Leases (Notes)

12 Months Ended

Dec. 31, 2023

Leases

For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term and accretion of the lease liability, while finance leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, we recognize lease expense for these short-term leases on a straight-line basis over the lease term.

We are a lessee for numerous operating leases, primarily related to real estate, transportation, and equipment. The vast majority of our operating leases have remaining lease terms of 10 years or less, some of which include options to extend the leases, and some of which include options to terminate the leases. We generally do not include renewal or termination options in our assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain. The accounting for some of our leases may require judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options. We also have some lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. For certain equipment leases, such as offshore vessels and drilling rigs, we account for the lease and non-lease components separately.

The following tables illustrate the financial impact of our leases as of and for the years ended December 31, 2023, 2022, and 2021, along with other supplemental information about our existing leases:


	Year Ended December 31
Millions of dollars	2023		2022		2021
Components of lease expense:
Finance lease cost:
Amortization of right-of-use assets	$	30	$	20	$	20
Interest on lease liabilities	41		38		38
Operating lease cost	337		301		274
Short-term lease cost	35		31		27
Sublease income	(2)		(3)		(4)
Total lease cost	$	441	$	387	$	355


	As of December 31
Millions of dollars	2023		2022
Components of balance sheet:
Operating leases:
Operating lease right-of-use assets (non-current)	$	1,088	$	913
Current portion of operating lease liabilities	262		224
Operating lease liabilities (non-current)	911		791
Finance leases:
Other assets (non-current)	$	120	$	124
Other current liabilities	32		26
Other liabilities (non-current)	132		115


	Year Ended December 31
Millions of dollars except years and percentages	2023			2022			2021
Other supplemental information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	354		$	332		$	307
Operating cash flows for finance leases	41			38			38
Financing cash flows for finance leases	37			26			24
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	487		$	249		$	433
Finance leases	64			62			6
Weighted-average remaining lease term:
Operating leases	8.2 years			9.5 years			9.8 years
Finance leases	5.3 years			5.9 years			6.3 years
Weighted-average discount rate for operating leases	5.3		%	5.2		%	4.9		%

The following table summarizes the maturity of our operating and finance leases as of December 31, 2023:


Millions of dollars	Operating Leases		Finance Leases
2024	$	323	$	68
2025	254		65
2026	176		63
2027	115		29
2028	88		10
Thereafter	536		18
Total lease payments	1,492		253
Imputed interest	(319)		(89)
Total lease payments, net of imputed interest	$	1,173	$	164

Lessee, Operating Leases

Leases


	Year Ended December 31
Millions of dollars	2023		2022		2021
Components of lease expense:
Finance lease cost:
Amortization of right-of-use assets	$	30	$	20	$	20
Interest on lease liabilities	41		38		38
Operating lease cost	337		301		274
Short-term lease cost	35		31		27
Sublease income	(2)		(3)		(4)
Total lease cost	$	441	$	387	$	355


	As of December 31
Millions of dollars	2023		2022
Components of balance sheet:
Operating leases:
Operating lease right-of-use assets (non-current)	$	1,088	$	913
Current portion of operating lease liabilities	262		224
Operating lease liabilities (non-current)	911		791
Finance leases:
Other assets (non-current)	$	120	$	124
Other current liabilities	32		26
Other liabilities (non-current)	132		115


	Year Ended December 31
Millions of dollars except years and percentages	2023			2022			2021
Other supplemental information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	354		$	332		$	307
Operating cash flows for finance leases	41			38			38
Financing cash flows for finance leases	37			26			24
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	487		$	249		$	433
Finance leases	64			62			6
Weighted-average remaining lease term:
Operating leases	8.2 years			9.5 years			9.8 years
Finance leases	5.3 years			5.9 years			6.3 years
Weighted-average discount rate for operating leases	5.3		%	5.2		%	4.9		%

The following table summarizes the maturity of our operating and finance leases as of December 31, 2023:


Millions of dollars	Operating Leases		Finance Leases
2024	$	323	$	68
2025	254		65
2026	176		63
2027	115		29
2028	88		10
Thereafter	536		18
Total lease payments	1,492		253
Imputed interest	(319)		(89)
Total lease payments, net of imputed interest	$	1,173	$	164