ConocoPhillips : 2023 Annual Report

Letter to shareholders

Dear fellow shareholders,ConocoPhillips delivered strong financial and operational results across our business in 2023, reflecting our deep, durable and diverse portfolio. We achieved record production across the entire company and within the Lower 48, reached several key milestones across our global operations and returned $11 billion of capital to shareholders. Looking ahead to 2024 and beyond, we are making investments across our portfolio that continue to drive competitive returns on and of capital. These include long-term growth opportunities in our liquefied natural gas (LNG) business and accelerated efforts to reduce our greenhouse gas (GHG) emissions intensity. In 2024, we plan to distribute $9 billion to our shareholders.

These achievements align with our Triple Mandate of responsibly and reliably meetingenergy transition pathway demand and delivering competitive returns on and of capital with a focus on achieving our net-zero operational emissions ambition. They also reflect the talent and dedication of our workforce.

Industry-leading value proposition

Last April at our Analyst & Investor Meeting, we reaffirmed our durable returns-focused value proposition with an updated 10-year financial plan that produces reliable free cash flow, allowing us to reward shareholders now and into the future. We remain committed to delivering superior returns through the cycles based on our foundational principles of balance sheet strength, peer-leading distributions, disciplined investments and responsible and reliable environmental, social and governance performance.

As a leading exploration and production company, ConocoPhillips produced more than 1.8 million barrels of oil equivalent per day globally in 2023. We operate in some of the most prolific basins in the U.S. Lower 48, leveraging technologies and operational excellence to improve drilling and completion efficiencies. Internationally, our teams reached first production at several subsea tiebacks in

Norway, Surmont Pad 267 in Canada and Bohai

Phase 4B in China and achieved startup at the second phase of Montney's central processing facility in Canada. In 2023, our total reserve replacement ratio was 123%, highlighting the breadth and depth of our portfolio.

Long-life, low sustaining capital assets like Surmont play an important role in our low cost of supply portfolio. This past

"ConocoPhillips delivered strong financial and operational results across our business in 2023, reflecting our deep, durable and diverse portfolio."

October, we opportunistically acquired the remaining 50% working interest in Surmont at an attractive price that fits our financial framework. Separately, we reached final investment decision (FID) in Alaska on Willow,

a project with estimated peak production of 180,000 barrels of oil per day. Located 8 miles from our existing infrastructure, Willow is an extension of our Alaska business, where we have over 50 years as a proven, responsible operator in the state.

LNG will play a valuable role through the energy transition. In 2023, we advanced our global LNG strategy through expansion in Qatar, FID at Port Arthur LNG, regasification agreements in the

Netherlands and offtake agreements in

Mexico. We now have equity, offtake and regasification agreements across major global markets.

Fulfilling our Triple Mandate

ConocoPhillips executed across all aspects of our Triple Mandate in

2023. We achieved a 17% return on capital employed and delivered on our plan to return $11 billion of capital to shareholders, well in excess of our greater than 30% of cash from operations (CFO) annual through-the-cycle commitment. We did this through ordinary dividends, variable return of cash distributions and share repurchases. Since 2017, following our strategy reset, our total shareholder distributions have averaged ~45% of CFO. In 2023, we increased our ordinary dividend by 14%, from 51 cents per share to 58 cents per share. We believe that our CFO-based returns framework differentiates us relative to peers and is a competitive advantage.

Advancing our Paris-aligned climate risk strategy, we accelerated our company's

Scope 1 and 2 GHG emissions-intensity reduction target through 2030 from 40-50% to 50-60%, using a 2016 baseline. We were one of 10 U.S.-based companies awarded the

Oil & Gas Methane Partnership 2.0's Gold

Standard Pathway designation in recognition of our ambitious multi-year measurement-based reporting plan, which goes beyond current regulatory requirements.

Our Low Carbon Technologies organization continues to work with the company's business units to develop and implement region-specific emissions-reduction initiatives and identify potential technology solutions for hard-to-abate emissions. We are exploring hydrogen opportunities in the U.S., Middle East and Asia Pacific regions, and advanced a project to potentially develop a low-carbon ammonia production facility on the U.S. Gulf Coast that would supply low-carbon fuels from the U.S. for use domestically and in Europe, Japan and greater Asia. In Canada, we are a member of Pathways Alliance, a group of six companies collaborating to evaluate the commerciality of large-scale carbon capture and storage with support from the provincial and federal governments.

World-class workforce

At ConocoPhillips, our people drive our success, so it is imperative that we create a workplace where everyone feels safe, respected and valued. The work we do is challenging and involves hazards, but it isnever so urgent or important that we cannot take the time to do it safely. We always look for ways to operate more safely, efficiently and responsibly, with an emphasis on reducing human error. In 2023, we continued our focus on programs and processes to attract and retain a global workforce with the skills to achieve our strategic objectives. Our workforce brings passion and excitement for solving important problems, and we are grateful for their ongoing contributions.

Premier and differentiated E&P

We are a premier exploration and production company with a diversified global portfolio in key unconventional basins in the Lower 48 and Canada and conventional opportunities in Alaska and international markets, as well as growing opportunities to expand our LNG business. Our competitive returns and durable cash flow growth differentiate us from our peers, and we are focused on reducing operational GHG emissions intensity to meet energy transition pathway demand. I am proud of the accomplishments across our organization. Our portfolio is well positioned to generate competitive returns for decades to come.

Ryan M. Lance

Chairman and Chief Executive Officer

Feb. 15, 2024

Surmont: A long-life, low sustaining capital asset

Located south of Fort McMurray, Alberta, Canada, Surmont is a 100% working interest asset that offers sustained, long-life production.

SPOTLIGHT

In October 2023, ConocoPhillips became the sole owner of Surmont, an oil sands asset in Canada that we have co-owned and operated since its inception more than 25 years ago.

Surmont is a steam-assisted gravity drainage development that is estimated to contain over 2 billion barrels of commercial resources and offers sustained, long-life production. Given our history and intimate knowledge of the asset, we understood its potential. When the remaining working interest became available, we knew it fit within our portfolio and financial framework.

"Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio," said Ryan Lance, chairman and chief executive officer, announcing the acquisition completion. "This transaction enhances our returns-focused value proposition, improves our return on capital employed, lowers our free cash flow breakeven and is expected to deliver significant free cash flow for decades to come.

We completed the purchase of the remaining 50% in Surmont for approximately $2.7 billion, as well as future contingent payments of up to approximately $0.4 billion CAD ($0.3 billion).

Surmont's gross-operated GHG emissions intensity has declined by about 20% since 2016, and ConocoPhillips is working on future operational emissions reductions. We are also part of Pathways Alliance, a group of six companies working toward a goal of net-zero Scope 1 and 2 emissions from oil sands operations.

In December 2023, ConocoPhillips achieved first production on Pad 267, Surmont's first new pad since 2016. Pad 267 will deliver some of the lowest cost of supply resource in our entire portfolio.

0)$/ ./ / .

. 0-$/$ . ) 3 # )" *(($..$*)

29K@AF?LGF

?B= "

(9JC *F= ))0 ' - +*-/ +0-.0 )/ /* . !GJ L@= >AK;9D Q=9J =F<=< 535=25B

/$*)

*-

< *! /# .

0-$/$ . 3 # )"

/ *!

*- /- ).$/$*) - +*-/ +0-.0 )/ /* . /$*) *- < *! /# . 0-$/$ . 3 # )" !GJ L@= LJ9FKALAGF H=JAG< >JGE 888888888888888 LG 888888888888888

/ *!

GEEAKKAGF >AD= FME:=J

?>?3?'89<<9@C

I24E ?2>6 @7 C68:DEC2?E 2D DA64:7:65 :? :ED 492CE6C

5<1G1B5

+E2E6 @C @E96C ;FC:D5:4E:@? @7 :?4@CA@C2E:@? @C @C82?:K2E:@?

! * +

>A=@J6C :56?E:7:42E:@? &@

% <4B9475 '1B;G1I ?ECD?> +/

55C6DD @7 AC:?4:A2= 6I64FE:G6 @77:46D 1:A @56 -=?AKLJ9FL K L=D=H@GF= FME:=J AF;DM<_af3f_ 9j="9" _3b_g3c_="">

: G> L@= ;L

+B149>7 CI=2?<>

%1=5 ?6 5138 5H381>75 ?> G8938 B579CD5B54

.=;MJALA=K J=?AKL=J=< HMJKM9FL LG .=;LAGF ? G> L@= ;L )GF=

4=K

)G

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" a=""> L@= J=?AKLJ9FL AK FGL J=IMAJ=< LG >AD= J=HGJLK HMJKM9FL LG .=;LAGF GJ .=;LAGF < G> L@= ;L 4=K

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" _l40_="J=?AKLJ9FL" _40_9k="">AD=< 9DD J=HGJLK J=IMAJ=< LG := >AD=< :Q .=;LAGF GJ < G> L@= .=;MJALA=K P;@9F?= ;L G><_mjaf3f_ _l40_=""><_af3f_ _egfl40_k="" gj="">GJ KM;@ K@GJL=J H=JAG< L@9L L@= J=?AKLJ9FL O9K J=IMAJ=< LG >AD= KM;@ J=HGJLK 9F< @9K :==F KM:B=;L LG KM;@ >ADAF? J=IMAJ=E=FLK >GJ L@= H9KL <9QK 4=K )G

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" _l40_="J=?AKLJ9FL" _40_9k="" _km3a_eall="<" _3d_d=";LJGFA;9DDQ" _3d_n="JQ" _24_fl="J9;LAN=" 9l9="" _21_ad="J=IMAJ=<" lg="" _3a_="KM:EALL=<" hmjkm9fl="" -md="G"> -=?MD9LAGF . / S G> L@AK ;@9HL=J <_mjaf3f_ _l40_=""><_af3f_ _egfl40_k="" gj="">GJ KM;@ K@GJL=J H=JAG< L@9L L@= J=?AKLJ9FL O9K J=IMAJ=< LG KM:EAL KM;@ >AD=K 4=K )G

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" _l40_="J=?AKLJ9FL" ak="" 9="" _d9j3f_="9;;=D=J9L=<">AD=J 9F 9;;=D=J9L=< >AD=J 9 FGF 9;;=D=J9L=< >AD=J 9 KE9DD=J J=HGJLAF? ;GEH9FQ GJ 9F =E=J?AF? ?JGOL@ ;GEH9FQ .== L@= <=>AFALAGFK G> ^D9J?= 9;;=D=J9L=< >AD=J _ ^9;;=D=J9L=< >AD=J _ ^KE9DD=J J=HGJLAF? ;GEH9FQ_ 9F< ^=E=J?AF? ?JGOL@ ;GEH9FQ_ AF -MD= : G> L@= P;@9F?= ;L

'9J?= ;;=D=J9L=< !AD=J ;;=D=J9L=< >AD=J )GF 9;;=D=J9L=< >AD=J

.E9DD=J J=HGJLAF?

E=J?AF? ?JGOL@

;GEH9FQ

;GEH9FQ

$> 9F =E=J?AF? ?JGOL@ ;GEH9FQ AF<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" a=""> L@= J=?AKLJ9FL @9K =D=;L=< FGL LG MK= L@= =PL=F<=< LJ9FKALAGF H=JAG< >GJ ;GEHDQAF? OAL@ 9FQ F=O GJ J=NAK=< >AF9F;A9D 9;;GMFLAF? KL9F<9J L@= P;@9F?= ;L

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" _l40_="J=?AKLJ9FL" _40_9k="">AD=< 9 J=HGJL GF 9F< 9LL=KL9LAGF LG ALK E9F9?=E=FL]K 9KK=KKE=FL G> L@= =>>=;LAN=F=KK G> ALK AFL=JF9D ;GFLJGD GN=J >AF9F;A9D J=HGJLAF? MF<=J .=;LAGF : G> L@= .9J:9F=K *PD=Q ;L 0 . : :Q L@= J=?AKL=J=< HM:DA; 9;;GMFLAF? >AJE L@9L HJ=H9J=< GJ AKKM=< ALK 9M

$> K=;MJALA=K 9J= J=?AKL=J=< HMJKM9FL LG .=;LAGF : G> L@= ;L AF<_a3b_9l3d_ _3a_q="" _3b_40_=";CE9JC" _o40_="L@=J" _l40_="">AF9F;A9D KL9L=E=FLK G> L@= J=?AKLJ9FL AF;DM<=< AF L@= >ADAF? J=>D=;L L@= ;GJJ=;LAGF G> 9F =JJGJ LG HJ=NAGMKDQ AKKM=< >AF9F;A9D KL9L=E=FLK

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" 9fq="" g=""> L@GK= =JJGJ ;GJJ=;LAGFK 9J= J=KL9L=E=FLK L@9L J=IMAJ=< 9 J=;GN=JQ 9F9DQKAK G> AF;=FLAN= :9K=< ;GEH=FK9LAGF J=;=AN=< :Q 9FQ G> L@= J=?AKLJ9FL K =P=;MLAN= G>>A;=JK <_mjaf3f_ _l40_="J=D=N9FL" j=";GN=JQ" h="JAG<" hmjkm9fl="" lg="" s="">

$F<_a3b_9l3d_ _3a_q="" _3b_40_=";C" e9jc="" _o40_="L@=J" _l40_="J=?AKLJ9FL" ak="" 9="" _k40_="DD" _3b_geh9fq="" 9k="" _3c_="">AF=< AF -MD= : G> L@= ;L 4=K )G

/@= 9??J=?9L= E9JC=L N9DM= G> ;GEEGF KLG;C @=D< :Q FGF 9>>ADA9L=K G> L@= J=?AKLJ9FL GF %MF= J=;=FLDQ ;GEHD=L=< K=;GF< >AK;9D IM9JL=J :9K=< GF L@= ;DGKAF? HJA;= GF L@9L <9L= G>

L@= D9KL :MKAF=KK <9Q G> L@= J=?AKLJ9FL]K EGKLO9K

:ADDAGF

/@= J=?AKLJ9FL @9<

K@9J=K G> ;GEEGF KLG;C GMLKL9F<_af3f_ 9l=""> ?3E=5>DC 9>3?B@?B1D54 2I B565B5>35

+GJLAGFK G> L@= +JGPQ .L9L=E=FL >GJ L@= FFM9D (==LAF? G> .LG;C@GD<=JK LG := @=D< GF (9Q

+9JL $$$

dŚŝƐ WĂŐĞ /ŶƚĞŶƟŽŶĂůůLJ >ĞŌ ůĂŶŬ͘

+12<5 ?6 ?>D5>DC

+9?=

GEEGFDQ 0K=< ::J=NA9LAGFK

$L=E '1BD

9F< MKAF=KK 9F< +JGH=JLA=K

GJHGJ9L= .LJM;LMJ= .=?E=FL 9F< "=G?J9H@A; $F>GJE9LAGF

D9KC9

'GO=J 9F9<9

MJGH= (A<<_d3d_ 9kl="" _9f3c_="" _29_gjl40_="">JA;9 KA9 +9;A>A;

*L@=J $FL=JF9LAGF9D *L@=J

=DAN=JQ GEEALE=FLK GEH=LALAGF

#ME9F 9HAL9D (9F9?=E=FL "=F=J9D

-AKC !9;LGJK

0FJ=KGDN=< .L9>> GEE=FLK Q:=J.=;MJALQ '=?9D +JG;==<_af3f_k _28_af=".9">=LQ AK;DGKMJ=K

$F>GJE9LAGF :GML GMJ P=;MLAN= *>>A;=JK '1BD

(9JC=L >GJ -=?AKLJ9FL]K GEEGF IMALQ -=D9L=< .LG;C@GD<=J (9LL=JK 9F< $KKM=J +MJ;@9K=K G>

IMALQ .=;MJALA=K

6-=K=JN=<7

(9F9?=E=FL]K AK;MKKAGF 9F< F9DQKAK G> !AF9F;A9D GF *H=J9LAGFK ,M9FLAL9LAN= 9F< ,M9DAL9LAN= AK;DGKMJ=K :GML (9JC=L -AKC

!AF9F;A9D .L9L=E=FLK 9F< .MHHD=E=FL9JQ 9L9

@9F?=K AF 9F< AK9?J==E=FLK OAL@ ;;GMFL9FLK GF ;;GMFLAF? 9F< !AF9F;A9D AK;DGKMJ= GFLJGDK 9F< +JG;=<>

*L@=J $F>GJE9LAGF

AK;DGKMJ= -=?9J<_af3f_ _21_gj="A?F"><_a3b_lagfk _l40_9l="" _2b_j="N=FL" _24_fkh="">

'1BD

AJ=;LGJK P=;MLAN= *>>A;=JK 9F< GJHGJ9L= "GN=JF9F;= P=;MLAN= GEH=FK9LAGF

.=;MJALQ *OF=JK@AH G> =JL9AF =F=>A;A9D *OF=JK 9F< (9F9?=E=FL 9F< -=D9L=< .LG;C@GD<=J

(9LL=JK

=JL9AF -=D9LAGFK@AHK 9F< -=D9L=< /J9FK9;LAGFK 9F< AJ=;LGJ $F<=H=F<=F;= +JAF;AH9D ;;GMFLAF? !==K 9F< .=JNA;=K '1BD -

P@A:ALK !AF9F;A9D .L9L=E=FL .;@=<>

.A?F9LMJ=K

GEEGFDQ 0K=< ::J=NA9LAGFK

?==?>C

/@= >GDDGOAF? AFA; 9;;GMFLAF? 9F< GL@=J L=JEK 9F< 9::J=NA9LAGFK E9Q := ;GEEGFDQ MK=< AF L@AK J=HGJL

EBB5>395C GJ 0.

0-"+ )*&

,>9DC ?6 $51CEB5=5>D ' ! * ( (! (( (( * ( *

0 .

JALAK@ HGMF< )GJO=?A9F CJGF=J

:9JJ=D

:ADDAGF ;M:A; >==L :9JJ=DK G> GAD =IMAN9D=FL L@GMK9F :9JJ=DK H=J <9Q L@GMK9F< ;M:A; >==L

EADDAGF

(( *

EADDAGF :9JJ=DK G> GAD =IMAN9D=FL L@GMK9F< G> :9JJ=DK G> GAD =IMAN9D=FL H=J <9Q EADDAGF G> :9JJ=DK G> GAD =IMAN9D=FL H=J <9Q

(( /0 (( ! (/+

EADDAGF JALAK@ L@=JE9D MFALK EADDAGF ;M:A; >==L H=J <9Q EADDAGF LGFF=K H=J 9FFME

>4ECDBI '( ( . +

! !$ !+. !+.*MJ=9M G> '9F< (9F9?=E=FL ;G9D:=< E=L@9F= ;9J:GF ;9HLMJ= 9F< KLGJ9?= =PHDGJ9LAGF 9F< HJG<_m3b_lagf>JGFL =F< =F?AF==JAF? 9F< <=KA?F >AF9D AFN=KLE=FL <=;AKAGF >DG9LAF? HJG<_m3b_lagf kqkl="E">DG9LAF? HJG<_m3b_lagf _klgj93f_="9F<" g="">>DG9<>

"" %* ')" )"'K *+ +. +0 K . " 2. 2/$

?=GDG?A;9D 9F< ?=GH@QKA;9D BGAFL GH=J9LAF? 9?J==E=FL DAIM=>A=< F9LMJ9D ?9K F9LMJ9D ?9K DAIMA +=LJGD=ME PHGJLAF? GMFLJA=K HJG<_m3b_lagf _k40_9jaf3f_="" _3b_gflj93b_l="" hjgn="<" _mf3c_="N=DGH=<" j="K=JN=K" kl="9E" 9kkakl="<" j9nalq=""><_j9af93f_3d_ 2="KL=JF"><>

33?E>D9>7 -* . .0

! .

!$!* " " + '$!* )+). ++ 1$

$9C35<<1>5?EC - '

9KK=L J=LAJ=E=FL G:DA?9LAGF 9;;GMFLAF? KL9F<9JA;9LAGF 9;;GMFLAF? KL9F<9J

!AF9F;A9D ;;GMFLAF? .L9F<9J

>AJKL AF >AJKL GML ?=F=J9D 9F< 9<_eafaklj9lan3d_ _3d_f="J9DDQ" _93b_3b_="HL=<" _93b_3b_gmflaf3f_="" _hjaf3b_ahd="">

D9KL AF >AJKL GML

FGJE9D HMJ;@9K= FGJE9D K9D= HJGH=JLA=K HD9FLK 9F< =IMAHE=FL N9JA9:D= AFL=J=KL =FLALQ

+ ." 0 !-$

!=<=J9D GEHJ=@=FKAN= FNAJGFE=FL9D -=KHGFK= GEH=FK9LAGF 9F< 'A9:ADALQ ;L <_an3d_jkalq _3d_imalq="" _9f3c_="" _af3b_dmkagf="" fnajgfe="FL9D" _2b_jgl=";LAGF" _3d_f3b_q="FNAJGFE=FL9D" _kg3b_a9d="" gn="JF9F;=" mjgh="9F" 0fagf="" _21_="<=J9D" f="J?Q" -="?MD9LGJQ">

"#" #.

?J==F@GMK= ?9K

$ $ .$

@=9DL@ K9>=LQ 9F< =FNAJGFE=FL $FL=JF9LAGF9D @9E:=J G> GEE=J;= 2GJD< 9FC]K $FL=JF9LAGF9D

$-. */ )4. .

=FLJ= >GJ .=LLD=E=FL G> $FN=KLE=FL AKHML=K $FL=JF9D -=N=FM= .=JNA;= GN=J L@= ;GMFL=J )=O 4GJC .LG;C P;@9F?= 0 . .=;MJALA=K 9F< P;@9F?= GEEAKKAGF

• 0 &

  /.-

  LGL9D K@9J=@GD<=J J=LMJF 0FAL=< &AF?<>

  1-*

• 0 .

0FAL=< .L9L=K G> E=JA;9 N9JA9:D= J=LMJF G> ;9K@

GFG;G+@ADDAHK

&

Attachments

• Original Link
• Original Document
• Permalink

Disclaimer

ConocoPhillips published this content on 01 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2024 12:12:04 UTC.