ConocoPhillips prices debt exchange offers, gives early results

By William Gullotti

Buffalo, N.Y., March 8 – ConocoPhillips announced the pricing terms and early results of its Feb. 22 exchange offers in two pools, including for up to $2 billion of notes from four series and up to $1 billion of notes from five series, according to a company press release on Tuesday.

For both exchange offers, a minimum of $500 million of new notes needs to be issued in exchange for each series.

Pool 1

In the first pool, the company is offering to exchange notes for cash and up to $2 billion of new ConocoPhillips Co. notes due March 15, 2062.

As of the early deadline at 5 p.m. ET on March 7, holders had tendered the following pool 1 notes, listed by acceptance priority level and with the total consideration per $1,000 principal amount:

• $1,162,146,000 of $2.75 billion outstanding 6.5% notes due 2039, issued by ConocoPhillips (Cusip: 20825CAQ7) for a total consideration of $1,378.80, with pricing based on a reference yield of 2.358% and an offer yield of 3.508%, calculated using the 2.375% U.S. Treasury due Feb. 15, 2042 plus 115 basis points;

• $172,579,000 of $500 million outstanding 5.95% notes due 2036 issued by Burlington Resources LLC (Cusip: 20825VAB8) for a total consideration of $1,296.41, with pricing based on a reference yield of 1.863% and an offer yield of 3.363%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 150 bps;

• $249.92 million of $600 million outstanding 5.9% notes due 2038 issued by ConocoPhillips (Cusip: 20825CAP9) for a total consideration of $1,293.33, with pricing based on a reference yield of 2.358% and an offer yield of 3.508%, calculated using the 2.375% U.S. Treasury due Feb. 15, 2042 plus 115 bps; and

• $170,008,000 of $500 million outstanding 5.95% notes due 2046 issued by ConocoPhillips Co. (Cusip: 20826FAR7) for a total consideration of $1,385.41, with pricing based on a reference yield of 2.275% and an offer yield of 3.525%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2051 plus 125 bps.

In each case except for the 2046 notes, the consideration accounts for $1,000 principal amount of new 2062 notes with the remainder paid in cash. In the latter case, the consideration accounts for $1,077.08 principal amount of new notes and $308.33 in cash.

The new 2062 notes are priced based on the 1.875% Treasury note due Nov. 15, 2051 plus 175 bps, yielding 4.025%.

Pool 2

In the second pool, the notes are exchangeable for up to $1 billion of new ConocoPhillips Co. notes due March 15, 2042.

Listed by acceptance priority level and with the total consideration per $1,000 principal amount, the following pool 2 notes were tendered by the early deadline:

• $353,429,000 of $1,549,114,000 outstanding 6.95% notes due 2029 issued by ConocoPhillips Co. (Cusip: 208251AE8) for a total consideration of $1,279.16, based on a reference yield of 1.863% and an offer yield of 2.613%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 75 bps;

• $117,721,000 of $500 million outstanding 7.4% notes due 2031 issued by Burlington Resources LLC (Cusip: 12201PAN6) for a total consideration of $1,387.75, based on a reference yield of 1.863% and an offer yield of 2.813%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 95 bps;

• $99,672,000 of $500 million outstanding 7.25% notes due 2032 issued by Burlington Resources Oil & Gas Co. (Cusip: 20825UAC8) for a total consideration of $1,370.79, based on a reference yield of 1.863% and an offer yield of 2.813%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 95 bps;

• $127,626,000 of $575 million outstanding 7.2% notes due 2031 issued by Burlington Resources LLC (Cusip: 12201PAB2) for a total consideration of $1,361.05, based on a reference yield of 1.863% and an offer yield of 2.813%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 95 bps; and

• $87,507,000 of $200 million outstanding 7% notes due 2029 issued by ConocoPhillips Co. (Cusip: 718507BK1 for a total consideration of $1,273.48, based on a reference yield of 1.863% and an offer yield of 2.713%, calculated using the 1.875% U.S. Treasury due Feb. 15, 2032 plus 85 bps.

In each case except for the 7% notes due 2029, the consideration accounts for $1,000 principal amount of new 2042 notes with the remainder paid in cash. In the latter case, the consideration accounts for $972.65 principal amount of new notes and $300.83 in cash.

The new 2042 notes are priced based on the 2.375% Treasury note due Feb. 15, 2042 plus 140 bps, yielding 3.758%.

Consideration

Total considerations include an early participation payment of $30 principal amount of new notes per $1,000 of existing notes.

As previously reported, early settlement is expected to occur on March 11.

Interest will also be paid to the settlement date, but the amount of pre-issuance interest on the new notes will be subtracted out of the interest due and could result in no interest paid.

In addition to the minimum amount exchange condition, the new notes and the total consideration or exchange consideration should not be “substantially different” as of the pricing time.

The exchange offers will expire at one minute after 11:59 p.m. ET on March 21.

Final settlement is planned for March 23.

Global Bondholder Services Corp. (855 654-2015, 212 430-3774, contact@gbsc-usa.com, https://gbsc-usa.com/eligibility/cop) is the exchange agent and information agent.

ConocoPhillips is an independent exploration and production company based in Houston.

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