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, 2020,

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, 2020 and 2019, 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.

A hypothetical 10 percent change in

prevailing interest rates would not have a material

impact on interest expense associated with our floating-rate

debt.

The fair value of the fixed-rate debt is measured

using prices available from a pricing service

that is

corroborated by market data.

Changes to prevailing interest rates would not

impact our cashflows associated

with fixed rate debt,

unless we elect to repurchase or retire such

debt prior to maturity.

Millions of Dollars Except as Indicated

Debt

Fixed

Average

Floating

Average

Rate

Interest

Rate

Interest

Expected Maturity Date

Maturity

Rate

Maturity

Rate

Year

-End 2020

2021

$

8.47

%

$

0.22

%

2022

2.53

1.12

2023

7.03

-

-

2024

3.51

-

-

2025

5.33

-

-

Remaining years

11,793

6.28

0.11

Total

$

13,209

$

1,083

Fair value

$

18,023

$

1,083

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

$

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, 2020 and 2019, we held foreign

currency exchange forwards hedging cross-border

commercial activity and foreign currency exchange

swaps for purposes of mitigating our cash-related

exposures.

Although these forwards and swaps 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, 2020,

we had outstanding foreign currency exchange

forward contracts to sell $0.45 billion

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

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.

Based on the

assumed volatility in the fair value calculation,

the net fair value of these foreign currency

contracts at

December 31, 2020 and December 31, 2019, were

a before-tax loss of $16 million and $28 million,

respectively.

Based on an adverse hypothetical 10 percent

change in the December 2020 and December 2019

exchange rate, this would result in an additional

before-tax loss of $39 million and $115 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, 2020 and 2019, were as follows:

In Millions

Foreign Currency Exchange Derivatives

Notional

Fair Value*

2020

2019

2020

2019

Sell Canadian dollar, buy U.S. dollar

CAD

1,350

(16)

(28)

Buy Canadian dollar, sell U.S. dollar

CAD

-

Sell British pound, buy euro

GBP

-

-

-

Buy British pound, sell euro

GBP

-

-

*Denominated in USD.

For additional information about our use of derivative

instruments, see Note 13—Derivative

and Financial

Instruments, in the Notes to Consolidated Financial

Statements.