ConocoPhillips Reports Second-Quarter Net Income of $5.4 Billion or $3.50 Per Share

HOUSTON--(Business Wire)--
ConocoPhillips (NYSE:COP):

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Earnings at a glance

Second Quarter Six Months
----------------------------------------------------------------------
2008 2007 2008 2007
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Net income $5,439 million 301 million $9,578 million 3,847 million
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Diluted
income per
share $3.50 0.18 $6.11 2.31
----------------------------------------------------------------------

----------------------------------------------------------------------
Earnings
adjusted
for the
second-
quarter
2007
Venezuela
impairment $5,439 million 4,813 million $9,578 million 8,359 million
----------------------------------------------------------------------
Diluted
earnings
per share
adjusted
for the
second-
quarter
2007
Venezuela
impairment $3.50 2.90 $6.11 5.02
----------------------------------------------------------------------

----------------------------------------------------------------------
Revenues $71.4 billion 47.4 billion $126.3 billion 88.7 billion
----------------------------------------------------------------------
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ConocoPhillips (NYSE:COP) today reported second-quarter net income
of $5,439 million, or $3.50 per share. This compared with $301
million, or $0.18 per share, for the same quarter in 2007, which
included a $4,512 million impairment associated with the company's
Venezuelan operations. Second-quarter 2007 earnings adjusted for the
Venezuela impairment were $4,813 million, or $2.90 per share. Revenues
were $71.4 billion, versus $47.4 billion a year ago.

"During the second quarter, we produced 2.2 million BOE per day,
including an estimated 0.4 million BOE per day from our LUKOIL
Investment segment," said Jim Mulva, chairman and chief executive
officer. "In the downstream business, our worldwide refining crude oil
capacity utilization rate improved to 93 percent.

"We generated $5.4 billion of cash from operations during the
quarter, and this enabled us to repurchase $2.5 billion of
ConocoPhillips common stock, fund $3.6 billion of our capital program,
and pay $0.7 billion in dividends. We ended the quarter with debt of
$21.9 billion and a debt-to-capital ratio of 19 percent."

The results for ConocoPhillips' business segments follow.

Exploration and Production (E&P)

Second-quarter financial results: E&P second-quarter net income
was $3,999 million, compared with net income of $2,887 million in the
previous quarter and a net loss of $2,404 million in the second
quarter of 2007. Second-quarter 2007 earnings adjusted for the
Venezuela impairment were $2,108 million.

The increase from the first quarter of 2008 was primarily due to
higher commodity prices, partially offset by higher production taxes
and increased operating costs. The increase from the second-quarter
2007 adjusted earnings was primarily due to higher commodity prices,
partially offset by higher production taxes, lower volumes, and
increased operating costs.

Daily production from the E&P segment, including Canadian
Syncrude, averaged 1.75 million barrels of oil equivalent (BOE) per
day, a decrease from 1.79 million BOE per day in the previous quarter
and 1.91 million BOE per day in the second quarter of 2007. The
decrease from the previous quarter was primarily due to downtime
associated with planned and unplanned maintenance activities, mainly
in the United Kingdom, Norway, Alaska and Canada. This decrease was
partially offset by a net increase in production in the U.S. Lower 48,
as higher natural gas production in the San Juan Basin was partly
offset by planned maintenance in the region.

The decrease from the second quarter of 2007 was primarily due to
the expropriation of the company's Venezuelan oil projects, as well as
normal field decline. This decrease was partially offset by production
from new developments, mainly in Indonesia, Norway, the United
Kingdom, the U.S. Lower 48 and Canada.

Before-tax exploration expenses were $288 million in the second
quarter of 2008, compared with $309 million in the previous quarter
and $259 million in the second quarter of 2007.

Six-month financial results: E&P net income for the first six
months of 2008 was $6,886 million, compared with a net loss of $75
million during the first six months of 2007. Six-month 2007 earnings
adjusted for the Venezuela impairment were $4,437 million. The
increase from the six-month 2007 adjusted earnings was primarily due
to higher commodity prices, partially offset by higher production
taxes, lower volumes, increased operating costs, and a lower net
benefit from asset rationalization efforts.

Midstream

Second-quarter financial results: Midstream second-quarter net
income was $162 million, up from $137 million in the previous quarter
and $102 million in the second quarter of 2007. The increases from the
previous quarter and the second quarter of 2007 were primarily due to
higher realized natural gas liquids prices.

Six-month financial results: Midstream net income for the first
six months of 2008 was $299 million, up from $187 million in 2007. The
increase was primarily due to higher realized natural gas liquids
prices.

Refining and Marketing (R&M)

Second-quarter financial results: R&M net income was $664 million
in the second quarter, up from $520 million in the previous quarter
and down from $2,358 million in the second quarter of 2007.

The increase in net income from the previous quarter was primarily
due to higher worldwide realized refining margins and improved
refining operations in the U.S. Gulf Coast and the United Kingdom.
Although global refining margins improved by nearly 50 percent versus
the previous quarter, the company's realized refining margins
increased by 24 percent. The lower market capture was primarily due to
secondary product prices, which have not kept pace with crude oil
prices. Secondary products, such as fuel oil, natural gas liquids, and
petroleum coke, comprised approximately 20 percent of ConocoPhillips'
overall refined product output during the quarter. In addition,
international realized refining margins were impacted in the second
quarter by a temporary inventory build. The improvement in global
realized margins was partially offset by a lower net benefit from
asset rationalization efforts, as well as higher turnaround and
utility costs. The decrease in net income from the second quarter of
2007 was primarily due to significantly lower U.S. refining and
marketing margins, a lower net benefit from the company's asset
rationalization efforts, and higher turnaround and utility costs.

The domestic refining crude oil capacity utilization rate for the
second quarter was 94 percent, a 4 percent increase from the previous
quarter. The increase was primarily due to improved refining
operations in the U.S. Gulf Coast. The international crude oil
capacity utilization rate was 88 percent, up from 86 percent in the
previous quarter. However, weak hydro-skimming margins continued to
impact crude oil capacity utilization at ConocoPhillips'
Wilhelmshaven, Germany, refinery.

Worldwide, R&M's refining crude oil capacity utilization rate was
93 percent, up from 89 percent the previous quarter and the same as
the second quarter of 2007. Before-tax turnaround costs were $170
million in the second quarter of 2008, up from $90 million in the
previous quarter and $58 million in the second quarter of 2007.

Six-month financial results: R&M net income for the first six
months of 2008 was $1,184 million, down from $3,494 million in 2007.
The decrease was primarily due to significantly lower U.S. refining
and marketing margins, as well as a reduced net benefit from the
company's asset rationalization efforts, and higher turnaround and
utility costs.

LUKOIL Investment

Second-quarter financial results: LUKOIL Investment segment net
income for second quarter was $774 million, up from $710 million in
the previous quarter and $526 million in the second quarter of 2007.
The results include ConocoPhillips' estimate of its equity share of
OAO LUKOIL's (LUKOIL) income for the second 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, partially offset by higher estimated
taxes and operating costs, estimated downstream volume impacts, and a
net $104 million negative impact from the alignment of estimated net
income to LUKOIL's reported results. The increase in net income from
the second quarter of 2007 was primarily due to higher estimated
realized prices, partially offset by higher estimated taxes and
operating costs, as well as the net impact from the alignment of
estimated net income to LUKOIL's reported results.

For the second quarter of 2008, ConocoPhillips estimated its
equity share of LUKOIL production was 448,000 BOE per day and its
share of LUKOIL daily refining crude oil throughput was 215,000
barrels per day (BPD).

Six-month financial results: Net income for the first six months
of 2008 was $1,484 million, up from $782 million in 2007. The increase
was primarily due to higher estimated realized prices, partially
offset by higher estimated taxes and operating costs.

Chemicals

Second-quarter financial results: Chemicals net income was $18
million in the second quarter, down from $52 million in the previous
quarter and $68 million in the second quarter of 2007. The decrease
from the previous quarter was primarily due to higher utility and
turnaround costs. The decrease from the second quarter of 2007 was due
to lower benzene and polyethylene margins as the result of significant
increases in feedstock costs, as well as higher utility and turnaround
costs. This decrease was partially offset by an asset retirement
recorded in the second quarter of 2007.

Six-month financial results: Net income for the first six months
of 2008 was $70 million, down from $150 million in 2007. The decrease
was due to lower benzene and polyethylene margins as the result of
significant increases in feedstock costs, as well as higher utility
and turnaround costs. This decrease was partially offset by the asset
retirement in 2007.

Emerging Businesses

Emerging Businesses segment net income was $8 million in the
second quarter, down from $12 million in the previous quarter and up
from a net loss of $12 million in the second quarter of 2007. The
decrease from the previous quarter was primarily due to lower domestic
power generation results. The increase from the second quarter of 2007
was primarily due to higher international power generation results.

Corporate and Other

Second-quarter Corporate expenses were $186 million after-tax, up
from $179 million in the previous quarter and down from $337 million
in the second quarter of 2007. The increase from the previous quarter
was primarily due to lower interest income and higher benefit-related
charges, partially offset by favorable foreign exchange impacts. The
decrease from the second quarter of 2007 was primarily due to lower
net interest expense and favorable foreign exchange impacts. The
number of weighted-average diluted shares outstanding during the
second quarter was 1,555 million.

The company's effective tax rate for the quarter was 44 percent.
This compared with 45 percent in the previous quarter and 91 percent
in the second quarter of 2007. Adjusted for the Venezuela impairment,
the effective tax rate for the second quarter of 2007 was 41 percent.

Outlook

Mr. Mulva concluded:

"We recently signed an interim agreement with Abu Dhabi National
Oil Company (ADNOC) to develop the Shah gas field in Abu Dhabi. The
project will include the construction of a new 1
billion-cubic-feet-per-day natural gas processing plant at Shah, new
natural gas and liquid pipelines, and sulfur-exporting facilities at
Ruwais, United Arab Emirates.

"Elsewhere in the region, we approved the continued funding for
the development of the Yanbu Export Refinery Project. Together with
the Saudi Arabian Oil Company (Saudi Aramco), we expect to construct a
grassroots, 400,000 BPD, full-conversion refinery in Yanbu Industrial
City in The Kingdom of Saudi Arabia.

"We are pleased to be working with both ADNOC and Saudi Aramco on
world-class projects that will help meet the growing demand for energy
around the globe.

"ConocoPhillips also recently signed a Memorandum of Understanding
with Petrobras, the leading Brazilian energy company. Through this
agreement, we hope to identify opportunities to work together in oil
and gas exploration, production, refining, marketing and
transportation projects, as well as sugar-based ethanol production,
transportation and marketing projects based on mutual interest and
economic feasibility.

"In North America, through our joint ventures with TransCanada, we
plan to expand the Keystone crude oil pipeline system and provide
additional capacity of 500,000 BPD from Western Canada to the U.S.
Gulf Coast. When completed in 2012, this expansion will increase the
capacity of the Keystone pipeline system to approximately 1.1 million
BPD.

"Looking ahead to the third quarter, we anticipate the company's
E&P segment production will be similar to the second quarter. We
expect full-year 2008 production will be consistent with our operating
plan. We anticipate exploration expenses to be approximately $375
million for the quarter.

"In our downstream refining business, we expect continued negative
impacts on market capture due to secondary product margins. We
anticipate our U.S. crude oil capacity utilization will be similar to
the second quarter. In international refining, utilization at our
Wilhelmshaven refinery will continue to be impacted by hydro-skimming
margins. Turnaround costs are expected to be approximately $100
million before-tax for the third quarter.

"Lastly, we anticipate share repurchases will be between $2
billion and $3 billion for the third quarter, which is in line with
our $10 billion authorized share repurchase program for 2008."

ConocoPhillips is an international, integrated energy company with
interests around the world. Headquartered in Houston, the company had
approximately 33,100 employees, $190 billion of assets, and $253
billion of annualized revenues as of June 30, 2008. 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 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 activities; 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, environmental 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.

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

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