Item 1A. Risk Factors
Item 1A.
Risk Factors
Other than the risk factors set forth
below, there
have been no material changes
to the risk factors disclosed
in our
Annual Report on Form 10-K for the
fiscal year ended December 31, 2020.
Risks Related to the Proposed Shell Permian
Acquisition
Our ability to complete the Shell Permian
Acquisition is subject to various closing conditions,
including regulatory
clearance, which may impose conditions that could adversely
affect us or cause the acquisition not to be
completed.
The Shell Permian Acquisition is subject to a number of conditions
to closing as specified in the definitive
agreement signed on September 20, 2021 (Purchase
Agreement), including but not limited to
the expiration or
termination of the waiting period under the Hart-Scott
-Rodino Antitrust Improvements
Act of 1976, as
amended. No assurance can be given that
the required regulatory clearance
will be obtained or that the other
required conditions to closing will be satisfied,
and, if the regulatory clearance is obtained
and the required
conditions are satisfied, no assurance
can be given as to the terms, conditions and
timing of such clearance,
including whether any required conditions
will materially adversely affect
ConocoPhillips following the Shell
Permian Acquisition.
Any delay in closing the Shell Permian
Acquisition could cause ConocoPhillips not to
realize,
or to be delayed in realizing, some or all of the benefits that
we expect to achieve if the Shell Permian
Acquisition
is successfully closed within its expected time frame.
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The termination of the Purchase Agreement could negatively
impact our business and in some circumstances, we
could forfeit a portion of the purchase price.
If the Shell Permian Acquisition is not completed
for any reason, including if the above
closing conditions are not
satisfied, our ongoing business may be adversely
affected and, without realizing
any of the expected benefits of
having completed the Shell Permian
Acquisition, we would be subject to a number
of risks, including the following:
●
We may experience negative
reactions from the financial markets,
including negative impacts on the
trading price of our common stock; and
●
We will be required to pay
our costs relating to the Shell Permian Acquisition,
such as legal and
accounting costs and associated
fees and expenses, whether or not the Shell Permian
Acquisition is
completed.
Additionally, upon
entry into the Purchase Agreement, 5%
(the Deposit) of the $9.5 billion (Base Purchase Price)
was paid to Shell.
If the Purchase Agreement is terminated
solely as a result of the material breach or failure
of
any of our representations,
warranties or covenants
included in the Purchase Agreement, the Deposit will not
be
refunded.
Integrating the assets acquired in the Shell Permian Acquisition
may be more difficult, costly or time-consuming
than expected and we may fail to realize
the full anticipated benefits of the transaction, which may adversely
affect our business results and negatively affect the value of our common stock.
We may encounter difficulties
integrating the assets acquired
from Shell into our business and realizing the
anticipated benefits of the transaction
or such benefits may take longer
to realize than expected.
The Shell
Permian Acquisition is expected to
add approximately 225,000 net acres,
thereby increasing our unconventional
position in Permian by nearly 30 percent.
There are a large number of processes,
policies, procedures, operations
and technologies and systems
that must be integrated
in connection with the Shell Permian Acquisition and the
integration of Shell’s
assets.
It is possible that the integration process
could result in the disruption of our ongoing
business; inconsistencies in standards,
controls, procedures and
policies; unexpected integration
issues; higher
than expected integration
costs and an overall post
-completion integration process
that takes longer than
originally anticipated.
We will be required to devote
management attention
and resources to integrating
the
business practices and operations,
and prior to closing the transaction, management attention
and resources will
be required to plan for such integration.
An inability to realize the full extent
of the anticipated benefits of the
Shell Permian Acquisition, as well as any delays
encountered in the integration
process, could have an adverse
effect on our revenues or
on our level of expenses and operating
results, which may adversely affect
the value of
our common stock.
In addition, the actual integration may
result in additional and unforeseen expenses.
Although
we expect that the strategic
benefits, and additional income, as well as the realization
of other efficiencies related
to the integration of the Shell assets,
may offset incremental
transaction-related costs
over time, if we are not able
to adequately address integration
challenges, we may be unable to successfully
integrate operations
or realize the
anticipated benefits of the integration
of the Shell assets.
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