ConocoPhillips Releases Second-Quarter Interim Update

This update is intended to give an overview of market and operating conditions experienced by ConocoPhillips during the second quarter of 2006. The market indicators and company estimates may differ considerably from the company's actual results scheduled to be reported on July 26, 2006.

Exploration and Production (E&P)
The company completed its acquisition of Burlington Resources Inc. on March 31. The impact of the Burlington Resources assets and operations will be reflected in second-quarter earnings and operating statistics for the entire period. Second-quarter production on a barrel-of-oil equivalent (BOE) per day basis, including Syncrude and excluding Lukoil, is expected to be approximately 30 percent higher than the previous quarter. In addition to the inclusion of Burlington Resources' production, the company had initial crude oil liftings from Libya, including the make-up of a portion of the company's underlift position, partially offset by lower production in the United Kingdom due to planned maintenance.

Second-quarter exploration expenses are expected to be approximately $155 million before-tax. In addition to the inclusion of the Burlington Resources exploration program, the company is expected to have higher geological and geophysical expenditures than the previous quarter.

Refining and Marketing (R&M)
Worldwide refining margins for the second quarter are expected to be significantly higher than the first quarter. Light-heavy crude oil differentials remained strong and turnaround activity decreased in the second quarter. Turnaround costs are expected to be approximately $120 million before-tax.

The company's average crude oil refining capacity utilization rate for the second quarter is expected to be in the low-90-percent range. This represents an increase from the first quarter, which was impacted by significant turnaround activity and unplanned downtime. The return to normal operations during the second quarter for most of the company's domestic refineries more than offset the impact of an extended full plant turnaround at the Trainer, Pa., refinery and other unplanned downtime.

Lukoil Investment
In the second quarter of 2006, Lukoil publicly released results for the fourth quarter of 2005 and the first quarter of 2006. As a result, the Lukoil Investment segment earnings for the second quarter are expected to include a benefit of approximately $80 million due to alignment of the company's estimate of Lukoilís net income to actual results.

Second-quarter 2006 results also are expected to reflect higher estimated crude oil prices and refining margins than estimated in the first quarter of 2006 and increased ownership interest.

Corporate and Other
As expected, corporate expenses are anticipated to be significantly higher in the second quarter due to increased interest expense associated with a higher average debt balance attributable to the Burlington Resources acquisition and other related charges. In addition, the weakening of the U.S. Dollar is expected to result in negative foreign currency impacts.

As a result of tax rate reductions recently enacted in Canada and in the state of Texas, the company expects to record a second-quarter earnings benefit in the range of $0.25 per share. These anticipated benefits will primarily impact the company's E&P segment.

The company's debt balance is expected to be approximately $29.5 billion at the end of the second quarter. The number of weighted-average diluted shares outstanding during the second quarter is expected to be 1,678 million shares.


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