ConocoPhillips Reports Fourth-Quarter and Full-Year 2012 Results

  ConocoPhillips Reports Fourth-Quarter and Full-Year 2012 Results

2012 Organic Reserve Replacement of 156 Percent

Business Wire

HOUSTON -- January 30, 2013

ConocoPhillips (NYSE: COP) today reported fourth-quarter 2012 earnings of $1.4
billion, or $1.16 per share, compared with fourth-quarter 2011 earnings of
$3.4 billion, or $2.56 per share. Fourth-quarter 2011 reported earnings
included downstream results prior to the separation of Phillips 66 on April
30, 2012.

Excluding special items, fourth-quarter 2012 adjusted earnings were $1.8
billion, or $1.43 per share, compared with fourth-quarter 2011 adjusted
earnings of $2.1 billion, or $1.55 per share. Special items for the current
quarter included disposition-related impairments partially offset by tax
impacts, net benefits related to legal claims and settlements, and
discontinued operations.

Following recently announced agreements to dispose of the company’s interests
in the Kashagan Field and the Algeria and Nigeria business units, the
associated earnings and production impacts for these assets have been reported
as discontinued operations. This decreased adjusted earnings for
fourth-quarter 2012 by $27 million, or $0.02 per share.

Full-year 2012 earnings were $8.4 billion, or $6.72 per share, compared with
full-year 2011 earnings of $12.4 billion, or $8.97 per share. Reported
earnings for 2012 and 2011 included four months and 12 months of downstream
results, respectively. Full-year 2012 adjusted earnings were $6.7 billion, or
$5.37 per share, compared with full-year 2011 adjusted earnings of $8.0
billion, or $5.75 per share.

Highlights

  *Fourth-quarter total production of 1,607 MBOED; full-year total production
    of 1,578 MBOED.
  *Year-end proved reserves of 8.6 billion BOE; annual organic reserve
    replacement of 156 percent.
  *Eagle Ford and Bakken continued to set new production and efficiency
    records.
  *Oil sands production exceeded 100 MBOED average for the quarter.
  *FCCL expansion progressed with sanction of Christina Lake Phase F and
    Narrows Lake Phase A.
  *First oil achieved from the Gumusut Field in Malaysia.
  *Continued drilling and testing of unconventional shale plays; increased
    Niobrara acreage position to approximately 130,000 acres.
  *Increased deepwater Gulf of Mexico position to 1.9 million acres;
    continued exploration and appraisal drilling.
  *Announced agreements to sell Kashagan, Algeria, Nigeria and Cedar Creek
    Anticline, which are expected to generate approximately $9.6 billion in
    proceeds.

“We ended 2012 with another strong quarter,” said Ryan Lance, chairman and
chief executive officer. “We achieved our production targets, continued to
successfully execute our growth projects and drilling programs, and announced
significant progress on our asset disposition program. Our quarterly
production from continuing operations is growing and we delivered strong
organic reserve replacement. These achievements reflect our strategic focus on
organic growth and the strength of our resource base. We remain committed to
our goals of delivering 3 to 5 percent volume and margin growth, with a
compelling dividend.”

Reserves Update

Preliminary year-end 2012 proved reserves are 8.6 billion barrels of oil
equivalent (BOE). Proved organic reserve additions for 2012 are expected to be
942 million BOE, representing an organic reserve replacement ratio of 156
percent of 2012 production, including fuel gas. Sales completed during 2012,
net of purchases, reduced reserves by 83 million BOE, giving a total reserve
replacement ratio of 142 percent.

Organic reserves were added across the portfolio, adding approximately:

  *500 million BOE in Canada, primarily in the oil sands, with ongoing
    expansion phases at Foster Creek and Christina Lake, and following Phase A
    sanction at Narrows Lake;
  *230 million BOE in Lower 48, mostly in liquids-rich shale plays, including
    the rapidly growing Eagle Ford and Bakken;
  *100 million BOE in Asia Pacific, with progress at Australia Pacific LNG
    and multiple projects in Malaysia, including the recently online Gumusut
    Field and under-construction Malikai development; and
  *50 million BOE across multiple developments in Europe, including the
    Jasmine Field where first production is expected in 2013.

Final information related to the company’s 2012 oil and gas reserves as well
as finding and development costs will be provided in ConocoPhillips’ Annual
Report on Form 10-K, to be filed with the Securities and Exchange Commission
in late February.

Operations Update

Lower 48 and Latin America – Fourth-quarter production was 475 thousand
barrels of oil equivalent per day (MBOED), an increase of 31 MBOED compared to
the same period of 2011. Significant growth continues from the ramp up of core
shale plays in the Eagle Ford and Bakken. For the quarter, these shale plays
delivered approximately 113 MBOED, a 71 percent increase compared to the
fourth quarter of 2011. During the quarter, Eagle Ford averaged 89 MBOED,
achieving a peak daily rate of more than 100 MBOED, while Bakken averaged 24
MBOED. Earlier this month, the company announced an agreement to sell its
Cedar Creek Anticline properties for $1.05 billion, with closing expected by
the end of the first quarter of 2013.

Canada – Quarterly production increased by 17 MBOED over the same period in
2011, to 281 MBOED. The company’s oil sands programs continue to perform
strongly, with average production exceeding 100 MBOED for the quarter. Surmont
2 construction continued on schedule and FCCL expansion progressed with the
sanctioning of Christina Lake Phase F and Narrows Lake Phase A.

The production mix in the Lower 48 and Canada continues to shift from natural
gas to liquids. For the quarter, total liquids production in these segments
increased by 21 percent compared to the same period in 2011, resulting in the
liquids percentage of production increasing from 43 percent to 48 percent.

Alaska – Fourth-quarter production was 222 MBOED, down 15 MBOED compared to
the same period in 2011, primarily reflecting normal field decline, partially
offset by reduced downtime. During the quarter, the Alpine West CD5 Project
was sanctioned.

Asia Pacific and Middle East – Quarterly production was 322 MBOED, up 32 MBOED
compared to the fourth quarter of 2011. Fourth-quarter 2012 production
reflects stabilized production at Peng Lai and growth from Panyu, which more
than offset the impact of the Vietnam disposition earlier in the year. During
the quarter, first oil was achieved from the early production system at the
deepwater Gumusut oil field in Malaysia, representing the first field online
of four developments currently in execution. Additionally, new long-term sales
agreements were secured for QatarGas 3 LNG volumes, and the Australia Pacific
LNG Project continued on schedule with further progress on upstream and
downstream developments.

Europe – Production for the quarter was 216 MBOED, down 61 MBOED compared to
the same period a year ago, reflecting the impact of normal field decline,
higher downtime in the United Kingdom, and dispositions. Development continued
at Clair Ridge and Jasmine in the United Kingdom, and Ekofisk South and
Eldfisk II in Norway.

Other International – Production from continuing operations was 50 MBOED in
the fourth quarter of 2012, an increase of 24 MBOED compared to the same
period in 2011. This reflects the resumption of production in Libya earlier
this year following the civil unrest in 2011, offset by lower production from
Russia due to the sale of our interest in NaryanMarNefteGaz in the third
quarter of 2012. This segment also included fourth-quarter 2012 production
related to discontinued operations of 41 MBOED.

Unconventional exploration – Testing continues across shale plays in North
America. Fourth-quarter Lower 48 activity focused on drilling in the Permian
Basin Wolfcamp and Niobrara plays. In the Niobrara, the company has
accumulated approximately 130,000 acres. Drilling continues in Canada’s
Duvernay formation, Poland’s Baltic Basin and Australia’s Canning Basin. In
China, ConocoPhillips entered into a joint study agreement on a potential
shale gas opportunity in the Sichuan Basin, covering approximately one million
acres.

Conventional exploration – The company expects to increase its acreage in the
deepwater Gulf of Mexico by approximately 375,000 acres to 1.9 million acres,
reflecting successful participation in two lease sales in the central and
western zones during the second half of 2012. Also in the deepwater Gulf of
Mexico, drilling continued at the Coronado and Shenandoah prospects. The
company also advanced its conventional exploration program internationally.
ConocoPhillips was awarded two new licenses in the Central North Sea during
the U.K.’s 27th licensing round, and appraisal drilling continued in the
Browse Basin in Australia. In Angola, rig access was secured and plans are
underway to commence drilling in early 2014 on the company’s prospective
deepwater acreage. The company also signed a new production sharing contract
as operator for exploration of Block SB311 in Malaysia.

Fourth-Quarter Review – Continuing Operations

Production from continuing operations for the fourth quarter of 2012 was 1,566
MBOED, compared with 1,538 MBOED for the fourth quarter of 2011. Adjusted for
completed dispositions, production grew by 83 MBOED compared to fourth-quarter
2011. This increase was primarily due to new production from major projects
and drilling programs, as well as higher production in Libya and China. These
increases more than offset normal field decline and downtime.

Adjusted earnings decreased compared with fourth-quarter 2011 primarily due to
the impact of lower commodity prices. The company’s total realized price fell
to $67.45 per BOE, compared to $69.99 per BOE in the fourth quarter of 2011.
Realized crude oil prices decreased to $103.08 per barrel, compared with
$105.92 per barrel for the fourth quarter of 2011. Realized natural gas
liquids (NGL) prices decreased by 18 percent to $44.93 per barrel, compared
with $55.06 per barrel for the fourth quarter of 2011. Realized natural gas
prices decreased to $5.79 per thousand cubic feet (MCF), compared with $5.88
per MCF for the fourth quarter of 2011. Realized bitumen prices decreased by
31 percent to $48.32 per barrel, compared with $70.20 per barrel for the
fourth quarter of 2011.

For the quarter, cash provided by continuing operating activities was $3.87
billion. Excluding a working capital increase of $0.37 billion, ConocoPhillips
generated $4.24 billion in cash from operations. The company funded a $3.6
billion capital program and paid dividends of $0.8 billion. During the
quarter, debt increased $0.6 billion, reflecting the placement of $2.0 billion
in low-interest debt, retirement of maturing debt and repayment of commercial
paper.

Full-Year Review – Continuing Operations

Production from continuing operations for the year was 1,527 MBOED, compared
with 1,561 MBOED for 2011. Adjusted for completed dispositions, production
grew by 7 MBOED compared to 2011. New production from major projects and
drilling programs, as well as higher production from the resumption of
operations in Libya, offset normal field decline and downtime.

Adjusted earnings decreased compared with 2011 primarily due to the impact of
lower commodity prices and volumes. The company’s full-year 2012 realized
price fell to $67.68 per BOE, compared to $69.14 per BOE in 2011. Realized
crude oil prices increased to $105.72 per barrel, compared with $105.52 per
barrel for the full year of 2011. Realized NGL prices decreased by 17 percent
to $46.36 per barrel, compared with $55.73 per barrel for the full year of
2011. Realized natural gas prices decreased by 6 percent to $5.48 per MCF,
compared with $5.80 per MCF for the full year of 2011. Realized bitumen prices
decreased by 14 percent to $53.91 per barrel, compared with $62.56 per barrel
for the full year of 2011.

For the year, cash provided by continuing operating activities was $13.5
billion. Excluding a working capital increase of $1.2 billion, ConocoPhillips
generated $14.7 billion in cash from operations. The company received $2.1
billion in proceeds from asset dispositions and $5.5 billion in net cash
related to the separation of Phillips 66. ConocoPhillips funded a $15.7
billion capital program, including $0.8 billion related to discontinued
operations. During the year, the company paid dividends of $3.3 billion and
repurchased shares for $5.1 billion. Debt decreased by $0.9 billion.

As of Dec. 31, 2012, ConocoPhillips had debt of $21.7 billion and the
debt-to-capital ratio was 31 percent. The company had $3.62 billion of cash
and cash equivalents and $0.75 billion in restricted cash targeted for
dividends.

Outlook

Total production for the first quarter of 2013 is expected to be 1,580 to
1,600 MBOED, including production from discontinued operations of
approximately 40 MBOED. Full-year 2013 production from continuing operations
is expected to be 1,475 to 1,525 MBOED.

In addition to $2.1 billion in proceeds from asset dispositions completed in
2012, the company has announced asset sales that are expected to close by
mid-2013, generating additional proceeds of approximately $9.6 billion. The
company continues to evaluate opportunities to further optimize the portfolio.

ConocoPhillips will host a conference call at 9:30 a.m. EST on Jan. 31, 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.

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

                                --- # # # ---

About ConocoPhillips

Headquartered in Houston, Texas, ConocoPhillips had operations and activities
in 30 countries, $58 billion in annual revenue, $117 billion of assets, and
approximately 16,900 employees as of Dec. 31, 2012. Production from continuing
operations averaged 1,527 MBOED in 2012, and preliminary proved reserves were
8.6 billion BOE as of Dec. 31, 2012. 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 news 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 news 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
                              4Q                         FY
                              2012        2011         2012       2011
Earnings                      $ 1,426       3,390        8,428        12,436
Adjustments:
Impairments                     351         649          901          649
Net (gain)/loss on asset        -           15           (1,532 )     (124   )
sales
Bohai Bay incidents             -           101          89           142
Tax loss carry forward          (236  )     -            (236   )     -
realization
International tax law           -           -            167          109
changes
Deferred tax adjustment         -           -            (72    )     -
Separation costs                4           25           84           25
Cancelled projects              -           -            -            54
Pension settlement              5           -            87           -
expense
Pending claims and              (196  )     -            (235   )     -
settlements
Premium on early debt           -           -            68           -
retirement
Discontinued operations -       15          (2,066 )     (1,232 )     (5,042 )
Phillips 66
Discontinued operations -    386      (63    )     217       (267   )
Other International ^1
Adjusted earnings           $ 1,755    2,051       6,734     7,982  
^1 Includes Kashagan,
Algeria and Nigeria
                                                                      
Earnings per share of         $ 1.16        2.56         6.72         8.97
common stock (dollars)
                                                                      
Adjusted earnings per
share of common stock         $ 1.43        1.55         5.37         5.75
(dollars)
                                                                      
                                                                      
                                                                      
Reconciliation of Operating Results for Discontinued Operations - Other
International
$ Millions                    4Q                         FY
                              2012        2011         2012       2011
                                                                      
Income from discontinued      $ (401  )     2,129        1,015        5,309
operations
Less: Discontinued             (15   )   2,066       1,232     5,042  
operations - Phillips 66
Discontinued operations -       (386  )     63           (217   )     267
Other International
Less: Kashagan impairment    (413  )   -           (413   )   -      
Operating results for
Discontinued operations -   $ 27       63          196       267    
Other International

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