Financial and Derivative Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial and Derivative Instruments

inancial and Derivative Instruments

The company’s derivative instruments principally include crude oil, natural gas and refined product futures, swaps, options, and forward contracts. None of the company’s derivative instruments are designated as hedging instruments, although certain of the company’s affiliates make such a designation. The company’s derivatives are not material to the company’s consolidated financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodities and other derivatives activities.

The company uses derivative commodity instruments traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange. In addition, the company enters into swap contracts and option contracts principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets, which are governed by International Swaps and Derivatives Association agreements and other master netting arrangements.

Derivative instruments measured at fair value at June 30, 2020, and December 31, 2019, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows:

Consolidated Balance Sheet: Fair Value of Derivatives Not Designated as Hedging Instruments (Millions of dollars)
Type of Contract	Balance Sheet Classification	At June 30, 2020		At December 31, 2019
Commodity	Accounts and notes receivable, net	$	16	$	11
Commodity	Long-term receivables, net	7		—
Total Assets at Fair Value		$	23	$	11
Commodity	Accounts payable	$	80	$	74
Commodity	Deferred credits and other noncurrent obligations	3		—
Total Liabilities at Fair Value		$	83	$	74

Consolidated Statement of Income: The Effect of Derivatives Not Designated as Hedging Instruments (Millions of dollars)
Type of		Gain / (Loss) Three Months Ended June 30				Gain / (Loss) Six Months Ended June 30
Contract	Statement of Income Classification	2020		2019		2020		2019
Commodity	Sales and other operating revenues	$	(216)	$	(6)	$	245	$	(244)
Commodity	Purchased crude oil and products	(20)		(2)		(24)		(9)
Commodity	Other income	(3)		(3)		(3)		(3)
		$	(239)	$	(11)	$	218	$	(256)

The table below represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at June 30, 2020, and December 31, 2019.

Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities (Millions of dollars)
	Gross Amount Recognized		Gross Amounts Offset		Net Amounts Presented		Gross Amounts Not Offset		Net Amount
At June 30, 2020
Derivative Assets	$	1,603	$	1,580	$	23	$	—	$	23
Derivative Liabilities	$	1,663	$	1,580	$	83	$	—	$	83
At December 31, 2019
Derivative Assets	$	656	$	645	$	11	$	—	$	11
Derivative Liabilities	$	719	$	645	$	74	$	—	$	74

Derivative assets and liabilities are classified on the Consolidated Balance Sheet as accounts and notes receivable, long-term receivables, accounts payable, and deferred credits and other noncurrent obligations. Amounts not offset on the Consolidated Balance Sheet represent positions that do not meet all the conditions for “a right of offset.”