on these transactions,
see Note 4—Asset Acquisitions and Dispositions,
in the Notes to
Consolidated Financial Statements.
Facilities
●
Lost Cabin Gas Plant—We operate and own a 60 percent interest in the Lost Cabin
Gas Plant, a 246
MMCFD capacity natural gas processing facility
in Lysite, Wyoming.
The plant is currently operating at
less than capacity due to a fire in December 2018.
Restoration efforts are ongoing and anticipated to be
completed in the first half of 2021.
The expected production loss in 2021
is immaterial to the segment.
●
Helena Condensate Processing Facility—We operate and own the Helena Condensate
Processing Facility,
a 110 MBD condensate processing plant located in Kenedy, Texas.
●
Sugarloaf Condensate Processing Facility—We operate and own an 87.5 percent interest
in the Sugarloaf
Condensate Processing Facility, a 30 MBD condensate processing plant located
near Pawnee, Texas.
●
Bordovsky Condensate Processing Facility—We operate and own the Bordovsky Condensate
Processing
Facility, a 15 MBD condensate processing plant located in Kenedy, Texas.
This facility is currently being
decommissioned.
CANADA
Our Canadian operations consist of the Surmont
oil sands development in Alberta and the liquids-rich
Montney unconventional play in British Columbia.
In 2020, operations in Canada contributed
9 percent of our
consolidated liquids production and 3 percent
of our consolidated natural gas production.
2020
Crude Oil
NGL
Natural Gas
Bitumen
Total
Interest
Operator
MBD
MBD
MMCFD
MBD
MBOED
Average Daily Net
Production
Surmont
50.0
%
ConocoPhillips
-
-
-
Montney
100.0
ConocoPhillips
-
Total Canada
Surmont
Our bitumen resources in Canada are produced
via an enhanced thermal oil recovery method
called SAGD,
whereby steam is injected into the reservoir, effectively liquefying the heavy
bitumen, which is recovered and
pumped to the surface for further processing.
We hold approximately 600,000 net acres of land in the
Athabasca Region of northeastern Alberta.
The Surmont oil sands leases are located approximately
35 miles south of Fort McMurray, Alberta.
Surmont
is a 50/50 joint venture with Total S.A. that offers long-lived, sustained production.
We are focused on
structurally lowering costs, reducing GHG intensity
and optimizing asset performance.
In response to the oil price collapse that began
in early 2020, we voluntarily curtailed
production at Surmont
by approximately 12 MBOED in 2020.
For more information related to the 2020 industry
downturn and our
response, please see Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of
Operations.
Montney
In August 2020, we completed the acquisition
of additional Montney acreage from Kelt Exploration.
This
acquisition consisted primarily of undeveloped
properties, including 140,000 net acres in the
liquids-rich Inga
Fireweed asset Montney zone, which is directly
adjacent to our existing Montney position.
We now hold
approximately 300,000 net acres in the Montney
play with a 100 percent working interest.
For additional
information related to the Kelt Exploration acquisition,
please see Note 4—Acquisitions and Dispositions,
in
the Notes to Consolidated Financial Statements.
Following the completion of third-party offtake facilities,
our newly commissioned processing facility
and
production from our 2019 drilling program
came online in February 2020.
In 2020, development activity
consisted of drilling 14 horizontal wells and completing
18 wells.
Overall, 23 wells came online in 2020.
In
2021, appraisal drilling and completions activity
will continue to further explore the area’s resource potential.
Exploration
Our primary exploration focus is assessing our
Montney acreage.
Additionally, we have exploration acreage in
the Mackenzie Delta/Beaufort Sea Region and
the Arctic Islands.
EUROPE,
MIDDLE EAST AND NORTH AFRICA
The Europe, Middle East and North Africa segment
consists of operations principally located in the
Norwegian
sector of the North Sea; the Norwegian Sea;
Qatar; Libya; and commercial and terminalling
operations in the
U.K.
In 2020, operations in Europe, Middle East
and North Africa contributed 13 percent of our
consolidated
liquids production and 20 percent of our consolidated
natural gas production.
Norway
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Greater Ekofisk Area
30.7-35.1
%
ConocoPhillips
Heidrun
24.0
Equinor
Aasta Hansteen
10.0
Equinor
-
-
Troll
1.6
Equinor
-
Alvheim
20.0
Aker BP
-
Visund
9.1
Equinor
Other
Various
Equinor
-
Total Norway
The Greater Ekofisk Area is located approximately
200 miles offshore Stavanger, Norway, in the North Sea,
and comprises four producing fields: Ekofisk, Eldfisk,
Embla and Tor.
The Tor II redevelopment achieved
first production in December 2020.
Crude oil is exported to Teesside, England, and the natural gas is exported
to Emden, Germany.
The Ekofisk and Eldfisk fields consist
of several production platforms and facilities,
with development drilling continuing over the
coming years.
The Heidrun Field is located in the Norwegian
Sea.
Produced crude oil is stored in a floating
storage unit and
exported via shuttle tankers.
Part of the natural gas is currently injected into
the reservoir for optimization of
crude oil production,
some gas is transported for use as feedstock in
a methanol plant in Norway, in which we
own an 18 percent interest,
and the remainder is transported to Europe
via gas processing terminals in Norway.
Aasta Hansteen is a gas and condensate field located
in the Norwegian Sea.
Produced condensate is loaded
onto shuttle tankers and transported to market.
Gas is transported through the Polarled gas pipeline
to the
onshore Nyhamna processing plant for final processing
prior to export to market.
The Troll Field lies in the northern part of the North Sea and consists
of the Troll A, B and C platforms.
The
natural gas from Troll A is transported to Kollsnes, Norway.
Crude oil from floating platforms Troll B and
Troll C is transported to Mongstad, Norway, for storage and export.
The Alvheim Field is located in the northern part of
the North Sea near the border with the
U.K. sector, and
consists of a FPSO vessel and subsea installations.
Produced crude oil is exported via shuttle
tankers, and
natural gas is transported to the Scottish Area
Gas Evacuation (SAGE) Terminal at St. Fergus, Scotland,
through the SAGE Pipeline.
Visund is an oil and gas field located in the North Sea and consists of a floating
drilling, production and
processing unit, and subsea installations.
Crude oil is transported by pipeline to a nearby
third-party field for
storage and export via tankers.
The natural gas is transported to a gas processing
plant at Kollsnes, Norway,
through the Gassled transportation system.
We also have varying ownership interests in two other producing fields in the Norway
sector of the North Sea.
Exploration
A well we participated in during 2019, Canela,
was expensed as a dry hole in 2020 after post
drill analysis.
In 2020, we completed the third well of a three-well
operated exploration campaign in Block 25/7
in the North
Sea with the Hasselbaink Well.
The Hasselbaink Well encountered insufficient hydrocarbons and was
expensed as a dry hole in 2020.
In the second half of 2020 we completed
a two-well operated exploration
campaign in the Norwegian Sea with the Warka and Slagugle wells.
Both the Warka and Slagugle wells
encountered hydrocarbons and will be evaluated
for future appraisal programs.
We were awarded three new exploration licenses; PL1045, PL1047 and PL1064; and two
acreage additions,
PL917B and PL1009B.
Additionally, we exchanged our interest in the PL938 exploration license for
increased interest in the PL1047 exploration
license.
Transportation
We own a 35.1 percent interest in the Norpipe Oil Pipeline System, a 220-mile pipeline
which carries crude oil
from Ekofisk to a crude oil stabilization
and NGLs processing facility in Teesside, England.
Facilities
We operate and have a 40.25 percent ownership interest in an oil terminal at Teesside, England to support our
Norway operations.
Qatar
2020
Crude Oil
NGL
Natural
Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Qatargas Operating
QG3
30.0
%
Company Limited
Total Qatar
QG3 is an integrated development jointly owned
by Qatar Petroleum (68.5 percent), ConocoPhillips
(30 percent) and Mitsui & Co., Ltd. (1.5 percent).
QG3 consists of upstream natural gas production
facilities,
which produce approximately 1.4 billion gross cubic
feet per day of natural gas from Qatar’s North Field
over
a 25-year life, in addition to a 7.8 million gross
tonnes-per-year LNG facility.
LNG is shipped in leased LNG
carriers destined for sale globally.
QG3 executed the development of the onshore and
offshore assets as a single integrated development
with
Qatargas 4 (QG4), a joint venture between Qatar Petroleum
and Royal Dutch Shell plc.
This included the joint
development of offshore facilities situated in a common
offshore block in the North Field, as well as the
construction of two identical LNG process trains
and associated gas treating facilities
for both the QG3 and
QG4 joint ventures.
Production from the LNG trains and associated
facilities is combined and shared.
Libya
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Waha Concession
16.3
%
Waha Oil Co.
-
Total Libya
-
The Waha Concession consists of multiple concessions and encompasses nearly
13 million gross acres in the
Sirte Basin.
Our production operations in Libya and related
oil exports have periodically been interrupted over
the last several years due to the shutdown of the
Es Sider crude oil export terminal.
In 2020, we had five crude
liftings from Es Sider, compared with 19 crude liftings from Es Sider
in 2019.
Production ceased in February
2020, due to a forced shutdown of the Es
Sider export terminal and other eastern export
terminals after a
period of civil unrest.
In October 2020, force majeure was
lifted allowing production operations and related
oil
exports to resume.
ASIA PACIFIC
The Asia Pacific segment has exploration and
production operations in China, Indonesia,
Malaysia and
Australia.
In 2020, operations in the Asia Pacific segment
contributed 10 percent of our consolidated liquids
production and 32 percent of our consolidated
natural gas production.
Australia
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
ConocoPhillips/
Australia Pacific LNG
37.5
%
Origin Energy
-
-
Bayu-Undan*
56.9
ConocoPhillips
Total Australia and Timor-Leste
*This asset was disposed in May 2020.
See Note 4—Asset Acquisitions and Dispositions in the Notes to
Consolidated Financial Statements for
additional information.
Australia Pacific LNG
Australia Pacific LNG Pty Ltd (APLNG), our
joint venture with Origin Energy Limited and China
Petrochemical Corporation (Sinopec), is focused
on producing CBM from the Bowen and Surat
basins in
Queensland, Australia,
to supply the domestic gas market and convert
the CBM into LNG for export.
Origin
operates APLNG’s upstream production and pipeline system, and we operate
the downstream LNG facility,
located on Curtis Island near Gladstone, Queensland,
as well as the LNG export sales business.
We operate two fully subscribed 4.5-million-metric-tonnes-per-year LNG trains.
Approximately 2,800 net
wells are ultimately expected to supply both the
LNG sales contracts and domestic gas market.
The wells are
supported by gathering systems, central gas processing
and compression stations, water treatment
facilities,
and an export pipeline connecting the gas fields
to the LNG facilities.
The LNG is being sold to Sinopec under
20-year sales agreements for 7.6 million metric
tonnes of LNG per year, and Japan-based Kansai Electric
Power Co., Inc. under a 20-year sales agreement
for approximately 1 million metric
tonnes of LNG per year.
As of December 31, 2020, APLNG has an outstanding
balance of $6.2 billion on a $8.5 billion
project finance
facility.
Project finance interest payments are bi-annual, concluding
September 2030.
For additional information, see Note 5—Investments,
Loans and Long-Term Receivables and Note 11—
Guarantees, in the Notes to Consolidated Financial
Statements.
Exploration
In 2019, we entered into an agreement with 3D
Oil to acquire a 75 percent interest in and operatorship
of an
offshore Exploration Permit (T/49P) located in the Otway
Basin, Australia.
We obtained an additional five
percent interest in 2020, increasing our interest
to 80 percent.
The required government approvals for the
transfer of this interest were obtained in June 2020.
We plan to conduct a 3-D seismic survey in the second
half of 2021, subject to governmental approval
of a recently submitted Environmental
Plan.
Dispositions
In May 2020, we completed the divestiture
of our subsidiaries that held our Australia-West assets and
operations.
These subsidiaries held a 37.5 percent interest
in the Barossa Project and Caldita Field, a 56.9
percent interest in the Darwin LNG Facility
and Bayu-Undan Field, and a 40 percent
interest in the Greater
Poseidon Fields.
Production from the beginning of the year
through the disposition date in May 2020 averaged
43 MBOED.
See Note 4—Asset Acquisitions and
Dispositions in the Notes to Consolidated Financial
Statements for additional information.
Indonesia
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
South Sumatra
%
ConocoPhillips
-
Total Indonesia
-
During 2020, we operated
two PSCs in Indonesia: the Corridor
Block located in South Sumatra, and
Kualakurun in Central Kalimantan.
Currently, we have production from the Corridor Block.
South Sumatra
The Corridor PSC consists
of two oil fields and seven producing natural gas
fields.
Natural gas is supplied
from the Grissik and Suban gas processing
plants to the Duri steamflood in central Sumatra
and to markets in
Singapore, Batam and West Java.
In 2019, we were awarded a 20-year extension,
with new terms, of the
Corridor PSC.
Under these terms, we retain a majority
interest and continue as operator for at least
three years
after 2023 and retain a participating interest
until 2043.
Exploration
We entered into the Central Kalimantan Kualakurun Block PSC in 2015 with an exploration
period of six
years.
We completed the firm working commitment program in 2017, which included
satellite mapping
and a
740-kilometer 2-D seismic acquisition program.
After completion of prospect evaluation, both
PSC
contractors decided to relinquish rights and return
this block to the government.
Transportation
We are a 35 percent owner of a consortium company that has a 40 percent ownership
in PT Transportasi Gas
Indonesia, which owns and operates the Grissik
to Duri and Grissik to Singapore natural
gas pipelines.
China
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Penglai
49.0
%
CNOOC
-
-
Total China
-
-
Penglai
The Penglai 19-3,
19-9 and 25-6
fields are located
in the Bohai
Bay Block
11/05 and
are in
various stages of
development.
Phase 1 and 2 include production from all
three Penglai oil fields.
Wellhead Platform J Project in the Penglai 19-9 Field achieved first production in 2016.
This project consisted
of 62 wells that have all been completed and brought
online as of December 2020.
The Phase 3 Project in
the Penglai 19-3 and 19-9 fields
consists of three new wellhead platforms and
a central
processing platform.
First production
from Phase
3 was
achieved in
2018 for
two wellhead
platforms and
in
2020
for
the
third
wellhead
platform.
This
project
could
include
up
to
wells,
of
which
have
been
completed and brought online as of December
The Phase 4A Project in the Penglai 25-6 Field
consists of one new wellhead platform and achieved
first
production in December 2020.
This project could include up to 62 new
wells, two of which have been
completed and brought online as of December
Panyu
We have a production license for Panyu 4-1 in Block 15/34.
If a development occurs, our production license
is
for 15 years upon commencement of production.
Exploration
Exploration activities in the Bohai Penglai Field during
2020 consisted of two successful appraisal
wells
supporting future developments in the Bohai
Bay Block 11/05.
We fulfilled our exploration well commitment in Panyu 4-1 in early 2020.
No further exploration well
operations are planned.
Malaysia
2020
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Gumusut
29.0
%
Shell
-
-
Malikai
35.0
Shell
-
-
Kebabangan (KBB)
30.0
KPOC
-
Siakap North-Petai
21.0
PTTEP
-
-
Total Malaysia
-
We have varying stages of exploration, development and production activities across
1.5 million net acres in
Malaysia, with working interests in five PSCs.
Three of these PSCs are located in waters
off the eastern
Malaysian state of Sabah: Block G, Block J and
the Kebabangan Cluster (KBBC).
We operate two exploration
blocks, Block WL4-00 and SK304 in waters
off the eastern Malaysian state of Sarawak.
Block J
Gumusut
We currently have a 29 percent working interest in the Gumusut Field following the
redetermination of the
Block J and Block K Malaysia Unit in 2017.
Gumusut Phase 2 first oil was achieved in
Development
drilling associated with Gumusut Phase 3 is
planned to commence in the fourth quarter
of 2021 with the first
of four planned wells.
First oil is anticipated in 2022.
KBBC
The KBBC PSC grants us a 30 percent working
interest in the KBB, Kamunsu East and Kamunsu
East
Upthrown Canyon gas and condensate fields.
In 2020, we recognized dry hole expense
and impaired the
associated carrying value of unproved properties
in the Kamunsu East Field that is no longer
in our
development plans.
KBB
During 2019, KBB tied-in to a nearby third-party floating
LNG vessel which provided increased gas offtake
capacity.
Production from the field has been reduced
since January 2020, due to the rupture
of a third-party
pipeline which carries gas production from
KBB to market.
The pipeline operator has initiated repairs
with no
production expected to flow through the full length
of the pipeline during 2021.
Block G
Malikai
We hold a 35 percent working interest in Malikai.
This field achieved first production in December 2016
via
the Malikai Tension Leg Platform, ramping to peak production in 2018.
The KMU-1 exploration well was
completed and started producing through the Malikai
platform in 2018.
Malikai Phase 2 development,
a six-
well drilling campaign, commenced in 2020, with
first oil anticipated in 2021.
Siakap North-Petai
We hold a 21 percent working interest in the unitized Siakap North-Petai (SNP) oil
field.
First oil from SNP
Phase 2, a four-well program, is anticipated in the
fourth quarter of 2021.
Production Curtailments
We experienced production curtailments of 4 MBOED in 2020.
Exploration
In 2017, we were awarded operatorship and a
50 percent working interest in Block WL4-00,
which included
the existing Salam-1 oil discovery and encompassed
0.6 million gross acres.
In 2018 and 2019, two
exploration and two appraisal wells were drilled,
resulting in oil discoveries under evaluation
at Salam and
Benum, while two Patawali wells were expensed
as dry holes in 2019.
Further exploration drilling is planned
for 2021.
In 2018, we were awarded a 50 percent working
interest and operatorship of Block SK304 encompassing
2.1
million gross acres offshore Sarawak.
We acquired
3-D seismic over the acreage and completed
processing of
this data in 2019.
Exploration drilling is planned for 2021.
In June 2020, we relinquished our 50 percent interest
in Block SK 313, a 1.4 million gross-acre exploration
block offshore Sarawak.
OTHER INTERNATIONAL
The Other International segment includes exploration
activities in Colombia and Argentina and contingencies
associated with prior operations in other countries.
As a result of our completed Concho acquisition
on
January 15, 2021, we refocused our exploration
program and announced our intent to pursue a managed
exit
from certain areas.
Colombia
We have an 80 percent operated interest in the Middle Magdalena Basin Block
VMM-3.
The block extends
over approximately 67,000 net acres and contains
the Picoplata-1 Well,
which completed drilling in 2015 and
testing in 2017.
Plug and abandonment activity started during
2018 and completed in 2019.
In addition, we
have an 80 percent working interest in the VMM-2
Block which extends over approximately 58,000
net acres
and is contiguous to the VMM-3 Block.
As part of a case brought forward by environmental
groups, the
Highest Administrative Court granted a preliminary
injunction temporarily suspending hydraulic fracturing
activities until the substance of the case is decided.
As a result, we filed two separate Force Majeure requests
before the relevant authority for both blocks, which
were granted.
We
have no immediate plans to perform
under existing contracts, therefore, the Picoplata-1
Well was recorded to dry hole expense and we fully
impaired the capitalized undeveloped leasehold costs
associated with our Colombia assets
during 2020.
Chile
In September 2020,
we notified the operator of our decision to exit
our 49 percent interest in the Coiron Block,
located in the Magallanes Basin in southern Chile.
We are working with local authorities to finalize our
withdrawal from this block.
Argentina
We have a 50 percent nonoperated interest in El Turbio Este Block, within the Austral Basin in southern
Argentina.
Following the acquisition and processing of 3-D
seismic covering approximately 500 square
miles
in 2019, planned activities in 2020 were delayed
due to the impact of COVID-19 and force majeure
in the
block.
We have a 50 percent non-operated interest in the Bandurria Norte and Aguada Federal
blocks within the
Neuquen Basin in central Argentina.
Following a successful production test of two
horizontal wells on the
Aguada Federal Block,
we increased our interest from 45 to 50 percent
in April 2020 where two horizontal
wells continued production testing throughout the
year.
Preparation for a 2021 work program is ongoing.
Venezuela and Ecuador
For discussion of our contingencies in Venezuela and Ecuador, see Note 12—Contingencies and
Commitments, in the Notes to Consolidated Financial
Statements.
OTHER
Marketing Activities
Our Commercial organization manages our worldwide
commodity portfolio, which mainly includes natural
gas, crude oil, bitumen, NGLs and LNG.
Marketing activities are performed through offices
in the U.S.,
Canada, Europe and Asia.
In marketing our production, we attempt to
minimize flow disruptions, maximize
realized prices and manage credit-risk exposure.
Commodity sales are generally made at
prevailing market
prices at the time of sale.
We also purchase and sell third-party volumes to better position the company to
satisfy customer demand while fully utilizing
transportation and storage capacity.
Natural Gas
Our natural gas production, along with third-party
purchased gas, is primarily marketed
in the U.S., Canada,
Europe and Asia.
Our natural gas is sold to a diverse client portfolio
which includes local distribution
companies; gas and power utilities; large industrials;
independent, integrated or state-owned oil and gas
companies; as well as marketing companies.
To reduce our market exposure and credit risk, we also transport
natural gas via firm and interruptible transportation
agreements to major market hubs.
Crude Oil, Bitumen and Natural Gas Liquids
Our crude oil, bitumen and NGL revenues are
derived from production in the U.S., Canada,
Australia, Asia,
Africa and Europe.
These commodities are primarily sold under contracts
with prices based on market indices,
adjusted for location, quality and transportation.
LNG
LNG marketing efforts are focused on equity LNG
production facilities located in Australia
and Qatar.
LNG
is primarily sold under long-term contracts
with prices based on market indices.
Energy Partnerships
Marine Well Containment Company (MWCC)
We are a founding member of the MWCC, a non-profit organization formed in 2010, which
provides well
containment equipment and technology in the
deepwater U.S. Gulf of Mexico.
MWCC’s containment system
meets the U.S. Bureau of Safety and Environmental
Enforcement requirements for a subsea well containment
system that can respond to a deepwater well
control incident in the U.S. Gulf of Mexico.
OSRL Subsea Well Intervention Service (SWIS)
OSRL-SWIS is a non-profit organization in the
U.K. that is an industry funded joint initiative
providing the
capability to respond to subsea well-control incidents.
Through our SWIS subscription, ConocoPhillips
has
access to equipment that is maintained and stored
in a response ready state.
This provides well capping and
containment capability outside the U.S.
Oil Spill Response Removal Organizations (OSROs)
We maintain memberships in several OSROs across the globe as a key element of
our preparedness program in
addition to internal response resources.
Many of the OSROs are not-for-profit cooperatives
owned by the
member companies wherein we may actively
participate as a member of the board of directors,
steering
committee, work group or other supporting role.
Globally, our primary OSRO is Oil Spill Response Ltd.
based in the U.K., with facilities in several
other countries and the ability to respond anywhere
in the world.
In
North America, our primary OSROs include the
Marine Spill Response Corporation for the continental
U. S.
and Alaska Clean Seas and Ship Escort/Response
Ves
sel System for the Alaska North Slope and
Prince
William Sound, respectively.
Internationally, we maintain memberships in various regional OSROs including
the Norwegian Clean Seas Association for Operating
Companies, Australian Marine Oil Spill Center
and
Petroleum Industry of Malaysia Mutual Aid
Group.
Technology
We have several technology programs that improve our ability to develop unconventional
reservoirs, produce
heavy oil economically with less emissions,
improve the efficiency of our exploration program, increase
recoveries from our legacy fields, and implement sustainability
measures.
We are the second largest LNG liquefaction technology provider globally.
Our Optimized Cascade
®
LNG
liquefaction technology has been licensed for
use in 27 LNG trains around the world, with
feasibility studies
ongoing for additional trains and four new products
announced in 2020 that expand the scope
of LNG
licensing.
RESERVES
We have not filed any information with any other federal authority or agency with respect
to our estimated
total proved reserves at December 31, 2020.
No difference exists between our estimated total proved
reserves
for year-end 2019 and year-end 2018, which are shown in
this filing, and estimates of these reserves shown
in
a filing with another federal agency in 2020.
DELIVERY COMMITMENTS
We sell crude oil and natural gas from our producing operations under a variety
of contractual arrangements,
some of which specify the delivery of a fixed and
determinable quantity.
Our commercial organization also
enters into natural gas sales contracts where the
source of the natural gas used to fulfill the
contract can be the
spot market or a combination of our reserves and the
spot market.
Worldwide, we are contractually committed
to deliver approximately 1.1 trillion cubic feet
of natural gas and 156 million barrels of
crude oil in the future.
These contracts have various expiration dates
through the year 2030.
We expect to fulfill these delivery
commitments with third-party purchases, as supported
by our gas management agreements; proved developed
reserves;
and PUDs.
See the disclosure on “Proved Undeveloped
Reserves” in the “Oil and Gas Operations”
section following the Notes to Consolidated Financial
Statements, for information on the development of
PUDs.
COMPETITION
We compete with private, public and state-owned companies in all facets of the
E&P business.
Some of our
competitors are larger and have greater resources.
Each of our segments is highly competitive,
with no single
competitor, or small group of competitors, dominating.
We compete with numerous other companies in the industry, including state-owned companies, to locate and
obtain new sources of supply and to produce oil, bitumen,
NGLs and natural gas in an efficient, cost-effective
manner.
Based on statistics published in the September
7,
2020, issue of the
Oil and Gas Journal
, we were the
third-largest U.S.-based oil and gas company in worldwide
liquids production
and reserves and one of the top
ten U.S. companies measured by worldwide natural
gas production and reserves in 2019.
We deliver our
production into the worldwide commodity markets.
Principal methods of competing include geological,
geophysical and engineering research and technology;
experience and expertise; economic analysis
in
connection with portfolio management; and safely
operating oil and gas producing properties.
HUMAN CAPITAL MANAGEMENT
Values, Principles and Governance
At ConocoPhillips, our human capital management
approach is anchored to our core SPIRIT Values.
Our
SPIRIT Values – Safety,
People, Integrity, Responsibility, Innovation, and Teamwork – set the tone for how
we interact with all our stakeholders, internally
and externally. In particular, we believe a safe organization is a
successful organization, so we prioritize personal and
process safety across the company. Our SPIRIT Values
are a source of pride. Our day-to-day work is guided
by the principles of accountability and performance,
which means the way we do our work is as important
as the results we deliver. We believe these core values
and principles set us apart, align our workforce
and provide a foundation for our culture.
Our Executive Leadership Team (ELT) and our Board of Directors play a key role in setting our human capital
management philosophies and tracking our progress.
The ELT and Board of Directors engage often on
workforce-related topics. Our human capital
management programs are overseen and administered
by our
human resources function with support from
business leaders across the company.
We depend on our workforce to successfully execute our company’s strategy and we recognize the importance
of creating a workplace in which our people feel valued.
We take a broad view of human capital management
that begins with offering a compelling culture and includes
programs and processes necessary for ensuring
we
have an engaged workforce with the skills
to meet our business needs. The key elements
of our human capital
management are described below.
COVID-19 Response
In 2020, a significant effort was undertaken to address the
ongoing COVID-19 pandemic. In the very early
stages of the pandemic, we adopted and embraced
three company-wide priorities to guide our activities
in the
midst of COVID-19: to protect our employees, mitigate
the spread of COVID-19 and safely run the business.
We have pursued these priorities via a coordinated crisis management support team,
frequent workforce
communications and flexible programs to suit
the challenging environment.
We transitioned to a remote work
environment for periods of time to ensure the safety
of our employees, partners and the community, and then
implemented rigorous cleaning and disinfecting
processes and rigorous mitigation protocols
to keep our
workforce safe, including temperature scans, social
distancing, face covering requirements
and increased
sanitation as employees returned to the office setting.
Culture of Feedback and Engagement
Our human capital management approach recognizes
that a compelling culture and an engaged workforce
are
powerful determinants of business success.
Beginning in 2019, we launched a coordinated, multi-year, global
employee feedback program called “Perspectives.”
In mid-2019 we administered our first
Perspectives survey,
which received an 86 percent employee response
rate and yielded more than 35,000 comments.
We achieved
an employee satisfaction score that, on a 100-point
scale, was 5 points higher than general industry
and 11
points higher than our energy peers who used the same platform.
Importantly, the quantitative and qualitative
survey data were used by leaders across the company
to identify and analyze relative strengths
and gaps and to
develop action plans to address gaps.
We intended to repeat the comprehensive Perspectives survey in 2020; however, in light of the COVID-19
pandemic and the significant industry downturn,
we elected to defer the full survey until
2021 and instead
focused our 2020 feedback program on the specific
topic of Diversity and Inclusion (D&I).
The survey
“Perspectives Pulse: D&I” also received a high
response rate with over 10,000 comments.
The ELT and an
internal D&I Council are responsible for analyzing
the survey data to identify D&I strengths
and gaps, and to
use the findings to establish 2021 D&I priorities
and action plans.
The company’s D&I commitment, activities
and programs are described below.
Diversity and Inclusion
Our commitment to D&I is foundational to our SPIRIT
Values
and our stated company-wide D&I goal is
to
have “a diverse culture of belonging where everyone
feels valued.”
We believe a diverse workforce and an
inclusive environment that reflects different backgrounds,
experiences, ideas and perspectives drives
innovation, employee satisfaction and overall
company performance.
We hold our entire workforce
accountable for creating and sustaining an inclusive
work environment.
Our leaders are accountable for
having personal D&I goals each year and we believe
senior leadership involvement is critical
for achieving
meaningful progress on D&I.
The ELT has ultimate accountability for advancing our D&I commitment through a governance
structure that
includes an ELT-level D&I Champion, a global D&I Council consisting of senior leaders
from across the
company and organization-wide D&I goals.
Leaders meet regularly with each other and
with the workforce to
discuss challenges, opportunities, best practices
and progress.
In addition, our D&I plans and progress are
reviewed regularly with the Board of Directors.
In 2018, the company established three pillars
to guide our D&I activities: leadership accountability, employee
awareness, and processes and programs.
Since then, we have established corporate priorities
annually under
each of these areas.
In 2020 we also published our first D&I
Annual Report internally and we expect to update
this report periodically as an important part
of holding ourselves accountable for progressing
our D&I goals
throughout ConocoPhillips.
Some of our key D&I actions and accomplishments
over the past few years
include:
●
Publishing our first D&I Dashboards internally
which contain key D&I statistics for our
global and
U.S. employees at year-end for the periods 2015-2019;
●
Launching a company-wide platform for our workforce
to talk openly about D&I;
●
Expanding our workforce recognition programs to
include a prestigious “SPIRIT Award” for D&I
advocates;
●
Implementing a “how rating” and an upward feedback
process as part of our performance
management system to hold our workforce
and our leaders accountable for D&I;
●
Broadening our D&I-related training resources;
and
●
Advocating for broad participation in, and awareness
of our extensive network of employee resource
groups, which drew participation from over 5,000
people in 2020.
We recognize that achieving our D&I goals require the visible actions described above,
but also requires a
clear linkage to the daily activities of our workforce.
These activities include:
●
Educating managers on inclusive hiring practices;
●
Conducting immersive D&I training for senior
leaders and influencers;
●
Examining our Talent Management Teams’ processes to eradicate bias within our selection and
succession efforts;
●
Working with partners to connect veterans and individuals with disabilities with employment;
●
Promoting inclusion of employees with disabilities
through a robust accommodation process available
to all employees;
●
Ensuring diverse internal and external candidate
slates; and
●
Creating balanced interview teams to mitigate
any unconscious bias in our hiring processes.
We actively monitor diversity metrics on a global basis.
In addition to our internal dashboards, we publicly
report our representation of women and minorities
in leadership roles.
We have also committed to publicly
disclose ConocoPhillips’ Consolidated EEO-1 Report
effective upon our next submission to the U.S. Equal
Employment Opportunity Commission in 2021.
Tables of 2020 employee demographics by gender and
ethnicity, and by country, are shown below:
2020 Employees by Gender
and Ethnicity
Male
Female
Non-POC
**
POC
All Employees
%
%
%
%
All Leadership
Top Leadership
Junior Leadership
*While we present male and female, we acknowledge this is not fully encompassing
of all gender identities.
**"POC" refers to People of Color or racial and ethnic minorities self-reported in the U.S.
Note: percentages based on year-end 2020 employee count of 9,700.
2020 Employees by Country
Percent of Total
USA
%
Norway
Canada
Indonesia
Great Britain
Australia
China
Other Global Locations
Our human capital management approach addresses
programs and processes necessary for ensuring
an
engaged workforce with the skills to meet
our business needs.
We take a holistic view of human capital
management that addresses each of the critical
components of workforce planning.
These are described in
more detail below.
Hiring & Retention
Our success depends on having the right workforce
to meet our business needs. Attracting and retaining
a
skilled,
engaged and diverse workforce is a top priority.
We conduct routine personnel needs assessments with
leaders to ensure we have the organizational capacity
and capabilities to execute our business plans.
We’ve
taken significant steps to embed inclusion into
each step of our recruiting practices, including
adapting the way
we construct job descriptions to using intentionally
diverse interview panels.
To attract qualified, diverse
candidates for full-time positions or internships,
we recruit from a number of universities
in the U.S.
By
attending conferences and recruiting at Hispanic-serving
institutions and historically black colleges
and
universities, we have extended a broader outreach
to potential diverse candidates.
We closely monitor recruitment metrics through our university dashboards in areas
such as gender, ethnicity
and university acceptance rates to help guide
decisions and best practices.
These are disclosed internally
through our D&I Dashboards to ensure greater transparency.
In addition, voluntary turnover metrics are
routinely tracked and disclosed to guide our
retention activities, as necessary.
2020 Hiring & Retention Metrics (U.S.)
Percent of Total
University hire acceptance
%
Interns acceptance
Diversity hiring - Women
Diversity hiring - POC
Total voluntary attrition
Talent Development
We employ a comprehensive approach for ensuring our workforce is adequately
prepared for their
responsibilities and also to advance their career. Our workforce is trained
through a combination of on-the-job
learning, formal training, regular feedback and
mentoring.
Skill-based Talent Management Teams (TMTs)
guide employee development and career progression
by skills and location. The TMTs help identify our future
business needs and assess the availability of
critical skill sets within the company. We use a performance
management program focused on objectivity, credibility and transparency.
The program includes broad
stakeholder feedback, real-time recognition and
a formal rating to assess behaviors to ensure
they are in line
with our SPIRIT values.
ConocoPhillips has established core leadership
competencies that provide a common baseline
of knowledge,
skills, abilities, and behaviors to support employee
performance, growth, and success.
All supervisors have
access to a voluntary 360-feedback tool to receive
feedback on their strengths and opportunities
relative to
these competencies.
We offer training on a broad range of technical and professional skills, from data
analytics to communication skills.
Compensation, Benefits and Well-Being
We offer competitive, performance-based compensation packages and have global equitable
pay practices.
Our compensation programs are generally comprised
of a base pay rate, the annual Variable Cash Incentive
Program (VCIP) and, for eligible employees, the
Restricted Stock Unit (RSU) program.
From the CEO to the
frontline worker, every employee participates in VCIP, our annual incentive program, which aligns employee
compensation with ConocoPhillips’ success
on critical performance metrics and also recognizes individual
performance.
Our RSU program is designed to attract and
retain employees, reward performance, and
align
employee interest with stockholders by encouraging
stock ownership.
Our retirement and savings plans are
intended to support employee’s financial futures and are competitive within
local markets.
We routinely benchmark our global compensation and benefits programs to ensure
they are competitive,
inclusive, aligned with company culture, and allow
our employees to meet their individual needs and
the needs
of their families.
We provide flexible work schedules and competitive time off, including parental leave
policies in many locations.
In 2020, our U.S. parental leave benefit
increased from two weeks to six weeks
and combined with our maternity benefit
(eight weeks), new birth mothers are eligible
for up to 14 weeks of
paid leave.
Our global wellness programs include biometric
screenings and fitness challenges designed
to educate and
promote a healthy lifestyle.
All employees have access to our employee assistance
program, and many of our
locations offer custom programs to support mental
well-being.
Compensation Risk Mitigation
ConocoPhillips has considered the risks associated
with each of its executive and broad-based compensation
programs and policies.
As part of the analysis, we considered the performance
measures we use, as well as the
different types of compensation, varied performance measurement
periods, and extended vesting schedules
utilized under each incentive compensation program.
As a result of this review, management concluded the
risks arising from our compensation policies
and practices are not reasonably likely to have
a material adverse
effect on ConocoPhillips.
As part of the Board of Directors’ oversight of ConocoPhillips’
risk management
programs, the Human Resources Compensation
Committee (HRCC) conducts a similar review
with the
assistance of its independent compensation consultant.
The HRCC agrees with management’s conclusion that
the risks arising from our compensation policies
and practices are not reasonably likely to
have a material
adverse effect on ConocoPhillips.
GENERAL
At the end of 2020, we held a total of 1,038 active
patents in 50 countries worldwide, including
419 active
U.S. patents.
During 2020, we received 65 patents in the U.S.
and 69 foreign patents.
Our products and
processes generated licensing revenues of $16
million related to activity in 2020.
The overall profitability of
any business segment is not dependent on any
single patent, trademark, license, franchise
or concession.
Health, Safety and Environment
Our HSE organization provides tools and support to our
business units and staff groups to help them ensure
world class HSE performance.
The framework through which we safely
manage our operations, the HSE
Management System Standard, emphasizes process
safety, risk management, emergency preparedness and
environmental performance, with an intense focus
on process and occupational safety.
In support of the goal
of zero incidents, HSE milestones and criteria are
established annually to drive strong safety
and
environmental performance.
Progress toward these milestones and criteria
are measured and reported.
HSE
audits are conducted on business functions periodically, and improvement actions
are established and tracked
to completion.
We have designed processes relating to sustainable development in our economic,
environmental and social performance.
Our processes, related tools and requirements
focus on water,
biodiversity and climate change, as well as social
and stakeholder issues.
The environmental information contained in Management’s Discussion
and Analysis of Financial Condition
and Results of Operations on pages 64 through
69 under the captions “Environmental” and “Climate
Change”
is incorporated herein by reference.
It includes information on expensed and
capitalized environmental costs
for 2020 and those expected for 2021 and 2022.
Website Access to SEC Reports
Our internet website address is
.
Information contained on our internet website is
not
part of this report on Form 10-K.
Our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K
and any
amendments to these reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 are available on our website, free of
charge, as soon as reasonably practicable after such reports
are filed with, or furnished to, the SEC.
Alternatively, you may access these reports at the SEC’s website at
.