Operations Update

In the Lower 48 and Latin America segment, third-quarter production was 462 thousand barrels of oil equivalent (BOE) per day, an increase of 28 thousand BOE per day compared to the same period of 2011. Significant growth continues from the ramp up of several high-margin, liquids-rich shale plays, including Eagle Ford and Bakken. Eagle Ford reached a record production level of 86 thousand BOE per day in the third quarter. For the quarter, these shale plays delivered approximately 102 thousand BOE per day, a 51 thousand BOE per day increase compared to the third quarter of 2011.

In the Canada segment, third-quarter production increased by 21 thousand BOE per day over the same period in 2011, to 277 thousand BOE per day, reflecting strong performance from the company’s significant oil sands portfolio. Christina Lake Phase D achieved first production during the quarter, driving overall bitumen production to 92 thousand BOE per day, a 28 thousand BOE per day increase compared to the third quarter of 2011. Additional growth is expected from expansion phases at both FCCL and Surmont which are progressing on schedule.

For the quarter, total Lower 48 and Canada liquids production increased by 24 percent compared to the same period in 2011. This shift to liquids is consistent with the company’s overall strategy to improve margins over time.

Third-quarter production in the Alaska segment was 176 thousand BOE per day, down 32 thousand BOE per day compared to the same period in 2011, reflecting normal field decline and increased turnaround activity in the current quarter.

In the Asia Pacific and Middle East segment, quarterly production was 306 thousand BOE per day, down 6 thousand BOE per day compared to the third quarter of 2011, with continued ramp up in China largely offsetting the impact of dispositions. In Malaysia, development continued on several major offshore fields with first production from the deepwater Gumusut oil field expected in the fourth quarter. ConocoPhillips also further diluted its interest in the Australia Pacific LNG (APLNG) project from 42.5 percent to 37.5 percent during the quarter. This reduced ownership interest, coupled with Sinopec Corp.'s estimated $2.1 billion injection into APLNG associated with the dilution and APLNG's successful placement of $8.5 billion of project financing, will lower ConocoPhillips’ future capital requirements to fund the project.

In the Europe segment, production for the quarter was 191 thousand BOE per day, down 54 thousand BOE per day compared to the same period a year ago, reflecting the impact from dispositions and normal field decline. Progress continued on several major developments in the United Kingdom and Norway, which will result in significant new production from 2013 onwards.

In the Other International segment, production increased from 83 thousand BOE per day in the third quarter of 2011 to 113 thousand BOE per day in the current quarter, primarily reflecting the resumption of production in Libya following the civil unrest in 2011. During the quarter, the company completed the sale of its 30 percent interest in NaryanMarNefteGaz (NMNG) and certain related assets.

In conventional exploration, the company advanced its opportunities in the deepwater Gulf of Mexico, as drilling continued at the Coronado and Shenandoah prospects. ConocoPhillips holds 1.5 million acres in the deepwater Gulf of Mexico, and in October, secured access to a new build ultra deepwater drillship, providing future rig availability and flexibility for the company’s drilling programs. The company confirmed a successful appraisal in Australia’s Browse Basin following the drilling of the Boreas-1 well, and is currently evaluating seismic results in deepwater Angola and Bangladesh.

In unconventional exploration, several pilot programs are underway across shale plays in the Lower 48 and Canada. In Western Australia, the first phase of drilling commenced in the Canning Basin. In Europe, the company exercised its option to acquire a 70 percent interest in Lane Energy Poland and assumed operatorship for three western Baltic Basin concessions, where a fourth exploration well is currently being drilled, and ongoing analysis and testing is underway.

Third-Quarter Review

Production for the third quarter of 2012 was 1.525 million BOE per day, compared with 1.538 million BOE per day for the third quarter of 2011. As expected, production was lower due to the impact of dispositions. Normal field decline was more than offset by additional production from major projects as well as higher production in China and Libya. Sales volumes for the quarter exceeded production, resulting in a favorable impact to earnings of approximately $80 million.

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