ConocoPhillips (NYSE:COP) Files An 8-K Entry into a Material Definitive Agreement

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ConocoPhillips (NYSE:COP) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive
Agreement.

On March29, 2017, ConocoPhillips (the Company) and certain of its
affiliates entered into a Purchase and Sale Agreement (Sale
Agreement) with Cenovus Energy Inc. (Cenovus) providing for the
sale by the Company of its 50 percent non-operated interest in
the FCCL Partnership, the owner of the Foster Creek, Christina
Lake and Narrows Lake oil sands projects in northeast Alberta
(FCCL Interest), as well as the majority of the Companys western
Canadian conventional assets, including the Companys exploration
and production assets and related infrastructure and agreements
in the Elmworth-Wapiti, Kaybob-Edson and Clearwater operating
areas, and all of the Companys interest in petroleum and natural
gas rights and oil sands leases within a certain area of mutual
interest northwest of Foster Creek (collectively called the WCBU
Assets). In Canada, the Company will retain its operated 50
percent interest in the Surmont oil sands joint venture and its
100 percent operated interest in the Blueberry-Montney
unconventional acreage position. The effective date of the
transaction is January 1, 2017 and it is expected to close in the
second quarter of 2017 (the Closing).

The FCCL Interest and WCBU Assets are to be acquired by Cenovus
for total consideration comprised of $10.6 billion in cash
(subject to closing adjustments and the exercise of rights of
first refusal on certain assets) and 208,000,000 common shares
issued by Cenovus (Share Consideration). to the Sale Agreement,
the Company will receive an immediate deposit of $129.5 million
and, if the sale is completed, the deposit and interest thereon
will be credited to Cenovus as partial payment of the total
consideration.

As part of the Sale Agreement, Cenovus agreed that for each
quarter in the five years following the Closing in which the
average daily Western Canadian Select (WCS) price exceeds
CA$52.00/bbl, Cenovus will make contingent payments to the
Company in an amount equal to CA$6 million multiplied by the
amount that the average daily WCS price exceeds CA$52.00 per
barrel. The calculation includes an adjustment mechanism related
to significant outages which may reduce the amount of the
contingent payment. The contingent payments are uncapped.

The consummation of the transaction contemplated by the Sale
Agreement is subject to certain specified closing conditions
precedent including, but not limited to, receipt of regulatory
approvals and the accuracy of representations and warranties and
the performance of covenants and the receipt of certain
deliverables.

The Sale Agreement contains provisions regarding the
identification and rectification of environmental and title
defects of the WCBU Assets. The Sale Agreement also provides
adjustment and indemnification remedies for Cenovus if
undisclosed environmental and title defects identified by Cenovus
for the WCBU Assets have a value in excess of $250 million.
Cenovus and the Company have also agreed to indemnify each other
from Closing in respect of certain losses and liabilities arising
out of breaches of representations and warranties or failure to
perform covenants, subject to certain conditions. The indemnities
have thresholds and expire in a manner which is customary for
agreements of this type.

Until the Closing, the Company has agreed, subject to certain
exceptions, to conduct its business in the ordinary course
consistent with past practice and will not undertake certain
activities without consent from Cenovus.

As part of the Sale Agreement, the Company and certain of its
affiliates and Cenovus agreed to enter into an Investor Agreement
and a Registration Rights Agreement at Closing. These agreements
will regulate the Companys actions relating to the business and
affairs of Cenovus and provide the Company with certain rights in
respect of the Share Consideration. Under the Investor Agreement,
the Company has agreed not to transfer any of its Cenovus common
shares until the date six months from the Closing (the Lock-up
Termination Date), and, subject to certain exceptions, not to
transfer (i)5 percent or more of the then-outstanding Cenovus
common shares in a block trade or

(ii)5 percent or more of the then-outstanding Cenovus common
shares held by the Company and its affiliates to any single
person or group of related persons in a single transaction or
series of related transactions. The Company has also agreed
under the Investor Agreement that it (i)will vote its Cenovus
common shares (or abstain from voting) for all nominees
proposed by Cenovus to serve on Cenovus board of directors and
for all other matters recommended to shareholders by Cenovus
board of directors, and (ii)will not acquire any additional
Cenovus common shares, subject to limited exceptions, or
otherwise take certain specified actions designed to influence
Cenovus management or board of directors. The Companys
obligations under the Investor Agreement terminate upon
termination of the Registration Rights Agreement as described
below.

The Registration Rights Agreement provides the Company and its
affiliates with customary registration rights in Canada and the
United States with respect to the Share Consideration,
including three demand registration rights during each year and
piggyback registration rights on any offering conducted by
Cenovus. The Companys right to demand registration and
participate in Cenovus offerings under the Registration Rights
Agreement begin on the Lock-up Termination Date, and terminate
once the Company and its affiliates cease to hold more than 3.5
percent of the number of then-outstanding Cenovus common
shares.

The foregoing description of the Sale Agreement and the
transactions contemplated thereby does not purport to be
complete and is qualified in its entirety by reference to the
Sale Agreement, which will be filed with the Securities and
Exchange Commission as an exhibit to the Companys Quarterly
Report on Form10-Q for the period ended March31, 2017. The Sale
Agreement will be filed to provide investors with information
regarding its terms. It is not intended to provide any other
factual information about the Company or the other parties to
the Sale Agreement as of the specific dates therein, is solely
for the benefit of the parties to the Sale Agreement, may be
subject to limitations agreed upon by the contracting parties,
including being qualified by disclosures made for the purposes
of allocating contractual risk between the contracting parties
that differ from those applicable to investors. Investors are
not third-party beneficiaries under the Sale Agreement and
should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of
the actual state of facts or condition of the parties thereto
or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of
representations and warranties may change after the date of the
Sale Agreement and this subsequent information may or may not
be fully reflected in the Companys public disclosures.

Item 7.01 Regulation FD
Disclosure.

On March29, 2017, the Company issued a press release announcing
the Companys entry into the Sale Agreement. A copy of the press
release is furnished as Exhibit99.1 hereto and incorporated
herein by reference.

Item 9.01 Financial Statements and
Exhibits.

(d) Exhibits:

ExhibitNo.

Description

99.1

Press Release issued by ConocoPhillips on March29, 2017.


About ConocoPhillips (NYSE:COP)

ConocoPhillips (ConocoPhillips) is an independent exploration and production company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas and liquefied natural gas (LNG). The Company operates through six operating segments, which are primarily defined by geographic region: Alaska; Lower 48; Canada; Europe and North Africa; Asia Pacific and Middle East, and Other International. The Company’s continuing operations are producing in the United States, Norway, the United Kingdom, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia and Qatar. The Company’s portfolio includes North American unconventional assets and oil sands assets in Canada; assets in North America, Europe, Asia and Australia; several international developments, and an inventory of global conventional and unconventional exploration prospects.

ConocoPhillips (NYSE:COP) Recent Trading Information

ConocoPhillips (NYSE:COP) closed its last trading session up +0.55 at 45.95 with 7,034,758 shares trading hands.