Fitch Assigns 'F1' to ConocoPhillips CPP Funding LLC Program

ConocoPhillips

--Issuer Default Rating (IDR) 'A';

--Senior unsecured notes 'A';

--Bank revolver 'A';

--Term loan 'A';

--CP 'F1';

--Short-term IDR 'F1'.

ConocoPhillips Qatar Funding

--CP 'F1'.

Burlington Resources

--Senior unsecured 'A'.

Polar Tankers, Inc.

--IDR 'A'.

ConocoPhillips Co.

--IDR 'A';

--Senior notes 'A'.

The Rating Outlook is Stable.

Proceeds from the new CP program will be used to reduce outstanding CP borrowings under the company's existing CP program.

ConocoPhillips' ratings are supported by its size, strong cash flow generation, and the diversification created by its integrated business model. Offsetting concerns center primarily on the company's high level of planned capital expenditures, the political risk associated with its foreign holdings in Russia, rising service costs in the energy sector, and its significant leverage to natural gas in North America. The company also has a large global E&P development program and maintains a robust share repurchase and dividend programs, all of which could place additional pressure on free cash flow.

At the end of the third quarter, ConocoPhillips' total balance sheet debt stood at $22.1 billion, down approximately one-third from the $31.8 billion seen following the Burlington Resources acquisition. Debt-to-capitalization stood at 19%. For the latest 12 month (LTM) ending Sept. 30, 2008, ConocoPhillips generated record EBITDA of $39.3 billion and free cash flow of $9.2 billion, driven by primarily by surging commodity prices. As a result, credit metrics have remained robust. ConocoPhillips' EBITDA/interest coverage increased from 17.6 times (x) to 26.4x, while debt-to-EBITDA declined from 0.7x at year-end 2007 to just 0.6x. Similarly, total adjusted debt/EBITDAR declined from 0.9x to 0.7x. ConocoPhillips' operational performance also remains strong. In 2007, total reserves including affiliates were 10.56 billion barrels of oil equivalent (boe), of which 72% were proved developed. One and three year FD&A costs were $11.37/boe and $11.92/boe respectively, and the company had an R/P ratio of 12.3x, according to Fitch calculations. At $184.6 billion, the company's assets have also grown substantially, improving debt service capacity. Note that this figure includes $29.2 billion in goodwill.

ConocoPhillips is a large integrated oil company with a presence in just under 40 countries. Worldwide, it has the sixth largest proven reserves and fifth largest portfolio of refining assets, excluding national oil companies. In 2007 consolidated E&P production was 1.88 million barrels per day, and total reserves (including equity affiliates and LUKOIL) were 10.56 billion boe. ConocoPhillips also owns and operates approximately 2.04 million bpd of refining capacity, excluding the contributions of its Borger and Wood River refineries to the heavy oil joint venture with Encana (WRB Refining LLC). COP's businesses are broken out into six segments including: E&P, Midstream (including DCP Pipeline), Refining & Marketing, LUKOIL Investment, Chemicals, and Emerging Businesses.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

Fitch Ratings Mark Sadeghian, CFA, +1-312-368-2090 (Chicago) Sean T. Sexton, CFA, +1-312-368-3130 (Chicago) CindyStoller, +1-212-908-0526 (Media Relations, New York) cindy.stoller@fitchratings.com