UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

        (Mark One)

[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended		March 31, 2009

or

[  ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from		to

Commission file number:		001-32395

Delaware		01-0562944
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 North Dairy Ashford, Houston, TX 77079
(Address of principal executive offices)                     (Zip Code)

281-293-1000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [x]		Accelerated filer [  ]		Non-accelerated filer [  ]		Smaller reporting company [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ]  No [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [  ] No [x]

The registrant had 1,481,554,204 shares of common stock, $.01 par value, outstanding at March 31, 2009.

CONOCOPHILLIPS

TABLE OF CONTENTS

		Page
Part I — Financial Information
Item 1. Financial Statements
Consolidated Income Statement			1
Consolidated Balance Sheet			2
Consolidated Statement of Cash Flows			3
Notes to Consolidated Financial Statements			4
Supplementary Information—Condensed Consolidating Financial Information			24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			47
Item 4. Controls and Procedures			47
Part II — Other Information
Item 1. Legal Proceedings			48
Item 1A. Risk Factors			49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49
Item 6. Exhibits			50
Signature			51
EX-12
EX-31.1
EX-31.2
EX-32

Consolidated Income Statement		ConocoPhillips

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Revenues and Other Income
Sales and other operating revenues*		$	30,741				54,883
Equity in earnings of affiliates			415				1,359
Other income			124				310
Total Revenues and Other Income			31,280				56,552
Costs and Expenses
Purchased crude oil, natural gas and products			19,759				37,820
Production and operating expenses			2,545				2,691
Selling, general and administrative expenses			475				526
Exploration expenses			225				309
Depreciation, depletion and amortization			2,230				2,209
Impairments			3				6
Taxes other than income taxes*			3,464				5,155
Accretion on discounted liabilities			104				104
Interest and debt expense			310				207
Foreign currency transaction losses (gains)			131				(43	)
Total Costs and Expenses			29,246				48,984
Income before income taxes			2,034				7,568
Provision for income taxes			1,178				3,410
Net income			856				4,158
Less: net income attributable to noncontrolling interests			(16	)			(19	)
Net Income Attributable to ConocoPhillips		$	840				4,139
Net Income Attributable to ConocoPhillips Per Share of Common Stock (dollars)
Basic		$	.57				2.65
Diluted			.56				2.62
Dividends Paid Per Share of Common Stock (dollars)		$	.47				.47
Average Common Shares Outstanding (in thousands)
Basic			1,485,890				1,562,198
Diluted			1,495,247				1,582,025
*Includes excise taxes on petroleum products sales:		$	3,060				3,857
See Notes to Consolidated Financial Statements.

Consolidated Balance Sheet		ConocoPhillips

		Millions of Dollars
		March 31				December 31
		2009				2008
Assets
Cash and cash equivalents		$	802				755
Accounts and notes receivable (net of allowance of $109 million in 2009 and $61 million in 2008)			9,271				10,892
Accounts and notes receivable—related parties			1,048				1,103
Inventories			6,480				5,095
Prepaid expenses and other current assets			2,602				2,998
Total Current Assets			20,203				20,843
Investments and long-term receivables			31,724				30,926
Loans and advances—related parties			1,995				1,973
Net properties, plants and equipment			84,056				83,947
Goodwill			3,777				3,778
Intangibles			837				846
Other assets			659				552
Total Assets		$	143,251				142,865
Liabilities
Accounts payable		$	11,879				12,852
Accounts payable—related parties			1,442				1,138
Short-term debt			82				370
Accrued income and other taxes			4,143				4,273
Employee benefit obligations			673				939
Other accruals			2,111				2,208
Total Current Liabilities			20,330				21,780
Long-term debt			29,297				27,085
Asset retirement obligations and accrued environmental costs			7,177				7,163
Joint venture acquisition obligation—related party			5,507				5,669
Deferred income taxes			17,983				18,167
Employee benefit obligations			4,085				4,127
Other liabilities and deferred credits			2,679				2,609
Total Liabilities			87,058				86,600
Equity
Common stock (2,500,000,000 shares authorized at $.01 par value)
Issued (2009—1,730,674,524 shares; 2008—1,729,264,859 shares)
Par value			17				17
Capital in excess of par			43,419				43,396
Grantor trusts (at cost: 2009—40,773,505 shares; 2008—40,739,129 shares)			(703	)			(702	)
Treasury stock (at cost: 2009—208,346,815 shares; 2008—208,346,815 shares)			(16,211	)			(16,211	)
Accumulated other comprehensive loss			(2,118	)			(1,875	)
Unearned employee compensation			(95	)			(102	)
Retained earnings			30,786				30,642
Total Common Stockholders’ Equity			55,095				55,165
Noncontrolling interests			1,098				1,100
Total Equity			56,193				56,265
Total Liabilities and Equity		$	143,251				142,865

Consolidated Statement of Cash Flows		ConocoPhillips

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Cash Flows From Operating Activities
Net income		$	856				4,158
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization			2,230				2,209
Impairments			3				6
Dry hole costs and leasehold impairments			123				154
Accretion on discounted liabilities			104				104
Deferred taxes			(219	)			(17	)
Undistributed equity earnings			(322	)			(987	)
Gain on asset dispositions			(39	)			(181	)
Other			(2	)			(183	)
Working capital adjustments
Decrease (increase) in accounts and notes receivable			1,860				(725	)
Increase in inventories			(1,454	)			(2,783	)
Increase in prepaid expenses and other current assets			(201	)			(372	)
Increase (decrease) in accounts payable			(529	)			2,822
Increase (decrease) in taxes and other accruals			(525	)			2,382
Net Cash Provided by Operating Activities			1,885				6,587
Cash Flows From Investing Activities
Capital expenditures and investments			(2,906	)			(3,322	)
Proceeds from asset dispositions			86				370
Long-term advances/loans—related parties			(88	)			(67	)
Collection of advances/loans—related parties			11				-
Other			(29	)			7
Net Cash Used in Investing Activities			(2,926	)			(3,012	)
Cash Flows From Financing Activities
Issuance of debt			6,033				1,123
Repayment of debt			(4,102	)			(1,325	)
Issuance of company common stock			(21	)			7
Repurchase of company common stock			-				(2,496	)
Dividends paid on company common stock			(696	)			(730	)
Other			(203	)			(196	)
Net Cash Provided by (Used in) Financing Activities			1,011				(3,617	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents			77				9
Net Change in Cash and Cash Equivalents			47				(33	)
Cash and cash equivalents at beginning of period			755				1,456
Cash and Cash Equivalents at End of Period		$	802				1,423

Notes to Consolidated Financial Statements		ConocoPhillips

Note 1—Interim Financial Information

The interim-period financial information presented in the financial statements included in this report is unaudited and includes all known accruals and adjustments, in the opinion of management, necessary for a fair presentation of the consolidated financial position of ConocoPhillips and its results of operations and cash flows for such periods. All such adjustments are of a normal and recurring nature. To enhance your understanding of these interim financial statements, see the consolidated financial statements and notes included in our 2008 Annual Report on Form 10-K.

Note 2—Changes in Accounting Principles

SFAS No. 141 (Revised)
In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (Revised), “Business Combinations” (SFAS No. 141(R)), which was subsequently amended by FASB Staff Position (FSP) FAS 141(R)-1 in April 2009. This Statement applies prospectively to all transactions in which an entity obtains control of one or more other businesses on or after January 1, 2009. In general, SFAS No. 141(R) requires the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilities assumed in the transaction; establishes the acquisition date as the fair value measurement point; and modifies disclosure requirements. It also changes the accounting treatment for transaction costs, in-process research and development, restructuring costs, changes in deferred tax asset valuation allowances as a result of a business combination, and changes in income tax uncertainties after the acquisition date. Additionally, effective January 1, 2009, accounting for changes in valuation allowances for acquired deferred tax assets and the resolution of uncertain tax positions for prior business combinations impact tax expense instead of impacting goodwill.

SFAS No. 160
Effective January 1, 2009, we implemented SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51,” which requires noncontrolling interests, previously called minority interests, to be presented as a separate item in the equity section of the consolidated balance sheet. It also requires the amount of consolidated net income attributable to noncontrolling interests to be clearly presented on the face of the consolidated income statement. Additionally, this Statement clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions, and deconsolidation of a subsidiary requires gain or loss recognition in net income based on the fair value on the deconsolidation date. This Statement was applied prospectively with the exception of presentation and disclosure requirements, which were applied retrospectively for all periods presented, and did not significantly change the presentation of our consolidated financial statements. Equity attributable to noncontrolling interests did not change materially from year-end 2008 to March 31, 2009.

SFAS No. 161
We implemented SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB No. 133,” in the first quarter of 2009. This Statement does not affect amounts reported in the financial statements; it only expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” for derivative instruments within the scope of that Statement, to provide greater transparency. Disclosures previously required only for the annual financial statements will now be required in quarterly financial statements. In addition, we now must include an indication of the volume of derivative activity by category (e.g., interest rate, commodity and foreign currency); derivative gains and losses, by category, for the periods presented in the financial statements; and expanded disclosures about credit-risk-related contingent features. This Statement is effective for interim and annual financial statements. See Note 12—Financial Instruments and Derivative Contracts, for additional information.

SFAS No. 157
Effective January 1, 2008, we implemented SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. We elected to implement this Statement with the one-year deferral permitted by FSP FAS 157-2 for nonfinancial assets and nonfinancial liabilities measured at fair value, except those that are recognized or disclosed on a recurring basis (at least annually). Following the one-year deferral permitted by FSP FAS 157-2, effective January 1, 2009, we implemented SFAS No. 157 for nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis. The implementation covers assets and liabilities measured at fair value in a business combination; impaired properties, plants and equipment, intangible assets and goodwill; initial recognition of asset retirement obligations; and restructuring costs for which we use fair value. In the first three months of 2009, we did not have a business combination, impairment of goodwill or intangible asset, or restructuring accrual requiring the use of fair value. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of properties, plants and equipment in step two of a SFAS No. 144 impairment test is determined based on the present values of expected future cash flows using inputs reflecting our estimate of a number of variables used by industry participants when valuing similar assets or based on a multiple of operating cash flow validated with historical market transactions of similar assets where possible. Fair value used in the initial recognition of asset retirement obligations is determined based on the present value of expected future dismantlement costs incorporating our estimate of inputs used by industry participants when valuing similar liabilities. There was no impact to our consolidated financial statements from the implementation of SFAS No. 157 for nonfinancial assets and liabilities, and we do not expect any significant impact to our future consolidated financial statements, other than additional disclosures.

EITF No. 08-6
In November 2008, the FASB reached a consensus on Emerging Issues Task Force (EITF) Issue No. 08-6, “Equity Method Investment Accounting Considerations” (EITF 08-6), which was issued to clarify how the application of equity method accounting will be affected by SFAS No. 141(R) and SFAS No. 160. EITF 08-6 clarifies that an entity shall continue to use the cost accumulation model for its equity method investments. It also confirms past accounting practices related to the treatment of contingent consideration and the use of the impairment model under Accounting Principles Board (APB) Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock” (APB No. 18). Additionally, it requires an equity method investor to account for a share issuance by an investee as if the investor had sold a proportionate share of the investment. This Issue was effective January 1, 2009, and applies prospectively.

Note 3—Variable Interest Entities (VIEs)

We hold significant variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. Information on these VIEs follows.

We own a 24 percent interest in West2East Pipeline LLC, a company holding a 100 percent interest in Rockies Express Pipeline LLC, operated by Kinder Morgan Energy Partners, L.P. Rockies Express is constructing a natural gas pipeline from Colorado to Ohio. West2East is a VIE because a third party has a 49 percent voting interest through the end of the construction of the pipeline, but has no ownership interest. This third party was originally involved in the project, but exited and retained its voting interest to ensure project completion. We have no voting interest during the construction phase, but once the pipeline has been completed, our ownership will increase to 25 percent with a voting interest of 25 percent. Additionally, we have contracted for approximately 22 percent of the pipeline capacity for a 10-year period once the pipeline becomes operational. Construction commenced on the pipeline in 2006. The operator anticipates construction completion in late 2009 and estimates total construction costs of approximately $6.6 billion. Our portion is expected to be funded by a combination of equity contributions and a guarantee of debt incurred by Rockies Express. Given our 24 percent ownership and the fact expected returns are shared among the equity holders in proportion to ownership, we are not the primary beneficiary. We use the equity method of accounting for our investment. In 2006, we issued a guarantee for 24 percent of the $2 billion in credit facilities of Rockies Express. In addition, we have a guarantee for 24 percent of $600 million of Floating Rate Notes due in August 2009 issued by Rockies Express. At March 31, 2009, the book value of our investment in West2East

was $260 million. Construction cost estimates have increased significantly from original projections, and additional increases or other changes related to the investment may impact whether an other-than-temporary impairment of our equity investment in West2East is required under APB No. 18.

We have a 30 percent ownership interest with a 50 percent governance interest in the OOO Naryanmarneftegaz (NMNG) joint venture to develop resources in the Timan-Pechora province of Russia. The NMNG joint venture is a VIE because we and our related party, OAO LUKOIL, have disproportionate interests. When related parties are involved in a VIE, FASB Interpretation (FIN) 46(R) indicates that reasonable judgment should take into account the relevant facts and circumstances for the determination of the primary beneficiary. The activities of NMNG are more closely aligned with LUKOIL because they share Russia as a home country and LUKOIL conducts extensive exploration activities in the same province. Additionally, there are no financial guarantees given by LUKOIL or us, and LUKOIL owns 70 percent, versus our 30 percent direct interest. As a result, we have determined we are not the primary beneficiary of NMNG, and we use the equity method of accounting for this investment. The funding of NMNG has been provided with equity contributions for the development of the Yuzhno Khylchuyu (YK) field. Initial production from YK was achieved in June 2008. At March 31, 2009, the book value of our investment in the venture was $2,042 million.

Production from the NMNG joint venture fields is transported via pipeline to LUKOIL’s terminal at Varandey Bay on the Barents Sea and then shipped via tanker to international markets. LUKOIL completed an expansion of the terminal’s gross oil-throughput capacity from 30,000 barrels per day to 240,000 barrels per day, with us participating in the design and financing of the expansion. The terminal entity, Varandey Terminal Company, is a VIE because we and our related party, LUKOIL, have disproportionate interests. We had an obligation to fund, through loans, 30 percent of the terminal’s costs, but have no governance or direct ownership interest in the terminal. Similar to NMNG, we determined we are not the primary beneficiary for Varandey because of LUKOIL’s ownership, the activities are in LUKOIL’s home country, and LUKOIL is the operator of Varandey. We account for our loan to Varandey as a financial asset. Terminal construction was completed in June 2008, and the final loan amount was $249 million at March 2009 exchange rates, excluding accrued interest. Although repayments are not required to start until May 2010, beginning in the second half of 2008 and through March 31, 2009, Varandey used available cash to pay $23 million of interest. The outstanding accrued interest at March 31, 2009, was $31 million at March 2009 exchange rates.

We have an agreement with Freeport LNG Development, L.P. (Freeport LNG) to participate in a liquefied natural gas (LNG) receiving terminal in Quintana, Texas. We have no ownership in Freeport LNG; however, we own a 50 percent interest in Freeport LNG GP, Inc. (Freeport GP), which serves as the general partner managing the venture. We entered into a credit agreement with Freeport LNG, whereby we agreed to provide loan financing for the construction of the terminal. We also entered into a long-term agreement with Freeport LNG to use 0.9 billion cubic feet per day of regasification capacity. The terminal became operational in June 2008, and we began making payments under the terminal use agreement. In August 2008, the loan was converted from a construction loan to a term loan and consisted of $650 million in loan financing and $124 million of accrued interest. Freeport LNG began making loan repayments in September 2008, and the loan balance outstanding as of March 31, 2009, was $747 million. Freeport LNG is a VIE because Freeport GP holds no equity in Freeport LNG and the limited partners of Freeport LNG do not have any substantive decision making ability. We performed an analysis of the expected losses and determined we are not the primary beneficiary. This expected loss analysis took into account that the credit support arrangement requires Freeport LNG to maintain sufficient commercial insurance to mitigate any loan losses. The loan to Freeport LNG is accounted for as a financial asset, and our investment in Freeport GP is accounted for as an equity investment.

In the case of Ashford Energy Capital S.A., we consolidate this entity in our financial statements because we are the primary beneficiary of this VIE based on an analysis of the variability of the expected losses and expected residual returns. In December 2001, in order to raise funds for general corporate purposes, ConocoPhillips and Cold Spring Finance S.a.r.l. formed Ashford through the contribution of a $1 billion ConocoPhillips subsidiary promissory note and $500 million cash by Cold Spring. Through its initial $500 million investment, Cold Spring is entitled to a cumulative annual preferred return consisting of 1.32 percent plus a three-month LIBOR rate set at the beginning of each quarter. The preferred return at

March 31, 2009, was 2.74 percent. In 2008, Cold Spring declined its option to remarket its investment in Ashford. This option remains available in 2018 and at each 10-year anniversary thereafter. If remarketing is unsuccessful, we could be required to provide a letter of credit in support of Cold Spring’s investment, or in the event such a letter of credit is not provided, cause the redemption of Cold Spring’s investment in Ashford. Should our credit rating fall below investment grade, Ashford would require a letter of credit to support $475 million of the term loans, as of March 31, 2009, made by Ashford to other ConocoPhillips subsidiaries. If the letter of credit is not obtained within 60 days, Cold Spring could cause Ashford to sell the ConocoPhillips subsidiary notes. At March 31, 2009, Ashford held $2 billion of ConocoPhillips subsidiary notes and $28 million in investments unrelated to ConocoPhillips. We report Cold Spring’s investment as a noncontrolling interest because it is not mandatorily redeemable, and the entity does not have a specified liquidation date. Other than the obligation to make payment on the subsidiary notes described above, Cold Spring does not have recourse to our general credit.

Note 4—Inventories

Inventories consisted of the following:

		Millions of Dollars
		March 31				December 31
		2009				2008
Crude oil and petroleum products		$	5,573				4,232
Materials, supplies and other			907				863
		$	6,480				5,095

Inventories valued on the last-in, first-out (LIFO) basis totaled $5,378 million and $3,939 million at March 31, 2009, and December 31, 2008, respectively. The remaining inventories are valued under various methods, including first-in, first-out and weighted average. The excess of current replacement cost over LIFO cost of inventories amounted to $2,400 million and $1,959 million at March 31, 2009, and December 31, 2008, respectively.

Note 5—Assets Held for Sale

In January of 2009, we closed on the sale of a large part of our U.S. retail marketing assets, which included seller financing in the form of a $370 million five-year note and letters of credit totaling $54 million. In addition, we had smaller dispositions in the first quarter. Accordingly, at March 31, 2009, the balance of assets and liabilities held for sale was not material. We expect the disposal of the remaining held-for-sale assets to be completed in 2009.

Note 6—Investments, Loans and Long-Term Receivables

LUKOIL
Our ownership interest in LUKOIL was 20 percent at March 31, 2009, based on 851 million shares authorized and issued. For financial reporting under U.S. generally accepted accounting principles, treasury shares held by LUKOIL are not considered outstanding for determining our equity method ownership interest in LUKOIL. Our ownership interest, based on estimated shares outstanding, was 20.09 percent at March 31, 2009.

At March 31, 2009, the book value of our ordinary share investment in LUKOIL was $5,494 million. Our 20 percent share of the net assets of LUKOIL was estimated to be $10,104 million. A majority of this negative basis difference of $4,610 million is being amortized on a straight-line basis over a 22-year useful life as an

increase to equity earnings. On March 31, 2009, the closing price of LUKOIL shares on the London Stock Exchange was $37.50 per share, making the total market value of our LUKOIL investment $6,379 million.

Loans to Related Parties
As part of our normal ongoing business operations and consistent with industry practice, we invest and enter into numerous agreements with other parties to pursue business opportunities, which share costs and apportion risks among the parties as governed by the agreements. Included in such activity are loans made to certain affiliated companies. Significant loans to affiliated companies at March 31, 2009, included the following:

	•		$747 million in loan financing to Freeport LNG Development, L.P. for the construction of an LNG facility, which became operational in June 2008. In August 2008, when the loan was converted from a construction loan to a term loan, it consisted of $650 million in loan financing and $124 million of accrued interest. Freeport began making repayments in September 2008.
	•		$249 million at March 2009 exchange rates, excluding accrued interest, in loan financing to Varandey Terminal Company associated with the costs of a terminal expansion. Terminal expansion was completed in June 2008, and although repayments are not required to start until May 2010, beginning in the second half of 2008 and through March 31, 2009, Varandey used available cash to pay $23 million of interest. The outstanding accrued interest at March 31, 2009, was $31 million at March 2009 exchange rates.
	•		$923 million of project financing and an additional $79 million of accrued interest to Qatargas 3, an integrated project to produce and liquefy natural gas from Qatar’s North field. Our maximum exposure to this financing structure is $1.2 billion.

Other Investments
We have investments remeasured at fair value on a recurring basis to support certain nonqualified deferred compensation plans. The fair value of these assets at March 31, 2009, was $290 million, and substantially the entire value is categorized in Level 1 of the fair value hierarchy defined by SFAS No. 157.

Note 7—Properties, Plants and Equipment

Our investment in properties, plants and equipment (PP&E), with accumulated depreciation, depletion and amortization (Accum. DD&A), was:

		Millions of Dollars
		March 31, 2009												December 31, 2008
		Gross				Accum.				Net				Gross				Accum.				Net
		PP&E				DD&A				PP&E				PP&E				DD&A				PP&E
E&P		$	103,952				36,947				67,005				102,591				35,375				67,216
Midstream			121				71				50				120				70				50
R&M			21,651				6,167				15,484				21,116				5,962				15,154
LUKOIL Investment			-				-				-				-				-				-
Chemicals			-				-				-				-				-				-
Emerging Businesses			1,060				297				763				1,056				293				763
Corporate and Other			1,568				814				754				1,561				797				764
		$	128,352				44,296				84,056				126,444				42,497				83,947

Suspended Wells
Our capitalized cost of suspended wells at March 31, 2009, was $717 million, an increase of $57 million from $660 million at year-end 2008. For the category of exploratory well costs capitalized for a period greater than one year as of December 31, 2008, $3 million was charged to dry hole expense during the first three months of 2009.

Note 8—Debt

In early February 2009, we issued $1.5 billion of 4.75% Notes due 2014, $2.25 billion of 5.75% Notes due 2019, and $2.25 billion of 6.50% Notes due 2039. The proceeds of the notes were primarily used to reduce outstanding commercial paper balances. Under the terms of our $2.5 billion, 364-day revolving credit facility, the receipt of the proceeds from this bond offering terminated this revolving credit facility.

In late March 2009, we used proceeds from the issuance of commercial paper to redeem our $284 million 6.375% Notes upon their maturity.

At March 31, 2009, we had a $7.35 billion revolving credit facility, which expires in September 2012. The facility may be used as direct bank borrowings, as support for the ConocoPhillips $5.6 billion commercial paper program, as support for the ConocoPhillips Qatar Funding Ltd. $1.5 billion commercial paper program, as support for issuances of letters of credit totaling up to $750 million, or as support for up to $250 million of commercial paper issued by TransCanada Keystone Pipeline LP, a Keystone pipeline joint venture entity. At both March 31, 2009, and December 31, 2008, we had no outstanding borrowings under the credit facility, but $40 million in letters of credit had been issued. Under both ConocoPhillips commercial paper programs, $3,219 million of commercial paper was outstanding at March 31, 2009, compared with $6,933 million at December 31, 2008.

Since we had $3,219 million of commercial paper outstanding, had issued $40 million of letters of credit and had up to a $250 million guarantee on commercial paper issued by Keystone, we had access to $3.8 billion in borrowing capacity under our revolving credit facility at March 31, 2009.

Also at March 31, 2009, we classified $4,169 million of short-term debt as long-term debt, based on our ability and intent to refinance the obligation on a long-term basis under our revolving credit facility.

In early April 2009, we used proceeds from the issuance of commercial paper to redeem $950 million of Floating Rate Notes upon their maturity.

Note 9—Joint Venture Acquisition Obligation

We are obligated to contribute $7.5 billion, plus interest, over a 10-year period, beginning in 2007, to FCCL Oil Sands Partnership. Quarterly principal and interest payments of $237 million began in the second quarter of 2007 and will continue until the balance is paid. Of the principal obligation amount, approximately $634 million was short-term and was included in the “Accounts payable—related parties” line on our March 31, 2009, consolidated balance sheet. The principal portion of these payments, which totaled $153 million in the first three months of 2009, are included in the “Other” line in the financing activities section of our consolidated statement of cash flows. Interest accrues at a fixed annual rate of 5.3 percent on the unpaid principal balance. Fifty percent of the quarterly interest payment is reflected as a capital contribution and is included in the “Capital expenditures and investments” line on our consolidated statement of cash flows.

Note 10—Guarantees

At March 31, 2009, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability, at inception, for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated we are not currently performing with any significance under the guarantee and expect future performance to be either immaterial or have only a remote chance of occurrence.

Construction Completion Guarantees

•

In December 2005, we issued a construction completion guarantee for 30 percent of the $4 billion in loan facilities of Qatargas 3, which will be used to construct an LNG train in Qatar. Of the $4 billion in loan facilities, ConocoPhillips committed to provide $1.2 billion. The maximum potential amount of future payments to third-party lenders under the guarantee is estimated to be $850 million, which could become payable if the full debt financing is utilized and completion of the Qatargas 3 project is not achieved. The project financing will be nonrecourse to ConocoPhillips upon certified completion, which is expected in 2011. At March 31, 2009, the carrying value of the guarantee to the third-party lenders was $11 million.

Guarantees of Joint Venture Debt

	•		In June 2006, we issued a guarantee for 24 percent of the $2 billion in credit facilities of Rockies Express Pipeline LLC, operated by Kinder Morgan Energy Partners, L.P. Rockies Express is constructing a natural gas pipeline across a portion of the United States. At March 31, 2009, Rockies Express had $1,913 million outstanding under the credit facilities, with our 24 percent guarantee equaling $459 million. The maximum potential amount of future payments to third-party lenders under the guarantee is estimated to be $480 million, which could become payable if the credit facilities are fully utilized and Rockies Express fails to meet its obligations under the credit agreement. In addition, we also have a guarantee for 24 percent of $600 million of Floating Rate Notes due in August 2009 issued by Rockies Express. The operator anticipates construction completion in late 2009. Refinancing will take place at that time, making the debt nonrecourse to ConocoPhillips. At March 31, 2009, the total carrying value of these guarantees to third-party lenders was $12 million.
	•		In December 2007, we acquired a 50 percent equity interest in four Keystone pipeline entities (Keystone), to create a joint venture with TransCanada Corporation. Keystone is constructing a crude oil pipeline originating in Alberta, with delivery points in Illinois and Oklahoma. In December 2008, we provided a guarantee for up to $250 million of balances outstanding under a commercial paper program. This program was established by Keystone to provide funding for a portion of Keystone’s construction costs attributable to our ownership interest in the project. Payment under the guarantee would be due in the event Keystone failed to repay principal and interest, when due, to short-term noteholders. The commercial paper program and our guarantee are expected to increase as funding needs increase during construction of the Keystone pipeline. Keystone’s other owner will guarantee a similar, but separate, funding vehicle. Post-construction Keystone financing is anticipated to be nonrecourse to us. At March 31, 2009, $200 million was outstanding under the Keystone commercial paper program guaranteed by us.
	•		At March 31, 2009, we had guarantees outstanding for our portion of joint venture debt obligations, which have terms of up to 17 years. The maximum potential amount of future payments under the guarantees is approximately $90 million. Payment would be required if a joint venture defaults on its debt obligations.

Other Guarantees

•

In connection with certain planning and construction activities of the Keystone pipeline, we agreed to reimburse TransCanada with respect to a portion of guarantees issued by TransCanada for certain of Keystone’s obligations to third parties. Our maximum potential amount of future payments associated with these guarantees is based on our ultimate ownership percentage in Keystone and is estimated to be $62 million, which could become payable if Keystone fails to meet its obligations and the obligations cannot otherwise be mitigated. Payments under the guarantees are contingent upon the partners not making necessary equity contributions into Keystone; therefore, it is considered unlikely payments would be required. All but $8 million of the guarantees will terminate after construction is completed, currently estimated to occur in 2010.

			In October 2008, we elected to exercise an option to reduce our equity interest in Keystone from 50 percent to 20.01 percent. The change in equity will occur through a dilution mechanism, which is expected to gradually lower our ownership interest until it reaches 20.01 percent by the third quarter of 2009. At March 31, 2009, our ownership interest was approximately 29 percent.
			In addition to the above guarantee, in order to obtain long-term shipping commitments that would enable a pipeline expansion starting at Hardisty, Alberta, and extending to near Port Arthur, Texas, the Keystone owners executed an agreement in July 2008 to guarantee Keystone’s obligations under its agreement to provide transportation at a specified price for certain shippers to the Gulf Coast. Although our guarantee is for 50 percent of these obligations, TransCanada has agreed to reimburse us for amounts we pay in excess of our ownership percentage in Keystone. Our maximum potential amount of future payments, or cost of volume delivery, under this guarantee, after such reimbursement, is estimated to be $220 million ($550 million before reimbursement) based on a full 20-year term of the shipping commitments, which could become payable if Keystone fails to meet its obligations under the agreements and the obligations cannot otherwise be mitigated. Future payments are considered unlikely, as the payments, or cost of volume delivery, are contingent upon Keystone defaulting on its obligation to construct the pipeline in accordance with the terms of the agreement.
	•		In conjunction with our purchase of a 50 percent ownership interest in Australia Pacific LNG (APLNG) from Origin Energy in October 2008, we agreed to participate, if and when requested, in any parent company guarantees that were outstanding at the time we purchased our interest in APLNG. These parent company guarantees cover the obligation of APLNG to deliver gas under several sales agreements with remaining terms of eight to 22 years. Our maximum potential amount of future payments, or cost of volume delivery, under these guarantees is estimated to be $930 million ($1,940 million in the event of intentional or reckless breach) based on our 50 percent share of the remaining contracted volumes, which could become payable if APLNG fails to meet its obligations under these agreements and the obligations cannot otherwise be mitigated. Future payments are considered unlikely, as the payments, or cost of volume delivery, would only be triggered if APLNG does not have enough natural gas to meet these sales commitments and if the partners do not make necessary equity contributions into APLNG.
	•		We have other guarantees with maximum future potential payment amounts totaling $530 million, which consist primarily of dealer and jobber loan guarantees to support our marketing business, guarantees to fund the short-term cash liquidity deficits of certain joint ventures, a guarantee of minimum charter revenue for two LNG vessels, one small construction completion guarantee, guarantees relating to the startup of a refining joint venture, guarantees of the lease payment obligations of a joint venture, and guarantees of the residual value of leased corporate aircraft. These guarantees generally extend up to 16 years or life of the venture.

Indemnifications
Over the years, we have entered into various agreements to sell ownership interests in certain corporations and joint ventures and have sold several assets, including downstream and midstream assets, certain exploration and production assets, and downstream retail and wholesale sites that gave rise to qualifying indemnifications. Agreements associated with these sales include indemnifications for taxes, environmental liabilities, permits and licenses, employee claims, real estate indemnity against tenant defaults, and litigation. The terms of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, the term is generally indefinite and the maximum amount of future payments is generally unlimited. The carrying amount recorded for these indemnifications at March 31, 2009, was $455 million. We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information the liability is essentially relieved or amortize the liability over an appropriate time period as the fair value of our indemnification exposure declines. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. Included in the recorded carrying amount were $240 million of environmental accruals for known contamination that are included in asset retirement obligations and accrued environmental costs at March 31, 2009. For additional information about environmental liabilities, see Note 11—Contingencies and Commitments.

Note 11—Contingencies and Commitments

In the case of all known non-income-tax-related contingencies, we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, FIN 48 requires a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates that are particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental
We are subject to federal, state and local environmental laws and regulations. These may result in obligations to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using all information that is available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

Although liability of those potentially responsible for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies cited at a particular site. Due to the joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. If we were solely responsible, the costs, in some cases, could be material to our, or one of our segment’s, results of operations, capital resources or liquidity. However, settlements and costs incurred in matters that previously have been resolved have not been material to our results of operations or financial condition. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites at which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly.

As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit, and some of the indemnifications are subject to dollar limits and time limits. We have not recorded accruals for any potential contingent liabilities that we expect to be funded by the prior owners under these indemnifications.

We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except for those acquired in a purchase business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. At March 31, 2009, our balance sheet included a total environmental accrual of $960 million, compared with $979 million at December 31, 2008. We expect to incur the majority of these expenditures within the next 30 years. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Legal Proceedings
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases which have been scheduled for trial, as well as the pace of settlement discussions in individual matters. Based on professional judgment and experience in using these litigation management tools and available information about current developments in our cases, our legal organization believes there is a remote likelihood future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements.

Other Contingencies
We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized. In addition, at March 31, 2009, we had performance obligations secured by letters of credit of $1,491 million (of which $40 million was issued under the provisions of our revolving credit facility, and the remainder was issued as direct bank letters of credit) related to various purchase commitments for materials, supplies, services and items of permanent investment incident to the ordinary conduct of business.

Note 12—Financial Instruments and Derivative Contracts

Derivative Instruments
We use financial and commodity-based derivative contracts to manage exposures to fluctuations in foreign currency exchange rates, commodity prices, and interest rates, or to exploit market opportunities. Since we are not currently using SFAS No. 133 hedge accounting, all gains and losses, realized or unrealized, from derivative contracts have been recognized in the consolidated income statement. Gains and losses from derivative contracts held for trading not directly related to our physical business, whether realized or unrealized, have been reported net in other income.

SFAS No. 133 requires purchase and sales contracts for commodities that are readily convertible to cash (e.g., crude oil, natural gas and gasoline) to be recorded on the balance sheet as derivatives unless the contracts are for quantities we expect to use or sell over a reasonable period in the normal course of business (i.e., contracts eligible for the normal purchases and normal sales exception). We record most of our contracts to buy or sell natural gas as derivatives, but we do apply the normal purchases and normal sales exception to certain long-term contracts to sell our natural gas production. We generally apply this normal purchases and normal sales exception to eligible crude oil and refined product commodity purchase and sales contracts; however, we may elect not to apply this exception (e.g., when another derivative instrument will be used to mitigate the risk of the purchase or sale contract but hedge accounting will not be applied, in which case both the purchase or sales contract and the derivative contract mitigating the resulting risk will be recorded on the balance sheet at fair value).

The fair value hierarchy for our derivative assets and liabilities accounted for at fair value on a recurring basis was:

		Millions of Dollars
		March 31, 2009																December 31, 2008
		Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Assets
Commodity derivatives		$	4,659				2,593				109				7,361				4,994				2,874				112				7,980
Foreign exchange derivatives			-				81				-				81				-				97				-				97
Total assets			4,659				2,674				109				7,442				4,994				2,971				112				8,077
Liabilities
Commodity derivatives			(4,973	)			(2,184	)			(13	)			(7,170	)			(5,221	)			(2,497	)			(72	)			(7,790	)
Foreign exchange derivatives			-				(41	)			-				(41	)			-				(93	)			-				(93	)
Total liabilities			(4,973	)			(2,225	)			(13	)			(7,211	)			(5,221	)			(2,590	)			(72	)			(7,883	)
Net assets (liabilities)		$	(314	)			449				96				231				(227	)			381				40				194

The derivative values above are based on analysis of each contract as the fundamental unit of account as required by SFAS No. 157; therefore, derivative assets and liabilities with the same counterparty are not reflected net where the legal right of offset exists. Gains or losses from contracts in one level may be offset by gains or losses on contracts in another level or by changes in values of physical contracts or positions that are not reflected in the table above.

The fair value of net commodity derivatives classified as Level 3 in the fair value hierarchy changed as follows:

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning balance		$	40				(34	)
Total gains (losses), realized and unrealized
Included in earnings			26				(42	)
Included in other comprehensive income			-				-
Purchases, issuances and settlements			(10	)			24
Transfers in and/or out of Level 3			40				(1	)
Ending balance		$	96				(53	)

The amounts of Level 3 gains (losses) included in earnings were:

		Millions of Dollars
		Three Months Ended
		March 31
		2009												2008
						Purchased												Purchased
		Other				Crude Oil,								Other				Crude Oil,
		Operating				Natural Gas								Operating				Natural Gas
		Revenues				and Products				Total				Revenues				and Products				Total
Total gains (losses) included in earnings		$	27				(1	)			26				(43	)			1				(42	)
Change in unrealized gains (losses) relating to assets held at March 31		$	36				-				36				1				-				1
Change in unrealized gains (losses) relating to liabilities held at March 31		$	(10	)			-				(10	)			(31	)			-				(31	)

Commodity Derivative Contracts—We operate in the worldwide crude oil, refined product, natural gas, natural gas liquids and electric power markets and are exposed to fluctuations in the prices for these commodities. These fluctuations can affect our revenues as well as the cost of operating, investing and financing activities. Generally, our policy is to remain exposed to the market prices of commodities. However, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited, immaterial amount of trading not directly related to our physical business. These activities may move our risk profile away from market average prices.

The fair value of commodity derivative assets and liabilities at March 31, 2009, and the line items where they appear on our consolidated balance sheet were:

		Millions
		of Dollars
Assets
Prepaid expenses and other current assets		$	6,880
Other assets			513
Liabilities
Other accruals			6,768
Other liabilities and deferred credits			434

As required under SFAS No. 161, the amounts shown in the preceding table are presented gross (i.e., without netting assets and liabilities with the same counterparty where the right of offset and intent to net exist); however, derivative assets and liabilities resulting from eligible commodity contracts have been netted on our consolidated balance sheet in accordance with FIN 39, “Offsetting of Amounts Related to Certain Contracts.” In addition, the commodity derivative assets on our consolidated balance sheet appear net of $130 million of obligations to return cash collateral, and the commodity derivative liabilities appear net of $553 million of rights to reclaim cash collateral.

The gains (losses) from commodity derivatives incurred during the quarter ended March 31, 2009, and the line items where they appear on our consolidated income statement were:

		Millions
		of Dollars
Sales and other operating revenues		$	573
Other income			8
Purchased crude oil, natural gas and products			(512	)

As of March 31, 2009, we had the following net position of outstanding commodity derivative contracts, primarily to manage price exposure on our underlying operations. This exposure may be from other derivative contracts, such as forward sales contracts, or may be from non-derivative positions such as inventory volumes or firm natural gas transport contracts.

		Open Position
		Long / (Short)
Commodity
Crude oil, refined products and natural gas liquids (millions of barrels)			(45	)
Natural gas, power and carbon dioxide emissions (billions of cubic feet)
Flat price			(33	)
Basis			(127	)
Freight forwards (millions of metric tons)			3

Currency Exchange Rate Derivative Contracts—We have foreign currency exchange rate risk resulting from international operations. We do not comprehensively hedge the exposure to currency rate changes, although we may choose to selectively hedge certain foreign currency exchange rate exposures, such as firm commitments for capital projects or local currency tax payments and dividends.

The fair value of foreign currency derivative assets and liabilities open at March 31, 2009, and the line items where they appear on our consolidated balance sheet were:

		Millions
		of Dollars
Assets
Prepaid expenses and other current assets		$	79
Other assets			2
Liabilities
Other accruals			39
Other liabilities and deferred credits			2

As required under SFAS No. 161, the amounts shown in the preceding table are presented gross; however, derivative assets and liabilities resulting from eligible foreign currency contracts have been netted on our consolidated balance sheet in accordance with FIN 39. No collateral was deposited or held under these contracts.

The impacts from foreign currency derivatives during the quarter ended March 31, 2009, and the line item where they appear on our consolidated income statement were:

		Millions
		of Dollars
Foreign currency transaction losses (gains)		$	(6	)

As of March 31, 2009, we had the following net position of outstanding foreign currency swap contracts, entered into primarily to hedge price exposure in our international operations.

		In Millions
		Notional*
Foreign Currency Swaps
Sell U.S. dollar, buy euro		USD			761
Sell U.S. dollar, buy British pound		USD			1,382
Sell U.S. dollar, buy Canadian dollar		USD			1,262
Sell U.S. dollar, buy Danish kroner		USD			3
Sell U.S. dollar, buy Norwegian kroner		USD			627
Sell U.S. dollar, buy Swedish krona		USD			63
Sell U.S. dollar, buy Australian dollar		USD			117
Sell British pound, buy euro		GBP			6
Buy British pound, sell Canadian dollar		GBP			6

Credit Risk
Our financial instruments that are potentially exposed to concentrations of credit risk consist primarily of cash equivalents, over-the-counter derivative contracts and trade receivables. Our cash equivalents are placed in high-quality commercial paper, money market funds and time deposits with major international banks and financial institutions.

The credit risk from our over-the-counter derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction, typically a major bank or financial institution. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures contracts, but futures have a negligible credit risk because they are traded on the New York Mercantile Exchange or the ICE Futures.

Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit rating. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if we fall below investment grade. Cash is the primary collateral in all contracts; however, many also permit us to post letters of credit as collateral.

The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position on March 31, 2009, was $517 million, for which we posted $27 million in collateral in the normal course of business. If our credit rating were lowered one level from its “A” rating (per Standard and Poors) on March 31, 2009, we would be required to post no additional collateral to our counterparties. If we were downgraded below investment grade, we would be required to post $490 million of additional collateral, either with cash or letters of credit.

Note 13—Comprehensive Income

ConocoPhillips’ comprehensive income was as follows:

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Net income		$	856				4,158
After-tax changes in:
Defined benefit pension plans
Reclassification adjustment for amortization of prior service cost			3				4
Reclassification adjustment for amortization of prior net actuarial loss			34				9
Nonsponsored plans			(1	)			2
Foreign currency translation adjustments			(278	)			(435	)
Hedging activities			(1	)			(2	)
Comprehensive income			613				3,736
Less: comprehensive income attributable to noncontrolling interests			(16	)			(19	)
Comprehensive income attributable to ConocoPhillips		$	597				3,717

Accumulated other comprehensive loss in the equity section of the balance sheet included:

		Millions of Dollars
		March 31 2009				December 31 2008
Defined benefit pension plans		$	(1,398	)			(1,434	)
Foreign currency translation adjustments			(709	)			(431	)
Deferred net hedging loss			(11	)			(10	)
Accumulated other comprehensive loss		$	(2,118	)			(1,875	)

None of the items within accumulated other comprehensive loss relate to noncontrolling interests.

Note 14—Cash Flow Information

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Cash Payments
Interest		$	95				86
Income taxes			1,346				1,649

Note 15—Employee Benefit Plans

Pension and Postretirement Plans

		Millions of Dollars
		Pension Benefits																Other Benefits
Three Months Ended		March 31																March 31
		2009								2008								2009				2008
		U.S.				Int’l.				U.S.				Int’l.
Components of Net Periodic Benefit Cost
Service cost		$	48				20				47				23				2				3
Interest cost			69				33				62				44				12				12
Expected return on plan assets			(46	)			(29	)			(56	)			(44	)			-				-
Amortization of prior service cost			3				-				2				-				2				3
Recognized net actuarial loss (gain)			47				8				16				3				(4	)			(4	)
Net periodic benefit cost		$	121				32				71				26				12				14

During the first three months of 2009, we contributed $74 million to our domestic benefit plans and $33 million to our international benefit plans.

Severance Accrual
As a result of the current business environment’s impact on our operating and capital plans, a reduction in our overall employee work force is expected in 2009. Various business units and staff groups recorded accruals in the fourth quarter of 2008 for severance and related employee benefits totaling $162 million. The following table summarizes our severance accrual activity:

		Millions of Dollars
		March 31				December 31
		2009				2008
Beginning balance		$	162				-
Accruals			1				162
Benefit payments			(7	)			-
Ending balance		$	156				162

The remaining balance at March 31, 2009, of $156 million is classified as short-term.

Note 16—Related Party Transactions

Significant transactions with related parties were:

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Operating revenues (a)		$	1,473				3,171
Purchases (b)			2,482				4,398
Operating expenses and selling, general and administrative expenses (c)			85				116
Net interest expense (d)			19				21

(a)

We sold natural gas to DCP Midstream, LLC and crude oil to the Malaysian Refining Company Sdn. Bhd. (MRC), among others, for processing and marketing. Natural gas liquids, solvents and petrochemical feedstocks were sold to Chevron Phillips Chemical Company LLC (CPChem), gas oil and hydrogen feedstocks were sold to Excel Paralubes and refined products were sold primarily to CFJ Properties and LUKOIL. Natural gas, crude oil, blendstock and other intermediate products were sold to WRB Refining LLC. In addition, we charged several of our affiliates including CPChem and Merey Sweeny, L.P. (MSLP) for the use of common facilities, such as steam generators, waste and water treaters, and warehouse facilities.

(b)

We purchased refined products from WRB. We purchased natural gas and natural gas liquids from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased crude oil from LUKOIL and refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products and natural gas, as well as a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel Paralubes for use in our refinery and specialty businesses.

(c)

We paid processing fees to various affiliates. Additionally, we paid crude oil transportation fees to pipeline equity companies.

(d)

We paid and/or received interest to/from various affiliates, including FCCL Oil Sands Partnership. See Note 6—Investments, Loans and Long-Term Receivables, for additional information on loans to affiliated companies.

Note 17—Segment Disclosures and Related Information

We have organized our reporting structure based on the grouping of similar products and services, resulting in six operating segments:

	1)		E&P—This segment primarily explores for, produces, transports and markets crude oil, natural gas and natural gas liquids on a worldwide basis.
	2)		Midstream—This segment gathers, processes and markets natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids, predominantly in the United States and Trinidad. The Midstream segment primarily consists of our 50 percent equity investment in DCP Midstream, LLC.
	3)		R&M—This segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia.
	4)		LUKOIL Investment—This segment represents our investment in the ordinary shares of OAO LUKOIL, an international, integrated oil and gas company headquartered in Russia. At March 31, 2009, our ownership interest was 20 percent based on issued shares, and 20.09 percent based on estimated shares outstanding.
	5)		Chemicals—This segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our 50 percent equity investment in Chevron Phillips Chemical Company LLC.
	6)		Emerging Businesses—This segment represents our investment in new technologies or businesses outside our normal scope of operations.

Corporate and Other includes general corporate overhead, most interest expense and various other corporate activities. Corporate assets include all cash and cash equivalents. We evaluate performance and allocate resources based on net income attributable to ConocoPhillips. Intersegment sales are at prices that approximate market.

Analysis of Results by Operating Segment

		Millions of Dollars
		Three Months Ended
		March 31
		2009				2008
Sales and Other Operating Revenues
E&P
United States		$	6,096				11,547
International			6,651				8,441
Intersegment eliminations—U.S.			(859	)			(2,112	)
Intersegment eliminations—international			(1,388	)			(2,297	)
E&P			10,500				15,579
Midstream
Total sales			922				1,642
Intersegment eliminations			(48	)			(88	)
Midstream			874				1,554
R&M
United States			13,000				26,961
International			6,464				10,926
Intersegment eliminations—U.S.			(117	)			(219	)
Intersegment eliminations—international			(8	)			(7	)
R&M			19,339				37,661
LUKOIL Investment			-				-
Chemicals			3				3
Emerging Businesses
Total sales			154				258
Intersegment eliminations			(137	)			(177	)
Emerging Businesses			17				81
Corporate and Other			8				5
Consolidated sales and other operating revenues		$	30,741				54,883
Net Income (Loss) Attributable to ConocoPhillips
E&P
United States		$	173				1,349
International			527				1,538
Total E&P			700				2,887
Midstream			123				137
R&M
United States			98				435
International			107				85
Total R&M			205				520
LUKOIL Investment			48				710
Chemicals			23				52
Emerging Businesses			-				12
Corporate and Other			(259	)			(179	)
Net income attributable to ConocoPhillips		$	840				4,139

		Millions of Dollars
		March 31				December 31
		2009				2008
Total Assets
E&P
United States		$	36,514				36,962
International			58,161				58,912
Total E&P			94,675				95,874
Midstream			1,554				1,455
R&M
United States			24,173				22,554
International			7,989				7,942
Goodwill			3,777				3,778
Total R&M			35,939				34,274
LUKOIL Investment			5,494				5,455
Chemicals			2,212				2,217
Emerging Businesses			937				924
Corporate and Other			2,440				2,666
Consolidated total assets		$	143,251				142,865

Note 18—Income Taxes

Our effective tax rates for the first quarters of 2009 and 2008 were 58 percent and 45 percent, respectively. The change in the effective tax rate for the first quarter of 2009, versus the same period of 2008, was primarily due to a higher proportion of income in higher tax rate jurisdictions in 2009. The effective tax rate in excess of the domestic federal statutory rate of 35 percent was primarily due to foreign taxes.

Note 19—New Accounting Standards

In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” to improve the transparency associated with disclosures about the plan assets of a defined benefit pension or other postretirement plan. This FSP requires the disclosure of each major asset category at fair value using the fair value hierarchy in SFAS No. 157, “Fair Value Measurements.” Also, this FSP requires entities to disclose the net periodic benefit cost recognized for each annual period for which a statement of income is presented. This FSP is effective for annual financial statements beginning with the 2009 fiscal year.

Supplementary Information—Condensed Consolidating Financial Information

We have various cross guarantees among ConocoPhillips, ConocoPhillips Company, ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II, with respect to publicly held debt securities. ConocoPhillips Company is wholly owned by ConocoPhillips. ConocoPhillips Australia Funding Company is an indirect, wholly owned subsidiary of ConocoPhillips Company. ConocoPhillips Canada Funding Company I and ConocoPhillips Canada Funding Company II are indirect, wholly owned subsidiaries of ConocoPhillips. ConocoPhillips and ConocoPhillips Company have fully and unconditionally guaranteed the payment obligations of ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II, with respect to their publicly held debt securities. Similarly, ConocoPhillips has fully and unconditionally guaranteed the payment obligations of ConocoPhillips Company with respect to its publicly held debt securities. In addition, ConocoPhillips Company has fully and unconditionally guaranteed the payment obligations of ConocoPhillips with respect to its publicly held debt securities. All guarantees are joint and several. The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:

	•		ConocoPhillips, ConocoPhillips Company, ConocoPhillips Australia Funding Company, ConocoPhillips Canada Funding Company I, and ConocoPhillips Canada Funding Company II (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).
	•		All other nonguarantor subsidiaries of ConocoPhillips.
	•		The consolidating adjustments necessary to present ConocoPhillips’ results on a consolidated basis.

This condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes. Certain previously reported amounts appearing on the 2008 income statement have been reclassified to conform to the current year presentation.

		Millions of Dollars
		Three Months Ended March 31, 2009
										ConocoPhillips				ConocoPhillips				ConocoPhillips
										Australia				Canada				Canada
						ConocoPhillips				Funding				Funding				Funding				All Other				Consolidating				Total
Income Statement		ConocoPhillips				Company				Company				Company I				Company II				Subsidiaries				Adjustments				Consolidated
Revenues and Other Income
Sales and other operating revenues		$	-				17,534				-				-				-				13,207				-				30,741
Equity in earnings of affiliates			929				955				-				-				-				281				(1,750	)			415
Other income (loss)			(2	)			203				-				-				-				(77	)			-				124
Intercompany revenues			1				382				17				18				11				3,504				(3,933	)			-
Total Revenues and Other Income			928				19,074				17				18				11				16,915				(5,683	)			31,280
Costs and Expenses
Purchased crude oil, natural gas and products			-				14,841				-				-				-				8,587				(3,669	)			19,759
Production and operating expenses			2				1,094				-				-				-				1,475				(26	)			2,545
Selling, general and administrative expenses			3				323				-				1				1				157				(10	)			475
Exploration expenses			-				65				-				-				-				160				-				225
Depreciation, depletion and amortization			-				425				-				-				-				1,805				-				2,230
Impairments			-				(5	)			-				-				-				8				-				3
Taxes other than income taxes			-				1,155				-				-				-				2,327				(18	)			3,464
Accretion on discounted liabilities			-				18				-				-				-				86				-				104
Interest and debt expense			130				69				15				19				13				274				(210	)			310
Foreign currency transaction losses (gains)			-				7				-				(38	)			(7	)			169				-				131
Total Costs and Expenses			135				17,992				15				(18	)			7				15,048				(3,933	)			29,246
Income before income taxes			793				1,082				2				36				4				1,867				(1,750	)			2,034
Provision for income taxes			(47	)			153				1				1				(4	)			1,074				-				1,178
Net income			840				929				1				35				8				793				(1,750	)			856
Less: net income attributable to noncontrolling interests			-				-				-				-				-				(16	)			-				(16	)
Net Income Attributable to ConocoPhillips		$	840				929				1				35				8				777				(1,750	)			840
Income Statement		Three Months Ended March 31, 2008
Revenues and Other Income
Sales and other operating revenues		$	-				34,803				-				-				-				20,080				-				54,883
Equity in earnings of affiliates			4,185				3,061				-				-				-				1,308				(7,195	)			1,359
Other income			-				305				-				-				-				5				-				310
Intercompany revenues			9				717				24				23				14				6,050				(6,837	)			-
Total Revenues and Other Income			4,194				38,886				24				23				14				27,443				(14,032	)			56,552
Costs and Expenses
Purchased crude oil, natural gas and products			-				31,492				-				-				-				12,643				(6,315	)			37,820
Production and operating expenses			-				1,110				-				-				-				1,618				(37	)			2,691
Selling, general and administrative expenses			2				319				-				-				-				225				(20	)			526
Exploration expenses			-				55				-				-				-				254				-				309
Depreciation, depletion and amortization			-				372				-				-				-				1,837				-				2,209
Impairments			-				4				-				-				-				2				-				6
Taxes other than income taxes			-				1,254				-				-				-				3,962				(61	)			5,155
Accretion on discounted liabilities			-				15				-				-				-				89				-				104
Interest and debt expense			77				221				22				19				13				259				(404	)			207
Foreign currency transaction (gains) losses			-				(4	)			-				(72	)			(73	)			106				-				(43	)
Total Costs and Expenses			79				34,838				22				(53	)			(60	)			20,995				(6,837	)			48,984
Income before income taxes			4,115				4,048				2				76				74				6,448				(7,195	)			7,568
Provision for income taxes			(24	)			437				1				4				8				2,984				-				3,410
Net income			4,139				3,611				1				72				66				3,464				(7,195	)			4,158
Less: net income attributable to noncontrolling interests			-				-				-				-				-				(19	)			-				(19	)
Net Income Attributable to ConocoPhillips		$	4,139				3,611				1				72				66				3,445				(7,195	)			4,139