ConocoPhillips details early results, new note terms for exchange offer

By William Gullotti

Buffalo, N.Y., March 14 – ConocoPhillips further detailed the results of its Feb. 22 two-pool exchange offer for fixed-rate notes and reported totals of new notes issued on the early settlement date, according to an 8-K filing with the Securities and Exchange Commission.

Although both exchange offers remain open and are set to expire at one minute after 11:59 p.m. ET on March 21 with final settlement planned for March 23, ConocoPhillips issued $1,767,690,000 aggregate principal amount of new 2062 notes and $783,545,000 of new 2042 notes on March 11.

Both series of new notes will be unconditionally guaranteed by ConocoPhillips.

Pool 1

As previously reported, the company offered to exchange notes for cash and up to $2 billion of new ConocoPhillips Co. notes due March 15, 2062.

The new 4.025% notes due 2062 (Cusips: 20826FAY2, U19476AB3, 20826FAZ9) were priced based on the 1.875% Treasury note due Nov. 15, 2051 plus 175 basis points.

The notes, callable in whole or in part, will have a make-whole call at Treasuries plus 25 bps until Sept. 15, 2061, followed by a par call.

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 bps;

• $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.

Pool 2

As previously reported for the second pool, the company offered to exchange notes for cash and up to $1 billion of new ConocoPhillips Co. notes due March 15, 2042.

The new 3.758% notes due 2042 (Cusips: 20826FAW6, U19476AA5, 20826FAX4) were priced based on the 2.375% Treasury note due Feb. 15, 2042 plus 140 bps.

The notes, callable in whole or in part, will have a make-whole call at Treasuries plus 20 bps until Sept. 15, 2041, followed by a par call.

As previously reported and 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.

Consideration

As previously reported, the above total considerations included an early participation payment of $30 principal amount of new notes per $1,000 of existing notes.

Further notes tendered until the March 21 deadline will not receive the early participation payment.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC, TD Securities (USA) LLC, BofA Securities, Inc., Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., MUFG Securities Americas Inc., SMBC Nikko Securities America, Inc., Wells Fargo Securities, LLC, Barclays Capital Inc., BBVA Securities Inc., DNB Markets, Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Standard Chartered Bank and U.S. Bancorp Investments, Inc. are the dealer managers for the new notes.

ConocoPhillips will be obligated to pay additional interest on the new notes if, among other things, the exchange offer registration statement or the registered exchange offer itself have not been deemed effective on or prior to June 30, 2023.

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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