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corresp

June 11, 2010

Via EDGAR

Mr. H. Roger Schwall

Assistant Director

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

     ConocoPhillips

Form 10-K for the Fiscal Year Ended December 31, 2009

Form 10-K/A for the Fiscal Year Ended December 31, 2009

Schedule 14A Filed March 31, 2010

Response Letter Dated April 15, 2010

File No. 001-32395

Dear Mr. Schwall:

Our responses to the comments raised in your letter dated May 27, 2010, are set forth below. The
Staff’s comments are shown in bold followed by our responses.

Form 10-K for Fiscal Year Ended December 31, 2009

Financial Statements

Note 6 — Investments, Loans and Long-Term Receivables

Lukoil, page 89

    1.

    We note your response to our prior comment number seven and that you are changing your method
of recording the earnings from your investment in LUKOIL. Your response indicates that LUKOIL
is now able to consistently provide financial information more timely than was capable in
prior periods. Please explain further, why you believe it is preferable to change your
accounting for your earnings of LUKOIL to a one quarter lag basis, given the receipt of more
timely LUKOIL financial information.

    Response: In our Form 10-Q for the first quarter of 2010, we disclosed the
background information and an explanation of why this change in accounting principle was
preferable, as required by FASB Accounting Standards Codification (ASC) Topic 250,
“Accounting Changes

U.S. Securities and Exchange Commission

June 11, 2010

Page 2

    and Error Corrections,” section 250-10-50-1a. The disclosure was made in Note 2 — Changes
in Accounting Principles, in the Notes to Consolidated Financial Statements.

    For the Staff’s additional information, we deemed the 93-day rule a critical factor in
determining the initial accounting approach to recording our equity earnings from LUKOIL, as
well as the decision to change to a one-quarter lag approach. Although both ConocoPhillips
and LUKOIL have fiscal year-ends of December 31, LUKOIL’s U.S. GAAP financial information is
not available in time for ConocoPhillips to record its equity share on a current-quarter
basis. Thus, at the time of our initial investment in LUKOIL in the fourth quarter of 2004,
we had to decide on the appropriate basis to recognize the effect of this timing difference.

    FASB ASC Topic 323, “Investments — Equity Method and Joint Ventures,” provided this
guidance in 323-10-35-6:

    “If financial statements of an investee are not sufficiently timely for an investor
to apply the equity method currently, the investor ordinarily shall record its
share of the earnings or losses of an investee from the most recent available
financial statements. A lag in reporting shall be consistent from period to
period.”

    At the time we had to apply this guidance (the fourth quarter of 2004), we knew that
LUKOIL’s fourth quarter earnings would not be available until after we had filed our first
quarter 2005
Form 10-Q. Thus, the lag required to apply ASC Topic 323-10-35-6 would have been a
two-quarter lag. The appropriateness of a two-quarter lag within the context of
consolidation is addressed by the SEC in Regulation S-X 3A-02(b)(1):

    “(b) Different fiscal periods: Generally, registrants shall not consolidate any
entity whose financial statements are as of a date or for periods substantially
different from those of the registrant. Rather, the earnings or losses of such
entities should be reflected in the registrant’s financial statements on the equity
method of accounting. However:
(1) A difference in fiscal periods does not of itself justify the exclusion of an
entity from consolidation. It ordinarily is feasible for such entity to prepare,
for consolidation purposes, statements for a period which corresponds with or
closely approaches the fiscal year of the registrant. Where the difference is not
more than 93 days, it is usually acceptable to use, for consolidation purposes,
such entity’s statements for its fiscal period. Such difference, when it exists,
should be disclosed as follows: the closing date of the entity should be expressly
indicated, and the necessity for the use of different closing dates should be
briefly explained. Furthermore, recognition should be given by disclosure or
otherwise to the effect of intervening events which materially affect the financial
position or results of operations.”

    Although this guidance is specifically for consolidated subsidiaries, the SEC Staff
expressed the view at the AICPA International Practices Task Force Meeting on November 21,
2000, that there was no particular reason why the 93-day rule used in the consolidation
literature should not apply to equity investees. Since the Staff guidance discouraged the
use of a two-quarter lag to record our equity share of LUKOIL’s actual results, the Company
decided to initially apply an accounting policy selection of estimating LUKOIL’s
current-quarter earnings to result in a comparable reporting period with that of
ConocoPhillips.

    Subsequent to our initial investment in LUKOIL in 2004, LUKOIL made significant progress in
releasing its U.S. GAAP financial statements on a more timely basis. In April 2008, LUKOIL
for the first time released their fourth quarter and annual financial statements on a basis
sufficiently timely for ConocoPhillips to record its equity share within the normal
quarter-end closing

U.S. Securities and Exchange Commission

June 11, 2010

Page 3

    schedule, and thus LUKOIL’s fourth-quarter results could have been recorded on a one-quarter
lag basis and satisfied the 93-day rule. Before initiating a change in accounting principle
to move to a one-quarter lag basis, we believed it prudent to wait another year to determine
if LUKOIL could again demonstrate this sufficiently timely schedule of delivering their
fourth-quarter results. When in fact LUKOIL did demonstrate this again in 2009, we
initiated a process to analyze and implement making a change in accounting principle, with
an effective date of January 1, 2010.

    We believed this change in accounting principle was preferable because it resulted in
reporting more reliable financial information (LUKOIL’s actual results versus a
ConocoPhillips estimate), while still maintaining relevance (only a one quarter lag, which
is acceptable under ASC Topic 323 and SEC guidance). In addition, the earnings from our
LUKOIL segment now reflect LUKOIL’s actual earnings. Previously, any quarter’s results in the
LUKOIL segment contained both an estimate of current quarter LUKOIL earnings and a prior
quarter estimate-to-actual true-up adjustment. The change in accounting method will
facilitate an easier-to-understand analysis of our LUKOIL segment and its earnings variance.

    In accordance with Item 6.01 of Regulation S-K, our independent registered public accounting
firm, Ernst & Young LLP, provided a letter, filed as exhibit 18 to the first quarter 2010
Form 10-Q, in which they concluded that the change in accounting principle was to an
acceptable alternative method which, based on ConocoPhillips’ business judgment, was
preferable in our circumstances.

    Based on the above background analysis and changes in facts and circumstances, we believe
this change in accounting principle is preferable, and our independent auditors concurred.

    2.

    In addition, please address the following related to your investment in LUKOIL:

    •

    Please provide us with an analysis of what you have historically reported as your
earnings from LUKOIL, compared to what you expect to report for prior 2009 quarters,
using a one quarter lag basis.

    Response: The following table provides an analysis of what we originally reported as
equity in earnings from our LUKOIL investment in 2009, compared with the amounts recast to
reflect the change in accounting principle.

    As Originally

    Effect

    Reporting

    Reported

    As Recast

    of Change

    Period

    ($ Millions)

    ($ Millions)

    ($ Millions)

    1 Q 2009

    $
    42

    $
    0
    *

    $
    (42
    )

    2 Q 2009

    $
    678

    $
    234

    $
    (444
    )

    3 Q 2009

    $
    553

    $
    519

    $
    (34
    )

    4 Q 2009

    $
    396

    $
    466

    $
    70

    Year 2009

    $
    1,669

    $
    1,219

    $
    (450
    )

    *

    Equity earnings from LUKOIL were not recorded in the first quarter
of 2009 under the one-quarter lag basis, since our LUKOIL investment was
written down in the fourth quarter of 2008 to its fair value at December
31, 2008.

U.S. Securities and Exchange Commission

June 11, 2010

Page 4

    •

    Please provide us with a temporal analysis of your historical reporting process
that describes when and what information was customarily received from LUKOIL, prior to
your recent change in accounting policy.

    Response: ConocoPhillips bases its LUKOIL equity earnings on LUKOIL’s externally
published financial information, at the same time this information is released to the
public. We do not receive a separate financial reporting package, nor do we receive
financial information prior to its public release by LUKOIL. Prior to the accounting
change, when LUKOIL published their external financial information, we used this information
to “true-up” our earnings estimate recorded in the prior quarter. Since implementing the
accounting change, we now use this information to record LUKOIL’s actual results on a
one-quarter lag basis.

    As discussed in the response to Comment 1 above, LUKOIL’s fourth quarter was the primary
reporting period that could not meet the 93-day rule. As a temporal analysis, shown below
are the dates LUKOIL’s fourth quarter and annual financial statements were made public:

    •

    2003 financial statements — June 24, 2004

    •

    2004 financial statements — May 25, 2005

    •

    2005 financial statements — May 23, 2006

    •

    2006 financial statements — April 24, 2007

    •

    2007 financial statements — April 10, 2008

    •

    2008 financial statements — April 7, 2009

    •

    2009 financial statements — March 24, 2010

    As noted in Comment 1 above, LUKOIL’s demonstrated ability to deliver their fourth-quarter
and full-year results in consecutive years on a basis sufficiently timely for ConocoPhillips
to record equity earnings on a one-quarter lag basis supported the change in accounting
principle.

    •

    Please provide us with an understanding of the nature of the information you have
historically relied upon as well as an understanding of the process of estimation you
used in prior quarters.

    Response: Prior to the change in accounting principle, we used an internally
developed financial model to estimate LUKOIL’s current-quarter earnings. This model
utilized objective, verifiable data, such as broad market indicators (for example, current
commodity price and foreign exchange rate indices, monthly export tariff rates and mineral
extraction tax rates) and all publicly-available LUKOIL-specific information (for example,
prior period financial statements and MD&A, press releases, presentations to analysts, etc.)
at the time of the filing of our financial statements. Later, once the difference between
actual and estimated results was known, a “true-up” adjustment was recorded in a subsequent
quarter. Thus any quarter’s reported results for our LUKOIL segment consisted of our
estimate of their current-quarter earnings, plus the true-up adjustment from the previous
quarter. Non-recurring items, such as impairments, gains on asset sales and contingencies,
which normally were not publicly available, were not included in the model. Although
historically not material, these types of non-recurring items could contribute to
variability in the amount of the true-up required each quarter. The elimination of this
variability supported the improved reliability conclusion made in connection with the
accounting change.

    •

    We note you are expecting to divest up to half of your investment in LUKOIL and you
have already begun selling shares in the second quarter. Please tell us how you expect

U.S. Securities and Exchange Commission

June 11, 2010

Page 5

    the disposal of a portion of your LUKOIL investment will impact your accounting and
reporting. Further, given the planned divestment, explain why you believed the change
in accounting principle for your equity method investment was necessary.

    Response: We do not expect the sale of a portion of our investment in LUKOIL to
impact our accounting and reporting for LUKOIL. We will continue to use the equity method
of accounting, as the expected size of our share disposition will not impact the key
criteria that enable us to exercise significant influence over the operating and financial
policies of LUKOIL. We will also continue to report our LUKOIL investment as a separate
operating segment under ASC Topic 280, “Segment Reporting.” Even after the reduction in our
ownership interest in LUKOIL, this investment will still represent an important part of
ConocoPhillips’ portfolio, and the most appropriate accounting method should be applied in
determining and reporting our equity share of LUKOIL’s earnings. Given these
considerations, the sale of a portion of our investment did not affect the preferability of
the change in accounting principle.

Schedule 14A Filed March 31, 2010

General

    3.

    We note that you have not included any disclosure in response to Item 402(s) of Regulation
S-K. Please advise us of the basis for your conclusion that disclosure is not necessary and
describe the process you undertook to reach that conclusion.

    Response: ConocoPhillips has considered the risks associated with each of its
executive and broad-based compensation programs and policies. As part of the analysis, the
Company considered the performance measures used and described under the section entitled
“Measuring our Performance under our Compensation Programs” beginning on page 51 of the
Company’s Proxy Statement, as well as the different types of compensation, the varied
performance measurement periods and the extended vesting schedules utilized under each
incentive compensation program for both executives and employees generally. As a result of
this review, the Company concluded the risks arising from the Company’s compensation
policies and practices for its employees are not reasonably likely to have a material
adverse effect on the Company. As part of the Board’s oversight of the Company’s risk
management programs, the Human Resources and Compensation Committee (HRCC) conducts an
annual review of the risks associated with the Company’s executive and broad-based
compensation programs. In 2009, the Audit and Finance Committee, the HRCC’s independent
compensation consultant and the Company’s compensation consultant also participated in this
review. The HRCC’s independent consultant and the Company’s compensation consultant noted
their agreement with management’s conclusion that the risks arising from the Company’s
compensation policies and practices for its employees were not reasonably likely to have a
material adverse effect on the Company. As a result, the Company concluded that no
disclosure was required in response to Item 402(s) of Regulation S-K.

Human Resources and Compensation Committee Report, page 42

    4.

    We note your reference to “other work performed for the Company by Towers Perrin,” which is
the Committee’s compensation consultant. Please explain to us your analysis as to whether
disclosure of the fees paid for this other work is required under Item 407(e)(3)(iii) of
Regulation S-K.

U.S. Securities and Exchange Commission

June 11, 2010

Page 6

    Response: Disclosure of the fees paid for services provided by Towers Perrin, other
than their services as the ind