Inventory Accounting Policy
Inventory Disclosure
Adjustment to Inventory: from LIFO to FIFO
Adjusted Ratios: LIFO vs. FIFO (Summary)
Adjusted Current Ratio
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

ConocoPhillips has several valuation methods for the various types of inventories and consistently uses the following methods for each type of inventory. ConocoPhillips’ commodity-related inventories are recorded at cost primarily using the last-in, first-out (LIFO) basis. ConocoPhillips measures these inventories at the lower-of-cost-or-market in the aggregate. Any necessary lower-of-cost-or-market write-downs at year end are recorded as permanent adjustments to the LIFO cost basis. LIFO is used to better match current inventory costs with current revenues. Costs include both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location, but not unusual/nonrecurring costs or research and development costs. Materials, supplies and other miscellaneous inventories, such as tubular goods and well equipment, are valued using various methods, including the weighted-average-cost method, and the first-in, first-out (FIFO) method, consistent with industry practice.

Source: 10-K (filing date: 2018-02-20).

ConocoPhillips, Statement of Financial Position, Inventory

USD $ in millions

		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014		Dec 31, 2013
	Crude oil and natural gas
	Materials and supplies
	Inventories

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

Item	Description	The company
Inventories	Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.	ConocoPhillips’s inventories declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Adjustment to Inventories
	Inventories at LIFO (as reported)
	Add: Inventory LIFO reserve
	Inventories at FIFO (adjusted)
	Adjustment to Current Assets
	Current assets (as reported)
	Add: Inventory LIFO reserve
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Add: Inventory LIFO reserve
	Total assets (adjusted)
	Adjustment to Common Stockholders’ Equity
	Common stockholders’ equity (as reported)
	Add: Inventory LIFO reserve
	Common stockholders’ equity (adjusted)
	Adjustment to Net Income (loss) Attributable To ConocoPhillips
	Net income (loss) attributable to ConocoPhillips (as reported)
	Add: Increase (decrease) in inventory LIFO reserve
	Net income (loss) attributable to ConocoPhillips (adjusted)

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

ConocoPhillips’s inventory value on Dec 31, 2017 would be $1,184 (in millions) if the FIFO inventory method was used instead of LIFO. ConocoPhillips’s inventories, valued on a LIFO basis, on Dec 31, 2017 were $1,060 . ConocoPhillips’s inventories would have been $124 higher than reported on Dec 31, 2017 if the FIFO method had been used instead.

ConocoPhillips, Financial Data: Reported vs. Adjusted

ConocoPhillips, adjusted ratios

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Current Ratio
	Reported current ratio (LIFO)
	Adjusted current ratio (FIFO)
	Net Profit Margin
	Reported net profit margin (LIFO)
	Adjusted net profit margin (FIFO)
	Total Asset Turnover
	Reported total asset turnover (LIFO)
	Adjusted total asset turnover (FIFO)
	Financial Leverage
	Reported financial leverage (LIFO)
	Adjusted financial leverage (FIFO)
	Return on Equity (ROE)
	Reported ROE (LIFO)
	Adjusted ROE (FIFO)
	Return on Assets (ROA)
	Reported ROA (LIFO)
	Adjusted ROA (FIFO)

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	ConocoPhillips’s adjusted current ratio improved from 2015 to 2016 and from 2016 to 2017.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	ConocoPhillips’s adjusted net profit margin improved from 2015 to 2016 and from 2016 to 2017.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	ConocoPhillips’s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	ConocoPhillips’s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	ConocoPhillips’s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	ConocoPhillips’s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

ConocoPhillips, Ratios: Reported vs. Adjusted

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Current assets
	Current liabilities
	Ratio
	Current ratio¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Adjusted current assets
	Current liabilities
	Ratio
	Adjusted current ratio²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	ConocoPhillips’s adjusted current ratio improved from 2015 to 2016 and from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ConocoPhillips
	Sales and other operating revenues
	Ratio
	Net profit margin¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to ConocoPhillips
	Sales and other operating revenues
	Ratio
	Adjusted net profit margin²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to ConocoPhillips ÷ Sales and other operating revenues
= 100 × hidden ÷ hidden = hidden

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Sales and other operating revenues
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	ConocoPhillips’s adjusted net profit margin improved from 2015 to 2016 and from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Sales and other operating revenues
	Total assets
	Ratio
	Total asset turnover¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Sales and other operating revenues
	Adjusted total assets
	Ratio
	Adjusted total asset turnover²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ Total asset turnover = Sales and other operating revenues ÷ Total assets
= hidden ÷ hidden = hidden

² Adjusted total asset turnover = Sales and other operating revenues ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	ConocoPhillips’s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Total assets
	Common stockholders’ equity
	Ratio
	Financial leverage¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Adjusted total assets
	Adjusted common stockholders’ equity
	Ratio
	Adjusted financial leverage²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ Financial leverage = Total assets ÷ Common stockholders’ equity
= hidden ÷ hidden = hidden

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted common stockholders’ equity
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	ConocoPhillips’s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ConocoPhillips
	Common stockholders’ equity
	Ratio
	ROE¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to ConocoPhillips
	Adjusted common stockholders’ equity
	Ratio
	Adjusted ROE²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ ROE = 100 × Net income (loss) attributable to ConocoPhillips ÷ Common stockholders’ equity
= 100 × hidden ÷ hidden = hidden

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Adjusted common stockholders’ equity
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	ConocoPhillips’s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ConocoPhillips
	Total assets
	Ratio
	ROA¹
	Adjusted: from LIFO to FIFO
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to ConocoPhillips
	Adjusted total assets
	Ratio
	Adjusted ROA²

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-25).

2017 Calculations

¹ ROA = 100 × Net income (loss) attributable to ConocoPhillips ÷ Total assets
= 100 × hidden ÷ hidden = hidden

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	ConocoPhillips’s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

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Discounted Cash Flow (DCF) Valuation
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ConocoPhillips (COP)

Analysis of Inventory

Inventory Accounting Policy

Inventory Disclosure

Adjustment to Inventory: from LIFO to FIFO

ConocoPhillips, Financial Data: Reported vs. Adjusted

Adjusted Ratios: LIFO vs. FIFO (Summary)

ConocoPhillips, Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)