CONOCOPHILLIPS

ConocoPhillips is an independent exploration and production company with operations and activities in 14 countries, headquartered in Houston, Texas ¹. The company's diverse, low cost of supply portfolio includes resource-rich unconventional plays in North America; conventional assets in North America, Europe, Africa and Asia; LNG developments; oil sands in Canada; and an inventory of global exploration prospects ². At December 31, 2025, the company employed approximately 9,900 people worldwide and had total assets of about $122 billion ³. Total company production for the year was 2,375 MBOED ⁴. The company explores for, produces, transports and markets crude oil, bitumen, natural gas, NGLs and LNG on a worldwide basis ⁵. At December 31, 2025, operations were producing in the U.S., Norway, Canada, Australia, Malaysia, Libya, China, Qatar and Equatorial Guinea ⁶.

ConocoPhillips is one of the world's leading E&P companies based on both production and reserves, with a globally diversified asset portfolio ⁷. The company competes with private, public and state-owned companies in all facets of the E&P business ⁸. Some competitors are larger and have greater resources ⁹. Each of the company's segments is highly competitive, with no single competitor, or small group of competitors, dominating ¹⁰. The company competes with numerous other companies in the industry, including state-owned companies, to locate and obtain new sources of supply and to produce oil, bitumen, LNG, NGLs and natural gas in an efficient, cost-effective manner ¹¹. Principal methods of competing include geological, geophysical and engineering research and technology; experience and expertise; equipment and personnel; economic analysis in connection with portfolio management and safely operating oil and gas producing properties ¹².

The company generates revenue by exploring for, producing, transporting and marketing crude oil, bitumen, natural gas, NGLs and LNG on a worldwide basis ¹³. Commodity sales are generally made at prevailing market prices at the time of sale ¹⁴. The company also purchases and sells third-party commodity volumes to better position the company to satisfy customer demand while fully utilizing transportation and storage capacity ¹⁵. The company's commercial organization manages its worldwide commodity portfolio, which includes natural gas, crude oil, bitumen, NGLs, LNG and power ¹⁶. Marketing activities are performed through offices in the U.S., Canada, Europe and Asia ¹⁷.

The Alaska segment primarily explores for, produces, transports and markets crude oil, natural gas and NGLs ¹⁸. Alaska operations contributed 12 percent of consolidated liquids production and one percent of consolidated natural gas production ¹⁹. The Lower 48 segment consists of operations located in the 48 contiguous U.S. states, with a portfolio mainly consisting of low cost of supply, short cycle time, resource-rich unconventional plays and commercial operations ²⁰. Based on 2025 production volumes, the Lower 48 is the largest segment and contributed 67 percent of consolidated liquids production and 74 percent of consolidated natural gas production ²¹. The Canada segment operations include the Surmont oil sands development in Alberta, the Montney unconventional play in British Columbia and commercial operations ²². In 2025, operations in Canada contributed nine percent of consolidated liquids production and five percent of consolidated natural gas production ²³. The Europe, Middle East and North Africa segment consists of operations principally located in the Norwegian sector of the North Sea, the Norwegian Sea, Qatar, Libya, Equatorial Guinea and commercial and terminalling operations in the U.K. ²⁴. In 2025, operations in Europe, Middle East and North Africa contributed eight percent of consolidated liquids production and 18 percent of consolidated natural gas production ²⁵. The Asia Pacific segment has exploration and production operations in China, Malaysia, Australia and commercial operations in China, Singapore and Japan ²⁶. In 2025, operations in the Asia Pacific segment contributed four percent of consolidated liquids production and two percent of consolidated natural gas production ²⁷.

The company has investments in LNG facilities which are supplied with equity gas production in Australia, Qatar and Equatorial Guinea ²⁸. The company also has a 30 percent direct equity holding in Port Arthur Liquefaction Holdings, LLC for Phase 1 of the Port Arthur LNG project, which is scheduled to start up in 2027 ²⁹. As part of its LNG strategy to build a dynamic portfolio and expand its footprint across the value chain, the company has various commercial LNG offtake agreements in North America totaling 10.2 MTPA with offtake commencing between 2026-2031 ³⁰. Furthermore, the company currently has a total regasification capacity in Europe of approximately 6.7 MTPA ³¹. The company is the second-largest LNG liquefaction technology provider globally based on total global installed production capacity ³². Its Optimized Cascade® LNG liquefaction technology has been licensed for use in 28 LNG trains around the world, with FEED studies ongoing for additional trains ³³. Worldwide, the company is contractually committed to deliver approximately 9 MTPA of LNG, 820 billion cubic feet of natural gas and 175 million barrels of crude oil in the future ³⁴. These contracts have various expiration dates through the year 2042 ³⁵.

In November 2024, the company completed its acquisition of Marathon Oil ³⁶. In the first half of 2025, the company completed the asset integration of Marathon Oil and by year-end 2025 achieved more than $1 billion of synergies on a run-rate basis and approximately $1 billion of one-time benefits ³⁷. These one-time benefits include $0.5 billion recognized previously upon close of the transaction related to the utilization of foreign tax credits, with the remainder related to cash tax benefits from net operating losses, most of which was recognized in 2025 ³⁸. In the second half of 2025, the company announced incremental cost reductions and margin enhancements of more than $1 billion anticipated on a run-rate basis by year-end 2026 ³⁹. In late 2025, the company initiated a restructuring, reducing its overall employee workforce, which in addition to lease operating cost improvements and opportunities in transportation and processing is expected to contribute approximately $0.8 billion in cost reductions ⁴⁰. The company anticipates the remaining approximately $0.2 billion to be achieved through margin expansion ⁴¹. In August 2025, the company announced a total disposition target of $5 billion by year-end 2026 ⁴². The company disposed of $3.2 billion of assets in 2025 and expects to meet its $5 billion disposition target by year-end 2026 ⁴³. Completed dispositions to date include the Ursa and Europa fields and Ursa Oil Pipeline Company LLC for net proceeds of $0.7 billion, the Anadarko Basin for net proceeds of $1.2 billion and other noncore Lower 48 and Corporate assets for approximately $1.3 billion ⁴⁴. In 2025, the company retired $0.7 billion principal amount of debt at maturity ⁴⁵. The company returned $4.0 billion through the ordinary dividend, inclusive of an increase in December of eight percent to 84 cents per share, and returned $5.0 billion to shareholders through share repurchases ⁴⁶. As of December 31, 2025, the company had repurchased $39.3 billion of shares of its authorized share repurchase program since 2016 ⁴⁷. In February 2026, the company declared a first-quarter ordinary dividend of 84 cents per share ⁴⁸.

Total company production in 2025 was 2,375 MBOED, yielding cash provided by operating activities of $19.8 billion ⁴⁹. The company invested $12.6 billion into the business in the form of capital expenditures and investments and provided returns of capital to shareholders of $9.0 billion through its ordinary dividend and share repurchases ⁵⁰. Production for 2025 was 2,375 MBOED, representing an increase of 388 MBOED or 20 percent compared to 2024 ⁵¹. After adjusting for closed acquisitions and dispositions, production increased by 57 MBOED or 2.5 percent ⁵². Net income was $7,988 million in 2025, compared with $9,245 million in 2024 ⁵³. Sales and other operating revenues increased $4,199 million in 2025, primarily due to higher volumes of $6,197 million, inclusive of sales volumes from the acquisition of Marathon Oil and higher realized gas prices of $824 million and the timing of sales as compared to 2024 ⁵⁴. These increases were partially offset by lower realized crude and bitumen prices of $4,615 million and $349 million, respectively ⁵⁵.

Management guidance for 2026 includes capital expenditures of approximately $12 billion ⁵⁶. Production guidance is 2.33 to 2.36 MMBOED ⁵⁷. First-quarter 2026 production is expected to be 2.30 to 2.34 MMBOED, inclusive of weather-related downtime ⁵⁸. DD&A is expected to be $11.7 to $11.9 billion ⁵⁹.

The company continues to progress its LNG strategy to build a dynamic portfolio and expand its footprint across the value chain ⁶⁰. The company has various commercial LNG offtake agreements in North America totaling 10.2 MTPA with offtake commencing between 2026-2031 ⁶¹. The company currently has a total regasification capacity in Europe of approximately 6.7 MTPA ⁶². The company continues to progress discussions across all major LNG producing and consuming regions and markets to further add high-quality positions to its portfolio ⁶³. The company's equity LNG projects continued to advance at NFE and NFS in Qatar and PALNG on the U.S. Gulf Coast, with NFE startup expected in the second half of 2026 ⁶⁴. At Willow in Alaska, the project completed the peak construction season in 2025, which included gravel and pipeline construction and operations center hookup and installation, and is expected to achieve near 50 percent project completion this winter season ⁶⁵. Additionally, fabrication of the processing facility is on schedule for transport to the North Slope in 2027 ⁶⁶. First oil is anticipated in early 2029 ⁶⁷.

The company is continuing its exploration activities in the NPR-A with a planned four-well drilling program this 2026 winter season ⁶⁸. In the Lower 48, the company achieved drilling and completion efficiency improvements of more than 15% year over year ⁶⁹. In Canada, the company achieved first oil at Surmont Pad 104W-A in the fourth quarter of 2025, ahead of schedule ⁷⁰. In January 2026, the company signed an agreement with the Libyan Ministry of Oil and Gas and the National Oil Corporation of Libya to extend the Waha Concession up to December 31, 2050, with new fiscal terms, subject to normal regulatory approvals ⁷¹.

In the second half of 2025, the company announced incremental cost reductions and margin enhancements of more than $1 billion anticipated on a run-rate basis by year-end 2026 ⁷². In late 2025, the company initiated a restructuring, reducing its overall employee workforce, which in addition to lease operating cost improvements and opportunities in transportation and processing is expected to contribute approximately $0.8 billion in cost reductions ⁷³. The company anticipates the remaining approximately $0.2 billion to be achieved through margin expansion ⁷⁴.

The company's 2026 operating plan capital is expected to be approximately $12 billion ⁷⁵. The plan includes funding for ongoing development drilling programs, major projects, exploration and appraisal activities and base maintenance ⁷⁶. The company ended the year with cash and cash equivalents and restricted cash of $6.9 billion, short-term investments of $0.5 billion and long-term investments in debt securities of $1.1 billion, maintaining balance sheet strength ⁷⁷. As of December 31, 2025, up to $25.7 billion of share repurchase authority remained ⁷⁸. The company paid a quarterly ordinary dividend to its shareholders in each quarter of 2025 ⁷⁹. In February 2026, the company declared a first-quarter ordinary dividend of $0.84 per common share payable March 2, 2026, to shareholders of record on February 18, 2026 ⁸⁰.

The company anticipates that commodity prices will continue to be cyclical and volatile ⁸¹. Throughout 2025, the price of crude oil has been volatile due to multiple macroeconomic and geopolitical forces which slowed global oil demand growth concurrent with higher oil production from OPEC Plus and other major oil producing countries ⁸². The company continues to closely monitor the macroeconomic environment, including any impacts from tariffs, and the ongoing market volatility in the energy landscape and across global markets for implications to its business, results of operations and financial condition ⁸³. The company's reserve replacement was 80 percent in 2025, reflecting a net decrease from dispositions in noncore assets in Lower 48 and lower prices, partially offset by development drilling activity and extensions and discoveries ⁸⁴. The company's organic reserve replacement, which excludes a net decrease of 165 MMBOE from sales and purchases, was 99 percent in 2025 ⁸⁵.

The company's ability to successfully execute on its plans to reduce operational GHG emissions intensity is subject to a number of risks and uncertainties and such reductions may be costly and challenging to achieve ⁸⁶. The company's framework for managing climate-related business risk is set out in its Climate-related Risk Strategy, which describes its strategic flexibility, approach to reducing Scope 1 and 2 emissions intensity, technology choices and engagement efforts ⁸⁷. Among other things, the company has set near- and medium-term GHG intensity reduction targets, as well as targets around flaring and methane ⁸⁸. The company's ability to achieve the stated targets, goals and ambitions within the Climate-related Risk Strategy's framework is subject to a number of risks and uncertainties beyond its control, including government policies and markets, acceptance of carbon capture technologies, development of markets and potential permitting and regulatory changes, all of which may impair its ability to execute on current or future plans ⁸⁹.

The company's operating results, ability to execute on its strategy and the carrying value of its assets are exposed to the effects of volatile commodity prices or prolonged periods of low commodity prices ⁹⁰. Over the course of 2025, WTI crude oil prices ranged from a high of $80 per barrel in January to a low of $55 per barrel in December ⁹¹. Prolonged periods of low commodity prices could have a material adverse effect on the company's revenues, operating income, cash flows and liquidity, and may also affect the amount of dividends it elects to declare and pay on its common stock and the amount of shares it elects to acquire as part of its share repurchase program and the timing of such repurchases ⁹². The company expects to continue to incur substantial capital expenditures and operating costs as a result of its compliance with existing and future environmental laws and regulations ⁹³. Expensed environmental costs were $834 million in 2025 and are expected to be approximately $1.0 billion in each of 2026 and 2027 ⁹⁴. Capitalized environmental costs were $669 million in 2025 and are expected to be about $750 million and $550 million in 2026 and 2027, respectively ⁹⁵. The company's ability to successfully execute on its plans to reduce operational GHG emissions intensity is subject to a number of risks and uncertainties and such reductions may be costly and challenging to achieve ⁹⁶. The company's cost of compliance with the EU ETS in 2025 was approximately $21 million (net share before-tax) ⁹⁷. The company's cost of compliance with Norwegian carbon legislation in 2025 was approximately $42 million (net share before-tax) ⁹⁸. Approximately 29 percent of the company's hydrocarbon production was derived from production outside the U.S. in 2025, and 31 percent of its proved reserves, as of December 31, 2025, were located outside the U.S., exposing the company to risks associated with foreign jurisdictions ⁹⁹.

Management's message emphasizes that the company's value proposition to deliver competitive returns to stockholders through price cycles is guided by its foundational principles, which consist of maintaining balance sheet strength, providing peer-leading distributions, making disciplined investments, and demonstrating responsible and reliable ESG performance ¹⁰⁰. Management states that the company is unhedged, remains committed to its disciplined investment framework and continually monitors market fundamentals, including the impacts associated with geopolitical tensions and conflicts, global demand for its products, oil and gas inventory levels, governmental policies, inflation and supply chain disruptions ¹⁰¹. Management highlights that in 2025, the company returned $4.0 billion through the ordinary dividend, inclusive of an increase in December of eight percent to 84 cents per share, and returned $5.0 billion to shareholders through share repurchases ¹⁰². Management also notes that the company completed the integration of Marathon Oil and doubled synergy capture to more than $1 billion on a run-rate basis in 2025, and achieved an additional ~$1 billion of one-time benefits ¹⁰³. Management's outlook for 2026 includes capital expenditures of approximately $12 billion, production guidance of 2.33 to 2.36 MMBOED, and DD&A expected to be $11.7 to $11.9 billion ¹⁰⁴.