ConocoPhillips COP · USD

Note 22—Segment Disclosures and Related InformationWe explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and NGLs on a worldwide basis. We manage our operations through five operating segments, which are primarily defined by geographic region: Alaska; Lower 48 (L48); Canada; Europe, Middle East and North Africa (EMENA); and Asia Pacific (AP).Corporate and Other (Corporate) represents income and costs not directly associated with an operating segment, such as most interest expense, premiums on early retirement of debt, corporate overhead and certain technology activities, including licensing revenues. Corporate assets include all cash and cash equivalents and short-term investments. Effective in the fourth quarter of 2025, we determined that our former Other International operating segment, which consisted of activities associated with prior operations in other countries, was no longer an operating segment. Residual results are aggregated into Corporate. Our historical operating segment reporting has been recast to reflect this change.Our chief operating decision maker (CODM) is our Chairman of the Board of Directors and Chief Executive Officer, who evaluates performance and allocates resources among our operating segments based on each segment's net income (loss). This is done through the annual budget and forecasting process. Segment accounting policies are the same as those in Note 1. Intersegment sales are at prices that approximate market. The significant segment expense categories and amounts in the tables below align with segment-level information that is regularly provided to the CODM.

Note 9—Contingencies and CommitmentsA number of lawsuits involving a variety of claims arising in the ordinary course of business have been filed against ConocoPhillips. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the low end of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. We accrue receivables for insurance or other third-party recoveries when applicable. With respect to income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain. See Note 15, for additional information about income tax-related contingencies.Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required and the determination of our liability in proportion to that of other responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.EnvironmentalWe are subject to international, federal, state and local environmental laws and regulations and record accruals for environmental liabilities based on management’s best estimates.

Note 7—DebtLong-term debt at December 31 was:Millions of Dollars202520242.4% Notes due 2025— 366 8.2% Debentures due 2025— 134 3.35% Notes due 2025— 199 6.875% Debentures due 202667 67 7.8% Debentures due 2027120 120 4.4% Notes due 2027422 424 3.75% Notes due 2027196 196 4.3% Notes due 2028223 223 7.375% Debentures due 202966 66 7.0% Debentures due 202995 95 5.3% Notes due 202984 86 6.95% Notes due 2029705 705 4.7% Notes due 20301,350 1,350 8.125% Notes due 2030207 207 2.4% Notes due 2031227 227 7.2% Notes due 2031447 447 7.25% Notes due 2031268 268 7.4% Notes due 2031232 232 4.85% Notes due 2032650 650 6.8% Notes due 2032180 180 5.9% Notes due 2032505 505 5.05% Notes due 20331,000 1,000 5.7% Notes due 2034103 103 4.15% Notes due 2034246 246 5.0% Notes due 20351,250 1,250 5.95% Notes due 2036326 326 5.951% Notes serially maturing 2022 through 2037541 573 6.6% Notes due 2037335 335 5.9% Notes due 2038350 350 6.5% Notes due 20391,588 1,588 3.758% Notes due 2042785 785 4.3% Notes due 2044750 750 5.2% Notes due 2045186 186 5.95% Notes due 2046329 329 7.9% Debentures due 204760 60 4.875% Notes due 2047319 319 4.85% Notes due 2048219 219 3.8% Notes due 20521,100 1,100 5.3% Notes due 20531,100 1,100 5.55% Notes due 20541,000 1,000 5.5% Notes due 20551,300 1,300 4.025% Notes due 20621,770 1,770 5.7% Notes due 2063700 700 5.65% Notes due 2065650 650 Marine Terminal Revenue Refunding Bonds due 2031 at 1.23% – 5.05% during 2025 and 1.78% – 4.80% during 2024265 265 Industrial Development Bonds due 2035 at 1.23% – 5.05% during 2025 and 1.78% – 4.22% during 202418 18 St. John the Baptist Parish, State of Louisiana—Revenue Refunding Bonds due 20371: $200 at 2.20%, $200 at 2.375%, $200 at 4.05%, $400 at 3.30%11,000 1,000 Other13 16 Debt at face value23,347 24,085 Finance leases801 940 Net unamortized premiums, discounts and debt issuance costs(704)(701)Total debt23,444 24,324 Short-term debt(1,020)(1,035)Long-term debt$22,424 23,289 1Future mandatory purchase dates for these bonds: July 1, 2026 for the 2.20% bonds of $200 million, 2.375% bonds of $200 million, 4.05% bonds of $200 million and July 3, 2028 for the 3.30% bonds of $400 million. Subsequent to the mandatory purchase dates, we will also have the right to remarket these bonds any time up to the 2037 maturity date.

Note 15—Income TaxesComponents of income tax provision (benefit) were:Millions of Dollars202520242023Income TaxesFederalCurrent$655 629 1,054 Deferred537 247 825 ForeignCurrent3,287 3,249 2,931 Deferred33 71 254 State and localCurrent177 182 202 Deferred(21)49 65 Total tax provision (benefit)$4,668 4,427 5,331 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were:Millions of Dollars20252024Deferred Tax LiabilitiesPP&E and intangibles$16,244 15,609 Inventory15 91 Other160 155 Total deferred tax liabilities16,419 15,855 Deferred Tax AssetsBenefit plan accruals330 432 Asset retirement obligations and accrued environmental costs2,985 2,799 Investments in joint ventures2,356 2,269 Other financial accruals and deferrals507 497 Loss and credit carryforwards4,048 4,910 Other103 187 Total deferred tax assets10,329 11,094 Less: valuation allowance(5,926)(6,435)Total deferred tax assets net of valuation allowance4,403 4,659 Net deferred tax liabilities$12,016 11,196 At December 31, 2025, noncurrent assets and liabilities included deferred taxes of $221 million and $12,237 million, respectively. At December 31, 2024, noncurrent assets and liabilities included deferred taxes of $230 million and $11,426 million, respectively.At December 31, 2025, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $2.9 billion and various jurisdictions net operating loss and credit carryforwards of $1.1 billion.At December 31, 2024, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $3.3 billion and various jurisdictions net operating loss and credit carryforwards of $1.6 billion. In 2024, $1.2 billion of U.S. foreign tax credits expired. This reduction was partly offset by an increase of $700 million in our U.S. net operating loss, foreign tax credit carryforwards, and other credit carryforwards due to our acquisition of Marathon Oil. See Note 3.

Note 13—Non-Mineral LeasesThe company primarily leases office buildings and drilling equipment, as well as ocean transport vessels, tugboats, corporate aircraft, and other facilities and equipment. Certain leases include escalation clauses for adjusting rental payments to reflect changes in price indices, and other leases include payment provisions that vary based on the nature of usage of the leased asset. Additionally, the company has executed certain leases that provide it with the option to extend or renew the term of the lease, terminate the lease prior to the end of the lease term, or purchase the leased asset as of the end of the lease term. In other cases, the company has executed lease agreements that require it to guarantee the residual value of certain leased office buildings. For additional information about guarantees, see Note 8. For those leasing arrangements where the underlying asset is not yet constructed, the company does not control the asset during construction. There are no significant restrictions imposed on us by the lease agreements with regard to dividends, asset dispositions or borrowing ability.We determine if an arrangement is or contains a lease at contract inception. Certain contractual arrangements may contain both lease and non-lease components. Only the lease components of these contractual arrangements are subject to the provisions of ASC Topic 842, “Leases,” and any non-lease components are subject to other applicable accounting guidance; however, we have elected to adopt the optional practical expedient not to separate lease components apart from non-lease components for existing asset classes, except for crude oil and LNG Vessels. For contractual arrangements involving a new leased asset class, we determine at contract inception whether it will apply the optional practical expedient to the new leased asset class. Leases are evaluated for classification as operating or finance leases at the commencement date of the lease and right-of-use assets and corresponding liabilities are recognized on our consolidated balance sheet based on the present value of future lease payments relating to the use of the underlying asset during the lease term. Future lease payments include variable lease payments that depend upon an index or rate using the index or rate at the commencement date and probable amounts owed under residual value guarantees.

Note 3—Acquisitions and DispositionsAll gains or losses on asset dispositions are reported before-tax and are included net in the “Gain (loss) on dispositions” line on our consolidated income statement. Cash proceeds and payments are included in the “Cash flows from investing activities” section of our consolidated statement of cash flows except for cash payments associated with a contingent consideration arrangement that are included in the "Cash flows from financing activities" section.2025Assets SoldIn the second quarter of 2025, we sold our interests in the Ursa and Europa fields and Ursa Oil Pipeline Company LLC for net proceeds of $699 million. We recognized a $274 million before-tax and $266 million after-tax gain for this transaction, inclusive of the reduction of our valuation allowance recognized in the first quarter of 2025. At the time of disposition, these assets, in our Lower 48 segment, had a net carrying value of $444 million, comprised of $536 million of assets, primarily $522 million of PP&E, and $92 million of liabilities, primarily related to noncurrent AROs. For tax-related impacts of this disposition, see Note 15.In the fourth quarter of 2025, we sold Lower 48 assets in the Anadarko basin for net proceeds of $1.2 billion, after customary closing adjustments. At the time of the disposition, these assets had a net carrying value of approximately $1.2 billion, comprised primarily of PP&E. Additionally, during 2025, we sold our interests in other noncore assets in the Lower 48 segment for $1.1 billion and recognized a $404 million before-tax and $310 million after-tax net gain. Our interests in the disposed assets had an aggregate net carrying value of $719 million, comprised of $770 million of assets, primarily related to $645 million of PP&E and $51 million of liabilities related to noncurrent AROs. 2024Acquisition of Marathon Oil Corporation (Marathon Oil)In November 2024, we completed our acquisition of Marathon Oil, an independent oil and gas exploration and production company with operations across the Lower 48 and in Equatorial Guinea. At close, the transaction was valued at $16.5 billion, which primarily represented 0.255 shares of ConocoPhillips common stock exchanged for each outstanding share of Marathon Oil common stock.

Cybersecurity Risk Assessment and ManagementWe take a multilayered approach to cybersecurity risk management and strategy. Our IT/OT Security Program integrates administrative, technical, and physical controls against evolving cybersecurity threats, and includes enterprise IT and OT security architecture, cybersecurity operations, data privacy and governance, supply chain security, and governance, risk, and compliance. Additionally, it is designed to identify, assess, and manage cybersecurity risks and protect the confidentiality, integrity, and availability of our data, IT, and OT. Cybersecurity is a component of our IT/OT Security Program, which we periodically review and adapt to respond to new and evolving circumstances, cybersecurity threats and regulations. We evaluate security, privacy, and resiliency risks, including those related to cybersecurity, in our overall Enterprise Risk Management (ERM) program's annual risk assessment process. This annual risk assessment process takes into account broader risks based on likelihood, potential consequences, and mitigations, such as operational and economic impact; health, safety and environmental impact; and reputational and financial implications. This risk assessment is discussed with members of the ELT, Audit and Finance Committee (AFC) of the Board of Directors, and Board of Directors on at least an annual basis. We consult recognized security frameworks, such as the National Institute of Standards and Technology Cybersecurity Framework to organize, improve, and assess our IT/OT Security Program to manage and reduce cybersecurity risk. We deploy, configure, and maintain various technologies designed to enforce security policies, detect and protect against cybersecurity threats, and help safeguard IT and OT assets. We operate a Cybersecurity Operation Center (CSOC) to ingest threat intelligence, monitor cybersecurity threats, coordinate incident response resources and manage response times. Our Global Computer Security Incident Response Plan (CSIRP) establishes the framework for our response to cybersecurity incidents. Under the CSIRP, cybersecurity incidents are escalated based on a defined incident categorization to the Chief Information Security Officer (CISO) and senior leaders, including the Chief Digital & Information Officer (CD&IO), General Counsel, Chief Financial Officer, and other cybersecurity program stakeholders, such as the AFC and/or the full Board of Directors.

Note 12—EquityCommon StockThe changes in our shares of common stock, as categorized in the equity section of the balance sheet, were:Shares202520242023IssuedBeginning of year2,250,672,734 2,103,772,516 2,100,885,134 Acquisition of Marathon Oil— 142,941,624 — Distributed under benefit plans2,845,548 3,958,594 2,887,382 End of year2,253,518,282 2,250,672,734 2,103,772,516 Held in TreasuryBeginning of year974,806,010 925,670,961 877,029,062 Repurchase of common stock53,544,176 49,135,049 48,641,899 End of year1,028,350,186 974,806,010 925,670,961 Preferred StockWe have authorized 500 million shares of preferred stock, par value $0.01 per share, none of which was issued or outstanding at December 31, 2025 or 2024.Repurchase of Common StockIn late 2016, we initiated our current share repurchase program. In October 2024, our Board of Directors approved an increase from our prior authorization of $45 billion by a total of the lesser of $20 billion or the number of shares issued in our acquisition of Marathon Oil, such that the company is not to exceed $65 billion in aggregate purchases. Since inception of our current program, shares repurchased totaled 486 million shares at a cost of $39.3 billion through the end of December 2025.