UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):   April 30, 2012

ConocoPhillips

(Exact name of registrant as specified in its charter)

 

Delaware   001-32395   01-0562944

(State or other jurisdiction of

incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

600 North Dairy Ashford

Houston, Texas 77079

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code:   (281) 293-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.01 Completion of Acquisition or Disposition of Assets.

On April 30, 2012, the separation of Phillips 66 from ConocoPhillips was completed. Phillips 66 is now an independent public company trading under the symbol “PSX” on the New York Stock Exchange. After the close of the New York Stock Exchange on April 30, 2012, the shareholders of record as of April 16, 2012 (the “Record Date”) received one share of Phillips 66 common stock for every two ConocoPhillips common shares held as of the Record Date. Fractional shares of Phillips 66 common stock were not distributed. Any fractional shares of Phillips 66 common stock otherwise issuable to ConocoPhillips shareholders were aggregated into whole shares and sold in the open market, and such ConocoPhillips shareholders will receive a ratable share of the proceeds of such sale, after deducting any taxes required to be withheld and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale.

 

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The unaudited pro forma condensed consolidated financial statements of ConocoPhillips have been derived from our historical consolidated financial statements and are being presented to give effect to the separation of Phillips 66 into an independent, publicly traded company. The unaudited pro forma condensed consolidated balance sheet of ConocoPhillips as of March 31, 2012, and the unaudited pro forma condensed consolidated income statements of ConocoPhillips for the three months ended March 31, 2012, and March 31, 2011, and for the years ended December 31, 2011, 2010 and 2009, and the related notes thereto are furnished as Exhibit 99.1 to this Current Report on Form 8-K.

(d) Exhibits

99.1     —   Unaudited pro forma condensed consolidated financial statements.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      CONOCOPHILLIPS
     

/s/ Glenda M. Schwarz

     

Glenda M. Schwarz

Vice President and Controller

May 2, 2012      

 

3


EXHIBIT INDEX

 

Exhibit
No.
  

Description

99.1    Unaudited pro forma condensed consolidated financial statements.

 

4

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements of ConocoPhillips have been derived from our historical consolidated financial statements and are being presented to give effect to the separation of Phillips 66 into an independent, publicly traded company. Effective with the filing of the ConocoPhillips Form 10-Q for the period ending June 30, 2012, Phillips 66 will be reported as a discontinued operation of ConocoPhillips. The unaudited pro forma condensed consolidated balance sheet has been prepared as though the separation of Phillips 66 occurred on March 31, 2012. The unaudited pro forma condensed consolidated income statements have been prepared as though the separation of Phillips 66 occurred on January 1, 2009. The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical financial statements and accompanying notes.

The pro forma adjustments are based on available information and assumptions management believes are factually supportable and for income statement purposes recurring in nature. The pro forma adjustments to reflect the separation of Phillips 66 include:

 

   

Reclassification of crude oil and natural gas sales to Phillips 66 and the related costs previously eliminated in consolidation as third-party transactions, as such sales will continue after separation.

 

   

Reclassification of accounts receivable from and payable to Phillips 66 previously eliminated in consolidation as third-party accounts receivable and payable.

 

   

A special cash distribution of approximately $5.9 billion from Phillips 66 in connection with the separation.

 

   

Costs incurred in connection with the separation of Phillips 66.

 

   

Reclassification and remeasurement of the remaining tax balances after the separation of Phillips 66 on the balance sheet.

Debt incurred by Phillips 66 prior to March 31, 2012 and, related restricted cash and financing costs are reflected in the “Separation of Phillips 66” column of the pro forma condensed consolidated balance sheet at March 31, 2012, and pro forma condensed consolidated income statement for the three months ended March 31, 2012, respectively. No adjustments have been made for the costs of operating after the separation of Phillips 66, the potentially dilutive impact of changes to stock-based compensation resulting from the Employee Matters Agreement executed in connection with the separation, the use of proceeds from the special cash distribution from Phillips 66 and any working capital adjustments to be determined after the separation as the impact of these items are not factually supportable at this time.

The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only, and do not reflect what our financial position and results of operations would have been had the separation occurred on the dates indicated and are not necessarily indicative of our future financial position and future results of operations.

 

1


 

Unaudited Pro Forma Condensed Consolidated Income Statement

  

    ConocoPhillips   

Three Months Ended March 31, 2012

 

  

     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Revenues and Other Income

        

Sales and other operating revenues

   $           56,132        (45,498     4,350   (a)      14,984   

Equity in earnings of affiliates

     1,220        (734       486   

Gain on dispositions

     942        (2       940   

Other income

     60        (4     3   (a)      59   

 

 

Total Revenues and Other Income

     58,354        (46,238     4,353        16,469   

 

 

Costs and Expenses

        

Purchased crude oil, natural gas and products

     41,889        (40,104     4,336   (a)      6,121   

Production and operating expenses

     2,696        (1,072     14   (a)      1,638   

Selling, general and administrative expenses

     685        (290     (99 ) (a) (b)      296   

Exploration expenses

     679        -          679   

Depreciation, depletion and amortization

     1,838        (216       1,622   

Impairments

     259        (45       214   

Taxes other than income taxes

     4,521        (3,420       1,101   

Accretion on discounted liabilities

     114        (7       107   

Interest and debt expense

     209        (19       190   

Foreign currency transaction (gains) losses

     (11     15          4   

 

 

Total Costs and Expenses

     52,879        (45,158     4,251        11,972   

 

 

Income from continuing operations before income taxes

     5,475        (1,080     102        4,497   

Provision for income taxes

     2,520        (322     39  (h)      2,237   

 

 

Income From Continuing Operations

     2,955        (758     63        2,260   

Less: income from continuing operations attributable to noncontrolling interests

     (18     2          (16

 

 

Income From Continuing Operations Attributable to ConocoPhillips

   $ 2,937        (756     63        2,244   

 

 

Income From Continuing Operations Attributable to ConocoPhillips Per Share of Common Stock (dollars)

        

Basic

   $ 2.29            1.75   

Diluted

     2.27            1.74   

 

 

Average Common Shares Outstanding (in thousands)

        

Basic

     1,283,493            1,283,493   

Diluted

     1,293,104            1,293,104   

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

2


 

 
Unaudited Pro Forma Condensed Consolidated Income Statement      ConocoPhillips   
Three Months Ended March 31, 2011   

 

     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Revenues and Other Income

        

Sales and other operating revenues

   $           56,530        (44,774     4,024  (a)      15,780   

Equity in earnings of affiliates

     1,017        (691       326   

Gain on dispositions

     616        (3       613   

Other income

     84        (3     3  (a)      84   

 

 

Total Revenues and Other Income

     58,247        (45,471     4,027        16,803   

 

 

Costs and Expenses

        

Purchased crude oil, natural gas and products

     42,376        (39,419     4,001  (a)      6,958   

Production and operating expenses

     2,628        (1,072     23  (a)      1,579   

Selling, general and administrative expenses

     499        (254     3  (a)      248   

Exploration expenses

     176        -          176   

Depreciation, depletion and amortization

     2,070        (222       1,848   

Impairments

     -        -          -   

Taxes other than income taxes

     4,364        (3,480       884   

Accretion on discounted liabilities

     112        (7       105   

Interest and debt expense

     262        (5       257   

Foreign currency transaction (gains) losses

     (36     43          7   

 

 

Total Costs and Expenses

     52,451        (44,416     4,027        12,062   

 

 

Income from continuing operations before income taxes

     5,796        (1,055       4,741   

Provision for income taxes

     2,754        (330       2,424   

 

 

Income From Continuing Operations

     3,042        (725       2,317   

Less: income from continuing operations attributable to noncontrolling interests

     (14     1          (13

 

 

Income From Continuing Operations Attributable to ConocoPhillips

   $ 3,028        (724       2,304   

 

 

Income From Continuing Operations Attributable to ConocoPhillips Per Share of Common Stock (dollars)

        

Basic

   $ 2.11            1.61   

Diluted

     2.09            1.59   

 

 

Average Common Shares Outstanding (in thousands)

        

Basic

     1,432,285            1,432,285   

Diluted

     1,445,477            1,445,477   

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

3


 

 

Unaudited Pro Forma Condensed Consolidated Income Statement

  

    ConocoPhillips   

Year Ended December 31, 2011

 

        
     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Revenues and Other Income

        

Sales and other operating revenues

   $           244,813        (196,068     17,011   (a)      65,756   

Equity in earnings of affiliates

     4,077        (2,843       1,234   

Gain on dispositions

     2,007        (1,637       370   

Other income

     329        (59     4   (a)      274   

 

 

Total Revenues and Other Income

     251,226        (200,607     17,015        67,634   

 

 

Costs and Expenses

        

Purchased crude oil, natural gas and products

     185,867        (172,838     16,946   (a)      29,975   

Production and operating expenses

     10,770        (4,089     62   (a)      6,743   

Selling, general and administrative expenses

     2,078        (1,217     (23 ) (a) (b)      838   

Exploration expenses

     1,066        -          1,066   

Depreciation, depletion and amortization

     7,934        (920       7,014   

Impairments

     792        (472       320   

Taxes other than income taxes

     18,307        (14,288     1   (a)      4,020   

Accretion on discounted liabilities

     455        (29       426   

Interest and debt expense

     972        (18       954   

Foreign currency transaction (gains) losses

     (16     39          23   

 

 

Total Costs and Expenses

     228,225        (193,832     16,986        51,379   

 

 

Income from continuing operations before income taxes

     23,001        (6,775     29        16,255   

Provision for income taxes

     10,499        (1,729     11   (h)      8,781   

 

 

Income From Continuing Operations

     12,502        (5,046     18        7,474   

Less: income from continuing operations attributable to noncontrolling interests

     (66     5          (61

 

 

Income From Continuing Operations Attributable to ConocoPhillips

   $ 12,436        (5,041     18        7,413   

 

 

Income From Continuing Operations Attributable to ConocoPhillips Per Share of Common Stock (dollars)

        

Basic

   $ 9.04            5.39   

Diluted

     8.97            5.34   

 

 

Average Common Shares Outstanding (in thousands)

        

Basic

     1,375,035            1,375,035   

Diluted

     1,387,100            1,387,100   

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

4


 

 
Unaudited Pro Forma Condensed Consolidated Income Statement          ConocoPhillips   

Year Ended December 31, 2010

 

        
     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Revenues and Other Income

        

Sales and other operating revenues

   $           189,441        (146,542     14,397 (a)      57,296   

Equity in earnings of affiliates

     3,133        (1,765       1,368   

Gain on dispositions

     5,803        (240       5,563   

Other income

     278        (99     3 (a)      182   

 

 

Total Revenues and Other Income

     198,655        (148,646     14,400        64,409   

 

 

Costs and Expenses

        

Purchased crude oil, natural gas and products

     135,751        (125,093     14,311 (a)      24,969   

Production and operating expenses

     10,635        (4,194     84 (a)      6,525   

Selling, general and administrative expenses

     2,005        (1,198     4 (a)      811   

Exploration expenses

     1,155        -          1,155   

Depreciation, depletion and amortization

     9,060        (891       8,169   

Impairments

     1,780        (1,699       81   

Taxes other than income taxes

     16,793        (13,990     1 (a)      2,804   

Accretion on discounted liabilities

     447        (30       417   

Interest and debt expense

     1,187        (20       1,167   

Foreign currency transaction (gains) losses

     92        (93       (1

 

 

Total Costs and Expenses

     178,905        (147,208     14,400        46,097   

 

 

Income from continuing operations before income taxes

     19,750        (1,438       18,312   

Provision for income taxes

     8,333        (470       7,863   

 

 

Income From Continuing Operations

     11,417        (968       10,449   

Less: income from continuing operations attributable to noncontrolling interests

     (59     5          (54

 

 

Income From Continuing Operations Attributable to ConocoPhillips

   $ 11,358        (963       10,395   

 

 

Income From Continuing Operations Attributable to ConocoPhillips Per Share of Common Stock (dollars)

        

Basic

   $ 7.68            7.03   

Diluted

     7.62            6.97   

 

 

Average Common Shares Outstanding (in thousands)

        

Basic

     1,479,330            1,479,330   

Diluted

     1,491,067            1,491,067   

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

5


 

 

Unaudited Pro Forma Condensed Consolidated Income Statement

  

    ConocoPhillips   

Year Ended December 31, 2009

 

  

   
     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Revenues and Other Income

        

Sales and other operating revenues

   $           149,341        (112,675     12,162  (a)      48,828   

Equity in earnings of affiliates

     2,531        (1,092       1,439   

Gain on dispositions

     160        (79       81   

Other income

     358        (102     1  (a)      257   

 

 

Total Revenues and Other Income

     152,390        (113,948     12,163        50,605   

 

 

Costs and Expenses

        

Purchased crude oil, natural gas and products

     102,433        (93,142     12,058  (a)      21,349   

Production and operating expenses

     10,339        (4,142     95  (a)      6,292   

Selling, general and administrative expenses

     1,830        (1,175     9  (a)      664   

Exploration expenses

     1,182        -          1,182   

Depreciation, depletion and amortization

     9,295        (888       8,407   

Impairments

     535        (66       469   

Taxes other than income taxes

     15,529        (13,668     1  (a)      1,862   

Accretion on discounted liabilities

     422        (33       389   

Interest and debt expense

     1,289        (22       1,267   

Foreign currency transaction (gains) losses

     (46     56          10   

 

 

Total Costs and Expenses

     142,808        (113,080     12,163        41,891   

 

 

Income from continuing operations before income taxes

     9,582        (868       8,714   

Provision for income taxes

     5,090        (173       4,917   

 

 

Income From Continuing Operations

     4,492        (695       3,797   

Less: income from continuing operations attributable to noncontrolling interests

     (78     4          (74

 

 

Income From Continuing Operations Attributable to ConocoPhillips

   $ 4,414        (691       3,723   

 

 

Income From Continuing Operations Attributable to ConocoPhillips Per Share of Common Stock (dollars)

        

Basic

   $ 2.96            2.50   

Diluted

     2.94            2.49   

 

 

Average Common Shares Outstanding (in thousands)

        

Basic

     1,487,650            1,487,650   

Diluted

     1,497,608            1,497,608   

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

6


 

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet

  

    ConocoPhillips   

At March 31, 2012

 

        
     Millions of Dollars  
     Historical     Separation of
Phillips 66
    Pro Forma
Adjustments
   

Pro

Forma

 
  

 

 

 

Assets

        

Cash and cash equivalents

   $               3,707        -          3,707   

Short-term investments*

     508        -          508   

Restricted cash

     6,050        (6,050     5,949   (e)      5,949   

Accounts and notes receivable

     15,575        (9,405     1,408   (c)      7,578   

Accounts and notes receivable—related parties

     1,908        (1,693       215   

Inventories

     6,072        (4,951       1,121   

Prepaid expenses and other current assets

     3,246        (818     (55 ) (d)      2,373   

 

 

Total Current Assets

     37,066        (22,917     7,302        21,451   

Investments and long-term receivables

     33,574        (10,793     (2 ) (d) (g)      22,779   

Loans and advances—related parties

     1,615        (1       1,614   

Net properties, plants and equipment

     85,559        (15,202       70,357   

Goodwill

     3,330        (3,330       -   

Intangibles

     742        (730       12   

Other assets

     995        (121       874   

 

 

Total Assets

   $ 162,881        (53,094     7,300        117,087   

 

 

 

Liabilities

        

Accounts payable

   $ 19,637        (11,771     144   (c) (f)      8,010   

Accounts payable—related parties

     1,913        (1,029       884   

Short-term debt

     7,002        (6,002       1,000   

Accrued income and other taxes

     4,751        (1,151     20   (d)      3,620   

Employee benefit obligations

     700        (35     (157 ) (g)      508   

Other accruals

     2,427        (436       1,991   

 

 

Total Current Liabilities

     36,430        (20,424     7        16,013   

Long-term debt

     21,358        (176       21,182   

Asset retirement obligations and accrued
      environmental costs

     9,073        (777       8,296   

Joint venture acquisition obligation—related party

     3,393        -          3,393   

Deferred income taxes

     18,709        (5,663     323   (d)      13,369   

Employee benefit obligations

     4,033        (119     (1,009 ) (g)      2,905   

Other liabilities and deferred credits

     2,842        (422       2,420   

 

 

Total Liabilities

     95,838        (27,581     (679     67,578   

 

 

 

Equity

        

Common stock (2,500,000,000 shares authorized at $.01 par value)

        

Issued (2012—1,753,755,416 shares)

        

Par value

     18        -          18   

Capital in excess of par

     44,936        -          44,936   

Treasury stock (at cost: 2012—489,198,910 shares)

     (33,678     -          (33,678

Accumulated other comprehensive income

     3,972        (311     566   (f) (g)      4,227   

Unearned employee compensation

     -        -          -   

Retained earnings

     51,286        (25,171     7,413   (i)      33,528   

 

 

Total Common Stockholders’ Equity

     66,534        (25,482     7,979        49,031   

Noncontrolling interests

     509        (31       478   

 

 

Total Equity

     67,043        (25,513     7,979        49,509   

 

 

Total Liabilities and Equity

   $ 162,881        (53,094     7,300        117,087   

 

 

* Includes marketable securities of:

   $ 407         

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

7


 

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

     ConocoPhillips   

 

(a) Represents the reclassification of sales of crude oil and natural gas to Phillips 66 and the related costs of purchased crude oil, natural gas and products; production and operating expenses; selling, general and administrative expenses; and taxes other than income taxes previously eliminated in consolidation as third party since such sales will continue after the separation.

 

(b) Reduction of separation costs incurred related to the separation of Phillips 66. Expenses incurred of $102 million and $29 million for the quarter ended March 31, 2012 and the year ended December 31, 2011, respectively, primarily include legal, accounting and information systems costs.

 

(c) Adjustments to reflect amounts previously recorded as accounts receivable from and payable to Phillips 66 of $1,408 million and $99 million, respectively and previously eliminated in consolidation as third-party accounts receivable and payable.

 

(d) Represents certain tax reclassification and remeasurement, primarily related to pension and other employee benefits and directly related to the separation of Phillips 66. Also included are the effects of the Tax Sharing Agreement executed in connection with the separation of Phillips 66.

 

(e) Pursuant to the private letter ruling received from the Internal Revenue Service (IRS), immediately prior to the separation, Phillips 66 distributed approximately $5.9 billion in cash primarily using the proceeds from the $5.8 billion in Senior Notes issued by Phillips 66 in March 2012 and a $2.0 billion term loan Phillips 66 entered into immediately prior to the separation. Under the terms of the IRS ruling, these funds will be used solely to pay dividends, repurchase common stock, repay debt, or a combination of the foregoing, within twelve months following the distribution.

 

(f) Additional costs of approximately $72 million are expected to be incurred in connection with the separation. These costs are as follows:

 

     Millions of
Dollars
 

Compensation and benefits

   $ 39   

Information technology

     15   

Legal

     10   

Other general and administrative expenses

     8   

 

 

Total remaining separation costs

   $ 72   

 

 

 

(g) Represents the assets and liabilities formerly associated with ConocoPhillips-sponsored pension plans and other employee benefit arrangements for the known Phillips 66 employees located in the United States and the United Kingdom. These amounts were transferred to the newly formed Phillips 66-sponsored plans. The transfer of these assets and liabilities increased accumulated other comprehensive income by $550 million and retained earnings by $568 million.

 

(h) Represents the tax effect of pro forma adjustments to income before income taxes using a blended statutory rate of 38.25 percent. The effective tax rate of ConocoPhillips could be different (either higher or lower) depending on activities subsequent to the separation.

 

(i) Stockholders’ equity was adjusted as a result of adjustments (c) through (g).

 

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