COP, §1A diff (2020 → 2021)

Item 1A. RISK FACTORS You should carefully consider the following risk factors in addition to the other information included in this Annual Report on Form 10-K. These risk factors are not the only risks we face. Our business could also be affected by additional risks and uncertainties not currently known to us or that we currently consider to be immaterial. If any of these risks or other risks that are yet unknown were to occur, our business, operating results and financial condition, as well as the value of an investment in our common stock could be adversely affected. Risks Related to Our Industry We have been negatively affected and may continue to be negatively affected by the prolonged drop in commodity prices that began in early 2020. The oil and gas business is fundamentally a commodity business and our revenues, operating results and future rate of growth are highly dependent on the prices we receive for crude oil, bitumen, natural gas, NGLs and LNG. Such prices can fluctuate widely depending upon global events or conditions that affect supply and demand, most of which are out of our control. Since early 2020, there has been a precipitous decrease in demand for oil globally, largely caused by the dramatic decrease in travel and commerce resulting from the COVID-19 pandemic. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, for additional information on commodity prices and how we have been impacted. There is no assurance of when or if commodity prices will return to pre-COVID-19 levels, and if they do return to pre- COVID levels, how long they will remain at those levels. The speed and extent of any recovery remains uncertain and is subject to various risk factors, including the duration, impact and actions taken to stem the proliferation of the COVID-19 pandemic, the extent to which those nations party to the OPEC plus production agreement decide to increase production of crude oil, bitumen, natural gas and NGLs and other factors described herein. Even after a recovery, our industry will continue to be exposed to the effects of changing commodity prices given the volatility in commodity price drivers and the worldwide political and economic environment generally, as well as continued uncertainty caused by armed hostilities in various oil-producing regions around the globe. Lower crude oil, bitumen, natural gas, NGL and LNG prices may have a material adverse effect on our revenues, earnings, cash flows and liquidity, and may also affect the amount of dividends we elect to declare and pay on our common stock. As a result of the oil market downturn that began in early 2020, we suspended our share repurchase program. Lower prices may also limit the amount of reserves we can produce economically, thus adversely affecting our proved reserves and reserve replacement ratio and accelerating the reduction in our existing reserve levels as we continue production from upstream fields. Prolonged depressed crude oil prices may affect certain decisions related to our operations, including decisions to reduce capital investments or curtail operated production. Significant reductions in crude oil, bitumen, natural gas, NGLs and LNG prices could also require us to reduce our capital expenditures, impair the carrying value of our assets or discontinue the classification of certain assets as proved reserves. In 2020, we recognized several impairments, which are described in Note 7- Suspended Wells and Exploration Expenses and Note 8-Impairments, in the Notes to Consolidated Financial Statements, due to changes in assumptions for commodity prices and development plans. If the outlook for commodity prices remains low relative to historic levels, and as we continue to optimize our investments and exercise capital flexibility, it is reasonably likely we will incur future impairments to long-lived assets used in operations, investments in nonconsolidated entities accounted for under the equity method and unproved properties. If oil and gas prices persist at depressed levels, our reserve estimates may decrease further, which could incrementally increase the rate used to determine DD&A expense on our unit-of-production method properties. See Item 7. Management’s Discussion and Analysis for further examination of DD&A rate impacts versus comparative periods. Although it is not reasonably practicable to quantify the impact of any future impairments or estimated change to our unit-of-production rates at this time, our results of operations could be adversely affected as a result. Our business has been, and will continue to be, adversely affected by the coronavirus (COVID-19) pandemic. The COVID-19 pandemic and the measures put in place to address it have negatively impacted the global economy, disrupted global supply chains, reduced global demand for oil and gas, and created significant volatility and disruption of financial and commodity markets. According to the National Bureau of Economic Research, as a result of the pandemic and its broad reach across the entire economy, the U.S. entered a recession in early 2020 and the timing, pace and extent of the recovery is still unknown. Public health officials have recommended or mandated certain precautions to mitigate the spread of COVID-19, including limiting non-essential gatherings of people, ceasing all non-essential travel and issuing “social or physical distancing” guidelines, “shelter-in-place” orders and mandatory closures or reductions in capacity for non-essential businesses. Although some of these limitations and mandates have been relaxed in certain jurisdictions, others have been reinstated in areas that have experienced a resurgence of COVID-19 cases. In addition, despite approval of vaccines to immunize against COVID-19, the speed at which such vaccinations will be available to the public, the public’s willingness to be inoculated and the effectiveness of the vaccine (including to variants) still remain unknown. As a result, the full impact of the COVID-19 pandemic remains uncertain and will depend on the severity, location and duration of the effects and spread of the disease, the effectiveness and duration of actions taken by authorities to contain the virus or treat its effect, the availability and effectiveness of vaccines or other treatments, and how quickly and to what extent economic conditions improve. We have already been impacted by the COVID-19 pandemic. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, for additional information on how we have been impacted and the steps we have taken in response. Our business is likely to continue to be further negatively impacted by the COVID-19 pandemic. These impacts could include but are not limited to: ● Continued reduced demand for our products as a result of prolonged reductions in travel and commerce, even if restrictions are lifted; ● Disruptions in our supply chain due in part to scrutiny or embargoing of shipments from infected areas or invocation of force majeure clauses in commercial contracts due to restrictions imposed as a result of the global response to the pandemic; ● Failure of third parties on which we rely, including our suppliers, contract manufacturers, contractors, joint venture partners and external business partners, to meet their obligations to the company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties or restrictions imposed in response to the disease outbreak; ● Reduced workforce productivity caused by, but not limited to, illness, travel restrictions, quarantine, or government mandates; ● Business interruptions resulting from a portion of our workforce continuing to telecommute, as well as the implementation and maintenance of protections for employees commuting for work, such as personnel screenings and self-quarantines before or after travel; and ● Voluntary or involuntary curtailments to support oil prices or alleviate storage shortages for our products. Any of these factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our revenues and damage our financial condition, results of operations, cash flows and liquidity position. Despite the rollout of vaccines, the pandemic continues to progress and evolve, and the full extent and duration of any such impacts cannot be predicted at this time because of the sweeping impact of the COVID-19 pandemic on daily life around the world and a lack of certainty as to if or when conditions will return to pre-COVID levels. Unless we successfully add to our existing proved reserves, our future crude oil, bitumen, natural gas and NGL production will decline, resulting in an adverse impact to our business. The rate of production from upstream fields generally declines as reserves are depleted. If we do not conduct successful exploration and development activities, or, through engineering studies, optimize production performance or identify additional or secondary recovery reserves, our proved reserves will decline materially as we produce crude oil, bitumen, natural gas and NGLs, and our business will experience reduced cash flows and results of operations. Any cash conservation efforts we may undertake as a result of commodity price declines may further limit our ability to replace depleted reserves. The exploration and production of oil and gas is a highly competitive industry. The exploration and production of crude oil, bitumen, natural gas and NGLs is a highly competitive business. We compete with private, public and state-owned companies in all facets of the exploration and production business, including to locate and obtain new sources of supply and to produce crude oil, bitumen, natural gas and NGLs in an efficient, cost-effective manner. Some of our competitors are larger and have greater resources than we do or may be willing to incur a higher level of risk than we are willing to incur to obtain potential sources of supply. In addition, we may be at a competitive disadvantage when competing with state- owned companies if they are motivated by political or other factors in making their business decisions, with less emphasis on financial returns. If we are not successful in our competition for new reserves, our financial condition and results of operations may be adversely affected. Any material change in the factors and assumptions underlying our estimates of crude oil, bitumen, natural gas and NGL reserves could impair the quantity and value of those reserves. Our proved reserve information included in this annual report represents management’s best estimates based on assumptions, as of a specified date, of the volumes to be recovered from underground accumulations of crude oil, bitumen, natural gas and NGLs. Such volumes cannot be directly measured and the estimates and underlying assumptions used by management are subject to substantial risk and uncertainty. Any material changes in the factors and assumptions underlying our estimates of these items could result in a material negative impact to the volume of reserves reported or could cause us to incur impairment expenses on property associated with the production of those reserves. Future reserve revisions could also result from changes in, among other things, governmental regulation. Our business may be adversely affected by price controls, government-imposed limitations on production of crude oil, bitumen, natural gas and NGLs, or the unavailability of adequate gathering, processing, compression, transportation, and pipeline facilities and equipment for our production of crude oil, bitumen, natural gas and NGLs. As discussed herein, our operations are subject to extensive governmental regulations. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of crude oil, bitumen, natural gas and NGL wells below actual production capacity. Because legal requirements are frequently changed and subject to interpretation, we cannot predict whether future restrictions on our business may be enacted or become applicable to us. Our ability to sell and deliver the crude oil, bitumen, natural gas, NGLs and LNG that we produce also depends on the availability, proximity, and capacity of gathering, processing, compression, transportation and pipeline facilities and equipment, as well as any necessary diluents to prepare our crude oil, bitumen, natural gas, NGLs and LNG for transport. The facilities, equipment and diluents we rely on may be temporarily unavailable to us due to market conditions, extreme weather events, regulatory reasons, mechanical reasons or other factors or conditions, many of which are beyond our control. In addition, in certain newer plays, the capacity of necessary facilities, equipment and diluents may not be sufficient to accommodate production from existing and new wells, and construction and permitting delays, permitting costs and regulatory or other constraints could limit or delay the construction, manufacture or other acquisition of new facilities and equipment. If any facilities, equipment or diluents, or any of the transportation methods and channels that we rely on become unavailable for any period of time, we may incur increased costs to transport our crude oil, bitumen, natural gas, NGLs and LNG for sale or we may be forced to curtail our production of crude oil, bitumen, natural gas or NGLs. Our investments in joint ventures decrease our ability to manage risk. We conduct many of our operations through joint ventures in which we may share control with our joint venture partners. There is a risk our joint venture participants may at any time have economic, business or legal interests or goals that are inconsistent with those of the joint venture or us, or our joint venture partners may be unable to meet their economic or other obligations and we may be required to fulfill those obligations alone. Failure by us, or an entity in which we have a joint venture interest, to adequately manage the risks associated with any operations, acquisitions or dispositions could have a material adverse effect on the financial condition or results of operations of our joint ventures and, in turn, our business and operations. Our operations present hazards and risks that require significant and continuous oversight. The scope and nature of our operations present a variety of significant hazards and risks, including operational hazards and risks such as explosions, fires, crude oil spills, severe weather, geological events, labor disputes, armed hostilities, terrorist attacks, sabotage, civil unrest or cyber attacks. Our operations may also be adversely affected by unavailability, interruptions or accidents involving services or infrastructure required to develop, produce, process or transport our production, such as contract labor, drilling rigs, pipelines, railcars, tankers, barges or other infrastructure. Our operations are subject to the additional hazards of pollution, releases of toxic gas and other environmental hazards and risks. Offshore activities may pose incrementally greater risks because of complex subsurface conditions such as higher reservoir pressures, water depths and metocean conditions. All such hazards could result in loss of human life, significant property and equipment damage, environmental pollution, impairment of operations, substantial losses to us and damage to our reputation. Further, our business and operations may be disrupted if we do not respond, or are perceived not to respond, in an appropriate manner to any of these hazards and risks or any other major crisis or if we are unable to efficiently restore or replace affected operational components and capacity. Legal and Regulatory Risks We expect to continue to incur substantial capital expenditures and operating costs as a result of our compliance with existing and future environmental laws and regulations. Our business is subject to numerous laws and regulations relating to the protection of the environment, which are expected to continue to have an increasing impact on our operations. For a description of the most significant of these environmental laws and regulations, see the “Contingencies-Environmental” and “Contingencies-Climate Change” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations. These laws and regulations continue to increase in both number and complexity and affect our operations with respect to, among other things: ● Permits required in connection with exploration, drilling, production and other activities, including those issued by national, subnational, and local authorities; ● The discharge of pollutants into the environment; ● Emissions into the atmosphere, such as nitrogen oxides, sulfur dioxide, mercury and GHG emissions; ● Carbon taxes; ● The handling, use, storage, transportation, disposal and cleanup of hazardous materials and hazardous and nonhazardous wastes; ● The dismantlement, abandonment and restoration of our properties and facilities at the end of their useful lives; and ● Exploration and production activities in certain areas, such as offshore environments, arctic fields, oil sands reservoirs and unconventional plays. We have incurred and will continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of these laws and regulations. Any failure by us to comply with existing or future laws, regulations and other requirements could result in administrative or civil penalties, criminal fines, other enforcement actions or third-party litigation against us. To the extent these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our business, financial condition, results of operations and cash flows in future periods could be materially adversely affected. Existing and future laws, regulations and internal initiatives relating to global climate change, such as limitations on GHG emissions, may impact or limit our business plans, result in significant expenditures, promote alternative uses of energy or reduce demand for our products. Continuing political and social attention to the issue of global climate change has resulted in both existing and pending international agreements and national, regional or local legislation and regulatory measures to limit GHG emissions, such as cap and trade regimes, carbon taxes, restrictive permitting, increased fuel efficiency standards and incentives or mandates for renewable energy. For example, in December 2015, the U.S. joined the international community at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris that prepared an agreement requiring member countries to review and represent a progression in their intended GHG emission reduction goals every five years beginning in 2020. While the U.S. previously withdrew from the Paris Agreement, the new administration has recommitted the United States to the Paris Agreement, and a significant number of U.S. state and local governments and major corporations headquartered in the U.S. have also announced their intention to satisfy these commitments. In addition, our operations continue in countries around the world which are party to, and have not announced an intent to withdraw from, the Paris Agreement. The implementation of current agreements and regulatory measures, as well as any future agreements or measures addressing climate change and GHG emissions, may adversely impact the demand for our products, impose taxes on our products or operations or require us to purchase emission credits or reduce emission of GHGs from our operations. As a result, we may experience declines in commodity prices or incur substantial capital expenditures and compliance, operating, maintenance and remediation costs, any of which may have an adverse effect on our business and results of operations. In October 2020, we announced the adoption of a Paris-aligned climate risk framework, whereby we committed to a reduction of our gross operated (scope 1 and 2) emissions intensity, with an ambition to achieve net zero by 2050 from operated emissions. We also endorsed the World Bank Zero Routine Flaring by 2030 initiative, with an ambition to meet that goal by 2025 and reaffirmed our commitment to advocate for reduction of scope 3 emissions intensity through our support for a U.S. carbon price. Compliance with, and achievement of, climate change related internal initiatives such as the foregoing may increase costs, require us to purchase emission credits, or limit or impact our business plans, potentially resulting in the reduction to the economic end-of-field life of certain assets and an impairment of the associated net book value. Increasing attention to global climate change has also resulted in pressure upon stockholders, financial institutions and/or financial markets to modify their relationships with oil and gas companies and to limit investments and/or funding to such companies. For example, in 2019 Norway’s Government Pension Fund announced it would reduce its investment exposure to companies that explore for oil and gas, and in 2020 a number of major financial institutions announced that they would no longer finance oil and gas exploration projects in the Arctic. As public pressure continues to mount, our access to capital on terms we find favorable (if it is available at all) may be limited and our costs may increase or our business and results of operations may be otherwise adversely affected. Furthermore, increasing attention to global climate change has resulted in an increased likelihood of governmental investigations and private litigation, which could increase our costs or otherwise adversely affect our business. Beginning in 2017, cities, counties, governments and other entities in several states in the U.S. have filed lawsuits against oil and gas companies, including ConocoPhillips, seeking compensatory damages and equitable relief to abate alleged climate change impacts. Additional lawsuits with similar allegations are expected to be filed. The amounts claimed by plaintiffs are unspecified and the legal and factual issues involved in these cases are unprecedented. ConocoPhillips believes these lawsuits are factually and legally meritless and are an inappropriate vehicle to address the challenges associated with climate change and will vigorously defend against such lawsuits. The ultimate outcome and impact to us cannot be predicted with certainty, and we could incur substantial legal costs associated with defending these and similar lawsuits in the future. In addition, although we design and operate our business operations to accommodate expected climatic conditions, to the extent there are significant changes in the earth’s climate, such as more severe or frequent weather conditions in the markets where we operate or the areas where our assets reside, we could incur increased expenses, our operations could be adversely impacted, and demand for our products could fall. For more information on legislation or precursors for possible regulation relating to global climate change that affect or could affect our operations and a description of the company’s response, see the “Contingencies- Climate Change” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. Domestic and worldwide political and economic developments could damage our operations and materially reduce our profitability and cash flows. Actions of the U.S., state, local and foreign governments, through sanctions, tax and other legislation, executive order and commercial restrictions, could reduce our operating profitability both in the U.S. and abroad. In certain locations, restrictions on our operations; special taxes or tax assessments; and payment transparency regulations that could require us to disclose competitively sensitive information or might cause us to violate non-disclosure laws of other countries have been imposed or proposed by governments or certain interest groups. For example, in 2020 a ballot initiative known as the Fair Share Act was proposed in the state of Alaska, which, if enacted would have increased the state’s share of production revenues and required producers to publicly disclose additional financial information. Although ultimately defeated, similar initiatives may be proposed and may be successful in the future. The change in control of Congress and the White House because of the 2020 election increases the possibility of the promulgation of more stringent regulations of our operations and the enactment of tax law changes that may adversely affect the fossil fuel industry. In addition, the current administration may use the Congressional Review Act to repeal the regulations finalized in the last five months of the prior administration. We also cannot rule out the possibility of similar regulatory shifts and attendant cost and market access implications in other international jurisdictions. One area subject to significant political and regulatory activity is the use of hydraulic fracturing, an essential completion technique that facilitates production of oil and natural gas otherwise trapped in lower permeability rock formations. A range of local, state, federal and national laws and regulations currently govern or, in some hydraulic fracturing operations, prohibit hydraulic fracturing in some jurisdictions. Although hydraulic fracturing has been conducted safely for many decades, a number of new laws, regulations and permitting requirements are under consideration which could result in increased costs, operating restrictions, operational delays or could limit the ability to develop oil and natural gas resources. Certain jurisdictions in which we operate have adopted or are considering regulations that could impose new or more stringent permitting, disclosure or other regulatory requirements on hydraulic fracturing or other oil and natural gas operations, including subsurface water disposal. On January 27, 2021, the new administration signed an executive order directing the Secretary of the Interior to stop issuing new oil and gas leases on federal lands, allowing time to review and reset the Federal Government’s oil and gas leasing program. Existing production and permits already issued on Federal lands were not impacted by this order. If this temporary moratorium were to be extended indefinitely, we believe we can mitigate the impact for a considerable period of time with our current permits and adjusting our development plans across our diverse acreage position. In addition, certain interest groups have also proposed ballot initiatives and constitutional amendments designed to restrict oil and natural gas development generally and hydraulic fracturing in particular. In the event that ballot initiatives, local, state, or national restrictions or prohibitions are adopted and result in more stringent limitations on the production and development of oil and natural gas in areas where we conduct operations, we may incur significant costs to comply with such requirements or may experience delays or curtailment in the permitting or pursuit of exploration, development or production activities. Such compliance costs and delays, curtailments, limitations or prohibitions could have a material adverse effect on our business, prospects, results of operations, financial condition and liquidity. The U.S. government can also prevent or restrict us from doing business in foreign countries. These restrictions and those of foreign governments have in the past limited our ability to operate in, or gain access to, opportunities in various countries. Actions by host governments, such as the expropriation of our oil assets by the Venezuelan government, have affected operations significantly in the past and may continue to do so in the future. Changes in domestic and international policies and regulations may affect our ability to collect payments such as those pertaining to the settlement with PDVSA or the ICSID Award against the Government of Venezuela; or to obtain or maintain permits, including those necessary for drilling and development of wells in various locations. Similarly, the declaration of a “climate emergency” could result in actions to limit exports of our products and other restrictions. Local political and economic factors in international markets could have a material adverse effect on us. Approximately 48 percent of our hydrocarbon production was derived from production outside the U.S. in 2020, and 42 percent of our proved reserves, as of December 31, 2020, were located outside the U.S. We are subject to risks associated with operations in international markets, including changes in foreign governmental policies relating to crude oil, natural gas, bitumen, NGLs or LNG pricing and taxation, other political, economic or diplomatic developments (including the macro effects of international trade policies and disputes), potentially disruptive geopolitical conditions, and international monetary and currency rate fluctuations. In addition, some countries where we operate lack a fully independent judiciary system. This, coupled with changes in foreign law or policy, results in a lack of legal certainty that exposes our operations to increased risks, including increased difficulty in enforcing our agreements in those jurisdictions and increased risks of adverse actions by local government authorities, such as expropriations. Risks Related to Our Acquisition of Concho Combining our business with Concho’s may be more difficult, costly or time-consuming than expected and we may fail to realize the anticipated benefits of the Merger, which may adversely affect our business results and negatively affect the value of our common stock. Our acquisition of Concho (the Merger) involved the combination of two companies which, until the completion of the Merger, operated as independent public companies. The success of the Merger will depend on, among other things, the ability of our two companies to combine our businesses in a manner that adds value to shareholders. However, there can be no assurances that our respective businesses can be integrated successfully, and we will be required to devote significant management attention and resources to the integration process. We must achieve the anticipated improvement in free cash flow generation and returns and achieve the planned cost savings without adversely affecting current revenues or compromising the disciplined investment philosophy to maximize value for shareholders. There are a large number of processes, policies, procedures, operations and technologies and systems that must be integrated, and although we expect that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the business, may offset incremental transaction and Merger-related costs over time, we may encounter difficulties in the integration and any net benefit may not be achieved in the near term or at all. It is possible that the integration process could take longer than originally anticipated and could result in the loss of key employees; the loss of commercial and vendor partners; the disruption of our ongoing businesses; inconsistencies in standards, controls, procedures and policies; unexpected integration issues; and higher than expected integration costs. An inability to realize the full extent of the anticipated benefits of the Merger and the other transactions contemplated by the Merger Agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of ConocoPhillips, which may adversely affect the value of our common stock. The market value of our common stock could decline if large amounts of our common stock are sold now that the Concho acquisition has been consummated. We issued shares of ConocoPhillips common stock to former Concho stockholders. Former Concho stockholders may decide not to hold the shares of ConocoPhillips common stock that they received in the Merger, and ConocoPhillips stockholders may decide to reduce their investment in ConocoPhillips as a result of the changes to ConocoPhillips’ investment profile as a result of the Merger. Other Concho stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of ConocoPhillips common stock that they received in the Merger. Such sales of ConocoPhillips common stock could have the effect of depressing the market price for ConocoPhillips common stock. Other Risk Factors Facing our Business or Operations We may need additional capital in the future, and it may not be available on acceptable terms or at all. We have historically relied primarily upon cash generated by our operations to fund our operations and strategy; however, we have also relied from time to time on access to the debt and equity capital markets for funding. There can be no assurance that additional debt or equity financing will be available in the future on acceptable terms, or at all. In addition, although we anticipate we will be able to repay our existing indebtedness when it matures or in accordance with our stated plans, there can be no assurance we will be able to do so. Our ability to obtain additional financing or refinance our existing indebtedness when it matures or in accordance with our plans, will be subject to a number of factors, including market conditions, our operating performance, investor sentiment and our ability to incur additional debt in compliance with agreements governing our then-outstanding debt. If we are unable to generate sufficient funds from operations or raise additional capital for any reason, our business could be adversely affected. In addition, we are regularly evaluated by the major rating agencies based on a number of factors, including our financial strength and conditions affecting the oil and gas industry generally. We and other industry companies have had their ratings reduced in the past due to negative commodity price outlooks. Any downgrade in our credit rating or announcement that our credit rating is under review for possible downgrade could increase the cost associated with any additional indebtedness we incur. Our business may be adversely affected by deterioration in the credit quality of, or defaults under our contracts with, third parties with whom we do business. The operation of our business requires us to engage in transactions with numerous counterparties operating in a variety of industries, including other companies operating in the oil and gas industry. These counterparties may default on their obligations to us as a result of operational failures or a lack of liquidity, or for other reasons, including bankruptcy. Market speculation about the credit quality of these counterparties, or their ability to continue performing on their existing obligations, may also exacerbate any operational difficulties or liquidity issues they are experiencing, particularly as it relates to other companies in the oil and gas industry as a result of the volatility in commodity prices. Any default by any of our counterparties may result in our inability to perform our obligations under agreements we have made with third parties or may otherwise adversely affect our business or results of operations. In addition, our rights against any of our counterparties as a result of a default may not be adequate to compensate us for the resulting harm caused or may not be enforceable at all in some circumstances. We may also be forced to incur additional costs as we attempt to enforce any rights we have against a defaulting counterparty, which could further adversely impact our results of operations. In particular, in August 2018, we entered into a settlement agreement with Petróleos de Venezuela, S.A. (PDVSA) providing for the payment of approximately $2 billion over a five-year period in connection with an arbitration award issued by the International Chamber of Commerce (ICC) Tribunal in favor of ConocoPhillips on a contractual dispute arising from Venezuela’s expropriation of our interests in the Petrozuata and Hamaca heavy oil ventures and other pre-expropriation fiscal measures. We have collected approximately $0.8 billion of the $2.0 billion settlement to date and PDVSA has defaulted on its remaining payment obligations under this agreement. We are therefore incurring additional costs as we seek to recover any unpaid amounts under the agreement. Additionally, in March 2019, an ICSID arbitration tribunal issued an award unanimously ordering the government of Venezuela to pay ConocoPhillips approximately $8.7 billion in compensation for the government’s unlawful expropriation of the company’s investments in Venezuela in 2007. ConocoPhillips has filed requests for recognition of the award in several jurisdictions. On August 29, 2019, the ICSID tribunal issued a decision rectifying the award and reducing it by approximately $227 million. The award now stands at $8.5 billion plus interest. The government of Venezuela is seeking annulment of the award before another panel at ICSID and annulment proceedings are underway. No amounts have been collected as a result of this award yet. Our ability to declare and pay dividends and repurchase shares is subject to certain considerations. Dividends are authorized and determined by our Board of Directors in its sole discretion and depend upon a number of factors, including: ● Cash available for distribution; ● Our results of operations and anticipated future results of operations; ● Our financial condition, especially in relation to the anticipated future capital needs of our properties; ● The level of distributions paid by comparable companies; ● Our operating expenses; and ● Other factors our Board of Directors deems relevant. We expect to continue to pay quarterly dividends to our stockholders; however, our Board of Directors may reduce our dividend or cease declaring dividends at any time, including if it determines that our net cash provided by operating activities, after deducting capital expenditures and investments, are not sufficient to pay our desired levels of dividends to our stockholders or to pay dividends to our stockholders at all. Additionally, as of December 31, 2020, $14.5 billion of repurchase authority remained of the $25 billion share repurchase program our Board of Directors had authorized. Our share repurchase program does not obligate us to acquire a specific number of shares during any period, and our decision to commence, discontinue or resume repurchases in any period will depend on the same factors that our Board of Directors may consider when declaring dividends, among others. In the past we have suspended our share repurchase program in response to market downturns, and we may do so again in the future. Any downward revision in the amount of dividends we pay to stockholders or the number of shares we purchase under our share repurchase program could have an adverse effect on the market price of our common stock. There are substantial risks with any acquisitions or divestitures we may choose to undertake. We regularly review our portfolio and pursue growth through acquisitions and seek to divest non-core assets or businesses. We may not be able to complete these transactions on favorable terms, on a timely basis, or at all. Even if we do complete such transactions, our cash flow from operations may be adversely impacted or otherwise the transactions may not result in the benefits anticipated due to various risks, including, but not limited to (i) the failure of the acquired assets or businesses to meet or exceed expected returns, including risk of impairment; (ii) difficulties in integrating the operations, technologies, products and personnel of the acquired assets or businesses; (iii) the inability to dispose of non-core assets and businesses on satisfactory terms and conditions; and (iv) the discovery of unknown and unforeseen liabilities or other issues related to any acquisition for which contractual protections are inadequate or we lack insurance or indemnities, including environmental liabilities, or with regard to divested assets or businesses, claims by purchasers to whom we have provided contractual indemnification. Our technologies, systems and networks may be subject to cyber attacks. Our business, like others within the oil and gas industry, has become increasingly dependent on digital technologies, some of which are managed by third-party service providers on whom we rely to help us collect, host or process information. Among other activities, we rely on digital technology to estimate oil and gas reserves, process and record financial and operating data, analyze seismic and drilling information and communicate with employees and third-parties. As a result, we face various cyber security threats such as attempts to gain unauthorized access to, or control of, sensitive information about our operations and our employees, attempts to render our data or systems (or those of third-parties with whom we do business) corrupted or unusable, threats to the security of our facilities and infrastructure as well as those of third-parties with whom we do business and attempted cyber terrorism. In addition, computers control oil and gas production, processing equipment and distribution systems globally and are necessary to deliver our production to market. A disruption, failure, or a cyber breach of these operating systems, or of the networks and infrastructure on which they rely, many of which are not owned or operated by us, could damage critical production, distribution or storage assets, delay or prevent delivery to markets or make it difficult or impossible to accurately account for production and settle transactions. Although we have experienced occasional breaches of our cyber security, none of these breaches have had a material effect on our business, operations or reputation. As cyber attacks continue to evolve, we must continually expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities detected. Our implementation of various procedures and controls to monitor and mitigate security threats and to increase security for our information, facilities and infrastructure may result in increased costs. Despite our ongoing investments in security resources, talent and business practices, we are unable to assure that any security measures will be effective. If our systems and infrastructure were to be breached, damaged or disrupted, we could be subject to serious negative consequences, including disruption of our operations, damage to our reputation, a loss of counterparty trust, reimbursement or other costs, increased compliance costs, significant litigation exposure and legal liability or regulatory fines, penalties or intervention. Any of these could materially and adversely affect our business, results of operations or financial condition. Although we have business continuity plans in place, our operations may be adversely affected by significant and widespread disruption to our systems and infrastructure that support our business. While we continue to evolve and modify our business continuity plans, there can be no assurance that they will be effective in avoiding disruption and business impacts. Further, our insurance may not be adequate to compensate us for all resulting losses, and the cost to obtain adequate coverage may increase for us in the future. Item 1B.