Financial and Derivative Instruments

9 Months Ended

Sep. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The company’s commodity derivative instruments principally include crude oil, natural gas, liquefied natural gas and refined product futures, swaps, options and forward contracts. The company applies cash flow hedge accounting to certain commodity transactions, where appropriate, to manage the market price risk associated with forecasted sales of crude oil. 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 commodity derivative 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 September 30, 2024, and December 31, 2023, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows:


Consolidated Balance Sheet: Fair Value of Derivatives
Type of		At September 30, 2024		At December 31, 2023
Contract	Balance Sheet Classification	(Millions of dollars)
Commodity	Accounts and notes receivable, net	$	172	$	151
Commodity	Long-term receivables, net	13		8
Total Assets at Fair Value		$	185	$	159
Commodity	Accounts payable	$	106	$	216
Commodity	Deferred credits and other noncurrent obligations	22		46
Total Liabilities at Fair Value		$	128	$	262


Consolidated Statement of Income: The Effect of Derivatives
		Gain / (Loss) Three Months Ended September 30				Gain / (Loss) Nine Months Ended September 30
Type of		2024		2023		2024		2023
Contract	Statement of Income Classification	(Millions of dollars)
Commodity	Sales and other operating revenues	$	258	$	(420)	$	18	$	(439)
Commodity	Purchased crude oil and products	55		(202)		16		(183)
Commodity	Other income (loss)	(8)		(8)		13		(24)
		$	305	$	(630)	$	47	$	(646)

The amount reclassified from AOCL to “Sales and other operating revenues” from designated hedges for the first nine months of 2024 was a decrease of $43 million compared with a decrease of $17 million in the same period of the prior year. At September 30, 2024, before-tax deferred gains in AOCL related to outstanding crude oil price hedging contracts were $18 million, of which all is expected to be reclassified into earnings during the next 12 months as the hedged crude oil sales are recognized in earnings.

The following table represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at September 30, 2024, and December 31, 2023.


Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Gross Amounts Not Offset		Net Amount

At September 30, 2024	(Millions of dollars)
Derivative Assets - not designated	$	2,453	$	2,286	$	167	$	5	$	162
Derivative Assets - designated	$	20	$	2	$	18	$	—	$	18
Derivative Liabilities - not designated	$	2,414	$	2,286	$	128	$	2	$	126
Derivative Liabilities - designated	$	2	$	2	$	—	$	—	$	—
At December 31, 2023
Derivative Assets - not designated	$	2,394	$	2,242	$	152	$	4	$	148
Derivative Assets - designated	$	8	$	1	$	7	$	—	$	7
Derivative Liabilities - not designated	$	2,504	$	2,242	$	262	$	15	$	247
Derivative Liabilities - designated	$	1	$	1	$	—	$	—	$	—

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.”