ConocoPhillips Reports Third-Quarter 2017 Results; Lowers Capital Guidance and Delivers on Strategic and Operational Targets; Strong Momentum Going into November Analyst and Investor Meeting

ConocoPhillips (NYSE: COP) today reported third-quarter 2017 earnings of
$0.4 billion, or $0.34 per share, compared with a third-quarter 2016
loss of $1.0 billion, or ($0.84) per share. Excluding special items,
third-quarter 2017 adjusted earnings were $0.2 billion, or $0.16 per
share, compared with a third-quarter 2016 adjusted loss of $0.8 billion,
or ($0.66) per share. Special items for the current quarter were
primarily driven by a net gain from previously announced dispositions
and a tax benefit related to our prior decision to exit Nova Scotia
deepwater exploration, partially offset by premiums on early debt
retirement.

Summary

• Achieved third-quarter production excluding Libya of 1,202 MBOED; 1.4
  percent year-over-year underlying production growth excluding the
  impact of closed or signed dispositions; underlying production grew 19
  percent on a production per debt-adjusted share basis.
• Lowering full-year 2017 expected capital expenditures to $4.5 billion,
  a 10 percent reduction from initial guidance.
• Maintaining full-year production guidance despite impacts from
  Hurricane Harvey, which were offset by increased volumes from our
  globally diverse portfolio.
• Cash provided by operating activities has exceeded capital and
  dividends year-to-date.
• Reduced year-over-year production and operating expenses by 20 percent
  and adjusted operating costs by 15 percent.
• Closed San Juan and Panhandle dispositions. Expect over $16 billion of
  dispositions during 2017.
• Repurchased $1.0 billion in shares, which reduced ending share count
  by 2 percent from the end of the second quarter. On track for $3
  billion in share repurchases in 2017.
• Reduced balance sheet debt by $2.4 billion and received credit rating
  upgrade. On track for less than $20 billion of debt by year-end.
• Released final project financing loan guarantee for APLNG in Australia
  after successful two-train lenders’ test.

“We are pleased with our financial and operational performance for the
quarter and the outstanding resilience of our employees during Hurricane
Harvey,” said Ryan Lance, chairman and chief executive officer. “We
continued to deliver transformational actions to reset our company
through non-core asset sales, debt reduction and share repurchases.
While the outlook for commodity prices has improved, we remain committed
to our disciplined strategy. We are focused on free cash flow
generation, strong financial returns, shareholder value creation and
distributions through the cycles. We look forward to updating the market
on our plan at the upcoming Analyst and Investor Meeting.”

Third-Quarter Review

Production excluding Libya for the third quarter of 2017 was 1,202
thousand barrels of oil equivalent per day (MBOED), a decrease of 355
MBOED compared with the same period a year ago. Excluding the
third-quarter volume impact from closed and signed dispositions of 58
MBOED in 2017 and 429 MBOED in 2016, underlying production increased 16
MBOED, or 1.4 percent. Underlying production increased from the ramp up
of several major projects and multiple development programs, which more
than offset normal field decline and hurricane downtime.

In the Lower 48, 12 operated drilling rigs were running in the Eagle
Ford, Bakken, and Delaware unconventional areas. During the quarter,
Eagle Ford production was impacted by 15 MBOED from Hurricane Harvey,
but was fully restored by quarter end. Record production was achieved at
Surmont and appraisal activity continues at Montney in Canada. In
Alaska, the first well was spud at 1H NEWS, which remains on track for
first oil by year-end. Project work progressed in Europe, with the Aasta
Hansteen topsides sail-away completed. In Australia, the APLNG two-train
lenders’ test was completed with performance exceeding target, resulting
in the release of the final project financing loan guarantee.
Turnarounds were successfully completed at Prudhoe Bay in Alaska and
Britannia in the United Kingdom. Production from Libya was 24 MBOED for
the quarter.

Earnings improved compared with the third quarter of 2016 due to higher
realized prices, reduced depreciation expense, lower exploration
expense, impacts from dispositions as well as the absence of special
item impacts from a tax functional currency change at APLNG and
restructuring costs. Adjusted earnings improved compared with the third
quarter of 2016 due to higher realized prices, reduced depreciation
expense, lower exploration expense and impacts from dispositions. The
company’s total realized price was $39.49 per barrel of oil equivalent
(BOE), compared with $29.78 per BOE in the third quarter of 2016,
reflecting higher average realized prices across all commodities.

For the quarter, cash provided by operating activities was $1.1 billion.
This was reduced by a $0.6 billion U.S. pension fund contribution driven
by a discretionary decision to accelerate funding of future obligations.
The company funded $1.1 billion in capital expenditures and investments
and paid dividends of $0.3 billion. In addition, the company received
proceeds from asset dispositions of $3.0 billion, paid $2.5 billion to
reduce debt and repurchased $1.0 billion of company common stock.

Nine-Month Review

ConocoPhillips’ nine-month 2017 earnings were a loss of $2.4 billion, or
($1.98) per share, compared with a nine-month 2016 loss of $3.6 billion,
or ($2.88) per share. Nine-month 2017 adjusted earnings were $0.2
billion, or $0.16 per share, compared with a nine-month 2016 adjusted
loss of $3.0 billion, or ($2.40) per share.

Production excluding Libya for the first nine months of 2017 was 1,403
MBOED, compared with 1,560 MBOED for the same period in 2016. Excluding
the nine-month impact from closed and signed dispositions of 247 MBOED
in 2017 and 432 MBOED in 2016, underlying production increased 28 MBOED,
or 2.4 percent. Excluding the impact of dispositions, underlying
production increased from new production from major projects,
development programs and improved well performance, which more than
offset normal field decline. Production from Libya was 15 MBOED.

The company’s total realized price during this period was $37.10 per
BOE, compared with $26.84 per BOE in the first nine months of 2016. This
reflected higher average realized prices across all commodities.

For the nine months ended Sept. 30, 2017, cash provided by operating
activities was $4.6 billion. Excluding a $0.1 billion change in
operating working capital, ConocoPhillips generated $4.5 billion in cash
from operations, exceeding $3.1 billion in capital expenditures and
investments and dividends of $1.0 billion. In addition, the company
received proceeds from asset dispositions of $13.7 billion, paid $6.6
billion to reduce debt, purchased $2.6 billion in short-term investments
and repurchased company common stock of $2.0 billion.

Outlook

Fourth-quarter and full-year 2017 production is expected to be 1,195 to
1,235 MBOED and 1,350 to 1,360 MBOED, respectively. This excludes Libya
and reflects expected impacts from the Barnett disposition.

Full-year guidance for capital expenditures has been lowered to $4.5
billion. The company’s other guidance items remain unchanged.

The company expects to reduce debt to less than $20 billion by year-end
2017, and expects full-year share repurchases of $3 billion,
accelerating performance on a per debt-adjusted share basis.

ConocoPhillips will host a conference call today at 12:00 p.m. EDT to
discuss this announcement. To listen to the call, and view related
presentation materials and supplemental information, go to www.conocophillips.com/investor.

The company will provide a strategy update and announce its preliminary
2018 operating plan at its Analyst and Investor Meeting on Nov. 8, 2017
in New York City. A live webcast of the meeting will be made available
on the ConocoPhillips Investor Relations site, www.conocophillips.com/investor.

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About ConocoPhillips

ConocoPhillips is the world’s largest independent E&P company based on
production and proved reserves. Headquartered in Houston, Texas,
ConocoPhillips had operations and activities in 17 countries, $75
billion of total assets, and approximately 11,600 employees as of Sept.
30, 2017. Production excluding Libya averaged 1,403 MBOED for the nine
months ended Sept. 30, 2017, and proved reserves were 6.4 billion BOE as
of Dec. 31, 2016. 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 our
ability to liquidate the common stock issued to us by Cenovus Energy
Inc. as part of our sale of assets in western Canada at prices we deem
acceptable, or at all; our ability to complete the sale of our announced
dispositions on the timeline currently anticipated, if at all; the
possibility that regulatory approvals for our announced dispositions
will not be received on a timely basis, if at all, or that such
approvals may require modification to the terms of our announced
dispositions or our remaining business; business disruptions during or
following our announced dispositions, including the diversion of
management time and attention; the ability to deploy net proceeds from
our announced dispositions in the manner and timeframe we currently
anticipate, if at all; 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 or technical difficulties in constructing, maintaining, or
modifying company facilities; international monetary conditions and
exchange rate fluctuations; 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 – To supplement the
presentation of the Company’s financial results prepared in accordance
with U.S. generally accepted accounting principles (GAAP), this news
release and the accompanying supplemental financial information contain
certain financial measures that are not prepared in accordance with
GAAP, including adjusted earnings (calculated on a consolidated and on a
segment-level basis), adjusted earnings per share, operating costs,
adjusted operating costs, and cash provided by operating activities
excluding working capital. Operating costs is defined by the Company as
the sum of production and operating expenses, selling, general and
administrative expenses, and exploration general and administrative
expenses, geological and geophysical and lease rental and other
expenses. Adjusted operating costs is defined as the Company’s operating
costs further adjusted to exclude expenses that are included as
adjustments to arrive at adjusted earnings to the extent those
adjustments impact production and operating expenses, selling, general
and administrative expenses, and exploration general and administrative
expenses, geological and geophysical and lease rental and other expenses.

The Company believes that the non-GAAP measures adjusted earnings
(both on an aggregate and a per share basis), operating costs, and
adjusted operating costs are useful to investors to help facilitate
comparisons of the Company’s operating performance and controllable
costs associated with the Company’s core business operations across
periods on a consistent basis and with the performance and cost
structures of peer companies in a manner that, when viewed in
combination with the Company’s results prepared in accordance with GAAP,
provide a more complete understanding of the factors and trends
affecting the Company’s business and performance. The Company further
believes that the non-GAAP measures adjusted operating costs provides a
more indicative measure of the Company’s underlying, controllable costs
of operations by excluding other items that do not directly relate to
the Company’s core business operations. Cash provided by operating
activities excluding working capital is useful to investors to help
facilitate comparisons of the Company’s financial performance across
periods and with the performance of peer companies in a manner that,
when viewed in combination with the Company’s results prepared in
accordance with GAAP, provides a more complete understanding of the
factors and trends affecting the Company’s business and performance. The
Company’s Board of Directors and management also use these non-GAAP
measures to analyze the Company’s operating performance across periods
when overseeing and managing the Company’s business.

Each of the non-GAAP measures included in this news release and the
accompanying supplemental financial information has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for an analysis of the Company’s results calculated in
accordance with GAAP. In addition, because not all companies use
identical calculations, the Company’s presentation of non-GAAP measures
in this news release and the accompanying supplemental financial
information may not be comparable to similarly titled measures disclosed
by other companies, including companies in our industry. The Company may
also change the calculation of any of the non-GAAP measures included in
this news release and the accompanying supplemental financial
information from time to time in light of its then existing operations
to include other adjustments that may impact its operations.

Reconciliations of each non-GAAP measure presented in this news
release to the most directly comparable financial measure calculated in
accordance with GAAP are included below.

The release also contains the terms underlying production, production
per debt-adjusted share and free cash flow. Underlying production
excludes Libya and signed or closed dispositions. Production per
debt-adjusted share is calculated on an underlying production basis
using ending period debt divided by ending share price plus ending
shares outstanding. Free cash flow is cash provided by operating
activities in excess of capital expenditures and investments required to
maintain flat production, working capital changes associated with
investing activities, and dividends paid. The company believes that free
cash flow is useful to investors as it provides measures to compare cash
provided by operating activities after deduction of capital expenditures
and investments, working capital changes associated with investing
activities, and dividends paid across periods on a consistent basis. The
company believes that underlying production is useful to investors to
compare production excluding Libya and the full impact of closed or
signed 2016 and 2017 dispositions on a consistent go-forward basis with
peer companies. The company believes that production per debt-adjusted
share is useful to investors as it provides a consistent view of
production on a total equity basis by converting debt to equity and
allows for comparisons across peer companies.

References in the release to earnings refer to net income/(loss)
attributable to ConocoPhillips.

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