ConocoPhillips Reports Third-Quarter Earnings of $1.8 Billion or $1.46 Per Share

  ConocoPhillips Reports Third-Quarter Earnings of $1.8 Billion or $1.46 Per
  Share

Adjusted Earnings of $1.44 Per Share

Business Wire

HOUSTON -- October 25, 2012

ConocoPhillips (NYSE: COP) today reported third-quarter 2012 earnings of $1.8
billion, or $1.46 per share, compared with third-quarter 2011 earnings of $2.6
billion, or $1.91 per share.

Excluding special items of $26 million, third-quarter 2012 adjusted earnings
were $1.8 billion, or $1.44 per share, compared with third-quarter 2011
adjusted earnings of $1.9 billion, or $1.40 per share. Special items for the
current quarter were primarily related to net gains on asset sales offset by
the impact of tax law changes in the United Kingdom and pension settlement
expense.

Highlights

  *Quarterly production of 1.525 million BOE per day.
  *Continued ramp up in Eagle Ford and Bakken.
  *Ongoing growth from Canadian oil sands and successful startup of Christina
    Lake Phase D.
  *Major projects and drilling programs on schedule to deliver volume and
    margin growth.
  *Completed turnarounds at major worldwide facilities, as planned.
  *Ramping up exploration activity in conventional and unconventional
    opportunities globally.
  *Completed sale of NMNG and dilution of interest in APLNG.

“We performed well in our first full quarter as an independent E&P company,”
said Ryan Lance, chairman and chief executive officer. “Our production was on
target, our growth projects and drilling programs are on track and our
portfolio optimization plans continue to progress. Quarterly production,
excluding the impact of dispositions, grew by 40 thousand BOE per day compared
to the third quarter of 2011.”

“For the first nine months of 2012, we have generated $2.1 billion in proceeds
from asset dispositions and remain on track to complete our $8-$10 billion
disposition program by the end of 2013,” Lance added. “We are focused on
delivering average annual production growth and margin growth of 3 to 5
percent, improving our financial returns, and offering a sector-leading
dividend.”

Operations Update

In the Lower 48 and Latin America segment, third-quarter production was 462
thousand barrels of oil equivalent (BOE) per day, an increase of 28 thousand
BOE per day compared to the same period of 2011. Significant growth continues
from the ramp up of several high-margin, liquids-rich shale plays, including
Eagle Ford and Bakken. Eagle Ford reached a record production level of 86
thousand BOE per day in the third quarter. For the quarter, these shale plays
delivered approximately 102 thousand BOE per day, a 51 thousand BOE per day
increase compared to the third quarter of 2011.

In the Canada segment, third-quarter production increased by 21 thousand BOE
per day over the same period in 2011, to 277 thousand BOE per day, reflecting
strong performance from the company’s significant oil sands portfolio.
Christina Lake Phase D achieved first production during the quarter, driving
overall bitumen production to 92 thousand BOE per day, a 28 thousand BOE per
day increase compared to the third quarter of 2011. Additional growth is
expected from expansion phases at both FCCL and Surmont which are progressing
on schedule.

For the quarter, total Lower 48 and Canada liquids production increased by 24
percent compared to the same period in 2011. This shift to liquids is
consistent with the company’s overall strategy to improve margins over time.

Third-quarter production in the Alaska segment was 176 thousand BOE per day,
down 32 thousand BOE per day compared to the same period in 2011, reflecting
normal field decline and increased turnaround activity in the current quarter.

In the Asia Pacific and Middle East segment, quarterly production was 306
thousand BOE per day, down 6 thousand BOE per day compared to the third
quarter of 2011, with continued ramp up in China largely offsetting the impact
of dispositions. In Malaysia, development continued on several major offshore
fields with first production from the deepwater Gumusut oil field expected in
the fourth quarter. ConocoPhillips also furtherdiluted its interest in the
Australia Pacific LNG(APLNG) project from 42.5 percent to 37.5 percent during
the quarter.This reduced ownership interest, coupled withSinopec Corp.'s
estimated $2.1 billion injection into APLNG associated with the dilution and
APLNG's successful placement of $8.5 billion of project financing, willlower
ConocoPhillips’ future capital requirements to fund the project.

In the Europe segment, production for the quarter was 191 thousand BOE per
day, down 54 thousand BOE per day compared to the same period a year ago,
reflecting the impact from dispositions and normal field decline. Progress
continued on several major developments in the United Kingdom and Norway,
which will result in significant new production from 2013 onwards.

In the Other International segment, production increased from 83 thousand BOE
per day in the third quarter of 2011 to 113 thousand BOE per day in the
current quarter, primarily reflecting the resumption of production in Libya
following the civil unrest in 2011. During the quarter, the company completed
the sale of its 30 percent interest in NaryanMarNefteGaz (NMNG) and certain
related assets.

In conventional exploration, the company advanced its opportunities in the
deepwater Gulf of Mexico, as drilling continued at the Coronado and Shenandoah
prospects. ConocoPhillips holds 1.5 million acres in the deepwater Gulf of
Mexico, and in October, secured access to a new build ultra deepwater
drillship, providing future rig availability and flexibility for the company’s
drilling programs. The company confirmed a successful appraisal in Australia’s
Browse Basin following the drilling of the Boreas-1 well, and is currently
evaluating seismic results in deepwater Angola and Bangladesh.

In unconventional exploration, several pilot programs are underway across
shale plays in the Lower 48 and Canada. In Western Australia, the first phase
of drilling commenced in the Canning Basin. In Europe, the company exercised
its option to acquire a 70 percent interest in Lane Energy Poland and assumed
operatorship for three western Baltic Basin concessions, where a fourth
exploration well is currently being drilled, and ongoing analysis and testing
is underway.

Third-Quarter Review

Production for the third quarter of 2012 was 1.525 million BOE per day,
compared with 1.538 million BOE per day for the third quarter of 2011. As
expected, production was lower due to the impact of dispositions. Normal field
decline was more than offset by additional production from major projects as
well as higher production in China and Libya. Sales volumes for the quarter
exceeded production, resulting in a favorable impact to earnings of
approximately $80 million.

In line with worldwide commodity prices, ConocoPhillips’ realized prices fell
in the third quarter compared to the same period of 2011. Realized crude oil
prices decreased $3.89 per barrel to $102.72 per barrel, compared with $106.61
per barrel for the third quarter of 2011. Realized natural gas prices
decreased by 16 percent from $5.45 per thousand cubic feet (MCF) in the third
quarter of 2011 to $4.56 per MCF for the current quarter. Realized natural gas
liquids (NGL) prices decreased by 27 percent to $40.39 per barrel, compared
with $55.61 per barrel for the third quarter of 2011.

During the quarter, ConocoPhillips generated $3.9 billion in cash from
continuing operating activities, excluding working capital. Cash provided by
continuing operating activities was $3.5 billion, reflecting a $0.4 billion
increase in working capital. The company also received $0.5 billion in
proceeds from asset dispositions. The company funded a $3.7 billion capital
program, paid dividends of $0.8 billion and reduced debt by $2.0 billion.

Nine-Month Review

ConocoPhillips’ nine-month 2012 earnings were $7.0 billion, or $5.55 per
share, compared with $9.0 billion, or $6.42 per share, for the same period in
2011. Nine-month 2012 adjusted earnings were $5.1 billion, or $4.09 per share,
compared with nine-month 2011 adjusted earnings of $6.1 billion, or $4.35 per
share.

Production for the first nine months of 2012 was 1.569 million BOE per day,
compared with 1.626 million BOE per day for the same period in 2011. Excluding
asset dispositions, normal field decline was largely offset by new production
from major projects and drilling programs.

ConocoPhillips’ nine-month 2012 worldwide realized price for crude oil
increased to $106.92 per barrel, compared with $105.78 per barrel for the
first nine months of 2011. Realized natural gas prices decreased by 15 percent
from $5.39 per MCF for the first nine months of 2011 to $4.60 per MCF for the
first nine months of 2012. Realized NGL prices decreased by 16 percent to
$46.02 per barrel, compared with $54.97 per barrel for the first nine months
of 2011.

As of Sept. 30, 2012, ConocoPhillips had debt of $21.1 billion and the
debt-to-capital ratio was 31 percent. The company had $1.3 billion of cash and
cash equivalents and $2.5 billion in restricted cash targeted for dividends
and debt reduction.

Outlook

Production for the fourth quarter is expected to increase compared to the
third quarter of 2012, reflecting completion of turnaround activity and
ongoing ramp up in major North American programs, notably in the Eagle Ford
and oil sands. Full-year 2012 production is expected to be 1.570 million to
1.580 million BOE per day. The company expects continued progress on its major
projects and drilling programs in the fourth quarter, including evaluating
drilling results on several exploration prospects.

“Our business is running well, and we expect to achieve several operational
and strategic milestones in the months to come,” said Lance. “Our projects and
drilling programs continue to perform, our exploration activities are building
momentum and our asset sales are progressing. We are on our way to delivering
our unique combination of growth, returns and yield.”

ConocoPhillips will hold its annual analyst meeting on Feb. 28, 2013 in New
York. Representatives from company management will discuss the company’s
strategic plans for growth and value creation.

ConocoPhillips will host a conference call at 1 p.m. Eastern time today to
discuss its quarterly results and provide a status update on operational and
strategic plans. To listen to the call and view related presentation
materials, go to www.conocophillips.com/investor. For detailed supplemental
information, go to www.conocophillips.com/investor/earnings.

                                --- # # # ---

About ConocoPhillips

Headquartered in Houston, Texas, ConocoPhillips had operations and activities
in 30 countries, $115 billion of assets, and approximately 16,700 employees as
of Sept. 30, 2012. Production averaged 1.57 million BOE per day for the nine
months ended Sept. 30, 2012, and proved reserves were 8.4 billion BOE as of
Dec. 31, 2011. For more information, go to www.conocophillips.com.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statements. Forward-looking
statements relate to future events and anticipated results of operations,
business strategies, and other aspects of our operations or operating results.
In many cases you can identify forward-looking statements by terminology such
as "anticipate," "estimate," "believe," "continue," "could," "intend," "may,"
"plan," "potential," "predict," "should," "will," "expect," "objective,"
"projection," "forecast," "goal," "guidance," "outlook," "effort," "target"
and other similar words. However, the absence of these words does not mean
that the statements are not forward-looking. Where, in any forward-looking
statement, the company expresses an expectation or belief as to future
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, there can be no assurance that such
expectation or belief will result or be achieved. The actual results of
operations can and will be affected by a variety of risks and other matters
including, but not limited to, changes in commodity prices; changes in
expected levels of oil and gas reserves or production; operating hazards,
drilling risks, unsuccessful exploratory activities; difficulties in
developing new products and manufacturing processes; unexpected cost
increases; international monetary conditions; potential liability for remedial
actions under existing or future environmental regulations; potential
liability resulting from pending or future litigation; limited access to
capital or significantly higher cost of capital related to illiquidity or
uncertainty in the domestic or international financial markets; and general
domestic and international economic and political conditions; as well as
changes in tax, environmental and other laws applicable to our business. Other
factors that could cause actual results to differ materially from those
described in the forward-looking statements include other economic, business,
competitive and/or regulatory factors affecting our business generally as set
forth in our filings with the Securities and Exchange Commission. Unless
legally required, ConocoPhillips undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.

Use of Non-GAAP Financial Information – This press release includes the terms
adjusted earnings and adjusted earnings per share. These are non-GAAP
financial measures. Adjusted earnings and adjusted earnings per share are
included to help facilitate comparisons of company operating performance
across periods.

References in the release to earnings refer to net income attributable to
ConocoPhillips.

                                                                 
ConocoPhillips
Reconciliation of Earnings to Adjusted Earnings
$ Millions, Except as Indicated
                                    Third Quarter          Nine Months
                                    2012       2011       2012      2011
Earnings                            $ 1,798     2,616      7,002      9,046
Adjustments:
Impairments                           -         -          550        -
Net (gain)/loss on asset sales        (310  )   280        (1,532 )   (139   )
Bohai Bay incidents                   -         41         89         41
International tax law changes         167       109        167        109
Deferred tax adjustment               -         -          (72    )   -
Separation costs                      7         -          80         -
Cancelled projects                    -         -          -          54
Pension settlement expense            82        -          82         -
Pending claims and settlements        (39   )   -          (39    )   -
Premium on early debt retirement      68        -          68         -
Discontinued operations             (1    )  (1,134 )   (1,247 )  (2,976 )
Adjusted earnings                  $ 1,772   1,912     5,148    6,135  
                                                                      
Earnings per share of common        $ 1.46      1.91       5.55       6.42
stock (dollars)
                                                                      
Adjusted earnings per share of      $ 1.44      1.40       4.09       4.35
common stock (dollars)

Contact:

ConocoPhillips
Aftab Ahmed, 281-293-4138 (media)
aftab.ahmed@conocophillips.com
or
Daren Beaudo, 281-293-2073 (media)
daren.beaudo@conocophillips.com
or
Vladimir R. dela Cruz, 212-207-1996 (investors)
v.r.delacruz@conocophillips.com
 
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