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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): January 23, 2008

ConocoPhillips
(Exact name of registrant as specified in its charter)

Delaware

001-32395

01-0562944

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS 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 2.02     Results of Operations and Financial Condition.

On January 23, 2008, ConocoPhillips issued a press release announcing the company's financial and operating results for the quarter ended December 31, 2007. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference. Additional financial and operating information about the quarter is furnished as Exhibits 99.2 and 99.3 hereto and incorporated herein by reference.

The press release contains the following measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP):

We have included these non-GAAP financial measures because, in management's opinion, excluding the second-quarter 2007 charge associated with the complete impairment of our Venezuelan oil interests is a useful indicator of the company's ongoing earnings and earnings per share, and is therefore useful in comparing the Company's results with prior and future periods.

Item 9.01     Financial Statements and Exhibits.

 (d) Exhibits

99.1 — Press release issued by ConocoPhillips on January 23, 2008.

99.2 — Financial and operational tables.

99.3 — Supplemental financial information.

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/ Rand C. Berney

Rand C. Berney

Vice President and Controller

January 23, 2008

 

 

   

EXHIBIT INDEX

Exhibit
No.

 

Description

 

99.1

Press release issued by ConocoPhillips on January 23, 2008.

 

99.2

Financial and operational tables.

 

99.3

Supplemental financial information.

Exhibit 99.1

ConocoPhillips Reports Fourth-Quarter Net Income of $4.4 Billion Or $2.71 Per Diluted Share

HOUSTON--(BUSINESS WIRE)--ConocoPhillips (NYSE:COP):

Earnings at a glance

 
 

Fourth Quarter

Twelve Months

  2007 2006 2007 2006
Net income

$4,371 million

3,197 million

$11,891 million

15,550 million
Diluted income per share

$2.71

1.91

$7.22

9.66
         

Earnings adjusted for the second-quarter 2007 Venezuela impairment

$4,371 million 3,197 million $16,403 million 15,550 million
Diluted earnings per share adjusted for the second-quarter 2007 Venezuela impairment

$2.71

1.91

$9.97

9.66
         

Revenues*

$52.7 billion

41.5 billion

$187.4 billion

183.7 billion

* Effective April 1, 2006, revenues no longer include the sales portion of buy/sell contracts, reflecting the adoption of EITF No. 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counterparty.”

ConocoPhillips (NYSE:COP) today reported fourth-quarter net income of $4,371 million, or $2.71 per share. This compared with $3,197 million, or $1.91 per share, for the same quarter in 2006. Revenues were $52.7 billion, versus $41.5 billion a year ago.

“During the fourth quarter, our upstream business produced 2.26 million BOE per day, including our share of LUKOIL’s production,” said Jim Mulva, chairman and chief executive officer. “In the downstream business, our worldwide refining crude oil capacity utilization rate improved to 95 percent.

“We ended the quarter with debt of $21.7 billion, a debt-to-capital ratio of 19 percent and a cash balance of $1.5 billion. During the quarter, we repurchased $2.5 billion of ConocoPhillips common stock, funded $4.3 billion of our capital program, reduced debt by $0.2 billion, and paid $0.7 billion in dividends. This was accomplished using $6.9 billion of cash generated from operations and $0.5 billion in proceeds from asset dispositions.”

For 2007, net income was $11,891 million, or $7.22 per share, including a second-quarter, after-tax impairment of $4,512 million in the Exploration and Production segment related to the expropriation of the company’s Venezuelan oil projects. Earnings for 2007 adjusted for the Venezuela impairment were $16,403 million, or $9.97 per share, versus net income of $15,550 million, or $9.66 per share, for 2006. Revenues were $187.4 billion, versus $183.7 billion a year ago.

The results for ConocoPhillips’ business segments follow.

Exploration and Production (E&P)

Fourth-quarter financial results: E&P fourth-quarter net income was $2,608 million, compared with third-quarter net income of $2,082 million, and fourth-quarter 2006 net income of $2,087 million. The increase from the third quarter of 2007 was primarily due to higher realized commodity prices, a deferred tax benefit from a federal rate reduction recently enacted in Canada, and the release of escrowed funds in connection with the extinguishment of the Hamaca project financing. This increase was partially offset by increased production taxes, primarily due to legislation enacted by the state of Alaska; lower net gains from asset rationalization efforts; and the absence of a benefit related to retroactive adjustments for crude oil quality differentials on Trans-Alaska Pipeline System shipments. The Alaska production tax legislation impact was $234 million after-tax, of which $95 million is associated with periods prior to the fourth quarter of 2007.

The increase from the fourth quarter of 2006 was primarily due to higher realized commodity prices, the Canadian tax-rate reduction, and the benefit from the release of the escrowed funds. This increase was partially offset by higher production taxes, including the Alaska production tax legislation impact, and lower volumes.

Daily production from the E&P segment, including Canadian Syncrude and excluding the LUKOIL Investment segment, averaged 1.84 million barrels of oil equivalent (BOE) per day, an increase from 1.76 million BOE per day in the previous quarter, and a decrease from 2.05 million BOE per day in the fourth quarter of 2006. The production increase from the previous quarter was primarily due to increased volumes from the United Kingdom and Alaska, reflecting seasonality and less planned and unplanned downtime.

The production decrease from the fourth quarter of 2006 was primarily due to expropriation of the company’s Venezuelan oil projects, ConocoPhillips’ exit from Dubai, the effect of asset dispositions, planned maintenance in the Timor Sea, and unplanned downtime in Nigeria.

Before-tax exploration expenses were $268 million in the fourth quarter of 2007, compared with $218 million in the previous quarter and $391 million in the fourth quarter of 2006.

Twelve-month financial results: E&P net income for 2007 was $4,615 million, or earnings of $9,127 million adjusted for the second-quarter 2007 Venezuela impairment. This compared with $9,848 million of net income for 2006. The decrease in earnings adjusted for the Venezuela impairment was primarily due to lower volumes; higher operating costs and taxes; and increased depreciation, depletion and amortization expense. These impacts were partially offset by higher realized prices and the net benefit from the company’s asset rationalization efforts.

Midstream

Fourth-quarter financial results: The Midstream segment had fourth-quarter net income of $162 million, up from $104 million in the previous quarter and $89 million in the fourth quarter of 2006. The increases from the previous quarter and the fourth quarter of 2006 were primarily due to higher realized natural gas liquids prices.

Twelve-month financial results: Midstream net income for 2007 was $453 million, down from $476 million in 2006. The decrease was primarily due to lower realized processing margins, partially offset by higher realized natural gas liquids prices.

Refining and Marketing (R&M)

Fourth-quarter financial results: R&M net income was $1,122 million in the fourth quarter, down from $1,307 million in the previous quarter and up from $919 million in the fourth quarter of 2006. The decrease from the previous quarter was primarily due to a lower net benefit from the company’s asset rationalization efforts and the absence of a third-quarter German tax legislation benefit. This decrease was partially offset by slightly higher realized worldwide refining margins. In the United States, although market indicators were lower, the company’s realized margins benefited from planned inventory reductions and improved refining market capture due to crude differentials and clean product yield.

The increase from the fourth quarter of 2006 was primarily due to higher realized worldwide refining margins and net benefits from the company’s asset rationalization efforts. This increase was partially offset by lower volumes due to the contribution of assets to the downstream business venture with EnCana and foreign currency impacts.

The domestic refining crude oil capacity utilization rate for the fourth quarter was 96 percent, a 1 percent decrease from the previous quarter due to higher turnaround activity, partially offset by lower unplanned downtime. The international crude oil capacity utilization rate was 92 percent, up from 84 percent in the previous quarter. The increase was primarily due to the return of the Wilhelmshaven, Germany, refinery to a full quarter of production.

Worldwide, R&M’s refining crude oil capacity utilization rate was 95 percent, up slightly from 94 percent in both the previous quarter and the fourth quarter of 2006. Before-tax turnaround costs were $80 million in the fourth quarter of 2007, up from $27 million in the previous quarter and down from $94 million in the fourth quarter of 2006.

Twelve-month financial results: R&M net income for 2007 was $5,923 million, up from $4,481 million in 2006. The increase was primarily due to the company’s asset rationalization efforts and higher realized worldwide refining margins. The benefits from higher market cracks and planned inventory reductions were partially offset by the impact of specific refinery configurations and crude differentials on the company’s market capture. In addition, net income benefited from higher Gulf and East Coast refining volumes and the German tax legislation benefit. The improvement in net income was partially offset by the net impact associated with the contribution of assets to the downstream business venture with EnCana, foreign currency impacts, and lower marketing sales volumes due to the marketing disposition program.

LUKOIL Investment

Fourth-quarter financial results: LUKOIL Investment segment net income was $649 million, up from $387 million in the previous quarter and $302 million in the fourth quarter of 2006. The results include ConocoPhillips’ estimated equity share of OAO LUKOIL’s (LUKOIL) income for the fourth quarter based on market indicators and LUKOIL’s publicly available operating results.

The increase in net income from the previous quarter was primarily due to higher estimated realized prices and the net impact from the alignment of estimated net income to LUKOIL’s reported results. This increase was partially offset by higher estimated extraction and export taxes and lower estimated volumes. The increase from the fourth quarter of 2006 was primarily due to higher estimated realized prices, partially offset by the higher estimated taxes, the net impact from the alignment of estimated net income to LUKOIL’s reported results, and higher estimated operating costs.

For the fourth quarter of 2007, ConocoPhillips estimated its equity share of LUKOIL production was 426,000 BOE per day and its share of LUKOIL daily refining crude oil throughput was 227,000 barrels per day.

Twelve-month financial results: Net income for 2007 was $1,818 million, up from $1,425 million in 2006. The increase was primarily due to higher estimated realized prices, higher estimated volumes, and ConocoPhillips’ increased equity ownership. This increase was partially offset by the higher estimated taxes and operating costs, as well as the net impact from the alignment of estimated net income to LUKOIL’s reported results.

Chemicals

Fourth-quarter financial results: The Chemicals segment had fourth-quarter net income of $99 million, which included a one-time, capital-loss tax benefit of $65 million. Net income for the segment was $110 million in the third quarter of 2007 and $98 million in the fourth quarter of 2006. Excluding the one-time tax benefit, the decreases from the previous quarter and the fourth quarter of 2006 were primarily due to lower olefins and polyolefins margins, and to a lesser extent, lower margins for aromatics and styrenics.

Twelve-month financial results: Net income for 2007 was $359 million, down from $492 million in 2006. The decrease was primarily due to lower olefins and polyolefins margins and higher turnaround and repair costs, partially offset by the one-time tax benefit.

Emerging Businesses

The Emerging Businesses segment had net income of $2 million in the fourth quarter, down from $3 million in the previous quarter and $8 million in the fourth quarter of 2006. The decrease from the fourth quarter of 2006 was primarily due to higher spending associated with the company’s alternative energy programs.

Corporate and Other

Fourth-quarter Corporate expenses were $271 million after-tax, down from $320 million in the previous quarter and $306 million in the fourth quarter of 2006. The decreases from the previous quarter and the fourth quarter of 2006 were primarily due to lower net interest expense and lower acquisition-related charges, partially offset by net foreign exchange losses.

The company’s effective tax rate for the quarter was 40.3 percent. This compared with 42.3 percent in the previous quarter and 46.0 percent in the fourth quarter of 2006.

Outlook

Mr. Mulva concluded:

“We had another solid quarter, which contributed to a strong year in terms of operating performance and market conditions, enabling us to achieve positive financial results. We are delivering on our commitments, and we remain focused on continuous improvement in all of our operations.

“We were pleased to recently advance two important initiatives. Before year-end, ConocoPhillips acquired a 50 percent equity interest in the Keystone crude oil pipeline. This pipeline will play a critical role in supplying North American crude oil to refineries in the U.S. mid-continent region. In addition, we signed a Memorandum of Understanding with Qatar Petroleum International to pursue and develop international energy projects outside of Qatar, which represents an exciting opportunity for both companies.

“ConocoPhillips also recently announced its decision to join and support the World Bank’s Global Gas Flaring Reduction partnership. We are committed to minimizing the environmental impact and improving the energy and material efficiency of our operations, and are confident this partnership will lead to major progress in reducing gas flaring around the world.

“As planned, we repurchased $7 billion of ConocoPhillips common stock during the year, and the number of weighted-average diluted shares outstanding during the fourth quarter was 1,612 million. For the first quarter of 2008, we anticipate share repurchases will be between $2 billion and $3 billion.

“Our asset rationalization program remains on target, with proceeds of approximately $3.8 billion since inception. We expect to continue our rationalization efforts in 2008, including the completion of the disposition of our U.S. retail assets. We will evaluate additional opportunities to optimize and strengthen our asset portfolio as the year progresses.

“We anticipate the company’s first-quarter E&P segment production will be approximately 1.8 million BOE per day, and we expect exploration expenses to be in the range of $250 million to $300 million for the quarter. Downstream, we anticipate the worldwide refining crude oil capacity utilization rate in the first quarter to be in the mid-90-percent range. Turnaround costs are expected to be approximately $125 million before-tax for the quarter.

“Our previously announced capital program of $15.3 billion for 2008 supports our value-generating growth strategies, as well as a complementary financial strategy designed to strengthen distributions to shareholders through increased dividends and continued share repurchases.

“We look forward to discussing our 2008 capital and operating plans in greater detail when we meet with the investment community on March 12 in New York.”

ConocoPhillips is an international, integrated energy company with interests around the world. Headquartered in Houston, the company had approximately 32,600 employees, $178 billion of assets, and $187 billion of revenues as of December 31, 2007. For more information, go to www.conocophillips.com.

ConocoPhillips’ quarterly conference call is scheduled for 11 a.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.conocophillips.com and click on the “Investor Information” link.

For financial and operational tables and detailed supplemental information, go to

www.conocophillips.com/investor/financial_reports/earnings_reports

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. 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, crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax 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 (SEC). 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.

Cautionary Note to U.S. Investors -- The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Production is distinguished from oil and gas production because SEC regulations define Syncrude as mining-related and not part of conventional oil and natural gas reserves. The company uses certain terms in this release, such as "including Canadian Syncrude," and “resources” that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosures in the company’s periodic filings with the SEC, available from the company at 600 North Dairy Ashford Road, Houston, Texas 77079 and the company’s Web site at www.conocophillips.com/investor/sec. This information also can be obtained from the SEC by calling 1-800-SEC-0330.

CONTACT:
ConocoPhillips, Houston
Becky Johnson, 281-293-6743 (media)
or
Gary Russell, 212-207-1996 (investors)

Exhibit 99.2

ConocoPhillips
Houston, Texas 77079

     
Preliminary
FINANCIAL HIGHLIGHTS
Millions of Dollars
Three Months Ended Twelve Months Ended
December 31 December 31
  2007   2006     2007   2006  
Revenues and Other Income
Sales and other operating revenues* $ 52,685 41,519 $ 187,437 183,650
Equity in earnings of affiliates 1,338 868 5,087 4,188
Other income   275   148     1,971   685  
  54,298   42,535     194,495   188,523  
Costs and Expenses
Purchased crude oil, natural gas and products 35,032 25,445 123,429 118,899
Production and operating expenses 3,014 2,864 10,683 10,413
Selling, general and administrative expenses 606 650 2,306 2,476
Exploration expenses 268 391 1,007 834
Depreciation, depletion and amortization 2,206 2,002 8,298 7,284
Impairment - expropriated assets - - 4,588 -
Impairments 157 366 442 683
Taxes other than income taxes* 5,336 4,526 18,990 18,187
Accretion on discounted liabilities 100 74 341 281
Interest and debt expense 236 304 1,253 1,087
Foreign currency transaction gains (3 ) (20 ) (201 ) (30 )
Minority interests   22   16     87   76  
  46,974   36,618     171,223   160,190  
 
Income before income taxes 7,324 5,917 23,272 28,333
Provision for income taxes   2,953   2,720     11,381   12,783  
Net Income   4,371   3,197     11,891   15,550  
 
Net Income per share of common stock (dollars)
Basic $ 2.75   1.94   $ 7.32   9.80  
Diluted $ 2.71   1.91   $ 7.22   9.66  
 
Average common shares outstanding (in thousands)
Basic 1,590,957 1,649,960 1,623,994 1,585,982
Diluted 1,612,179 1,672,375 1,645,919 1,609,530
 
 
*Includes excise taxes on petroleum products sales: $ 4,073 4,062 $ 15,937 16,072
1

ConocoPhillips
Houston, Texas 77079

     
Preliminary
SELECTED FINANCIAL DATA
Millions of Dollars
Three Months Ended Twelve Months Ended
December 31 December 31
  2007   2006     2007   2006  
SUMMARY OF NET INCOME (LOSS)
E&P
United States $ 1,052 872 $ 4,248 4,348
International   1,556   1,215     367   5,500  
Total E&P   2,608   2,087     4,615   9,848  
Midstream   162   89     453   476  
R&M
United States 967 741 4,615 3,915
International   155   178     1,308   566  
Total R&M   1,122   919     5,923   4,481  
LUKOIL Investment 649 302 1,818 1,425
Chemicals 99 98 359 492
Emerging Businesses 2 8 (8 ) 15
Corporate and other   (271 ) (306 )   (1,269 ) (1,187 )
Consolidated $ 4,371   3,197   $ 11,891   15,550  
2

ConocoPhillips
Houston, Texas 77079

 
Preliminary
SELECTED FINANCIAL DATA
Three Months Ended Twelve Months Ended
December 31 December 31
  2007   2006     2007   2006  
 
 
Effective tax rate % 40.3 % 46.0 48.9 % 45.1
 
Millions of Dollars
FOREIGN CURRENCY GAINS (LOSSES)
AFTER-TAX
E&P $ 34 3 $ 216 (44 )
Midstream (1 ) - (2 ) -
R&M (11 ) 35 (13 ) 60
LUKOIL Investment 2 (2 ) 5 -
Chemicals - - - -
Emerging Businesses - 1 1 1
Corporate and other   (55 ) 61     (120 ) 65  
$ (31 ) 98   $ 87   82  
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 4,371 3,197 $ 11,891 15,550
Depreciation, depletion and amortization 2,206 2,002 8,298 7,284
Impairment - expropriated assets - - 4,588 -
Impairments 157 366 442 683
Dry hole costs and leasehold impairments 108 210 463 351
Accretion on discounted liabilities 100 74 341 281
Deferred taxes (212 ) (10 ) (157 ) 263
Undistributed equity earnings (351 ) 62 (1,823 ) (945 )
Gain on asset dispositions (32 ) (52 ) (1,348 ) (116 )
Other 77 95 105 (201 )
Working capital adjustments   496   (307 )   1,750   (1,634 )
Net cash provided by operating activities $ 6,920   5,637   $ 24,550   21,516  
 
CAPITAL EXPENDITURES AND INVESTMENTS
E&P
United States $ 1,232 825 $ 3,788 2,828
International   1,808   1,856     6,147   6,685  
3,040 2,681 9,935 9,513
Midstream 3 2 5 4
R&M 634 532 1,386 3,016
LUKOIL Investment - 753 - 2,715
Chemicals - - - -
Emerging Businesses 130 37 257 83
Corporate and other   77   78     208   265  
$ 3,884   4,083   $ 11,791   15,596  
 
 
OTHER
At December 31, 2007 At December 31, 2006
Total debt

$21,687

27,134
Common stockholders' equity

88,983

82,646
3

ConocoPhillips
Houston, Texas 77079

 
Preliminary            
OPERATING HIGHLIGHTS
BY SEGMENT
 

Three Months Ended

Twelve Months Ended

December 31 December 31
2007 2006 2007 2006
Thousands of Barrels Daily
E&P
Crude oil produced
United States
Alaska 257 257 261 263
Lower 48 98 113 102 104
355 370 363 367
Norway 158 185 162 189
United Kingdom 50 56 48 56
Canada 21 27 19 25
China 25 36 31 33
Indonesia 11 10 12 12
Vietnam 22 23 22 25
Timor Sea 19 27 22 36
Libya 47 56 47 50
Other 44 69 44 63
Total consolidated 752 859 770 856
Equity affiliates
Canada 27 - 27 -
Russia 16 14 15 15
Venezuela - 99 42 101
Total Worldwide 795 972 854 972
 
Syncrude 23 26 23 21
 
Natural gas liquids produced
United States
Alaska* 19 17 19 17
Lower 48** 106 72 79 62
125 89 98 79
Norway 12 8 8 9
United Kingdom 8 6 6 4
Canada 25 31 27 25
Timor Sea 12 15 12 18
Other 5 1 4 1
Total Worldwide 187 150 155 136
 

*Includes reinjected volumes sold lease-to-lease:

13 9 14 11
**Fourth quarter of 2007 includes 22 MBD related to out-of-period adjustments for the first three quarters in 2007. The amounts attributable to the first, second and third quarters were 5, 8, and 9 MBD, respectively. Fourth quarter NGL production in L48 was 84 MBD excluding the adjustment.
 
Millions of Cubic Feet Daily
Natural gas produced*
United States
Alaska 102 131 110 145
Lower 48 2,101 2,250 2,182 2,028
2,203 2,381 2,292 2,173
Norway 270 291 236 270
United Kingdom 723 734 673 761
Canada 1,073 1,140 1,106 983
China 8 9 11 7
Timor Sea 207 243 223 235
Indonesia 310 315 330 319
Vietnam 14 20 15 21
Libya 9 17 8 4
Other 164 237 188 188
Total consolidated 4,981 5,387 5,082 4,961
Equity affiliates
Venezuela - 7 5 9
Total Worldwide 4,981 5,394 5,087 4,970
 
*Represents quantities available for sale. Excludes gas equivalent of NGL shown above.
 
Liquefied natural gas sales 426 470 468 423
 
LUKOIL Investment
Production (MBOE/D)* 426 438 444 401
Refinery crude oil throughput (MB/D)* 227 220 214 179
*Represents our estimated net share of LUKOIL.
4

ConocoPhillips
Houston, Texas 77079

     
Preliminary
OPERATING HIGHLIGHTS
Three Months Ended Twelve Months Ended
December 31 December 31
2007 2006 2007 2006
E&P
Per Unit
Average sales prices
Crude oil (per barrel)
United States
Alaska $87.88 57.00 $69.75 62.66
Lower 48 78.98 51.26 63.49 57.04
Total U.S. 85.31 55.26 68.00 61.09
International 87.09 58.06 70.79 63.38
Total consolidated 86.28 56.87 69.47 62.39
Equity affiliates* 52.45 41.79 45.31 46.01
Total Worldwide 84.53 55.10 67.11 60.37
Natural gas (per MCF)
United States
Alaska $4.12

4.05

$3.68

3.59

Lower 48 5.88 5.85 5.99 6.14
Total U.S. 5.86 5.84 5.98 6.11
International 7.31 6.38 6.51 6.27
Total consolidated 6.66 6.13 6.26 6.20
Equity affiliates* - 0.32 0.30 0.30
Total Worldwide 6.66 6.12 6.26 6.19
*Excludes our equity share of LUKOIL reported in the LUKOIL Investment segment.
 
 
Midstream
Thousands of Barrels Daily
Natural gas liquids extracted
Consolidated
United States 24 21 22 22
International - - - -
Equity affiliates
United States 189 181 181 181
International 8 7 8 6
221 209 211 209
 
 
 
Per Barrel
U.S. product prices
Weighted average NGL**
Consolidated $ 60.19 37.41 $ 47.93 40.22
DCP 58.60 36.34 46.80 39.45
 
**Prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted by natural gas liquids component and location mix.
5

ConocoPhillips
Houston, Texas 77079

       
 
Three Months Ended Twelve Months Ended
December 31 December 31
2007 2006 2007 2006

Thousands of Barrels Daily

Thousands of Barrels Daily

R&M
United States*
Crude oil capacity** 2,037 2,208 2,035 2,208
Crude oil runs 1,961 2,128 1,944 2,025
Refinery production 2,165 2,325 2,146 2,213
 
International*
Crude oil capacity** 669 693 687 651
Crude oil runs 617 605 616 591
Refinery production 633 633 633 618
 
U.S. petroleum products sales volumes
Gasoline 1,207 1,416 1,244 1,336
Distillates 929 921 872 850
Other products 309 535 432 531
2,445 2,872 2,548 2,717
International 710 720 697 759
3,155 3,592 3,245 3,476
 
Per Gallon Per Gallon
U.S. average sales prices***
Gasoline-wholesale $ 2.41 1.74 $ 2.27 2.04
Gasoline-retail 2.54 1.89 2.42 2.18
Distillates-wholesale 2.67 1.95 2.29 2.11
 
 
*Includes ConocoPhillips' share of equity affiliates, except for our share of LUKOIL, which is reported in the LUKOIL Investment segment.
 
**Weighted-average crude oil capacity for the three-and twelve-month periods.
Actual capacity at December 31, 2007 and 2006, was 2,037,000 and,2,208,000 barrels per day, respectively, for our domestic refineries, 669,000 and 693,000 barrels per day, respectively, for our international refineries and 2,706,000 and 2,901,000 barrels per day, respectively, worldwide.
 
***Excludes excise taxes.

6

Exhibit 99.3

       

SUMMARY OF NET INCOME (LOSS) BY SEGMENT

 
Millions of Dollars
      2006         2007    

1st
Qtr

 

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
Income (Loss) from Continuing Operations
U.S. E&P

1,181

1,300 995 872 4,348 916 1,055 1,225 1,052 4,248
International E&P    

1,372

  2,004   909   1,215   5,500   1,413   (3,459 ) 857   1,556   367  
Total E&P      

2,553

  3,304   1,904   2,087   9,848   2,329   (2,404 ) 2,082   2,608   4,615  
 
Midstream      

110

  108   169   89   476   85   102   104   162   453  
 
U.S. R&M

297

1,433 1,444 741 3,915 896 1,879 873 967 4,615
International R&M    

93

  275   20   178   566   240   479   434   155   1,308  
Total R&M      

390

  1,708   1,464   919   4,481   1,136   2,358   1,307   1,122   5,923  
 
LUKOIL Investment

249

387 487 302 1,425 256 526 387 649 1,818
 
Chemicals

149

103 142 98 492 82 68 110 99 359
 
Emerging Businesses

8

(12 ) 11 8 15 (1 ) (12 ) 3 2 (8 )
 
Corporate and Other

(168

) (412 ) (301 ) (306 ) (1,187 ) (341 ) (337 ) (320 ) (271 ) (1,269 )
                             
Consolidated    

3,291

  5,186   3,876   3,197   15,550   3,546   301   3,673   4,371   11,891  
 
Cumulative Effect of Accounting Changes
U.S. E&P

-

- - - - - - - - -
International E&P    

-

  -   -   -   -   -   -   -   -   -  
Total E&P       -   -   -   -   -   -   -   -   -   -  
 
Midstream       -   -   -   -   -   -   -   -   -   -  
 
U.S. R&M - - - - - - - - - -
International R&M     -   -   -   -   -   -   -   -   -   -  
Total R&M       -   -   -   -   -   -   -   -   -   -  
 
LUKOIL Investment - - - - - - - - - -
 
Chemicals - - - - - - - - - -
 
Emerging Businesses - - - - - - - - - -
 
Corporate and Other - - - - - - - - - -
                             
Consolidated     -   -   -   -   -   -   -   -   -   -  
 
Income (Loss) from Discontinued Operations
Corporate and Other   -   -   -   -   -   -   -   -   -   -  
 
 
Net Income (Loss)
U.S. E&P 1,181 1,300 995 872 4,348 916 1,055 1,225 1,052 4,248
International E&P     1,372   2,004   909   1,215   5,500   1,413   (3,459 ) 857   1,556   367  
Total E&P       2,553   3,304   1,904   2,087   9,848   2,329   (2,404 ) 2,082   2,608   4,615  
 
Midstream       110   108   169   89   476   85   102   104   162   453  
 
U.S. R&M 297 1,433 1,444 741 3,915 896 1,879 873 967 4,615
International R&M     93   275   20   178   566   240   479   434   155   1,308  
Total R&M       390   1,708   1,464   919   4,481   1,136   2,358   1,307   1,122   5,923  
 
LUKOIL Investment 249 387 487 302 1,425 256 526 387 649 1,818
 
Chemicals 149 103 142 98 492 82 68 110 99 359
 
Emerging Businesses 8 (12 ) 11 8 15 (1 ) (12 ) 3 2 (8 )
 
Corporate and Other (168 ) (412 ) (301 ) (306 ) (1,187 ) (341 ) (337 ) (320 ) (271 ) (1,269 )
                             
Consolidated     3,291   5,186   3,876   3,197   15,550   3,546   301   3,673   4,371   11,891  
 
 
 
 
Page 1 of 12

 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
Millions of Dollars
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
 

Income from Continuing Operations
Before Income Taxes

U.S. E&P 1,853 2,062 1,598 1,380 6,893 1,425 1,627 1,867 1,560 6,479
International E&P     2,862   3,814   3,460   2,948   13,084   2,894   (1,976 ) 2,357   3,464   6,739  
Total E&P       4,715   5,876   5,058   4,328   19,977   4,319   (349 ) 4,224   5,024   13,218  
 
Midstream       173   187   214   150   724   132   156   157   245   690  
 
U.S. R&M 512 2,260 2,282 1,195 6,249 1,400 2,891 1,369 1,526 7,186
International R&M     112   343   107   222   784   218   633   403   167   1,421  
Total R&M       624   2,603   2,389   1,417   7,033   1,618   3,524   1,772   1,693   8,607  
 
LUKOIL Investment 257 398 496 311 1,462 262 542 396 663 1,863
 
Chemicals 209 134 191 128 662 107 80 140 20 347
 
Emerging Businesses 9 (20 ) 14 11 14 (3 ) (20 ) (17 ) (2 ) (42 )
 
Corporate and Other (190 ) (496 ) (425 ) (428 ) (1,539 ) (369 ) (415 ) (308 ) (319 ) (1,411 )
                           
Consolidated     5,797   8,682   7,937   5,917   28,333   6,066   3,518   6,364   7,324   23,272  
 
 

Income from Continuing Operations
Effective Tax Rates

U.S. E&P 36.3 % 37.0 % 37.7 % 36.8 % 36.9 % 35.7 % 35.2 % 34.4 % 32.6 % 34.4 %
International E&P     52.1 % 47.5 % 73.7 % 58.8 % 58.0 % 51.2 % -   63.6 % 55.1 % 94.6 %
Total E&P       45.9 % 43.8 % 62.4 % 51.8 % 50.7 % 46.1 % -   50.7 % 48.1 % 65.1 %
 
Midstream       36.4 % 42.2 % 21.0 % 40.7 % 34.3 % 35.6 % 34.6 % 33.8 % 33.9 % 34.3 %
 
U.S. R&M 42.0 % 36.6 % 36.7 % 38.0 % 37.3 % 36.0 % 35.0 % 36.2 % 36.6 % 35.8 %
International R&M     17.0 % 19.8 % 81.3 % 19.8 % 27.8 % -10.1 % 24.3 % -7.7 % 7.2 % 8.0 %
Total R&M       37.5 % 34.4 % 38.7 % 35.1 % 36.3 % 29.8 % 33.1 % 26.2 % 33.7 % 31.2 %
 
LUKOIL Investment 3.1 % 2.8 % 1.8 % 2.9 % 2.5 % 2.3 % 3.0 % 2.3 % 2.1 % 2.4 %
 
Chemicals 28.7 % 23.1 % 25.7 % 23.4 % 25.7 % 23.4 % 15.0 % 21.4 % - -3.5 %
 
Emerging Businesses 11.1 % 40.0 % 21.4 % 27.3 % -7.1 % 66.7 % 40.0 % - - 81.0 %
 
Corporate and Other 11.6 % 16.9 % 29.2 % 28.5 % 22.9 % 7.6 % 18.8 % -3.9 % 15.0 % 10.1 %
                           
Consolidated     43.2 % 40.3 % 51.2 % 46.0 % 45.1 % 41.5 % 91.4 % 42.3 % 40.3 % 48.9 %

 

 

 

 

 

 

 
 
 
Page 2 of 12

 
CERTAIN ITEMS INCLUDED IN INCOME FROM CONTINUING OPERATIONS (AFTER-TAX)
 
Millions of Dollars
    2006           2007      

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
U.S. E&P
Gain (loss) on asset sales - 15 - 33 48 36 11 - 25 72
FERC Rulings - - - - - - - 94 - 94
Impairments - (26 ) - (10 ) (36 ) - - - (45 ) (45 )
Insurance premium adjustments (2 ) - (5 ) (4 ) (11 ) - - - - -
Pending claims and settlements - - 18 - 18 - - - - -
Business interruption insurance claims recovery - - 15 - 15 - - - 13 13
Enacted tax legislation   -   2   -   -   2   -   -   -   -   -  
Total       (2 ) (9 ) 28   19   36   36   11   94   (7 ) 134  
 
International E&P
Gain (loss) on asset sales - 25 - - 25 407 (82 ) 164 147 636
Insurance premium adjustments (10 ) - (10 ) (8 ) (28 ) - - - - -
International tax law changes - 401 (270 ) (31 ) 100 38 - - 171 209
Impairment - expropriated assets - - - - - - (4,512 ) - - (4,512 )
Impairments - - (4 ) (104 ) (108 ) (88 ) (33 ) (32 ) (75 ) (228 )
Business interruption insurance claims recovery - - 11 3 14 - - - - -
Pending claims and settlements -   -   -   25   25   -   -   -   28   28  
Total       (10 ) 426   (273 ) (115 ) 28   357   (4,627 ) 132   271   (3,867 )
 
Total E&P       (12 ) 417   (245 ) (96 ) 64   393   (4,616 ) 226   264   (3,733 )
 
Midstream
Business interruption insurance claims recovery - - - 5 5 - - - - -
DCP Midstream's sale of TEPPCO general ptnr - - 30 - 30 - - - - -
Enacted tax legislation   -   (6 ) -   -   (6 ) -   -   -   -   -  
Total       -   (6 ) 30   5   29   -   -   -   -   -  
 
U.S. R&M
Gain (loss) on asset sales - - - - - - - 2 14 16
Impairments - - (35 ) (192 ) (227 ) (13 ) - 3 (2 ) (12 )
Enacted tax legislation - 34 - - 34 - - - - -
Insurance premium adjustments (6 ) - (7 ) (6 ) (19 ) - - - - -
Business interruption insurance claims recovery -   -   111   -   111   -   -   -   10   10  
Total       (6 ) 34   69   (198 ) (101 ) (13 ) -   5   22   14  
 
International R&M
Gain (loss) on asset sales - - - - - - 163 158 2 323
Impairments - - (214 ) - (214 ) 148 (5 ) (30 ) 11 124
Germany tax rate change - - - - - - - 141 - 141
Insurance premium adjustments (1 ) -   (1 ) (1 ) (3 ) -   -   -   -   -  
Total       (1 ) -   (215 ) (1 ) (217 ) 148   158   269   13   588  
 
Total R&M       (7 ) 34   (146 ) (199 ) (318 ) 135   158   275   35   603  
 
LUKOIL Investment
Ownership interest adjustment -   -   23   -   23   -   -   -   -   -  
Total       -   -   23   -   23   -   -   -   -   -  
 
Chemicals
Business interruption insurance claims recovery - - 7 13 20 - - - - -
Asset retirements recorded by CPChem - - - (16 ) (16 ) - (21 ) - - (21 )
Tax benefit on capital loss - - - - - - - - 65 65
Enacted tax legislation   -   (5 ) -   -   (5 ) -   -   -   -   -  
Total       -   (5 ) 7   (3 ) (1 ) -   (21 ) -   65   44  
 
Emerging Businesses
Property write-down   -   (14 ) -   -   (14 ) -   -   -   -   -  
Total       -   (14 ) -   -   (14 ) -   -   -   -   -  
 
Corporate and Other
Acquisition-related expenses (5 ) (39 ) (32 ) (22 ) (98 ) (13 ) (16 ) (11 ) (4 ) (44 )
FERC Rulings - - - - - - - (14 ) - (14 )
Premium on early debt retirement - - - - - (14 ) - - - (14 )
Pending claims and settlements (15 ) - - - (15 ) - - - - -
Canada tax law change   -   (10 ) -   -   (10 ) -   -   -   15   15  
Total       (20 ) (49 ) (32 ) (22 ) (123 ) (27 ) (16 ) (25 ) 11   (57 )
 
Total Company     (39 ) 377   (363 ) (315 ) (340 ) 501   (4,495 ) 475   375   (3,143 )
 
 
 
Page 3 of 12

 
CASH FLOW INFORMATION
 
Millions of Dollars
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 

Cash Flows from Operating Activities

Net income 3,291 5,186 3,876 3,197 15,550 3,546 301 3,673 4,371 11,891
DD&A and impairments 1,180 2,015 2,404 2,368 7,967 2,023 2,114 2,240 2,363 8,740
Impairment - expropriated assets - - - - - - 4,588 - - 4,588
Dry hole costs and leasehold impairments 38 47 56 210 351 148 133 74 108 463
Accretion on discounted liabilities 60 73 74 74 281 79 81 81 100 341
Deferred income taxes 168 (390 ) 495 (10 ) 263 77 103 (125 ) (212 ) (157 )
Undistributed equity earnings (67 ) (687 ) (253 ) 62 (945 ) (557 ) (678 ) (237 ) (351 ) (1,823 )
Net gain on asset dispositions (3 ) (53 ) (8 ) (52 ) (116 ) (499 ) (428 ) (389 ) (32 ) (1,348 )
Other (203 ) 189 (282 ) 95 (201 ) (94 ) 182 (60 ) 77 105
Net working capital changes 336   (1,536 ) (127 ) (307 ) (1,634 ) 2,150   (1,630 ) 734   496   1,750  
Net Cash Provided by
Operating Activities   4,800   4,844   6,235   5,637   21,516   6,873   4,766   5,991   6,920   24,550  
 
Cash Flows from Investing Activities
Capital expenditures and investments*:
E&P (2,206 ) (2,172 ) (2,454 ) (2,681 ) (9,513 ) (2,570 ) (2,148 ) (2,177 ) (3,040 ) (9,935 )
Midstream (1 ) (1 ) - (2 ) (4 ) - (2 ) - (3 ) (5 )
R&M (1,635 ) (475 ) (374 ) (532 ) (3,016 ) (205 ) (271 ) (276 ) (634 ) (1,386 )
LUKOIL Investment (612 ) (648 ) (702 ) (753 ) (2,715 ) - - - - -
Chemicals - - - - - - - - - -
Emerging Businesses (12 ) (28 ) (6 ) (37 ) (83 ) (31 ) (34 ) (62 ) (130 ) (257 )
Corporate and Other   (48 ) (78 ) (61 ) (78 ) (265 ) (41 ) (45 ) (45 ) (77 ) (208 )
Total capital expend. & investments (4,514 ) (3,402 ) (3,597 ) (4,083 ) (15,596 ) (2,847 ) (2,500 ) (2,560 ) (3,884 ) (11,791 )
Acquisition of Burlington Resources Inc.* (14,190 ) (94 ) (1 ) - (14,285 ) - - - - -
Proceeds from asset dispositions 5 68 173 299 545 1,343 872 842 515 3,572
Long-term advances to/collections from
affiliates and other investments (115 ) (151 ) (251 ) (140 ) (657 ) (144 ) (97 ) (118 ) 16   (343 )
Net Cash Used for Investing Activities (18,814 ) (3,579 ) (3,676 ) (3,924 ) (29,993 ) (1,648 ) (1,725 ) (1,836 ) (3,353 ) (8,562 )
 
Cash Flows from Financing Activities
Net issuance (repayment) of debt 15,324 (2,756 ) (1,630 ) (706 ) 10,232 (3,491 ) (865 ) (961 ) (202 ) (5,519 )
Issuance of stock 40 64 41 75 220 40 141 70 34 285
Repurchase of stock - (425 ) (250 ) (250 ) (925 ) (1,000 ) (1,000 ) (2,501 ) (2,500 ) (7,001 )
Dividends (496 ) (595 ) (593 ) (593 ) (2,277 ) (674 ) (668 ) (667 ) (652 ) (2,661 )
Other       (27 ) (20 ) (76 ) (62 ) (185 ) (49 ) (104 ) (136 ) (155 ) (444 )
Net Cash Provided by (Used for)
Financing Activities   14,841   (3,732 ) (2,508 ) (1,536 ) 7,065   (5,174 ) (2,496 ) (4,195 ) (3,475 ) (15,340 )
 
Effect of Exchange Rate Changes (33 ) 113   (9 ) (56 ) 15   (8 ) 6   8   (15 ) (9 )
 
Net Change in Cash
and Cash Equivalents 794 (2,354 ) 42 121 (1,397 ) 43 551 (32 ) 77 639
Cash and cash equivalents
at beginning of period   2,214   3,008   654   696   2,214   817   860   1,411   1,379   817  
Cash and Cash Equivalents
at End of Period     3,008   654   696   817   817   860   1,411   1,379   1,456   1,456  
* Net of cash acquired.
 
Page 4 of 12

 
TOTAL E&P
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
E&P Net Income (Loss) ($ Millions) 2,553 3,304 1,904 2,087 9,848 2,329 (2,404 ) 2,082 2,608 4,615
 
Production
Total, Including Equity Affiliates
and Canadian Syncrude (MBOE/D) 1,610 2,134 2,036 2,047 1,957 2,020 1,910   1,759 1,835 1,880
E&P segment plus LUKOIL Investment segment: 1,932 2,537 2,472 2,485 2,358 2,465 2,383   2,191 2,261 2,324
 
Crude Oil and Condensate (MB/D)
Consolidated 777 924 865 859 856 840 760 730 752 770
Equity affiliates     126 121 104 113 116 120 128   44 43 84
Total       903 1,045 969 972 972 960 888   774 795 854
Sales of crude oil produced (MB/D) 913 1,040 953 988 973 949 876   803 792 854
 
Natural Gas Liquids (MB/D) 97 152 146 150 136   150 145   139 187 155
 
Natural Gas (MMCF/D)
Consolidated 3,554 5,498 5,379 5,387 4,961 5,313 5,124 4,916 4,981 5,082
Equity affiliates     11 10 8 7 9 9 9   - - 5
Total       3,565 5,508 5,387 5,394 4,970 5,322 5,133   4,916 4,981 5,087
 
Canadian Syncrude (MB/D) 16 19 23 26 21 23 21   27 23 23
 
Industry Prices (Platt's)
Crude Oil ($/bbl)
WTI spot 63.28 70.40 70.38 59.94 66.00 57.99 64.89 75.48 90.66 72.25
Brent dated 61.75 69.62 69.49 59.68 65.14 57.76 68.76 74.87 88.69 72.52
Natural Gas ($/mmbtu)
Henry Hub -- First of Month 9.01 6.80 6.58 6.56 7.24 6.77 7.55   6.16 6.97 6.86
 
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Consolidated 58.97 65.89 67.37 56.87 62.39 55.17 64.55 73.01 86.28 69.47
Equity affiliates 43.38 52.28 46.98 41.79 46.01 40.02 47.74 44.60 52.45 45.31
Total       56.63 64.34 65.04 55.10 60.37 53.38 61.97   71.34 84.53 67.11
 
Natural Gas Liquids ($/bbl) 43.13 41.75 43.62 38.23 41.50 38.56 44.80   48.09 54.82 47.13
 
Natural Gas ($/mcf)
Consolidated 7.26 5.86 5.92 6.13 6.20 6.36 6.45 5.56 6.66 6.26
Equity affiliates 0.23 0.36 0.32 0.32 0.30 0.29 0.30 - - 0.30
Total       7.24 5.85 5.91 6.12 6.19 6.35 6.44   5.56 6.66 6.26
 
Exploration Charges ($ Millions)
Dry Holes 19 15 18 142 194 62 74 23 50 209
Lease Impairments   19 33 37 68 157 86 59   51 58 254
Total Non-Cash Charges 38 48 55 210 351 148 133 74 108 463
Other (G&G and Lease Rentals) 74 86 142 181 483 114 126   144 160 544
Total Exploration Charges   112 134 197 391 834 262 259   218 268 1,007
 
Depreciation, Depletion and
Amortization (DD&A) ($ Millions) 910 1,659 1,860 1,703 6,132 1,802 1,790   1,828 1,971 7,391
 
Page 5 of 12

 
U.S. E&P
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
U.S. E&P Net Income ($ Millions) 1,181 1,300   995 872 4,348 916 1,055 1,225 1,052 4,248
 
Alaska ($ Millions)     692 760   425 470 2,347 507 535 765 448 2,255
Lower 48 ($ Millions)   489 540   570 402 2,001 409 520 460 604 1,993
 
Production
Total U.S. (MBOE/D)   636 894   846 856 808 855 848 821 847 843
 
Crude Oil and Condensate (MB/D)
Alaska 283 279 234 257 263 276 267 241 257 261
Lower 48       64 120   119 113 104 104 105 103 98 102
Total       347 399   353 370 367 380 372 344 355 363
Sales of crude oil produced (MB/D) 363 398   355 371 371 372 370 380 340 365
 
Natural Gas Liquids (MB/D)*
Alaska 22 20 11 17 17 22 18 15 19 19
Lower 48**     29 70   75 72 62 68 71 73 106 79
Total       51 90   86 89 79 90 89 88 125 98
*Includes reinjection volumes sold lease-to-lease: 14 14   7 9 11 16 15 11 13 14
 
Natural Gas (MMCF/D)
Alaska 163 163 123 131 145 122 100 116 102 110
Lower 48       1,264 2,265   2,320 2,250 2,028 2,190 2,219 2,219 2,101 2,182
Total       1,427 2,428   2,443 2,381 2,173 2,312 2,319 2,335 2,203 2,292
 
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Alaska
North Slope     52.92 59.89   62.85 51.11 56.47 48.83 56.31 66.54 81.17 62.91
West Coast     58.87 66.02   69.66 57.00 62.66 55.50 63.26 73.57 87.88 69.75
Lower 48       52.21 59.63   62.45 51.26 57.04 49.32 58.50 67.77 78.98 63.49
Total U.S.       57.70 64.09   67.25 55.26 61.09 53.78 61.91 72.00 85.31 68.00
 
Natural Gas Liquids ($/bbl)
Alaska       58.88 65.25   67.12 57.03 61.06 55.27 63.52 73.40 88.12 71.85
Lower 48***     38.20 38.29   41.34 34.51 38.10 36.46 43.29 46.37 48.88 44.43
Total U.S.       43.00 40.45   42.68 36.74 40.35 37.86 44.17 47.73 51.23 46.00
Natural Gas ($/mcf)
Alaska       3.58 3.42   3.36 4.05 3.59 4.19 4.04 2.15 4.12 3.68
Lower 48       7.50 5.81   6.00 5.85 6.14 6.21 6.51 5.38 5.88 5.99
Total U.S.       7.42 5.78   5.98 5.84 6.11 6.19 6.49 5.36 5.86 5.98
 
Kenai, Alaska LNG Sales
Volume (MMCF/D)   128 126   110 88 113 104 72 88 78 85
Sales price per MCF   6.45 5.16   6.16 6.33 6.00 5.83 5.86 6.01 7.28 6.21
 
U.S. Exploration Charges ($ Millions)
Dry Holes 8 3 8 67 86 13 36 19 14 82
Lease Impairments   8 15   13 46 82 43 43 43 40 169
Total Non-Cash Charges 16 18 21 113 168 56 79 62 54 251
Other (G&G and Lease Rentals) 14 1   66 55 136 26 40 57 50 173
Total U.S. Exploration Charges 30 19   87 168 304 82 119 119 104 424
Alaska Only     18 (7 ) 50 21 82 17 32 31 26 106
 
DD&A ($ Millions)
Alaska 132 135 137 151 555 168 167 165 167 667
Lower 48     251 634   784 623 2,292 618 661 667 642 2,588
Total U.S.     383 769   921 774 2,847 786 828 832 809 3,255

**Fourth quarter of 2007 includes 22 MBD related to out-of-period adjustments for the first three quarters in 2007. The amounts attributable to Q1, Q2, and Q3 2007 were 5, 8, and 9 MBD, respectively. Fourth-quarter 2007 NGL production in L48 was 84 MBD excluding the adjustments.

***Fourth quarter of 2007 includes $6.36/bbl related to out-of-period adjustments for the first three quarters in 2007. The amounts attributable to Q1, Q2, and Q3 2007 were $1.64/bbl, $2.23/bbl, and $2.49/bbl, respectively. Fourth-quarter 2007 NGL realized price in L48 was $55.24/bbl excluding the adjustments.

Page 6 of 12

 
INTERNATIONAL E&P
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
International E&P
Net Income (Loss) ($ Millions) 1,372 2,004 909 1,215 5,500 1,413 (3,459 ) 857 1,556 367
 
Production
Total, Including Equity Affiliates
and Canadian Syncrude (MBOE/D) 974 1,240 1,190 1,191 1,149 1,165 1,062   938 988 1,037
 
Crude Oil and Condensate (MB/D)
Consolidated
Norway 188 192 190 185 189 179 145 166 158 162
United Kingdom 62 57 50 56 56 55 48 37 50 48
Canada 22 27 26 27 25 21 19 17 21 19
China 25 34 36 36 33 38 32 29 25 31
Indonesia 14 14 11 10 12 13 13 11 11 12
Vietnam 31 22 24 23 25 23 22 22 22 22
Timor Sea 39 39 40 27 36 24 26 21 19 22
Libya - 74 71 56 50 45 47 48 47 47
Other 49 66 64 69 63 62 36 35 44 44
Equity affiliates
Canada - - - - - 23 28 29 27 27
Russia 16 15 15 14 15 15 15 15 16 15
Venezuela     110 106 89 99 101 82 85   - - 42
Total       556 646 616 602 605 580 516   430 440 491
Sales of crude oil produced (MB/D) 550 642 598 617 602 577 506   423 452 489
 
Natural Gas Liquids (MB/D)
Norway 11 8 9 8 9 8 5 7 12 8
United Kingdom 4 4 2 6 4 6 6 4 8 6
Canada 9 30 28 31 25 31 28 26 25 27
Timor Sea 20 20 20 15 18 12 14 11 12 12
Other       2 - 1 1 1 3 3   3 5 4
Total       46 62 60 61 57 60 56   51 62 57
 
Natural Gas (MMCF/D)
Consolidated
Norway 269 260 260 291 270 247 202 226 270 236
United Kingdom 851 796 665 734 761 785 668 519 723 673
Canada 424 1,204 1,154 1,140 983 1,152 1,133 1,069 1,073 1,106
China - 10 8 9 7 11 12 13 8 11
Timor Sea 144 251 300 243 235 243 250 194 207 223
Indonesia 294 323 342 315 319 331 329 349 310 330
Vietnam 24 19 20 20 21 15 12 19 14 15
Libya - - - 17 4 5 9 9 9 8
Other 121 207 187 237 188 212 190 183 164 188
Equity affiliates
Canada - - - - - - - - - -
Russia - - - - - - - - - -
Venezuela     11 10 8 7 9 9 9   - - 5
Total       2,138 3,080 2,944 3,013 2,797 3,010 2,814   2,581 2,778 2,795
 
Canadian Syncrude (MB/D) 16 19 23 26 21 23 21   27 23 23
 
Darwin, Australia LNG Sales (MMCF/D) 136 305 411 382 310 388 449   347 348 383
 
Page 7 of 12

 
INTERNATIONAL E&P (continued)
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Consolidated
Norway 61.36 68.64 68.48 60.07 64.61 57.36 67.50 75.54 88.75 72.04
United Kingdom 59.13 65.32 64.67 58.71 62.08 55.52 66.99 72.98 86.26 71.01
Canada 44.28 60.86 61.00 49.28 54.25 48.70 58.42 67.75 73.08 61.77
China 57.90 66.68 64.68 51.06 60.00 54.93 66.39 71.79 85.51 67.69
Indonesia 57.94 58.15 62.69 52.21 57.80 54.66 65.46 72.46 89.26 69.99
Vietnam 62.34 68.53 71.35 56.77 64.75 57.88 67.03 75.14 89.64 72.54
Timor Sea 60.37 66.98 66.84 57.27 63.21 59.15 73.51 71.20 83.95 71.50
Libya - 68.07 67.75 58.19 65.11 56.19 67.39 73.88 88.11 72.02
Other 62.95 69.20 70.39 60.92 65.85 55.73 67.71 74.48 87.54 69.76
Equity affiliates
Canada - - - - - 32.46 32.46 38.48 46.90 37.94
Russia 40.86 46.87 48.29 36.86 43.20 37.92 50.25 55.84 63.05 52.29
Venezuela 43.71 53.03 46.78 42.48 46.40 42.54 51.54 - - 47.46
Total       55.92 64.50 63.73 55.00 59.92 53.12 62.02 70.75 83.94 66.44
 
Natural Gas Liquids ($/bbl)
Norway 42.55 40.99 43.91 39.46 41.61 38.82 45.72 46.77 56.25 48.36
United Kingdom 35.39 34.87 38.51 22.38 31.29 34.93 39.34 36.91 52.79 41.78
Canada 46.21 46.73 46.16 43.87 45.62 41.15 46.82 51.77 66.27 50.85
Timor Sea 46.68 41.35 45.63 41.62 43.95 44.13 49.43 48.71 72.60 52.63
Other 8.11 8.09 8.11 8.25 8.15 8.32 29.42 34.00 42.30 31.17
Total       43.25 43.28 44.89 40.25 42.89 39.38 45.64 48.63 61.56 48.80
 
Natural Gas ($/mcf)
Consolidated
Norway 7.28 7.09 7.48 8.58 7.61 7.00 7.10 7.51 9.08 7.74
United Kingdom 8.81 6.84 7.08 8.52 7.85 8.14 7.23 6.69 9.19 7.92
Canada 6.28 5.47 5.43 5.91 5.67 6.38 6.60 5.13 6.20 6.09
China - 1.90 4.11 2.80 2.87 2.64 2.74 2.78 3.37 2.85
Timor Sea 0.67 0.65 0.69 0.74 0.69 0.76 0.68 0.66 0.74 0.71
Indonesia 7.45 7.53 6.71 5.78 6.86 6.04 6.99 7.78 8.51 7.31
Vietnam 1.07 1.07 1.07 1.05 1.06 1.10 1.09 1.12 1.13 1.11
Libya - - - 0.09 0.09 0.07 0.09 0.09 0.09 0.09
Other 0.82 2.57 2.04 2.02 1.98 2.71 2.53 2.41 3.43 2.75
Equity affiliates
Canada - - - - - - - - - -
Russia - - - - - - - - - -
Venezuela 0.23 0.36 0.32 0.32 0.30 0.29 0.30 - - 0.30
Total       7.13 5.90 5.85 6.36 6.25 6.47 6.40 5.75 7.31 6.50
 
International Exploration Charges ($ Millions)
Dry Holes 11 12 10 75 108 49 38 4 36 127
Lease Impairments   11 18 24 22 75 43 16 8 18 85
Total Non-Cash Charges 22 30 34 97 183 92 54 12 54 212
Other (G&G and Lease Rentals) 60 85 76 126 347 88 86 87 110 371
Total International Exploration Charges 82 115 110 223 530 180 140 99 164 583
 
DD&A ($ Millions)     527 890 939 929 3,285 1,016 962 996 1,162 4,136
 
Page 8 of 12

 
R&M
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
R&M Net Income ($ Millions) 390   1,708   1,464   919   4,481   1,136   2,358   1,307   1,122   5,923  
 
United States ($ Millions)   297   1,433   1,444   741   3,915   896   1,879   873   967   4,615  
International ($ Millions)   93   275   20   178   566   240   479   434   155   1,308  
 
Market Indicators
U.S. East Coast Crack Spread ($/bbl) 7.52 15.21 10.54 7.86 10.28 11.81 22.57 11.73 8.47 13.64
U.S. Gulf Coast Crack Spread ($/bbl) 8.28 17.26 11.00 6.77 10.83 10.06 24.28 11.74 6.55 13.16
U.S. Group Central Crack Spread ($/bbl) 9.81 19.60 17.75 10.11 14.32 14.84 31.26 20.92 9.37 19.10
U.S. West Coast Crack Spread ($/bbl) 18.87 32.47 21.70 20.36 23.35 28.68 34.32 16.22 16.58 23.95
U.S. Weighted 3:2:1 Crack Spread ($/bbl) 10.56 20.39 14.86 10.49 14.07 15.30 27.56 14.74 9.65 16.81
NW Europe Crack Spread ($/bbl) 10.18 15.20 14.18 11.46 12.75 12.06 15.56 13.37 15.55 14.14
Singapore 3:1:2 Crack Spread ($/bbl) 10.58 19.30 15.13 11.03 14.01 14.06 17.94 14.80 17.13 15.98
U.S. Wholesale Gasoline Mktg Mrgn ($/bbl) 0.71   1.83   5.75   1.81   2.52   1.15   2.09   0.65   (0.43 ) 0.87  
 
Realized Margins
Refining Margin ($/bbl)
U.S. 10.18 17.23 14.10 11.39 13.29 11.87 19.59 10.86 11.56 13.41
International     5.30   7.64   6.46   6.22   6.50   5.06   9.68   6.05   6.72   6.92  
Marketing Margin ($/bbl)*
U.S. 0.12 0.48 2.92 1.34 1.23 1.31 2.36 2.20 1.43 1.83
International     6.07   6.67   11.17   9.50   8.38   7.08   7.68   9.49   7.69   7.92  
 
 
DD&A ($ Millions)     239   253   246   266   1,004   191   196   194   203   784  
 
Turnaround Expense ($ Millions) 163   115   42   94   414   75   58   27   80   240  
 
Eastern U.S.
Crude Oil Charge Input (MB/D) 354 281 377 411 356 411 404 383 412 402
Total Charge Input (MB/D) 359 309 418 457 386 460 447 414 453 443
Crude Oil Capacity Utilization (%) 84 % 66 % 89 % 97 % 84 % 97 % 96 % 91 % 97 % 95 %
Clean Product Yield (%)   90 % 87 % 88 % 90 % 89 % 89 % 86 % 86 % 90 % 88 %
 
U.S. Gulf Coast
Crude Oil Charge Input (MB/D) 529 681 730 737 670 744 709 736 712 726
Total Charge Input (MB/D) 587 777 822 812 750 823 790 829 794 810
Crude Oil Capacity Utilization (%) 72 % 93 % 100 % 101 % 91 % 102 % 97 % 100 % 97 % 99 %
Clean Product Yield (%)   74 % 81 % 83 % 80 % 80 % 81 % 81 % 80 % 82 % 81 %
 
Western U.S.
Crude Oil Charge Input (MB/D) 386 419 420 397 406 333 388 415 395 383
Total Charge Input (MB/D) 419 443 446 426 433 375 420 445 433 418
Crude Oil Capacity Utilization (%) 94 % 101 % 102 % 96 % 98 % 81 % 94 % 100 % 95 % 92 %
Clean Product Yield (%)   79 % 81 % 80 % 79 % 80 % 79 % 79 % 80 % 80 % 80 %
 
Central U.S. - Consolidated
Crude Oil Charge Input (MB/D) 571 619 600 583 593 185 170 166 175 174
Total Charge Input (MB/D) 613 663 638 621 634 188 175 170 179 178
Crude Oil Capacity Utilization (%) 89 % 97 % 94 % 91 % 93 % 99 % 91 % 89 % 94 % 93 %
Clean Product Yield (%)   84 % 86 % 85 % 85 % 85 % 88 % 93 % 88 % 92 % 90 %
 
Central U.S. - Equity Affiliates - Net Share**
Crude Oil Charge Input (MB/D) - - - - - 265 225 280 267 259
Total Charge Input (MB/D) - - - - - 288 250 301 288 282
Crude Oil Capacity Utilization (%) - - - - - 96 % 81 % 101 % 96 % 94 %
Clean Product Yield (%)   -   -   -   -   -   82 % 85 % 83 % 84 % 84 %
 
TOTAL UNITED STATES
Crude Oil Charge Input (MB/D) 1,840 2,000 2,127 2,128 2,025 1,938 1,896 1,980 1,961 1,944
Total Charge Input (MB/D) 1,978 2,192 2,324 2,316 2,203 2,134 2,082 2,159 2,147 2,131
Crude Oil Capacity Utilization (%) 83 % 91 % 96 % 96 % 92 % 95 % 93 % 97 % 96 % 96 %
Clean Product Yield (%)   81 % 83 % 84 % 83 % 83 % 83 % 83 % 82 % 84 % 83 %
 
Refined Products Production (MB/D)
Gasoline 890 1,031 1,084 1,061 1,017 962 957 959 978 964
Distillates 684 764 821 824 774 762 736 779 795 768
Other       414   403   429   440   422   428   394   439   392   414  
Total       1,988   2,198   2,334   2,325   2,213   2,152   2,087   2,177   2,165   2,146  
 
Petroleum Products Sales (MB/D)
Gasoline 1,258 1,300 1,369 1,416 1,336 1,258 1,300 1,212 1,207 1,244
Distillates 813 820 848 921 850 862 827 869 929 872
Other       517   555   519   535   531   480   503   439   309   432  
Total       2,588   2,675   2,736   2,872   2,717   2,600   2,630   2,520   2,445   2,548  
* Represents marketing sales price less product costs for all distribution channels other than commercial product supply.
** Represents a 50 percent and 85 percent interest in the Wood River and Borger refineries, respectively. These refineries were contributed to a business venture with EnCana, effective January 1, 2007.
Page 9 of 12

 
R&M (continued)
   
   

2006

          2007      

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
International - Consolidated*
Crude Oil Charge Input (MB/D) 357 505 474 461 450 503 505 434 493 484
Total Charge Input (MB/D) 369 550 503 494 479 532 528 455 517 508
Crude Oil Capacity Utilization (%) 94 % 92 % 86 % 83 % 88 % 91 % 92 % 79 % 89 % 88 %
Clean Product Yield (%)   71 % 64 % 69 % 72 % 69 % 68 % 67 % 71 % 65 % 68 %
 
International - Equity Affiliates - Net Share**
Crude Oil Charge Input (MB/D) 133 144 143 144 141 120 145 140 124 132
Total Charge Input (MB/D) 137 149 149 147 145 121 146 142 125 134
Crude Oil Capacity Utilization (%) 94 % 102 % 102 % 102 % 100 % 83 % 101 % 104 % 106 % 98 %
Clean Product Yield (%)   82 % 82 % 81 % 80 % 81 % 77 % 79 % 81 % 84 % 80 %
 
TOTAL INTERNATIONAL
Crude Oil Charge Input (MB/D) 490 649 617 605 591 623 650 574 617 616
Total Charge Input (MB/D) 506 699 652 641 624 653 674 597 642 642
Crude Oil Capacity Utilization (%) 94 % 94 % 89 % 87 % 91 % 90 % 93 % 84 % 92 % 90 %
Clean Product Yield (%)   74 % 68 % 72 % 74 % 72 % 70 % 69 % 74 % 69 % 70 %
 
Refined Products Production (MB/D)
Gasoline 142 165 165 172 161 160 159 160 160 160
Distillates 228 297 288 291 276 289 302 273 277 285
Other       130   233   190   170   181   195   203   160   196   188  
Total       500   695   643   633   618   644   664   593   633   633  
 
Petroleum Products Sales (MB/D)
Gasoline 197 225 204 186 203 176 186 161 173 174
Distillates 339 397 374 399 377 381 379 328 366 363
Other       159   249   171   135   179   156   174   140   171   160  
Total       695   871   749   720   759   713   739   629   710   697  
 
 
Worldwide - Including Net Share of Equity Affiliates
Crude Oil Charge Input (MB/D) 2,330 2,649 2,744 2,733 2,616 2,561 2,546 2,554 2,578 2,560
Total Charge Input (MB/D) 2,484 2,891 2,976 2,957 2,827 2,787 2,756 2,756 2,789 2,773
Crude Oil Capacity Utilization (%) 85 % 91 % 95 % 94 % 92 % 94 % 93 % 94 % 95 % 94 %
Clean Product Yield (%)   79 % 80 % 81 % 81 % 80 % 80 % 80 % 80 % 81 % 80 %
 
Refined Products Production (MB/D)
Gasoline 1,032 1,196 1,249 1,233 1,178 1,122 1,116 1,119 1,138 1,124
Distillates 912 1,061 1,109 1,115 1,050 1,051 1,038 1,052 1,072 1,053
Other       544   636   619   610   603   623   597   599   588   602  
Total       2,488   2,893   2,977   2,958   2,831   2,796   2,751   2,770   2,798   2,779  
 
Petroleum Products Sales (MB/D)
Gasoline 1,455 1,525 1,573 1,602 1,539 1,434 1,486 1,373 1,380 1,418
Distillates 1,152 1,217 1,222 1,320 1,227 1,243 1,206 1,197 1,295 1,235
Other       676   804   690   670   710   636   677   579   480   592  
Total       3,283   3,546   3,485   3,592   3,476   3,313   3,369   3,149   3,155   3,245  
* Represents our Humber refinery in the United Kingdom, the Whitegate refinery in Ireland, and, effective March 1, 2006, our Wilhelmshaven refinery in Germany.
** Represents 18.75 percent interest in a refinery complex in Karlsruhe, Germany, and 47 percent interest in a refinery in Melaka, Malaysia. Through August 31, 2007, represents a 16.33 percent interest in two refineries in Kralupy and Litvinov, Czech Republic. We sold our interest in the two Czech refineries effective September 1, 2007.
 
 
Page 10 of 12

 
LUKOIL INVESTMENT
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
LUKOIL Investment
Net Income ($ Millions)   249 387 487 302 1,425 256 526 387 649 1,818
 
Upstream
Production*
Net crude oil production (MB/D) 306 346 388 397 360 393 427 390 395 401
Net natural gas production (MMCF/D) 98 343 288 247 244 309 278 249 188 256
BOE Total (MBOE/D)   322 403 436 438 401 445 473 432 426 444
* Represents our estimated net share of LUKOIL's production.
 
Industry Prices
Crude Oil ($/bbl)
Urals crude (CIF Mediterranean) 58.25 64.85 65.81 56.48 61.35 53.96 65.30 72.21 85.90 69.49
 
Downstream
Refinery Throughput*
Crude Processed (MB/D)   163 168 164 220 179 219 184 226 227 214
* Represents our estimated net share of LUKOIL's crude processed.
 
 
 
 
MIDSTREAM
 
    2006         2007    

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
 
 
Midstream Net Income ($ Millions) 110 108 169 89 476 85 102 104 162 453
 
U.S. Equity Affiliate ($ Millions)* 93 91 128 73 385 50 76 90 120 336
 
Natural Gas Liquids Extracted (MB/D)
Consolidated
United States 23 22 23 21 22 15 23 26 24 22
International - - - - - - - - - -
Equity Affiliates
United States* 178 183 180 181 181 174 181 182 189 181
International     6 6 7 7 6 8 7 8 8 8
Total       207 211 210 209 209 197 211 216 221 211
* Represents 50 percent interest in DCP Midstream.
 
Natural Gas Liquids Fractionated (MB/D)
United States* 141 125 124 136 131 161 163 155 160 160
International     11 14 14 12 13 13 13 13 13 13
Total       152 139 138 148 144 174 176 168 173 173
* Excludes DCP Midstream.
 

Product Prices

Weighted Average NGL ($/bbl)*
Consolidated 37.64 41.73 44.10 37.41 40.22 37.73 45.19 48.62 60.19 47.93
DCP Midstream     37.29 41.18 43.00 36.34 39.45 36.55 44.30 47.73 58.60 46.80
* Prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted by natural gas liquids component and location mix.
 
 
DD&A ($ Millions)     7 8 7 7 29 4 3 4 3 14
 
 
 
Page 11 of 12

 
CHEMICALS
 
    2006           2007      

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
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2nd
Qtr

3rd
Qtr

4th
Qtr

YTD
Chemicals
Net Income (Loss) ($ Millions) 149   103   142   98   492   82   68   110   99   359  
 
Industry Margins (Cents/Lb)*
Ethylene industry cash margin 20.5 14.3 17.0 16.0 17.0 11.1 10.8 11.5 9.7 10.8
HDPE industry contract sales margin 15.9 14.0 13.9 11.9 13.9 13.5 14.6 14.8 13.6 14.1
Styrene industry contract sales margin 12.5     11.9   11.3   11.5   11.8   11.1   11.6   11.5   10.7   11.2  

* Prices, economics and views expressed by CMAI are strictly the opinion of CMAI and Purvin & Gertz and are based on information collected within the public sector and on assessments by CMAI and Purvin & Gertz staff utilizing reasonable care consistent with normal industry practice. CMAI and Purvin & Gertz make no guarantee or warranty and assume no liability as to their use.

 
 
EMERGING BUSINESSES
 
    2006           2007      

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

1st
Qtr

2nd
Qtr

3rd
Qtr

4th
Qtr

YTD

Emerging Businesses
Net Income (Loss) ($ Millions) 8     (12 ) 11   8   15   (1 ) (12 ) 3   2   (8 )
 
Detail of Net Income (Loss) ($ Millions)
Power 31 3 26 22 82 13 (1 ) 21 20 53
Other       (23

)

 

(15 ) (15 ) (14 ) (67 ) (14 ) (11 ) (18 ) (18 ) (61 )
Total       8     (12 ) 11   8   15   (1 ) (12 ) 3   2   (8 )
 
 
 
CORPORATE AND OTHER
 
    2006         2007    
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
Corporate and Other

Net Income (Loss) ($ Millions)

(168

)

 

(412 ) (301 ) (306 ) (1,187 ) (341 ) (337 ) (320 ) (271 ) (1,269 )
 
 
Detail of Net Income (Loss) ($ Millions)
Net interest expense (93

)

 

(267 ) (242 ) (268 ) (870 ) (244 ) (224 ) (195 ) (157 ) (820 )
Corporate overhead (26

)

 

(39 ) (35 ) (33 ) (133 ) (23 ) (54 ) (49 ) (50 ) (176 )
Acquisition-related expenses (5

)

 

(39 ) (32 ) (22 ) (98 ) (13 ) (16 ) (11 ) (4 ) (44 )
Other       (44

)

 

(67 ) 8   17   (86 ) (61 ) (43 ) (65 ) (60 ) (229 )
Total       (168

)

 

(412 ) (301 ) (306 ) (1,187 ) (341 ) (337 ) (320 ) (271 ) (1,269 )
 
 
Before-Tax Net Interest Expense ($ Millions)
Interest expense (226

)

 

(468 ) (417 ) (434 ) (1,545 ) (395 ) (411 ) (485 ) (340 ) (1,631 )
Capitalized interest 111 107 110 130 458 135 139 141 150 565
Interest revenue 30 35 38 2 105 31 24 153 38 246
Premium on early debt retirement -     -   -   -   -   (17

)

-   -   -   (17 )
        (85

)

 

(326 ) (269 ) (302 ) (982 ) (246 ) (248 ) (191 ) (152 ) (837 )
 
Debt
Total Debt ($ Millions) 32,193 29,510 27,807 27,134 27,134 23,668 22,812 21,876 21,687 21,687
Debt-to-Capital Ratio   30

%

 

27 % 25 % 24 % 24 % 22 % 21 % 20 % 19 % 19 %
 
Page 12 of 12