Area of land



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| Notes to Consolidated Financial Statements | [Table of Contents](#if18581573a6045f6b6e889320c9d1887_7) |

Notes to Consolidated Financial Statements  
Note 1—Basis of PresentationThe interim-period financial information presented in the financial statements included in this report is unaudited and, in the opinion of management, includes all known accruals and adjustments necessary for a fair presentation of the consolidated financial position of ConocoPhillips, its results of operations and cash flows for such periods. All such adjustments are of a normal and recurring nature unless otherwise disclosed. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes included in our 2021 Annual Report on Form 10-K.  
Note 2—Inventories

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|  | Millions of Dollars |
|  | June 302022 | December 31 2021 |
| Crude oil and natural gas | $ | 653  |  | 647  |  |
| Materials and supplies | 581  |  | 561  |  |
| Total Inventories | $ | 1,234  |  | 1,208  |  |
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| Inventories valued on the LIFO basis | $ | 326  |  | 395  |  |

  
Note 3—Acquisitions and DispositionsAcquisition of Shell Enterprise LLC's (Shell) Permian AssetsIn December 2021, we completed our acquisition of Shell's assets in the Permian based Delaware Basin in an all-cash transaction for $8.6 billion after customary adjustments. Assets acquired include approximately 225,000 net acres and producing properties located entirely in Texas. The acquisition was accounted for as a business combination under FASB Topic ASC 805 using the acquisition method, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date as we identify new information about facts and circumstances that existed as of the acquisition date to consider.   
Oil and gas properties were valued using a discounted cash flow approach incorporating market participant and internally generated price assumptions, production profiles, and operating and development cost assumptions. The fair values determined for accounts receivable, accounts payable, and most other current assets and current liabilities were equivalent to the carrying value due to their short-term nature. The total consideration of $8.6 billion was allocated to the identifiable assets and liabilities based on their fair values at the acquisition date.   


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|  | ConocoPhillips      2022 Q2 10-Q | 6 |


