What is the main purpose of this 8-K filing?

This 8-K filing serves as a supplement to the definitive joint proxy statement/prospectus for the proposed merger between ConocoPhillips and Concho Resources. Its primary purpose is to provide additional details on the financial analyses conducted by the financial advisors for both companies, in response to litigation filed in connection with the merger.

What is the status of the litigation related to the merger?

Seven lawsuits were filed against ConocoPhillips, Concho, and their respective directors. These lawsuits generally allege that the merger-related disclosures contained false or misleading statements or omissions, particularly concerning financial projections and analyses. ConocoPhillips and Concho believe these claims are without merit. Importantly, due to the supplemental disclosures in this filing, the plaintiff in the Garfield lawsuit has agreed to voluntarily dismiss their action.

What kind of additional financial information is being disclosed?

The filing provides more detailed information about the discounted cash flow analyses performed by Goldman Sachs (ConocoPhillips' advisor), Credit Suisse, and J.P. Morgan (Concho's advisors). This includes specifics on discount rates used, perpetuity growth rates, terminal multiples, and the resulting implied equity value ranges for both Concho on a standalone basis and for ConocoPhillips under different scenarios. This aims to address concerns raised in the litigation about the completeness of the disclosed financial analyses.

Does this filing change the terms of the merger agreement?

No, this filing does not appear to change the terms of the merger agreement itself. It is primarily providing supplemental information to address litigation and enhance disclosures regarding the financial analyses, rather than altering the core terms of the transaction.

COP 8-K SEC Disclosure

Summary

This 8-K filing by ConocoPhillips (COP) on January 5, 2021, primarily serves as a supplement to the definitive joint proxy statement/prospectus related to its proposed merger with Concho Resources Inc. The filing addresses litigation that has arisen in connection with the merger, providing updated information and supplemental disclosures concerning the financial analyses performed by the financial advisors for both companies. Importantly, ConocoPhillips states that it and Concho believe the claims in the lawsuits are without merit and that no further disclosure is required. However, as a result of the supplemental disclosures provided in this filing, the plaintiff in one specific lawsuit (Garfield lawsuit) has agreed to voluntarily dismiss their action. The supplemental disclosures focus on elaborating on the financial valuation methodologies and results from the fairness opinions provided by Goldman Sachs (for ConocoPhillips) and Credit Suisse and J.P. Morgan (for Concho). These additions provide more granular detail on discounted cash flow analyses, including specific discount rates, perpetuity growth rates, terminal multiples, and resulting implied per-share equity value ranges for both Concho standalone and for ConocoPhillips under various scenarios. This additional information is intended to address allegations made in the litigation regarding material omissions or misstatements in the proxy statement/prospectus concerning these financial analyses.

Key Highlights

1ConocoPhillips filed an 8-K on January 5, 2021, to supplement its proxy statement concerning the merger with Concho Resources Inc.
2The filing addresses litigation filed against both companies and their directors related to alleged material omissions or misstatements in the merger-related disclosures.
3ConocoPhillips and Concho believe the litigation claims are without merit and that no further disclosure is legally required.
4As a result of supplemental disclosures in this 8-K, the plaintiff in the Garfield lawsuit has agreed to voluntarily dismiss their action.
5The filing provides additional details on the financial analyses and valuation methodologies used by financial advisors (Goldman Sachs, Credit Suisse, J.P. Morgan) in their fairness opinions.
6Specific details are added regarding discounted cash flow analyses, including discount rates, perpetuity growth rates, terminal multiples, and implied equity value ranges for both Concho and ConocoPhillips.
7The supplemental disclosures aim to address concerns raised in the litigation regarding the completeness of information provided to stockholders about the financial analyses and the merger process.

CONOCOPHILLIPS 8-K Report, Corporate Update (Jan 5, 2021)

Summary

Key Highlights

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