Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

Note 9—Debt

Long-term debt at December 31 was:

	Millions of Dollars
	2022		2021
2.40% Notes due 2022	—		329
7.65% Debentures due 2023	78		78
3.35% Notes due 2024	426		426
2.125% Notes due 2024	900		—
8.2% Notes due 2025	134		134
3.35% Debentures due 2025	199		199
2.40% Notes due 2025	900		—
6.875% Debentures due 2026	67		67
4.95% Notes due 2026	—		1,250
7.8% Debentures due 2027	203		203
3.75% Notes due 2027	196		1,000
4.3% Notes due 2028	223		1,000
7.375% Debentures due 2029	92		92
7.0% Debentures due 2029	112		200
6.95% Notes due 2029	1,195		1,549
8.125% Notes due 2030	390		390
7.4% Notes due 2031	382		500
7.25% Notes due 2031	400		500
7.2% Notes due 2031	447		575
2.4% Notes due 2031	227		500
5.9% Notes due 2032	505		505
4.15% Notes due 2034	246		246
5.95% Notes due 2036	326		500
5.951% Notes due 2037	631		645
5.9% Notes due 2038	350		600
6.5% Notes due 2039	1,588		2,750
3.758% Notes due 2042	785		—
4.3% Notes due 2044	750		750
5.95% Notes due 2046	329		500
7.9% Debentures due 2047	60		60
4.875% Notes due 2047	319		800
4.85% Notes due 2048	219		600
3.8% Notes due 2052	1,100		—
4.025% Notes due 2062	1,770		—
Floating rate notes due 2022 at 1.06% – 1.41% during 2022 and 1.02% – 1.12% during 2021	—		500
Marine Terminal Revenue Refunding Bonds due 2031 at 0.07% – 4.10% during 2022 and 0.04% – 0.15% during 2021	265		265
Industrial Development Bonds due 2035 at 0.07% – 4.10% during 2022 and 0.04% – 0.12% during 2021	18		18
Other	23		35
Debt at face value	15,855		17,766
Finance leases	1,320		1,261
Net unamortized premiums, discounts and debt issuance costs	(532)		907
Total debt	16,643		19,934
Short-term debt	(417)		(1,200)
Long-term debt	$	16,226	18,734

In December 2022, the company retired $329 million principal amount of our 2.40 percent Notes at the natural maturity date. In May 2022, we redeemed $1,250 million principal amount of our 4.95 percent Notes due 2026. We paid premiums above face value of $79 million to redeem the debt and recognized a loss on debt extinguishment of $83 million which is included in the "Other expenses" line on our consolidated income statement. We also paid $500 million to retire the outstanding principal amount of the floating rate notes due 2022 at maturity.

In the first quarter of 2022, we completed a debt refinancing consisting of three concurrent transactions: a tender offer to repurchase existing debt for cash; exchange offers to retire certain debt in exchange for new debt and cash; and a new debt issuance to partially fund the cash paid in the tender and exchange offers.

Tender Offer

In March 2022, we repurchased a total of $2,716 million aggregate principal amount of debt as listed below. We paid premiums above face value of $333 million to repurchase these debt instruments and recognized a gain on debt extinguishment of $155 million which is included in the "Other expenses" line on our consolidated income statement.

•3.75% Notes due 2027 with principal of $1,000 million (partial repurchase of $804 million)

•4.3% Notes due 2028 with principal of $1,000 million (partial repurchase of $777 million)

•2.4% Notes due 2031 with principal of $500 million (partial repurchase of $273 million)

•4.875% Notes due 2047 with principal of $800 million (partial repurchase of $481 million)

•4.85% Notes due 2048 with principal of $600 million (partial repurchase of $381 million)

Exchange Offers

Also in March 2022, we completed two concurrent debt exchange offers through which $2,544 million of aggregate principal of existing notes was tendered and accepted in exchange for a combination of new notes and cash. The debt exchange offers were treated as debt modifications for accounting purposes resulting in a portion of the unamortized debt discount, premiums and debt issuance costs of the existing notes being allocated to the new notes on the settlement dates of the exchange offers. We paid premiums above face value of $883 million, comprised of $872 million of cash as well as new notes, which were capitalized as additional debt discount. We incurred expenses of $28 million in the exchanges which are included in the "Other expenses" line on our consolidated income statement.

The notes tendered and accepted in the exchange offers were:

•7.0% Debentures due 2029 with principal amount of $200 million (partial exchange of $88 million)

•6.95% Notes due 2029 with principal amount of $1,549 million (partial exchange of $354 million)

•7.4% Notes due 2031 with principal amount of $500 million (partial exchange of $118 million)

•7.25% Notes due 2031 with principal amount of $500 million (partial exchange of $100 million)

•7.2% Notes due 2031 with principal amount of $575 million (partial exchange of $128 million)

•5.95% Notes due 2036 with principal amount of $500 million (partial exchange of $174 million)

•5.9% Notes due 2038 with principal amount of $600 million (partial exchange of $250 million)

•6.5% Notes due 2039 with principal amount of $2,750 million (partial exchange of $1,162 million)

•5.95% Notes due 2046 with principal amount of $500 million (partial exchange of $171 million)

The notes tendered and accepted were exchanged for the following new notes:

•3.758% Notes due 2042 with principal amount of $785 million

•4.025% Notes due 2062 with principal amount of $1,770 million

New Debt Issuance

In March 2022, we issued the following new notes consisting of:

•2.125% Notes due 2024 with principal of $900 million

•2.4% Note due 2025 with principal of $900 million

•3.8% Note due 2052 with principal of $1,100 million

In February 2022, we refinanced our revolving credit facility from a total borrowing capacity of $6.0 billion to $5.5 billion with an expiration date of February 2027. Our revolving credit facility may be used for direct bank borrowings, the issuance of letters of credit totaling up to $500 million, or as support for our commercial paper program. The revolving credit facility is broadly syndicated among financial institutions and does not contain any material adverse change provisions or any covenants requiring maintenance of specified financial ratios or credit ratings. The facility agreement contains a cross-default provision relating to the failure to pay principal or interest on other debt obligations of $200 million or more by ConocoPhillips, or any of its consolidated subsidiaries. The amount of the facility is not subject to redetermination prior to its expiration date.

Credit facility borrowings may bear interest at a margin above the Secured Overnight Financing Rate (SOFR). The facility agreement calls for commitment fees on available, but unused, amounts. The facility agreement also contains early termination rights if our current directors or their approved successors cease to be a majority of the Board of Directors.

The revolving credit facility supports our ability to issue up to $5.5 billion of commercial paper. Commercial paper is generally limited to maturities of 90 days and is included in short-term debt on our consolidated balance sheet. With no commercial paper outstanding and no direct borrowings or letters of credit, we had access to $5.5 billion in available borrowing capacity under our revolving credit facility at December 31, 2022. At December 31, 2021, we had no commercial paper outstanding and no direct borrowings or letters of credit issued.

In January 2021, we completed the acquisition of Concho in an all-stock transaction. In the acquisition, we assumed Concho’s publicly traded debt, with an outstanding principal balance of $3.9 billion, which was recorded at fair value of $4.7 billion on the acquisition date. The adjustment to fair value of the senior notes of approximately $0.8 billion on the acquisition date will be amortized as an adjustment to interest expense over the remaining contractual terms of the senior notes.

In February 2021, we completed a debt exchange offer related to the debt assumed from Concho. Of the approximately $3.9 billion in aggregate principal amount of Concho’s senior notes offered in the exchange, 98 percent, or approximately $3.8 billion, was tendered and accepted. The new debt issued by ConocoPhillips had the same interest rates and maturity dates as the Concho senior notes. The portion not exchanged, approximately $67 million, remained outstanding across five series of senior notes issued by Concho. The debt exchange was treated as a debt modification for accounting purposes resulting in a portion of the unamortized fair value adjustment of the Concho senior notes allocated to the new debt issued by ConocoPhillips on the settlement date of the exchange. The new debt issued in the exchange is fully and unconditionally guaranteed by ConocoPhillips Company. See Note 3.

For information on Finance Leases, see Note 15.

The current credit ratings on our long-term debt are:

•Fitch: “A” with a “stable” outlook

•S&P: “A-” with a “stable” outlook

•Moody's: "A2" with a "stable" outlook

We do not have any ratings triggers on any of our corporate debt that would cause an automatic default, and thereby impact our access to liquidity upon downgrade of our credit ratings. If our credit ratings are downgraded from their current levels, it could increase the cost of corporate debt available to us and restrict our access to the commercial paper markets. If our credit ratings were to deteriorate to a level prohibiting us from accessing the commercial paper market, we would still be able to access funds under our revolving credit facility.

At both December 31, 2022 and 2021, we had $283 million of certain variable rate demand bonds (VRDBs) outstanding with maturities ranging through 2035. The VRDBs are redeemable at the option of the bondholders on any business day. If they are ever redeemed, we have the ability and intent to refinance on a long-term basis, therefore, the VRDBs are included in the “Long-term debt” line on our consolidated balance sheet.