Oil and Gas Operations (Unaudited)
Exploration and Production

In accordance with SFAS No. 69, “Disclosures about Oil and Gas Producing Activities,” and regulations of the U.S. Securities and Exchange Commission (SEC), we are making certain supplemental disclosures about our oil and gas exploration and production operations. While this information was developed with reasonable care and disclosed in good faith, it is emphasized that some of the data is necessarily imprecise and represents only approximate amounts because of the subjective judgments involved in developing such information. Accordingly, this information may not necessarily represent our current financial condition or our expected future results.

Our disclosures by geographic area include the United States (U.S.), European North Sea (Norway and the United Kingdom), Asia Pacific, Canada and Other Areas. When we use equity accounting for operations that have proved reserves, these oil and gas operations are shown separately and designated as Equity Affiliates. In 2003 and 2002, these consisted of two heavy-oil projects in Venezuela, an oil development project in Northern Russia and a heavy-oil project in Canada. In 2001, this consisted of a heavy-oil project in Venezuela.

Amounts in 2002 were impacted by the merger of Conoco and Phillips (the merger) in late August 2002.

Proved Reserves Worldwide

	Purchases in 2002 were primarily related to the merger.
	At the end of 2000, Other Areas included 2 million barrels of reserves in Venezuela in which we had an economic interest through risk-service contracts. These properties were sold in June 2001. Our net production related to these contracts was approximately 400,000 barrels in 2001 and 1,200,000 barrels in 2000.
	In addition to conventional crude oil, natural gas and natural gas liquids (NGL) proved reserves, we have proved oil sands reserves in Canada, associated with a Syncrude project totaling 265 million barrels at the end of 2003. For internal management purposes, we view these reserves and their development as part of our total exploration and production operations. However, U.S. Securities and Exchange Commission regulations define these reserves as mining related. Therefore, they are not included in our tabular presentation of proved crude oil, natural gas and NGL reserves. These oil sands reserves also are not included in the standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities.

	Natural gas production may differ from gas production (delivered for sale) in our statistics disclosure, primarily because the quantities above include gas consumed at the lease, but omit the gas equivalent of liquids extracted at any of our owned, equity-affiliate, or third-party processing plant or facility.
	Purchases in 2002 were related to the merger.
	Natural gas reserves are computed at 14.65 pounds per square inch absolute and 60 degrees Fahrenheit.

Natural gas liquids reserves include estimates of natural gas liquids to be extracted from our leasehold gas at our gas processing plants or facilities. Estimates are based at the wellhead and assume full extraction. Production above differs from natural gas liquids production per day delivered for sale primarily due to: (1) Natural gas consumed at the lease. (2) Natural gas liquids production delivered for sale includes only natural gas liquids extracted from our leasehold gas and sold by our Exploration and Production (E&P) segment, whereas the production above also includes natural gas liquids extracted from our leasehold gas at equity-affiliate or third-party facilities.

Purchases in 2002 were related to the merger.

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