8-KOther Events

CONOCOPHILLIPS 8-K Report, Corporate Update (Dec 3, 2004)

Filed December 3, 2004For Securities:COP

Summary

ConocoPhillips announced a change in how it reports its finding and development cost-per-barrel metric. Historically, the company calculated this metric by dividing the net reserve change (excluding production and sales) by the costs incurred for the period, as detailed in its SFAS No. 69 disclosures. This method often included reserves where significant development costs were yet to be incurred, or costs related to reserves added in prior years. Due to these timing discrepancies, which could lead to the metric not fully representing the total costs for ongoing projects or future expectations, ConocoPhillips has decided to discontinue reporting this specific metric. Investors should note that this change does not reflect any alteration in the company's operational performance or underlying reserve values, but rather a refinement in the reporting methodology to provide a potentially more representative view of finding and development costs.

Key Highlights

  • 1ConocoPhillips is discontinuing the reporting of its historical finding and development cost-per-barrel metric.
  • 2The previous metric was calculated using net reserve changes (excluding production/sales) divided by period costs.
  • 3The discontinuation is due to timing discrepancies between reserve additions and incurred development costs.
  • 4The former metric could include reserves with significant future development costs or costs for prior-year reserve additions.
  • 5The company states the metric may not have accurately represented total costs for ongoing projects or future cost expectations.
  • 6This change impacts how the company discloses operational efficiency metrics, not its actual operational results.

Frequently Asked Questions

ConocoPhillips is discontinuing this metric because the previous calculation method had timing issues. It often included reserves for which most development costs had not yet been incurred, or it included costs related to reserves added in earlier years. This meant the metric may not have accurately represented the total finding and development costs for current projects or future expected costs.

This change means investors will no longer see the historical finding and development cost-per-barrel metric in ConocoPhillips' SEC filings. While it's a change in reporting, it is not an indication of a decline in operational performance or a change in the company's reserve base. It's a methodological adjustment aimed at improving clarity.

The filing specifically states the discontinuation of the 'finding and development cost-per-barrel metric' as previously calculated. It does not explicitly mention whether alternative metrics for finding and development costs will be introduced. Investors should review future SEC filings for any updated disclosures or alternative performance indicators.