<br />
derivative instruments that are designated and qualify as a fair<br />
value hedge, the gains or losses from adjusting the derivative to<br />
its fair value will be immediately recognized in earnings and, to<br />
the extent the hedge is effective, offset the concurrent<br />
recognition of changes in the fair value of the hedged item.<br />
Gains or losses from derivative instruments that are designated<br />
and qualify as a cash flow hedge or hedge of a net investment in<br />
a foreign entity will be recorded on the balance sheet in<br />
accumulated other comprehensive income (loss) until the<br />
hedged transaction is recognized in earnings; however, to the<br />
extent the change in the value of the derivative exceeds the<br />
change in the anticipated cash flows of the hedged transaction,<br />
the excess gains or losses will be recognized immediately<br />
in earnings.&l<a title="2008 Annual Report page 1" href="http://viewer.zmags.com/publication/1220b1e9?page=1">2008 Annual ReportManaging GlobalChall</a> 2008 Annual ReportManaging GlobalChall<a title="2008 Annual Report page 2" href="http://viewer.zmags.com/publication/1220b1e9?page=2">Financial Highlights . . . . . . . . . . . . . . .</a> Financial Highlights . . . . . . . . . . . . . . .<a title="2008 Annual Report page 3" href="http://viewer.zmags.com/publication/1220b1e9?page=3">Financial HighlightsMillions of Dollars Except a</a> Financial HighlightsMillions of Dollars Except a<a title="2008 Annual Report page 4" href="http://viewer.zmags.com/publication/1220b1e9?page=4">Letter to Shareholders</a> Letter to Shareholders<a title="2008 Annual Report page 5" href="http://viewer.zmags.com/publication/1220b1e9?page=5"> ConocoPhillips adapted to these condition</a> ConocoPhillips adapted to these condition<a title="2008 Annual Report page 6" href="http://viewer.zmags.com/publication/1220b1e9?page=6">OLetter to ShareholdersWe are a self-sustai</a> OLetter to ShareholdersWe are a self-sustai<a title="2008 Annual Report page 7" href="http://viewer.zmags.com/publication/1220b1e9?page=7">The global economic conditions and near-term ener</a> The global economic conditions and near-term ener<a title="2008 Annual Report page 8" href="http://viewer.zmags.com/publication/1220b1e9?page=8">Financial ReviewAdapting to Market Conditions</a> Financial ReviewAdapting to Market Conditions<a title="2008 Annual Report page 9" href="http://viewer.zmags.com/publication/1220b1e9?page=9"> ConocoPhillips ended theyear with a debt-</a> ConocoPhillips ended theyear with a debt-<a title="2008 Annual Report page 10" href="http://viewer.zmags.com/publication/1220b1e9?page=10">Worldwide Operations </a> Worldwide Operations <a title="2008 Annual Report page 11" href="http://viewer.zmags.com/publication/1220b1e9?page=11">Exploration </a> Exploration <a title="2008 Annual Report page 12" href="http://viewer.zmags.com/publication/1220b1e9?page=12">Operating Review2008 E&P Productio</a> Operating Review2008 E&P Productio<a title="2008 Annual Report page 13" href="http://viewer.zmags.com/publication/1220b1e9?page=13">Exploration and ProductionMaintaining Volume</a> Exploration and ProductionMaintaining Volume<a title="2008 Annual Report page 14" href="http://viewer.zmags.com/publication/1220b1e9?page=14">Operating Review — Exploration and Production </a> Operating Review — Exploration and Production <a title="2008 Annual Report page 15" href="http://viewer.zmags.com/publication/1220b1e9?page=15">Refining and MarketingOperating Profitably in </a> Refining and MarketingOperating Profitably in <a title="2008 Annual Report page 16" href="http://viewer.zmags.com/publication/1220b1e9?page=16">Operating Review — Refining and Marketing<<Co</a> Operating Review — Refining and Marketing<<Co<a title="2008 Annual Report page 17" href="http://viewer.zmags.com/publication/1220b1e9?page=17"><<Through training drills and a relentlessfocu</a> <<Through training drills and a relentlessfocu<a title="2008 Annual Report page 18" href="http://viewer.zmags.com/publication/1220b1e9?page=18">Operating ReviewCommercialFinding Gr</a> Operating ReviewCommercialFinding Gr<a title="2008 Annual Report page 19" href="http://viewer.zmags.com/publication/1220b1e9?page=19">Project DevelopmentMaximizing Efficiency and M</a> Project DevelopmentMaximizing Efficiency and M<a title="2008 Annual Report page 20" href="http://viewer.zmags.com/publication/1220b1e9?page=20">Operating ReviewEmerging Businesses</a> Operating ReviewEmerging Businesses<a title="2008 Annual Report page 21" href="http://viewer.zmags.com/publication/1220b1e9?page=21">MidstreamB</a> MidstreamB<a title="2008 Annual Report page 22" href="http://viewer.zmags.com/publication/1220b1e9?page=22">Operating ReviewChemicals</a> Operating ReviewChemicals<a title="2008 Annual Report page 23" href="http://viewer.zmags.com/publication/1220b1e9?page=23">Corporate Staffs</a> Corporate Staffs<a title="2008 Annual Report page 24" href="http://viewer.zmags.com/publication/1220b1e9?page=24">Corporate Staffs<<Upon its completion during </a> Corporate Staffs<<Upon its completion during <a title="2008 Annual Report page 25" href="http://viewer.zmags.com/publication/1220b1e9?page=25"><<Reinforcing the company's commitment to sound</a> <<Reinforcing the company's commitment to sound<a title="2008 Annual Report page 26" href="http://viewer.zmags.com/publication/1220b1e9?page=26">Corporate Staffs<<ConocoPhillips personnel pr</a> Corporate Staffs<<ConocoPhillips personnel pr<a title="2008 Annual Report page 27" href="http://viewer.zmags.com/publication/1220b1e9?page=27">Global Systems and ServicesLeveraging Business</a> Global Systems and ServicesLeveraging Business<a title="2008 Annual Report page 28" href="http://viewer.zmags.com/publication/1220b1e9?page=28">Corporate StaffsThrough exercises such as an o</a> Corporate StaffsThrough exercises such as an o<a title="2008 Annual Report page 29" href="http://viewer.zmags.com/publication/1220b1e9?page=29"><<To help educate the youth of America on vital</a> <<To help educate the youth of America on vital<a title="2008 Annual Report page 30" href="http://viewer.zmags.com/publication/1220b1e9?page=30">Financial and Operating ResultsManagement's Disc</a> Financial and Operating ResultsManagement's Disc<a title="2008 Annual Report page 31" href="http://viewer.zmags.com/publication/1220b1e9?page=31">Management's Discussion and Analysis ofFinancial</a> Management's Discussion and Analysis ofFinancial<a title="2008 Annual Report page 32" href="http://viewer.zmags.com/publication/1220b1e9?page=32"> Access to additional resources has become </a> Access to additional resources has become <a title="2008 Annual Report page 33" href="http://viewer.zmags.com/publication/1220b1e9?page=33">■ Effective tax rate. Our operations are located </a> ■ Effective tax rate. Our operations are located <a title="2008 Annual Report page 34" href="http://viewer.zmags.com/publication/1220b1e9?page=34">Results of OperationsConsolidated ResultsA summ</a> Results of OperationsConsolidated ResultsA summ<a title="2008 Annual Report page 35" href="http://viewer.zmags.com/publication/1220b1e9?page=35"> Foreign currency transaction losses incurre</a> Foreign currency transaction losses incurre<a title="2008 Annual Report page 36" href="http://viewer.zmags.com/publication/1220b1e9?page=36"> </a> <a title="2008 Annual Report page 37" href="http://viewer.zmags.com/publication/1220b1e9?page=37">offset by higher depreciation expense due to incr</a> offset by higher depreciation expense due to incr<a title="2008 Annual Report page 38" href="http://viewer.zmags.com/publication/1220b1e9?page=38">Midstream2008 2007 2006Mill</a> Midstream2008 2007 2006Mill<a title="2008 Annual Report page 39" href="http://viewer.zmags.com/publication/1220b1e9?page=39"> During 2008, our worldwide refining capacit</a> During 2008, our worldwide refining capacit<a title="2008 Annual Report page 40" href="http://viewer.zmags.com/publication/1220b1e9?page=40"> Because LUKOIL's accounting cycle close and </a> Because LUKOIL's accounting cycle close and <a title="2008 Annual Report page 41" href="http://viewer.zmags.com/publication/1220b1e9?page=41">2007 vs. 2006The Emerging Businesses segment had</a> 2007 vs. 2006The Emerging Businesses segment had<a title="2008 Annual Report page 42" href="http://viewer.zmags.com/publication/1220b1e9?page=42">Burlington Resources acquisition late in the firs</a> Burlington Resources acquisition late in the firs<a title="2008 Annual Report page 43" href="http://viewer.zmags.com/publication/1220b1e9?page=43">bank facility entered into during October 2008 to</a> bank facility entered into during October 2008 to<a title="2008 Annual Report page 44" href="http://viewer.zmags.com/publication/1220b1e9?page=44">Off-Balance Sheet ArrangementsAs part of our nor</a> Off-Balance Sheet ArrangementsAs part of our nor<a title="2008 Annual Report page 45" href="http://viewer.zmags.com/publication/1220b1e9?page=45">noncash impairments taken in the fourth quarter o</a> noncash impairments taken in the fourth quarter o<a title="2008 Annual Report page 46" href="http://viewer.zmags.com/publication/1220b1e9?page=46">(d) Does not include: Pensions — for the 2009 thr</a> (d) Does not include: Pensions — for the 2009 thr<a title="2008 Annual Report page 47" href="http://viewer.zmags.com/publication/1220b1e9?page=47"> Capital spending for our Alaskan operations </a> Capital spending for our Alaskan operations <a title="2008 Annual Report page 48" href="http://viewer.zmags.com/publication/1220b1e9?page=48">LUKOIL InvestmentCapital spending in our LUKOIL </a> LUKOIL InvestmentCapital spending in our LUKOIL <a title="2008 Annual Report page 49" href="http://viewer.zmags.com/publication/1220b1e9?page=49">marketing outlets throughout the United States. F</a> marketing outlets throughout the United States. F<a title="2008 Annual Report page 50" href="http://viewer.zmags.com/publication/1220b1e9?page=50">increase costs or reduce demand for fossil energy</a> increase costs or reduce demand for fossil energy<a title="2008 Annual Report page 51" href="http://viewer.zmags.com/publication/1220b1e9?page=51">contingent consideration and the use of the impai</a> contingent consideration and the use of the impai<a title="2008 Annual Report page 52" href="http://viewer.zmags.com/publication/1220b1e9?page=52">reserves. For complex exploratory discoveries, it</a> reserves. For complex exploratory discoveries, it<a title="2008 Annual Report page 53" href="http://viewer.zmags.com/publication/1220b1e9?page=53">based on judgmental assessments of future product</a> based on judgmental assessments of future product<a title="2008 Annual Report page 54" href="http://viewer.zmags.com/publication/1220b1e9?page=54">accounting rules and the pension plan funding reg</a> accounting rules and the pension plan funding reg<a title="2008 Annual Report page 55" href="http://viewer.zmags.com/publication/1220b1e9?page=55">Quantitative and Qualitative DisclosuresAbout Ma</a> Quantitative and Qualitative DisclosuresAbout Ma<a title="2008 Annual Report page 56" href="http://viewer.zmags.com/publication/1220b1e9?page=56"> The following tables present principal cash</a> The following tables present principal cash<a title="2008 Annual Report page 57" href="http://viewer.zmags.com/publication/1220b1e9?page=57">Selected Financial Data </a> Selected Financial Data <a title="2008 Annual Report page 58" href="http://viewer.zmags.com/publication/1220b1e9?page=58">Report of ManagementManagement prepared, and </a> Report of ManagementManagement prepared, and <a title="2008 Annual Report page 59" href="http://viewer.zmags.com/publication/1220b1e9?page=59">Report of Independent Registered Public Accountin</a> Report of Independent Registered Public Accountin<a title="2008 Annual Report page 60" href="http://viewer.zmags.com/publication/1220b1e9?page=60">Report of Independent Registered Public Accountin</a> Report of Independent Registered Public Accountin<a title="2008 Annual Report page 61" href="http://viewer.zmags.com/publication/1220b1e9?page=61">Consolidated Statement of Operations </a> Consolidated Statement of Operations <a title="2008 Annual Report page 62" href="http://viewer.zmags.com/publication/1220b1e9?page=62">Consolidated Balance Sheet </a> Consolidated Balance Sheet <a title="2008 Annual Report page 63" href="http://viewer.zmags.com/publication/1220b1e9?page=63">Consolidated Statement of Cash Flows </a> Consolidated Statement of Cash Flows <a title="2008 Annual Report page 64" href="http://viewer.zmags.com/publication/1220b1e9?page=64">Consolidated Statement of Changes in Common Stock</a> Consolidated Statement of Changes in Common Stock<a title="2008 Annual Report page 65" href="http://viewer.zmags.com/publication/1220b1e9?page=65">Notes to Consolidated Financial StatementsNote </a> Notes to Consolidated Financial StatementsNote <a title="2008 Annual Report page 66" href="http://viewer.zmags.com/publication/1220b1e9?page=66">derivative instruments that are designated and qu</a> derivative instruments that are designated and qu<a title="2008 Annual Report page 67" href="http://viewer.zmags.com/publication/1220b1e9?page=67">Syncrude mining operations are determined by the </a> Syncrude mining operations are determined by the <a title="2008 Annual Report page 68" href="http://viewer.zmags.com/publication/1220b1e9?page=68">perform on a guarantee, we accrue a separate liab</a> perform on a guarantee, we accrue a separate liab<a title="2008 Annual Report page 69" href="http://viewer.zmags.com/publication/1220b1e9?page=69">asset or liability, either directly or indirectly</a> asset or liability, either directly or indirectly<a title="2008 Annual Report page 70" href="http://viewer.zmags.com/publication/1220b1e9?page=70">additional disclosures about an entity's involvem</a> additional disclosures about an entity's involvem<a title="2008 Annual Report page 71" href="http://viewer.zmags.com/publication/1220b1e9?page=71">Note 4 — Variable Interest Entities (VIEs)We hol</a> Note 4 — Variable Interest Entities (VIEs)We hol<a title="2008 Annual Report page 72" href="http://viewer.zmags.com/publication/1220b1e9?page=72">of Cold Spring's investment in Ashford. Should ou</a> of Cold Spring's investment in Ashford. Should ou<a title="2008 Annual Report page 73" href="http://viewer.zmags.com/publication/1220b1e9?page=73">■ FCCL Oil Sands Partnership — 50 percent owned b</a> ■ FCCL Oil Sands Partnership — 50 percent owned b<a title="2008 Annual Report page 74" href="http://viewer.zmags.com/publication/1220b1e9?page=74">the closing date. The basis difference at Decembe</a> the closing date. The basis difference at Decembe<a title="2008 Annual Report page 75" href="http://viewer.zmags.com/publication/1220b1e9?page=75">the contract to have, a relatively stable purchas</a> the contract to have, a relatively stable purchas<a title="2008 Annual Report page 76" href="http://viewer.zmags.com/publication/1220b1e9?page=76">The following table provides an aging of suspende</a> The following table provides an aging of suspende<a title="2008 Annual Report page 77" href="http://viewer.zmags.com/publication/1220b1e9?page=77">it a controlling interest than an investor would </a> it a controlling interest than an investor would <a title="2008 Annual Report page 78" href="http://viewer.zmags.com/publication/1220b1e9?page=78"> On June 26, 2007, we announced we had been </a> On June 26, 2007, we announced we had been <a title="2008 Annual Report page 79" href="http://viewer.zmags.com/publication/1220b1e9?page=79">recorded an impairment of $131 million associated</a> recorded an impairment of $131 million associated<a title="2008 Annual Report page 80" href="http://viewer.zmags.com/publication/1220b1e9?page=80">Note 12 — DebtLong-term debt at December 31 was:</a> Note 12 — DebtLong-term debt at December 31 was:<a title="2008 Annual Report page 81" href="http://viewer.zmags.com/publication/1220b1e9?page=81">we had access to $2.6 billion in borrowing capaci</a> we had access to $2.6 billion in borrowing capaci<a title="2008 Annual Report page 82" href="http://viewer.zmags.com/publication/1220b1e9?page=82">Other Guarantees■ In connection with certain pla</a> Other Guarantees■ In connection with certain pla<a title="2008 Annual Report page 83" href="http://viewer.zmags.com/publication/1220b1e9?page=83">EnvironmentalWe are subject to federal, state an</a> EnvironmentalWe are subject to federal, state an<a title="2008 Annual Report page 84" href="http://viewer.zmags.com/publication/1220b1e9?page=84">Note 16 — Financial Instruments andDerivative Co</a> Note 16 — Financial Instruments andDerivative Co<a title="2008 Annual Report page 85" href="http://viewer.zmags.com/publication/1220b1e9?page=85">■ Enable us to use the market knowledge gained fr</a> ■ Enable us to use the market knowledge gained fr<a title="2008 Annual Report page 86" href="http://viewer.zmags.com/publication/1220b1e9?page=86">Note 18 — Preferred Share Purchase RightsIn 2002</a> Note 18 — Preferred Share Purchase RightsIn 2002<a title="2008 Annual Report page 87" href="http://viewer.zmags.com/publication/1220b1e9?page=87">Weighted-Average Assumptions Used to Determin</a> Weighted-Average Assumptions Used to Determin<a title="2008 Annual Report page 88" href="http://viewer.zmags.com/publication/1220b1e9?page=88">We recognized pension settlement losses of $18 mi</a> We recognized pension settlement losses of $18 mi<a title="2008 Annual Report page 89" href="http://viewer.zmags.com/publication/1220b1e9?page=89">Defined Contribution PlansMost U.S. employees (e</a> Defined Contribution PlansMost U.S. employees (e<a title="2008 Annual Report page 90" href="http://viewer.zmags.com/publication/1220b1e9?page=90"> Total share-based compensation expense recog</a> Total share-based compensation expense recog<a title="2008 Annual Report page 91" href="http://viewer.zmags.com/publication/1220b1e9?page=91"> The following summarizes our stock unit act</a> The following summarizes our stock unit act<a title="2008 Annual Report page 92" href="http://viewer.zmags.com/publication/1220b1e9?page=92"> The following summarizes the aggregate acti</a> The following summarizes the aggregate acti<a title="2008 Annual Report page 93" href="http://viewer.zmags.com/publication/1220b1e9?page=93">the future tax benefit for recognition of deferre</a> the future tax benefit for recognition of deferre<a title="2008 Annual Report page 94" href="http://viewer.zmags.com/publication/1220b1e9?page=94">Note 22 — Other Comprehensive Income (Loss)The c</a> Note 22 — Other Comprehensive Income (Loss)The c<a title="2008 Annual Report page 95" href="http://viewer.zmags.com/publication/1220b1e9?page=95">Note 25 — Related Party TransactionsSignificant </a> Note 25 — Related Party TransactionsSignificant <a title="2008 Annual Report page 96" href="http://viewer.zmags.com/publication/1220b1e9?page=96">Analysis of Results by Operating SegmentMillio</a> Analysis of Results by Operating SegmentMillio<a title="2008 Annual Report page 97" href="http://viewer.zmags.com/publication/1220b1e9?page=97">Millions of Dollars2008 2007 20</a> Millions of Dollars2008 2007 20<a title="2008 Annual Report page 98" href="http://viewer.zmags.com/publication/1220b1e9?page=98">Note 27 — New Accounting StandardsIn December 20</a> Note 27 — New Accounting StandardsIn December 20<a title="2008 Annual Report page 99" href="http://viewer.zmags.com/publication/1220b1e9?page=99">Oil and Gas Operations (Unaudited)In accordance </a> Oil and Gas Operations (Unaudited)In accordance <a title="2008 Annual Report page 100" href="http://viewer.zmags.com/publication/1220b1e9?page=100">■ Proved Reserves WorldwideYears EndedDecembe</a> ■ Proved Reserves WorldwideYears EndedDecembe<a title="2008 Annual Report page 101" href="http://viewer.zmags.com/publication/1220b1e9?page=101">Years EndedDecember 31Developed and Undeve</a> Years EndedDecember 31Developed and Undeve<a title="2008 Annual Report page 102" href="http://viewer.zmags.com/publication/1220b1e9?page=102">Years EndedDecember 31Developed and Undeve</a> Years EndedDecember 31Developed and Undeve<a title="2008 Annual Report page 103" href="http://viewer.zmags.com/publication/1220b1e9?page=103">■ Results of OperationsYears Ended </a> ■ Results of OperationsYears Ended <a title="2008 Annual Report page 104" href="http://viewer.zmags.com/publication/1220b1e9?page=104">Year Ended </a> Year Ended <a title="2008 Annual Report page 105" href="http://viewer.zmags.com/publication/1220b1e9?page=105">■ StatisticsNet Production </a> ■ StatisticsNet Production <a title="2008 Annual Report page 106" href="http://viewer.zmags.com/publication/1220b1e9?page=106">Taxes Other Than Income Taxes 2008 </a> Taxes Other Than Income Taxes 2008 <a title="2008 Annual Report page 107" href="http://viewer.zmags.com/publication/1220b1e9?page=107">■ Costs Incurred2008Unproved property a</a> ■ Costs Incurred2008Unproved property a<a title="2008 Annual Report page 108" href="http://viewer.zmags.com/publication/1220b1e9?page=108">■ Capitalized CostsAt December 31 </a> ■ Capitalized CostsAt December 31 <a title="2008 Annual Report page 109" href="http://viewer.zmags.com/publication/1220b1e9?page=109">■ Standardized Measure of Discounted Future Net </a> ■ Standardized Measure of Discounted Future Net <a title="2008 Annual Report page 110" href="http://viewer.zmags.com/publication/1220b1e9?page=110">Sources of Change in DiscountedFuture Net Cash F</a> Sources of Change in DiscountedFuture Net Cash F<a title="2008 Annual Report page 111" href="http://viewer.zmags.com/publication/1220b1e9?page=111">5-Year Financial Review (Millions of Dollars Exce</a> 5-Year Financial Review (Millions of Dollars Exce<a title="2008 Annual Report page 112" href="http://viewer.zmags.com/publication/1220b1e9?page=112">Board of DirectorsRichard L.Armitage, 63, presid</a> Board of DirectorsRichard L.Armitage, 63, presid<a title="2008 Annual Report page 113" href="http://viewer.zmags.com/publication/1220b1e9?page=113">Bobby S. Shackouls, 58, chairman of Burling-ton </a> Bobby S. Shackouls, 58, chairman of Burling-ton <a title="2008 Annual Report page 114" href="http://viewer.zmags.com/publication/1220b1e9?page=114">GlossaryAppraisal Drilling: Drilling carri</a> GlossaryAppraisal Drilling: Drilling carri<a title="2008 Annual Report page 115" href="http://viewer.zmags.com/publication/1220b1e9?page=115">Stockholder InformationAnnual MeetingConoc</a> Stockholder InformationAnnual MeetingConoc<a title="2008 Annual Report page 116" href="http://viewer.zmags.com/publication/1220b1e9?page=116">www.conocophillips.com</a> www.conocophillips.com