ConocoPhillips Reports Fourth-Quarter Earnings of $3.4 Billion or $2.56 Per Share

ConocoPhillips (NYSE:COP):

Fourth-Quarter Highlights

• 
  Production of 1.60 million BOE per day
  
• 
  Completed marketing for APLNG′s second train
  
• 
  Secured deepwater exploration opportunities in Angola and Gulf of
  Mexico
  
• 
  Worldwide refining capacity utilization rate of 94 percent
  
• 
  Commenced operations at Wood River′s CORE project
  
• 
  Progressed asset divestiture program
  
• 
  Repurchased 3 percent of ConocoPhillips shares
  
• 
  Moved forward on creating two leading energy companies
  

ConocoPhillips (NYSE:COP) today reported fourth-quarter earnings of $3.4
billion, compared with fourth-quarter 2010 earnings of $2.0 billion.
Fourth-quarter 2011 earnings excluding $723 million of special items
were $2.7 billion. Special items were primarily related to gains on
asset dispositions, partially offset by impairments and costs related to
the Bohai Bay incidents.

'We operated well during the fourth quarter,? said Jim Mulva, chairman
and chief executive officer. 'Production and refinery utilization met
expectations. For the year, we replaced 120 percent of our 2011
production with organic reserves across our asset base. We continued
execution of our 2010-2012 repositioning plan, including $4.8 billion of
asset sales and $11.1 billion of share repurchases during the year. We
are also progressing plans to create two leading energy companies during
the second quarter of 2012.?

Exploration and Production′s (E&P) fourth-quarter 2011 adjusted earnings
were higher, compared with the same period in 2010, primarily due to
stronger crude oil and liquefied natural gas (LNG) prices, partially
offset by higher taxes. Excluding the impact of dispositions and the
suspension of operations in Libya and China, production was lower by
21,000 barrels of oil equivalent (BOE) per day, or 1 percent, compared
with the fourth quarter of 2010. The decrease was primarily from natural
decline, partially offset by new production from major projects and
other field exploitation.

In January 2012, the company′s Australia Pacific LNG (APLNG) joint
venture announced an amendment to its existing LNG sales agreement with
Sinopec for the supply of an additional 3.3 million tonnes per annum
(MTPA) of LNG through to 2035 from its world-class LNG project in
Queensland. The joint venture partners also agreed to terms for Sinopec
to raise its ownership interest in APLNG to 25 percent. An agreement was
also signed in November with Kansai Electric Power Company for the
supply of approximately 1 MTPA of LNG commencing with the startup of the
second train. These two agreements complete the marketing of the second
train, with sanctioning of train construction expected during the first
quarter of 2012.

ConocoPhillips continues to pursue frontier exploration opportunities
around the world. During the quarter, the company signed production
sharing agreements for deepwater blocks 36 and 37 in Angola′s emerging
subsalt play trend. The company also acquired more than 100,000 acres in
North American liquids-rich shale plays, bringing its 2011 shale
acquisitions to more than 500,000 acres. In addition, ConocoPhillips
added to its position in the deepwater Gulf of Mexico, successfully
bidding on 75 blocks in the Paleogene play in December′s western Gulf of
Mexico lease sale.

The company′s North American unconventional assets were a source of
high-margin production growth during the quarter and the year.
Fourth-quarter production from Eagle Ford, Bakken and Barnett shale
plays and Canadian oil sands assets averaged 153,000 BOE per day, an
increase of 53,000 BOE per day from a year ago. At Eagle Ford,
production exceeded 50,000 BOE per day in late December and is expected
to grow to 100,000 BOE per day by the end of 2012.

The Refining and Marketing (R&M) segment operated well in the fourth
quarter. The worldwide capacity utilization rate and clean product yield
were at the highest levels of the year at 94 percent and 84 percent,
respectively. In addition, unplanned downtime was at the lowest level of
the year. R&M′s reported earnings for the quarter were $1,714 million,
including gains on asset dispositions.

R&M′s fourth-quarter 2011 adjusted earnings were $201 million, including
$180 million related to liquidating inventory associated with portfolio
changes during the year. Adjusted earnings were lower compared with a
year ago, primarily due to less favorable crude differentials partially
offset by improved market crack spreads, higher volumes and marketing
margins, as well as lower costs.

The U.S. refining capacity utilization rate was 93 percent and the
international rate was 98 percent. Pre-tax turnaround expenses for the
quarter were $90 million, in line with expectations. For the full year
of 2011, pre-tax turnaround expenses were $297 million.

During the quarter, the company disposed of its interests in the
Colonial, Seaway Crude and Seaway Products pipelines for a total of $2.4
billion in sales proceeds. In addition, Wood River′s Coker and Refinery
Expansion (CORE) project started up operations in mid-November,
resulting in a 5 percent increase in clean product yield at the refinery.

The Chemicals and Midstream segments posted solid earnings for the
fourth quarter. Chemicals earnings of $156 million increased over the
prior year, primarily due to higher volumes related to the startup of
international projects late in 2010. Midstream earnings of $118 million
were higher than a year ago reflecting higher natural gas liquids prices.

For the company, full-year 2011 controllable costs were in line with
2010. Higher costs from foreign currency impacts and increases in market
prices for goods and services were offset by reduced costs as a result
of asset dispositions. Corporate expenses for the quarter were $199
million after-tax, compared with $305 million for the fourth quarter of
2010. Adjusted corporate expenses were $151 million improved compared
with a year ago, primarily due to lower net interest expense and
benefit-related expenses, as well as higher foreign exchange gains.

During the fourth quarter of 2011, ConocoPhillips repurchased
approximately 46 million of its shares, or 3 percent of shares
outstanding, for $3.1 billion. This brings the company′s total shares
repurchased to approximately 15 percent of the shares outstanding at the
inception of the repurchase program in 2010. At Dec. 31, 2011, 1,292
million basic shares were outstanding. In December, ConocoPhillips also
announced a program to repurchase up to an additional $10 billion of the
company′s common stock from 2012 onwards.

Fourth-Quarter Financial Highlights

ConocoPhillips′ fourth-quarter 2011 earnings were $3.4 billion, or $2.56
per share, compared with earnings of $2.0 billion, or $1.39 per share,
for the same period in 2010. Fourth-quarter 2011 earnings included a
$1.5 billion net gain from asset sales, largely from pipeline
dispositions, partially offset by impairments primarily related to an
investment in the Naryanmarneftegaz joint venture in Russia of $0.4
billion and $0.2 billion for certain Canadian conventional natural gas
assets, as well as settlement of environmental claims and other costs
related to Bohai Bay of $0.1 billion.

Fourth-quarter adjusted earnings were $2.7 billion, or $2.02 per share,
compared with adjusted earnings of $1.9 billion, or $1.32 per share, for
the same period in 2010. Adjusted earnings for the quarter increased
compared with the prior year, primarily due to the impact of higher
commodity prices, partially offset by higher taxes and lower refining
margins.

During the fourth quarter of 2011, ConocoPhillips generated $5.8 billion
in cash from operations and received $2.7 billion in proceeds from asset
dispositions. These proceeds were used to fund a $4.0 billion capital
program, repurchase $3.1 billion of ConocoPhillips common stock, pay
$0.9 billion in dividends and reduce debt by $0.5 billion.

Full-Year Financial Highlights

ConocoPhillips′ full-year 2011 earnings were $12.4 billion, or $8.97 per
share, compared with $11.4 billion, or $7.62 per share, for 2010.

Full-year 2011 adjusted earnings were $12.2 billion, or $8.76 per share,
compared with full-year 2010 adjusted earnings of $8.8 billion, or $5.92
per share. Adjusted earnings were higher than a year ago, primarily due
to the impact of higher commodity prices and U.S. refining margins. The
increase was partially offset by the absence of $1.3 billion of equity
earnings from LUKOIL, higher taxes of approximately $2.0 billion and 8
percent lower production volumes. Earnings per share also benefited from
a substantial reduction in shares outstanding.

At year end, the company had $5.8 billion in cash and $0.6 billion in
short-term investments. As of Dec. 31, 2011, debt was $22.6 billion and
the debt-to-capital ratio was 26 percent.

2010-2012 Repositioning Plan Update

ConocoPhillips′ three-year strategic plan to reposition the company is
focused on improving portfolio returns and increasing value and
distributions for our shareholders. These actions began in 2010 and will
extend through 2012.

Over this period, ConocoPhillips′ asset divestiture program generated
$10.7 billion in proceeds, in addition to $9.5 billion from LUKOIL share
sales. The company has retired $6.0 billion in debt, repurchased 15
percent of shares outstanding for $15.0 billion and increased its
dividend rate 32 percent.

ConocoPhillips continues to invest in projects which will create
long-term shareholder value. The company is targeting high-return
upstream opportunities, spending $12.7 billion or 91 percent of its 2011
capital program in E&P. This is an increase of $3.4 billion over the
2010 E&P program of $9.3 billion, and is planned to grow to $14.0
billion in 2012. Due to the current market environment, the company
continues to limit investments in North American natural gas production,
which represented 26 percent of 2011 production.

As a result of the ongoing share repurchase program, production per
share, adjusted for Libya, has improved 5 percent from 2010 to 2011. The
company has also achieved an average organic reserve replacement of more
than 130 percent over the last three years.

Through these initiatives and market improvements, return on capital
employed on a reported basis increased from 6 percent in 2009 to 15
percent in 2011. Over this period of time, capital employed was reduced
by 3 percent while earnings improved by 182 percent.

The company′s repositioning into two independent companies continues to
progress. Phillips 66 will be the name of the independent downstream
company and will be headquartered in Houston and trade on the New York
Stock Exchange under the ticker symbol PSX. Several future executive
appointments have been announced for both ConocoPhillips and Phillips
66, reporting to the designated CEOs, Ryan Lance and Greg Garland,
respectively. A private letter ruling request from the U.S. Internal
Revenue Service and the initial Form 10 registration statement with the
Securities and Exchange Commission were filed during the quarter.

'We expect to complete our repositioning into two independent companies
in the second quarter of 2012,? said Mulva. 'Both companies are being
positioned for long-term value creation within their respective
industries.?

ConocoPhillips will host a conference call at 11 a.m. Eastern time today
to discuss its quarterly results and provide a status update on
operational and strategic plans. To listen to the conference call and
view related presentation materials, go to www.conocophillips.com
and click on the 'Investor Information? link. For detailed supplemental
information, go to www.conocophillips.com/EN/investor/financial_reports/earnings_reports/Pages/index.aspx.

ConocoPhillips is an integrated energy company with interests around the
world. Headquartered in Houston, the company had approximately 29,800
employees, $153 billion of assets, and $245 billion of revenues 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
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forward-looking statement, the company expresses an expectation or
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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 and refining and marketing margins; 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 or difficulties maintaining or improving
company manufacturing or refining facilities; unexpected difficulties in
manufacturing, transporting or refiningcrude oil; international
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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
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well as changes in tax, environmental and other laws applicable to our
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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
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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.

Controllable costs include production and operating expenses;
selling, general and administrative expenses; and exploration expenses
excluding dry hole costs and leasehold impairments.

Organic reserve additions comprise net proved reserve additions
resulting from extensions and discoveries, improved recovery and
revisions, and exclude the impact of sales and acquisitions.

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

ConocoPhillips

Aftab Ahmed, 281-293-4138 (media)

aftab.ahmed@conocophillips.com

or

Clayton
Reasor, 212-207-1996 (investors)

c.c.reasor@conocophillips.com