Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PHILLIPS 66

INDEX TO FINANCIAL STATEMENTS


			Page

Report of Management			96

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			97


Report of Independent Registered Public Accounting Firm (DCP Midstream, LP) (PCAOB ID: 34)			101

Consolidated Financial Statements of Phillips 66:

Consolidated Statement of Income for the years ended December 31, 2024, 2023 and 2022			102

Consolidated Statement of Comprehensive Income for the years ended December 31, 202 4 , 202 3 and 2022			103

Consolidated Balance Sheet at December 31, 202 4 and 2023			104

Consolidated Statement of Cash Flows for the years ended December 31, 202 4 , 202 3 and 2022			105

Consolidated Statement of Changes in Equity for the years ended December 31, 202 4 , 202 3 and 2022			106

Notes to Consolidated Financial Statements			108

Report of Management

Management prepared, and is responsible for, the consolidated financial statements and the other information appearing in this Annual Report. The consolidated financial statements present fairly the company’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States. In preparing its consolidated financial statements, the company includes amounts that are based on estimates and judgments management believes are reasonable under the circumstances. The company’s financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm appointed by the Audit and Finance Committee of the Board of Directors. Management has made available to Ernst & Young LLP all of the company’s financial records and related data, as well as the minutes of shareholders’ and directors’ meetings.

Assessment of Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Phillips 66’s internal control system was designed to provide reasonable assurance to the company’s management and directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded the company’s internal control over financial reporting was effective as of December 31, 2024.

Ernst & Young LLP has issued an audit report on the company’s internal control over financial reporting as of December 31, 2024, and their report is included herein.



/s/ Mark E. Lashier						/s/ Kevin J. Mitchell

Mark E. Lashier						Kevin J. Mitchell
Chairman and Chief Executive Officer						Executive Vice President and
						Chief Financial Officer

Date: February 21, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Phillips 66

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Phillips 66 (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits and, for 2023 and 2022, the report of Deloitte & Touche LLP, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.

We did not audit the 2023 and 2022 financial statements of DCP Midstream, LP (DCP LP), a consolidated subsidiary, whose financial statements reflect total assets constituting 14% of the Company’s total assets as of December 31, 2023 and total revenues constituting 4% and 3% of the Company’s revenues and other income for the years ended December 31, 2023 and 2022, respectively. Those statements were audited by Deloitte & Touche LLP, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for DCP LP for 2023 and 2022, is based solely on the report of Deloitte & Touche LLP.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of Deloitte & Touche LLP provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


						Impairment assessment of WRB Refining LP, an equity method investment
Description of the Matter						As discussed in Note 1 to the financial statements, the Company assesses investments in unconsolidated affiliates accounted for using the equity method for impairment when events or changes in circumstances indicate a loss in value that is other than temporary may have occurred. As discussed in Note 9 to the financial statements, the Company owns a 50% interest in WRB Refining LP (WRB), a joint venture that owns the Wood River and Borger refineries. The carrying value of the Company’s investment in WRB was $2.3 billion as of December 31, 2024. WRB’s earnings are subject to variability as they depend on, among other things, market conditions, the utilization of its refineries, cost levels and other factors relevant to its operations. Accordingly, significant judgment is required in determining whether events or changes in circumstances indicate a loss in value may have occurred that is indicative of a possible impairment. We determined the Company’s process for evaluating whether an other than temporary impairment of its investment in WRB has occurred is a critical audit matter because of the judgment and assumptions management uses to perform its identification and evaluation of such factors.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls for the assessment of potential other than temporary impairments in WRB, which included identifying and evaluating events or changes in circumstances that could indicate a potential other than temporary impairment. We exercised professional judgment based on our knowledge of the industry and WRB’s business to assess the appropriateness of management’s conclusion that no such events existed or changes in circumstances had occurred as of December 31, 2024. In our evaluation, among other things, we performed inquiries of management and evaluated WRB’s prior and current operating earnings to assess its ability to sustain an earnings capacity that justifies the Company’s recorded investment in WRB and to assess the Company’s ability to recover its investment in WRB. In addition, we evaluated potential contrary evidence to management’s conclusion, considering both internally and externally available information, such as demand for WRB’s products, gross margins, costs, refinery utilization, and other operating information, as well as comparable market multiples.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2011.

Houston, Texas

February 21, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Phillips 66

Opinion on Internal Control over Financial Reporting

We have audited Phillips 66’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Phillips 66 (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes, and our report dated February 21, 2025 expressed an unqualified opinion thereon, based on our audit and the report of Deloitte & Touche LLP.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included under the heading “Assessment of Internal Control Over Financial Reporting” in the accompanying “Report of Management.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Houston, Texas

February 21, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors of DCP Midstream GP, LLC and the Unitholders of DCP Midstream, LP

Opinion on the Financial Statements

We have audited the consolidated balance sheets of DCP Midstream, LP and subsidiaries (the "Partnership") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”) (not presented herein). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of Gulf Coast Express Pipeline, LLC, the Partnership’s investment which is accounted for by use of the equity method. The consolidated financial statements of the Partnership include its equity investment in Gulf Coast Express Pipeline, LLC of $385 million and $408 million as of December 31, 2023 and 2022, and its equity earnings in Gulf Coast Express Pipeline, LLC of $68 million and $67 million for the years ended December 31, 2023 and 2022, respectively. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Gulf Coast Express Pipeline, LLC is based solely on the report of the other auditors.

Basis for Opinion

These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Denver, Colorado

February 21, 2024

We began serving as the Partnership’s auditor in 2004. In 2024 we became the predecessor auditor.


Consolidated Statement of Income			Phillips 66


	Millions of Dollars
Years Ended December 31	2024		2023	2022
Revenues and Other Income
Sales and other operating revenues	$	143,153	147,399	169,990
Equity in earnings of affiliates	1,779		2,017	2,968
Net gain on dispositions	321		115	7
Other income	243		359	2,737
Total Revenues and Other Income	145,496		149,890	175,702

Costs and Expenses
Purchased crude oil and products	129,962		128,086	149,932
Operating expenses	5,939		6,154	6,111
Selling, general and administrative expenses	2,814		2,525	2,168
Depreciation and amortization	2,363		1,977	1,629
Impairments	456		24	60
Taxes other than income taxes	329		707	530
Accretion on discounted liabilities	40		29	23
Interest and debt expense	907		897	619
Foreign currency transaction (gains) losses	11		22	(9)
Total Costs and Expenses	142,821		140,421	161,063
Income before income taxes	2,675		9,469	14,639
Income tax expense	500		2,230	3,248


Net Income	2,175		7,239	11,391
Less: net income attributable to noncontrolling interests	58		224	367
Net Income Attributable to Phillips 66	$	2,117	7,015	11,024






Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic	$	5.01	15.56	23.36
Diluted	4.99		15.48	23.27



Weighted-Average Common Shares Outstanding (thousands)
Basic	420,174		450,136	471,497
Diluted	421,888		453,210	473,731


See Notes to Consolidated Financial Statements.


Consolidated Statement of Comprehensive Income	Phillips 66

	Millions of Dollars
Years Ended December 31	2024		2023	2022

Net Income	$	2,175	7,239	11,391
Other comprehensive income (loss)
Defined benefit plans

Net actuarial gain (loss) arising during the period	(23)		(11)	191

Amortization of net actuarial loss, prior service credit and settlements	14		19	90

Plans sponsored by equity affiliates	(19)		(8)	80
Income taxes on defined benefit plans	8		2	(85)
Defined benefit plans, net of income taxes	(20)		2	276
Foreign currency translation adjustments	(111)		182	(295)
Income taxes on foreign currency translation adjustments	6		(3)	4
Foreign currency translation adjustments, net of income taxes	(105)		179	(291)
Cash flow hedges	—		(3)	—
Income taxes on hedging activities	—		—	—
Hedging activities, net of income taxes	—		(3)	—
Other Comprehensive Income (Loss), Net of Income Taxes	(125)		178	(15)
Comprehensive Income	2,050		7,417	11,376
Less: comprehensive income attributable to noncontrolling interests	58		224	367
Comprehensive Income Attributable to Phillips 66	$	1,992	7,193	11,009
See Notes to Consolidated Financial Statements.


Consolidated Balance Sheet	Phillips 66

	Millions of Dollars
At December 31	2024		2023
Assets
Cash and cash equivalents	$	1,738	3,323
Accounts and notes receivable (net of allowances of $70 million in 2024 and $71 million in 2023)	9,544		10,483
Accounts and notes receivable—related parties	1,489		1,247
Inventories	3,995		3,750
Prepaid expenses and other current assets	1,144		1,138
Total Current Assets	17,910		19,941
Investments and long-term receivables	14,378		15,302
Net properties, plants and equipment	35,264		35,712
Goodwill	1,575		1,550
Intangibles	1,161		920
Other assets	2,294		2,076
Total Assets	$	72,582	75,501

Liabilities
Accounts payable	$	9,792	10,332
Accounts payable—related parties	512		569
Short-term debt	1,831		1,482
Accrued income and other taxes	1,060		1,200
Employee benefit obligations	732		863
Other accruals	1,160		1,410
Total Current Liabilities	15,087		15,856
Long-term debt	18,231		17,877
Asset retirement obligations and accrued environmental costs	1,129		864
Deferred income taxes	7,101		7,424
Employee benefit obligations	703		630
Other liabilities and deferred credits	1,868		1,200
Total Liabilities	44,119		43,851

Equity
Common stock (2,500,000,000 shares authorized at $0.01 par value) Issued (2024—656,987,861 shares; 2023—654,842,101 shares)
Par value	7		7
Capital in excess of par	19,788		19,650
Treasury stock (at cost: 2024—248,594,923 shares; 2023—224,377,439 shares)	(22,751)		(19,342)
Retained earnings	30,771		30,550
Accumulated other comprehensive loss	(407)		(282)
Total Stockholders’ Equity	27,408		30,583
Noncontrolling interests	1,055		1,067
Total Equity	28,463		31,650
Total Liabilities and Equity	$	72,582	75,501
See Notes to Consolidated Financial Statements.


Consolidated Statement of Cash Flows	Phillips 66

	Millions of Dollars
Years Ended December 31	2024		2023	2022
Cash Flows From Operating Activities
Net income	$	2,175	7,239	11,391
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	2,363		1,977	1,629
Impairments	456		24	60
Accretion on discounted liabilities	40		29	23
Deferred income taxes	(251)		840	1,320
Undistributed equity earnings	(411)		(822)	(1,308)
Loss (gain) on early redemption of debt	(3)		53	—
Net gain on dispositions	(321)		(115)	(7)
Gain related to merger of businesses	—		—	(3,013)
Unrealized investment loss	—		38	433
Other	758		(419)	217
Working capital adjustments
Accounts and notes receivable	574		(696)	(2,073)
Inventories	(278)		(245)	74
Prepaid expenses and other current assets	44		269	(249)
Accounts payable	(491)		(480)	1,736
Taxes and other accruals	(464)		(663)	580


Net Cash Provided by Operating Activities	4,191		7,029	10,813

Cash Flows From Investing Activities
Capital expenditures and investments	(1,859)		(2,155)	(1,888)
Acquisitions, net of cash acquired	(625)		(263)	(306)
Purchases of government obligations	(1,100)		—	—
Return of investments in equity affiliates	141		201	125
Proceeds from asset dispositions	1,082		392	4
Advances/loans—related parties	—		—	(75)
Collection of advances/loans—related parties	4		3	662

Other	(106)		32	(10)


Net Cash Used in Investing Activities	(2,463)		(1,790)	(1,488)

Cash Flows From Financing Activities
Issuance of debt	6,272		6,260	453
Repayment of debt	(4,140)		(4,252)	(2,883)
Issuance of common stock	86		123	103
Repurchase of common stock	(3,451)		(4,014)	(1,513)
Dividends paid on common stock	(1,882)		(1,882)	(1,793)
Distributions to noncontrolling interests	(70)		(163)	(185)
Repurchase of noncontrolling interests	—		(4,067)	(500)

Other	(120)		(97)	(70)


Net Cash Used in Financing Activities	(3,305)		(8,092)	(6,388)

Effect of Exchange Rate Changes on Cash and Cash Equivalents	(8)		43	49

Net Change in Cash and Cash Equivalents	(1,585)		(2,810)	2,986
Cash and cash equivalents at beginning of year	3,323		6,133	3,147
Cash and Cash Equivalents at End of Year	$	1,738	3,323	6,133
See Notes to Consolidated Financial Statements.


Consolidated Statement of Changes in Equity							Phillips 66

	Millions of Dollars
	Attributable to Phillips 66
	Common Stock
	Par Value		Capital in Excess of Par	Treasury Stock	Retained Earnings	Accum. Other Comprehensive Loss	Noncontrolling Interests	Total

December 31, 2021	$	7	20,504	(17,116)	16,216	(445)	2,471	21,637
Net income	—		—	—	11,024	—	367	11,391
Other comprehensive loss	—		—	—	—	(15)	—	(15)
Dividends paid on common stock	—		—	—	(1,793)	—	—	(1,793)
Repurchase of common stock	—		—	(1,540)	—	—	—	(1,540)
Distributions to noncontrolling interests	—		—	—	—	—	(185)	(185)
Acquisition of noncontrolling interest in Phillips 66 Partners LP	—		(901)	3,380	—	—	(2,163)	316
Merger of DCP Midstream, LLC and Gray Oak Holdings LLC	—		—	—	—	—	4,622	4,622
Acquisition of noncontrolling interest in DCP Midstream, LP	—		—	—	—	—	(500)	(500)
Benefit plan activity	—		188	—	(15)	—	—	173
December 31, 2022	7		19,791	(15,276)	25,432	(460)	4,612	34,106
Net income	—		—	—	7,015	—	224	7,239
Other comprehensive income	—		—	—	—	178	—	178
Dividends paid on common stock	—		—	—	(1,882)	—	—	(1,882)
Repurchase of common stock	—		—	(4,066)	—	—	—	(4,066)
Distributions to noncontrolling interests	—		—	—	—	—	(163)	(163)
Acquisition of noncontrolling interest in DCP Midstream, LP	—		(361)	—	—	—	(3,613)	(3,974)
Benefit plan activity and other	—		220	—	(15)	—	7	212
December 31, 2023	7		19,650	(19,342)	30,550	(282)	1,067	31,650
Net income	—		—	—	2,117	—	58	2,175
Other comprehensive loss	—		—	—	—	(125)	—	(125)
Dividends paid on common stock	—		—	—	(1,882)	—	—	(1,882)
Repurchase of common stock	—		—	(3,409)	—	—	—	(3,409)
Distributions to noncontrolling interests	—		—	—	—	—	(70)	(70)
Benefit plan activity	—		138	—	(14)	—	—	124
December 31, 2024	$	7	19,788	(22,751)	30,771	(407)	1,055	28,463


	Shares
	Common Stock Issued	Treasury Stock

December 31, 2021	650,026,318	211,771,827
Repurchase of common stock	—	16,583,076
Shares issued—share-based compensation	2,347,327	—
Shares issued—acquisition of noncontrolling interest in Phillips 66 Partners LP	—	(41,825,236)
December 31, 2022	652,373,645	186,529,667
Repurchase of common stock	—	37,847,772
Shares issued—share-based compensation	2,468,456	—
December 31, 2023	654,842,101	224,377,439
Repurchase of common stock	—	24,217,484
Shares issued—share-based compensation	2,145,760	—
December 31, 2024	656,987,861	248,594,923


	Dollars
Years Ended December 31	Dividends Paid Per Share of Common Stock

2022	$	3.83
2023	4.20
2024	$	4.50
See Notes to Consolidated Financial Statements.


Notes to Consolidated Financial Statements			Phillips 66

**Note 1—**Summary of Significant Accounting Policies

Consolidation Principles and Investments

Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities (VIEs) where we are the primary beneficiary. Undivided interests in pipelines, natural gas plants and terminals are consolidated on a proportionate basis. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further discussion about a significant VIE that we began consolidating in August 2022, and Note 30—Phillips 66 Partners LP, for further discussion regarding our merger with Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66.

The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies, including VIEs, of which we are not the primary beneficiary. Other securities and investments are generally carried at fair value, or cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. See Note 9—Investments, Loans and Long-Term Receivables, for further discussion on our significant unconsolidated VIEs.

Recast Financial Information

Certain prior period financial information has been recast and reclassified to reflect the current year’s presentation. See Note 29—Segment Disclosures and Related Information and Note 26—Cash Flow Information, for further information.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

Foreign Currency

Adjustments resulting from the process of translating financial statements with foreign functional currencies into U.S. dollars are included in accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction gains and losses result from remeasuring monetary assets and liabilities denominated in a foreign currency into the functional currency of our subsidiary holding the asset or liability. We include these transaction gains and losses in current earnings (loss). Most of our foreign operations use their local currency as the functional currency.

Cash Equivalents

Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and will mature within 90 days or less from the date of acquisition. We carry these investments at cost plus accrued interest.

Inventories

We have several valuation methods for our various types of inventories and consistently use the following methods for each type of inventory. Crude oil and petroleum products inventories are valued at the lower of cost or market in the aggregate, primarily on the last-in, first-out (LIFO) basis. Any necessary lower-of-cost-or-market write-downs at year end are recorded as permanent adjustments to the LIFO cost basis. LIFO is used to better match current inventory costs with current revenues and to meet tax-conformity requirements. Costs include both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location. Materials and supplies inventories are valued using the weighted-average-cost method.

Fair Value Measurements

We categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability that are used to measure fair value to the extent that relevant observable inputs are not available, and that reflect the assumptions we believe market participants would use when pricing an asset or liability for which there is little, if any, market activity at the measurement date.

Derivative Instruments

Derivative instruments, except those designated as normal purchases and normal sales, are recorded on the balance sheet at fair value. We have master netting agreements with most of our exchange-cleared instrument counterparties and certain of our counterparties to other commodity instrument contracts (e.g., physical commodity forward contracts). We have elected to net derivative assets and liabilities with the same counterparty on the balance sheet if the legal right of offset exists and certain other criteria are met. When applicable, we also net collateral payables and receivables against derivative assets and derivative liabilities, respectively.

Recognition and classification of the gain or loss that results from recording and adjusting a derivative to fair value depends on the purpose for issuing or holding the derivative. All realized and unrealized gains and losses from derivative instruments for which we do not apply hedge accounting are immediately recognized in our consolidated statement of income. Unrealized gains or losses from derivative instruments that qualify for and are designated as cash flow hedges are recognized in other comprehensive income (loss) and appear on the balance sheet in accumulated other comprehensive income (loss) until the hedged transactions are recognized in earnings. However, to the extent the change in the fair value of a derivative instrument exceeds the change in the anticipated cash flows of the hedged transaction, the excess gain or loss is recognized immediately in earnings.

Loans and Long-Term Receivables

We enter into agreements with other parties to pursue business opportunities, which may require us to provide loans or advances to certain affiliated and nonaffiliated companies. Loans are recorded when cash is transferred or seller financing is provided to the affiliated or nonaffiliated company pursuant to a loan agreement. The loan balance will increase as interest is earned on the outstanding loan balance and will decrease as interest and principal payments are received. Interest is earned at the loan agreement’s stated interest rate. Loans and long-term receivables are evaluated for impairment based on an expected credit loss assessment.

Impairment of Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliates accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When indicators exist, the fair value is estimated and compared to the investment carrying value. If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value. The fair value of the impaired investment is determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies.

Depreciation and Amortization

Depreciation and amortization of properties, plants and equipment (PP&E) are determined by either the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units).

Capitalized Interest

A portion of interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer. Capitalized interest is added to the cost of the related asset, and is depreciated over the useful life of the related asset.

Impairment of Properties, Plants and Equipment

PP&E used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group. If indicators of potential impairment exist, an undiscounted cash flow test is performed. If the sum of the undiscounted expected future before-tax cash flows of an asset group is less than the carrying value of the asset group, including applicable liabilities, the carrying value of the PP&E included in the asset group is written down to estimated fair value and the write down is reported in the “Impairments” line item on our consolidated statement of income in the period in which the impairment determination is made. Individual assets are grouped for impairment testing purposes at the lowest level for which identifiable cash flows are available. Because there is usually a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined using one or more of the following methods: the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants; a market multiple of earnings for similar assets; historical market transactions for similar assets, adjusted using principal market participant assumptions when necessary; or replacement cost adjusted for physical deterioration and economic obsolescence. Long-lived assets held for sale are accounted for at the lower of amortized cost or fair value, less cost to sell, with fair value determined using a binding negotiated price, if available, estimated replacement cost, or present value of expected future cash flows as previously described.

The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated future volumes, prices, costs, margins and capital project decisions, considering all available evidence at the date of review.

Property Dispositions

When complete units of depreciable property are sold, the asset cost and related accumulated depreciation are eliminated, with any gain or loss reflected in the “Net gain on dispositions” line item on our consolidated statement of income. When less than complete units of depreciable property are disposed of or retired, the difference between asset cost and salvage value is charged or credited to accumulated depreciation.

Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination. Goodwill is not amortized, but is assessed for impairment annually and when events or changes in circumstance indicate that the fair value of a reporting unit with goodwill is below its carrying value. The impairment assessment requires allocating goodwill and other assets and liabilities to reporting units. The fair value of each reporting unit is determined and compared to the book value of the reporting unit. If the fair value of the reporting unit is less than the book value, an impairment is recognized for the amount by which the book value exceeds the reporting unit’s fair value. A goodwill impairment cannot exceed the total amount of goodwill allocated to that reporting unit. For purposes of assessing goodwill for impairment, we have three reporting units with goodwill balances at our 2024 testing date: Marketing and Specialties (M&S), Transportation and Natural Gas Liquids (NGL).

Intangible Assets Other Than Goodwill

Intangible assets with finite useful lives are amortized using the straight-line method over their useful lives. Intangible assets with indefinite useful lives are not amortized, but are tested at least annually for impairment. Each reporting period, we evaluate intangible assets with indefinite useful lives to determine whether events and circumstances continue to support this classification. Indefinite-lived intangible assets are considered impaired if their fair value is lower than their net book value. The fair value of intangible assets is determined based on quoted market prices in active markets, if available. If quoted market prices are not available, the fair value of intangible assets is determined based upon the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants, or upon estimated replacement cost, if expected future cash flows from the intangible asset are not determinable.

Asset Retirement Obligations

When we have a legal obligation to incur costs to retire an asset, we record a liability in the period in which the obligation was incurred provided that a reasonable estimate of fair value can be made. If a reasonable estimate of fair value cannot be made at the time the obligation arises, we record the liability when sufficient information is available to estimate its fair value. When a liability is initially recorded, we capitalize the costs by increasing the carrying amount of the related PP&E. Over time, the liability is increased for changes in present value, and the capitalized costs in PP&E are depreciated over the useful life of the related assets. If our estimate of the liability changes after initial recognition, we record an adjustment to the liability and PP&E.

Our practice is to keep our refining and other processing assets in good operating condition through routine repair and maintenance of component parts in the ordinary course of business and by continuing to make improvements based on technological advances. As a result, we believe that generally these assets have no expected retirement dates for purposes of estimating asset retirement obligations since the dates or ranges of dates upon which we would retire these assets cannot be reasonably estimated at this time. We will recognize liabilities for these obligations in the period when sufficient information becomes available to estimate a date or range of potential retirement dates. See Note 4—Restructuring, for additional information regarding the change in asset retirement obligation related to our intention to cease operations at our Los Angeles Refinery.

Environmental Costs

Environmental expenditures are expensed or capitalized, depending upon their future economic benefit. Expenditures relating to an existing condition caused by past operations, and those having no future economic benefit, are expensed. When environmental assessments or cleanups are probable and the costs can be reasonably estimated, environmental expenditures are accrued on an undiscounted basis (unless acquired in a business combination). Recoveries of environmental remediation costs from other parties, such as state reimbursement funds, are recorded as a reduction to environmental expenditures.

Guarantees

The fair value of a guarantee is determined and recorded as a liability at the time the guarantee is given. The initial liability is subsequently reduced as we are released from exposure under the guarantee. We amortize the guarantee liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of guarantee. We amortize the guarantee liability to the related statement of income line item based on the nature of the guarantee. In cases where the guarantee term is indefinite, we reverse the liability when we have information to support the reversal. When the performance on the guarantee becomes probable and the liability can be reasonably estimated, we accrue a separate liability for the excess amount above the guarantee’s book value based on the facts and circumstances at that time. We reverse the fair value liability only when there is no further exposure under the guarantee.

Treasury Stock

We record treasury stock purchases at cost, which includes related transaction costs and excise taxes. Amounts are recorded as reductions of stockholders’ equity on the consolidated balance sheet. Common stock reissued from treasury stock is valued based on the average cost of historical repurchases.

Revenue Recognition

Our revenues are primarily associated with sales of refined petroleum products and renewable fuels, crude oil, NGL and natural gas. Each gallon, or other unit of measure of product, is separately identifiable and represents a distinct performance obligation to which a transaction price is allocated. The transaction prices of our contracts with customers are either fixed or variable, with variable pricing based upon various market indices. For our contracts that include variable consideration, we utilize the variable consideration allocation exception, whereby the variable consideration is only allocated to the performance obligations that are satisfied during the period. The related revenue is recognized at a point in time when control passes to the customer, which is when title and the risk of ownership passes to the customer and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. The payment terms with our customers vary based on the product or service provided, but usually are 30 days or less.

Revenues associated with pipeline transportation services are recognized at a point in time when the volumes are delivered based on contractual rates. Revenues associated with terminaling and storage services are recognized over time as the services are performed based on throughput volume or capacity utilization at contractual rates.

Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of inventory with the same counterparty are entered into in contemplation of one another, are combined and reported in the “Purchased crude oil and products” line item on our consolidated statement of income (i.e., these transactions are recorded net).

Taxes Collected from Customers and Remitted to Governmental Authorities

Excise taxes on sales of refined petroleum products and renewable fuels charged to our customers are presented net of taxes on sales of refined petroleum products and renewable fuels payable to governmental authorities in the “Taxes other than income taxes” line item on our consolidated statement of income. Other sales and value-added taxes are recorded net in the “Taxes other than income taxes” line item on our consolidated statement of income.

Shipping and Handling Costs

We have elected to account for shipping and handling costs as fulfillment activities and include these activities in the “Purchased crude oil and products” line item on our consolidated statement of income. Freight costs billed to customers are recorded in “Sales and other operating revenues.”

Maintenance and Repairs

Costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Major refinery maintenance turnarounds are expensed as incurred.

Share-Based Compensation

We recognize share-based compensation expense over the shorter of: (1) the service period (i.e., the stated period of time required to earn the award); or (2) the period beginning at the start of the service period and ending when an employee first becomes eligible for retirement, but not less than ten months for shared-based payment awards granted beginning in 2023 and not less than six months for share-based payment awards granted prior to 2023 as those are the minimum periods of time required for awards not to be subject to forfeiture. Our equity-classified programs generally provide accelerated vesting (i.e., a waiver of the remaining period of service required to earn an award) for awards held by employees at the time they become eligible for retirement (at age 55 with 5 years of service). We have elected to recognize expense on a straight-line basis over the service period for the entire award, irrespective of whether the award was granted with ratable or cliff vesting, and have elected to recognize forfeitures of awards when they occur.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. Income tax effects are released from accumulated other comprehensive loss to retained earnings, when applicable, on an individual item basis as those items are reclassified into income. Interest related to unrecognized income tax benefits is reflected in the “Interest and debt expense” line item, and penalties are reported in the “Operating expenses” or “Selling, general and administrative expenses” line items on our consolidated statement of income.

Note 2—Changes in Accounting Principles

Effective December 31, 2024, we adopted ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The adoption of this pronouncement did not have an impact on our consolidated financial statements; however, it resulted in additional disclosures within Note 29—Segment Disclosures and Related Information.

Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers

DCP Midstream, LLC and Gray Oak Holdings LLC Merger (DCP Midstream Merger)

On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity. Prior to the DCP Midstream Merger, we and Enbridge each held a 50% interest and jointly governed DCP Midstream, whose primary assets are its general partner and limited partner interests in DCP Midstream, LP (DCP LP), and we each held indirect economic interests in DCP LP of 28.26%. DCP LP is a VIE because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP. We and Enbridge also held 65% and 35% interests, respectively, in Gray Oak Holdings, whose primary asset was a 65% noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25% and 22.75%, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65% interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest.

In connection with the DCP Midstream Merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:

Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).
Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).

We hold a 76.64% Class A membership interest, which represents an indirect economic interest in DCP LP of 43.3%, and a 10% Class B membership interest, which represents an indirect economic interest in Gray Oak Pipeline of 6.5%. Enbridge holds the remaining Class A and Class B membership interests. We have been designated as the managing member of DCP Midstream Class A Segment and are responsible for conducting, directing and managing all activities associated with this segment, except as limited in certain instances. Enbridge has been designated as the managing member of DCP Midstream Class B Segment. Earnings and distributions from each segment are allocated to the members based on their membership interest in each membership class, except as otherwise provided.

DCP Midstream Class A Segment and DCP Midstream Class B Segment were determined to be silos under the variable interest consolidation model. As a result, DCP Midstream was also determined to be a VIE. We determined that we are the primary beneficiary of DCP Midstream Class A Segment because of the governance rights granted to us under the Amended and Restated LLC Agreement as managing member of the segment.

We hold a 33.33% direct ownership interest in DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills). DCP LP holds the remaining 66.67% ownership interest in these entities. As a result of the governance rights granted to us over DCP Midstream Class A Segment and the governance rights we hold through our direct ownership interests, we obtained controlling financial interests in these entities in connection with the DCP Midstream Merger. As a result of the DCP Midstream Merger, our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased from 52.2% to 62.2%.

Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills and reporting the direct and indirect economic interests held by others in these entities as noncontrolling interests on our financial statements.

We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting. As a result of the DCP Midstream Merger, we derecognized Enbridge’s noncontrolling interest in Gray Oak Holdings.

We accounted for our consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills as a business combination using the acquisition method of accounting.

See Note 5—Business Combinations, for additional information regarding our accounting for this transaction.

DCP Midstream, LP Merger (DCP LP Merger)

On June 15, 2023, we completed the acquisition of all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward, pursuant to the terms of the Agreement and Plan of Merger, dated as of January 5, 2023 (DCP LP Merger Agreement). The DCP LP Merger Agreement was entered into with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries merged with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the DCP LP Merger Agreement, at the effective time of the DCP LP Merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and its subsidiaries) issued and outstanding as of immediately prior to the effective time was converted into the right to receive $41.75 per common unit in cash. We paid $3,796 million in cash consideration to common unitholders, funded with a combination of available cash and debt proceeds. The DCP LP Merger was accounted for as an equity transaction. The DCP LP Merger increased our aggregate direct and indirect economic interest in DCP LP from 43.3% to 86.8% and our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased from 62.2% to 91.2%.

DCP Midstream Class A Segment

DCP Midstream Class A Segment is a VIE and we are the primary beneficiary. DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities.

DCP LP is a master limited partnership whose operations currently include producing and fractionating NGL; gathering, compressing, treating and processing natural gas; recovering condensate; and transporting, trading, marketing and storing natural gas and NGL.

The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:


	Millions of Dollars
	December 31, 2024		December 31, 2023
Accounts receivable	$	638	601
Net properties, plants and equipment	8,861		9,319
Investments and long-term receivables	1,622		1,901
Accounts payable	909		815
Short-term debt	532		357
Long-term debt	2,913		3,759

Preferred Units

On October 16, 2023, DCP LP redeemed its Series C preferred units at the aggregated liquidation preference of $110 million, which approximated the book value of the preferred units. On June 15, 2023, DCP LP redeemed its Series B preferred units at the aggregated liquidation preference of $161 million, which approximated the book value of the preferred units. In December 2022, DCP LP redeemed its Series A preferred units with an aggregate liquidation preference of $500 million, which approximated the book value of the preferred units. These preferred unit redemptions decreased the “Noncontrolling interests” balance on our consolidated balance sheet from December 31, 2022.

Trading and Reporting Status

In late 2023, DCP LP’s common units, Series B preferred units and Series C preferred units were delisted and deregistered from the New York Stock Exchange. In addition, DCP LP has suspended its reporting obligations to the Securities and Exchange Commission under Sections 13 and 15(d) of the Exchange Act.

Distributions

For the years ended December 31, 2024, 2023 and 2022, DCP LP made cash distributions of $47 million, $125 million and $51 million, respectively, to common unitholders other than Phillips 66 and its subsidiaries.

Note 4—Restructuring

Los Angeles Refinery

In October 2024, we announced our intention to cease operations at our Los Angeles Refinery in the fourth quarter of 2025, and are evaluating potential future uses of the property. As a result of this decision, the following impacts were recorded in our Refining segment:

We assessed the Los Angeles Refinery asset group for impairment and concluded that the carrying value of the asset group was recoverable. However, the estimated useful lives of the Los Angeles Refinery assets were shortened to reflect the plan to cease the use of the assets in the fourth quarter of 2025. As of December 31, 2024, the $1,248 million carrying value of the net PP&E and intangible assets will be depreciated through December 2025 to the estimated salvage value of $241 million. Total depreciation related to the Los Angeles Refinery assets for the year ended December 31, 2024, was $350 million, including $253 million of accelerated depreciation. This accelerated depreciation is included within the “Depreciation and amortization” line item on our consolidated statement of income for the year ended December 31, 2024.
We increased our asset retirement obligations (AROs) to $231 million as of December 31, 2024, mainly reflecting our change in the estimated timing of spending for asbestos abatement and decommissioning of assets at the Los Angeles Refinery. The asset retirement obligations recorded require significant judgment and are subject to changes in the underlying assumptions. Depreciation of the related capitalized asset retirement costs also will be recorded through December 2025, and the amount for the year ended December 31, 2024, is reflected in the accelerated depreciation discussed above.
We recorded $44 million of severance costs, which are included in the “Operating expenses” line item on our consolidated statement of income for the year ended December 31, 2024.

In April 2022, we began a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure. For the years ended December 31, 2023 and 2022, we recorded restructuring costs totaling $177 million and $160 million, respectively, primarily related to consulting fees and severance costs. Restructuring costs for the year ended December 31, 2022, also included an impairment related to assets held for sale. These costs are primarily recorded in the “Selling, general and administrative expenses” and “Impairments” line items on our consolidated statement of income and are reported in Corporate and Other.

In addition, for the years ended December 31, 2023 and 2022, we recorded restructuring costs of $38 million and $18 million, respectively, associated with the integration of DCP Midstream Class A Segment primarily related to severance and contract exit costs. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.

Note 5—Business Combinations

Midstream Acquisitions

Acquisition

On July 1, 2024, we acquired Pinnacle Midland Parent LLC (Pinnacle Midstream) to expand our natural gas gathering and processing operations in the Permian Basin for cash consideration of $565 million. For this acquisition, we provisionally recorded $325 million of PP&E, including finance lease right of use assets; $256 million of amortizable intangible assets, primarily customer relationships; $21 million of goodwill; $18 million of net working capital deficit; $13 million of AROs; and $6 million of finance lease liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the accounting for this acquisition.

DCP Midstream Merger

On August 17, 2022, we realigned our economic interest in, and governance rights over, DCP Midstream and Gray Oak Holdings through the DCP Midstream Merger, with DCP Midstream as the surviving entity. As part of the DCP Midstream Merger, we transferred a 35.75% indirect economic interest in Gray Oak Pipeline and contributed $404 million of cash to DCP Midstream, which was then paid to Enbridge, in return for a 15.05% incremental indirect economic ownership interest in DCP LP. As noted above, the additional governance rights we were granted as part of this transaction resulted in us consolidating DCP Midstream Class A Segment, as well as DCP Sand Hills and DCP Southern Hills. Given the nature of this transaction, we have accounted for the consolidation of these entities using the acquisition method of accounting.

The components of the fair value of the DCP Midstream Merger consideration are:


	Millions of Dollars
Cash contributed	$	404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$	4,891

The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed of the entities consolidated based upon their estimated fair values as of the DCP Midstream Merger on August 17, 2022. We finalized the valuation of the assets acquired and liabilities assumed during the three months ended September 30, 2023, prior to the end of the one-year measurement period on August 16, 2023.

The following table shows the purchase price allocation as of the date of the DCP Midstream Merger, and cumulative adjustments we made during the one-year measurement period that ended on August 16, 2023:


	Millions of Dollars
Fair value of assets acquired:	As Originally Reported		Adjustments	As Adjusted
Cash and cash equivalents	$	98	—	98
Accounts and notes receivable	1,003		—	1,003
Inventories	74		238	312
Prepaid expenses and other current assets	439		13	452
Investments and long-term receivables	2,192		(125)	2,067
Properties, plants and equipment	12,837		193	13,030

Intangibles	36		(36)	—
Other assets	343		(158)	185
Total assets acquired	17,022		125	17,147
Fair value of liabilities assumed:
Accounts payable	912		3	915
Short-term debt	625		(2)	623
Accrued income and other taxes	107		13	120
Employee benefit obligation—current	50		22	72
Other accruals	497		(6)	491
Long-term debt	4,541		40	4,581
Asset retirement obligations and accrued environmental costs	168		16	184
Deferred income taxes	40		14	54
Employee benefit obligations	54		—	54
Other liabilities and deferred credits	227		36	263

Total liabilities assumed	7,221		136	7,357
Fair value of net assets	9,801		(11)	9,790




Less: Fair value of noncontrolling interests	4,910		(11)	4,899
Total merger consideration	$	4,891	—	4,891

The adjustments reflected in the table above include reclassification adjustments we made to the purchase price allocation to conform with our historical presentation and adjustments we made to the estimated fair value of certain assets acquired and liabilities assumed during the measurement period. The adjustments to our purchase price allocation recorded during the measurement period were not material. See Note 19—Fair Value Measurements, for additional information on the determination of the fair value of the DCP Midstream Merger.

In connection with the DCP Midstream Merger, we recognized before-tax gains totaling $2,831 million from remeasuring our previously held equity investments in DCP Midstream, DCP Sand Hills and DCP Southern Hills to their fair values and a before tax gain of $182 million related to the transfer of a 35.75% indirect economic interest in Gray Oak Pipeline to our co-venturer. These before-tax gains are included in the “Other income” line item in our consolidated statement of income for the year ended December 31, 2022, and are reported in the Midstream segment. See Note 19—Fair Value Measurements, for additional information on the determination of the fair value of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills.

The following “Sales and other operating revenues” and “Net Income Attributable to Phillips 66” of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills were included in our consolidated statement of income from August 18, 2022, forward, for the year ended December 31, 2022.


	Millions of Dollars
Sales and other operating revenues	$	4,531
Net Income Attributable to Phillips 66	216

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents consolidated results for the years ending December 31, 2022 and 2021, as if the DCP Midstream Merger occurred on January 1, 2021. The unaudited pro forma information includes adjustments based on available information, and we believe the estimates and assumptions used are reasonable, and that the significant effects of the transactions are properly reflected in the unaudited pro forma information. An aggregate before-tax gain of $2,831 million was included in the pro forma financial information for the year ended December 31, 2021, which is related to the remeasurement of the previously held equity investments in DCP Midstream, DCP Sand Hills and DCP Southern Hills to their fair values in connection with the DCP Midstream Merger. Adjustments related to the economic interest change in our equity investment in Gray Oak Pipeline were excluded from the pro forma financial information.

The unaudited pro forma financial information presented is for comparative purposes only and does not give effect to any potential synergies that could be achieved and is not necessarily indicative of the results of future operations.


	Year Ended December 31
	2022		2021
Sales and other operating revenues (millions)	$	177,127	119,027
Net Income Attributable to Phillips 66 (millions)	8,847		3,360
Net Income Attributable to Phillips 66 per share—basic (dollars)	18.74		7.61
Net Income Attributable to Phillips 66 per share—diluted (dollars)	18.68		7.60

Pending Midstream Acquisition

On January 6, 2025, we entered into a definitive agreement to acquire all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC (Y-Grade GP) and EPIC Y-Grade, LP (Y-Grade LP, and, together with Y-Grade GP and their respective subsidiaries, EPIC Y-Grade), which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems, for cash consideration of $2.2 billion, subject to certain closing adjustments. The closing date of this transaction is dependent on regulatory approval and completion of other customary closing conditions.

Marketing and Specialties Acquisitions

On October 1, 2024, we acquired a marketing business on the U.S. West Coast for total consideration of $65 million. These operations were acquired to support the placement of renewable diesel produced by the Rodeo Renewable Energy Complex (Rodeo Complex). For this acquisition, we provisionally recorded $17 million of amortizable intangible assets, primarily customer relationships; $62 million of PP&E, including finance lease right of use assets; $31 million of net working capital; and $45 million of finance lease liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize our accounting for this acquisition.

On August 1, 2023, we acquired a marketing business on the U.S. West Coast for total consideration of $272 million. These operations were acquired to support the placement of renewable diesel produced by the Rodeo Complex. We finalized the valuation of the assets acquired and the liabilities assumed during the three months ended June 30, 2024, prior to the end of the one-year measurement period on July 31, 2024. For this acquisition, we recorded $146 million of amortizable intangible assets, primarily customer relationships; $82 million of PP&E, including finance lease right of use assets; $40 million of net working capital; $67 million of goodwill; and $63 million of finance lease liabilities.

Note 6—Sales and Other Operating Revenues

Disaggregated Revenues

The following tables present our disaggregated sales and other operating revenues:


	Millions of Dollars
	2024		2023	2022
Product Line and Services
Refined petroleum products and renewable fuels	$	103,685	108,644	131,798
Crude oil resales	22,008		20,824	20,574
NGL and natural gas	14,548		14,467	16,174
Services and other*	2,912		3,464	1,444
Consolidated sales and other operating revenues	$	143,153	147,399	169,990

Geographic Location**
United States	$	113,599	118,786	136,995
United Kingdom	12,713		14,642	16,741
Germany	5,265		5,547	6,392
Other countries	11,576		8,424	9,862
Consolidated sales and other operating revenues	$	143,153	147,399	169,990
** Includes derivatives-related activities. See Note 18—Derivatives and Financial Instruments, for additional information.*
*** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues.*

Contract-Related Assets and Liabilities

At December 31, 2024 and 2023, receivables from contracts with customers were $8,615 million and $9,638 million, respectively. Significant noncustomer balances, such as buy/sell receivables and excise tax receivables, were excluded from these amounts.

Our contract-related assets also include payments we make to our marketing customers related to incentive programs. An incentive payment is initially recognized as an asset and subsequently amortized as a reduction to revenue over the contract term, which generally ranges from 5 to 15 years. At December 31, 2024 and 2023, our asset balances related to such payments were $643 million and $537 million, respectively.

Our contract liabilities primarily represent advances from our customers prior to product or service delivery. At December 31, 2024 and 2023, contract liabilities were $232 million and $187 million, respectively.

Remaining Performance Obligations

Most of our contracts with customers are spot contracts or term contracts with only variable consideration. We do not disclose remaining performance obligations for these contracts as the expected duration is one year or less or because the variable consideration has been allocated entirely to an unsatisfied performance obligation. We also have certain contracts in our Midstream segment that include minimum volume commitments with fixed pricing. At December 31, 2024, the remaining performance obligations related to these minimum volume commitment contracts amounted to $566 million. This amount excludes variable consideration and estimates of variable rate escalation clauses in our contracts with customers, and is expected to be recognized through 2031 with a weighted average remaining life of three years as of December 31, 2024.

Note 7—Credit Losses

We are exposed to credit losses primarily through our sales of refined petroleum products, renewable fuels, renewable feedstocks, crude oil, NGL and natural gas. We assess each counterparty’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the counterparty’s established credit rating or our assessment of the counterparty’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risk, and business strategy in our evaluation. A credit limit is established for each counterparty based on the outcome of this review. We may require collateralized asset support or a prepayment to mitigate credit risk.

We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. In addition, when events and circumstances arise that may affect certain counterparties’ abilities to fulfill their obligations, we enhance our credit monitoring, and we may seek collateral to support some transactions or require prepayments from higher-risk counterparties.

At December 31, 2024 and 2023, we reported $11,033 million and $11,730 million of accounts and notes receivable, net of allowances of $70 million and $71 million, respectively. Based on an aging analysis at December 31, 2024, more than 95% of our accounts receivable were outstanding less than 60 days.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and accounts receivables sold under a securitization facility, as well as standby letters of credit. See Note 15—Debt, Note 16—Guarantees, and Note 17—Contingencies and Commitments, for more information on these off-balance sheet exposures.

Note 8—Inventories

Inventories at December 31 consisted of the following:


	Millions of Dollars
	2024		2023

Crude oil and products	$	3,547	3,330
Materials and supplies	448		420
	$	3,995	3,750

Inventories valued on the LIFO basis totaled $3,443 million and $3,050 million at December 31, 2024 and 2023, respectively. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $4.9 billion and $5.3 billion at December 31, 2024 and 2023, respectively.

During each of the three years ended December 31, 2024, certain volume reductions in inventory caused liquidations of LIFO inventory values. For the year ended December 31, 2024, LIFO inventory liquidations decreased net income by $10 million. For the years ended December 31, 2023 and 2022, LIFO inventory liquidations increased net income by $94 million, and $75 million, respectively.

Note 9—Investments, Loans and Long-Term Receivables

Components of investments and long-term receivables at December 31 were:


	Millions of Dollars
	2024		2023

Equity investments	$	14,013	14,728
Other investments	191		195
Loans and long-term receivables	174		379
	$	14,378	15,302

Equity Investments

The following table represents our significant investments in unconsolidated affiliates at December 31:


	At December 31, 2024			Millions of Dollars
	VIE	Ownership Percentage		2024		2023

Chevron Phillips Chemical Company LLC		50.00	%	$	7,819	7,341
WRB Refining LP*		50.00		2,323		2,736
Gulf Coast Express Pipeline LLC		25.00		776		800
Dakota Access, LLC		25.00		777		538
Front Range Pipeline LLC		33.33		459		477
Rockies Express Pipeline LLC**		—		—		451
CF United LLC***		47.09		284		350
OnCue Holdings, LLC****	X	50.00		185		166
*** See Note 15—Debt, for additional information regarding the non-cash distribution of WRB Refining LP’s (WRB) Advance Term Loan, which reduced our investment balance by $290 million.
**** Sold as of June 14, 2024. See discussion in Investment Dispositions section below.
***** On January 1, 2024, CF United LLC (CF United) ceased to be a VIE following the completion of the acquisition of another joint venture in which we had an ownership interest. In connection with this acquisition, the governing agreement for CF United was amended and restated. The amended and restated agreement included removal of a put option that required us to purchase our co-venturer’s interest based on a fixed multiple that was considered a variable interest.
****** We fully guarantee various debt agreements of OnCue Holdings, LLC (OnCue), and our co-venturer does not participate in the guarantees. This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses. We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance. At December 31, 2024, our maximum exposure to loss was $245 million, which represented the book value of our investment in OnCue of $185 million and guaranteed debt obligations of $60 million.

The following table presents significant basis differences between the carrying value of our investments in unconsolidated affiliates and our share of their underlying equity at December 31:


	Millions of Dollars
	2024		2023
Excess (deficit) of Carrying Value over (under) Underlying Equity in Unconsolidated Affiliates
WRB Refining LP	$	(1,526)	(1,400)
Gulf Coast Express Pipeline LLC	393		415
Front Range Pipeline LLC	280		292
Rockies Express Pipeline LLC*	—		261
*** Sold as of June 14, 2024. See further discussion in “Investment Dispositions” section below.

The basis differences result from the carrying values of our investments being higher or lower than our share of the underlying equity of our unconsolidated affiliates. Carrying amounts in excess of the underlying equity of our unconsolidated affiliates are amortized and recognized as a decrease to equity earnings over the remaining life of the underlying long-lived assets of the affiliate. Carrying amounts that are less than the underlying equity of our unconsolidated affiliates are amortized and recognized as a benefit to equity earnings over the remaining life of the underlying long-lived assets of the affiliate.

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

Dakota Access is a 25 percent-owned joint venture that owns a pipeline system transporting crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois. ETCO is a 25 percent-owned joint venture that owns a connecting crude oil pipeline system that extends from Patoka to Nederland, Texas. These two pipeline systems collectively form the Bakken Pipeline system, which is operated by a co-venturer.

In 2020, the trial court presiding over litigation brought by the Standing Rock Sioux Tribe (the Tribe) ordered the U.S. Army Corps of Engineers (USACE) to prepare an Environmental Impact Statement (EIS) addressing an easement under Lake Oahe in North Dakota. The trial court later vacated the easement. Although the easement is vacated, the USACE has no plans to stop pipeline operations while it proceeds with the EIS, and the Tribe’s request for a shutdown was denied in May 2021. In June 2021, the trial court dismissed the litigation entirely. Once the EIS is completed, new litigation or challenges may be filed.

In February 2022, the U.S. Supreme Court (the Supreme Court) denied Dakota Access’ writ of certiorari requesting the Supreme Court to review the trial court’s decision to order the EIS and vacate the easement. Therefore, the requirement to prepare the EIS stood. Also in February 2022, the Tribe withdrew as a cooperating agency, causing the USACE to halt the EIS process while the USACE engaged with the Tribe on their reasons for withdrawing.

The draft EIS process resumed in August 2022, and in September 2023, the USACE published its draft EIS for public comment. The USACE identified five potential outcomes but did not indicate which one it preferred. The options comprise two “no action” alternatives where the USACE would deny an easement to Dakota Access and require it to shut down the pipeline and either remove the pipe from under Lake Oahe or allow the pipeline to be abandoned-in-place under the lake. The USACE also identified three “action” alternatives; two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning of the current pipeline and construction of a new line 39 miles upstream from the current location.

The public comment period concluded on December 13, 2023. The USACE plans to review the comments and issue its final EIS in early 2026. The Record of Decision will follow within 30 to 60 days after the issuance of the final EIS. The final EIS must be completed before the USACE can reauthorize the easement for the pipeline. If reauthorization occurs, new litigation challenging the reauthorization may be filed.

In October 2024, the Tribe filed another lawsuit against the USACE in federal district court in Washington, D.C., again challenging USACE’s allowance of pipeline operations while the EIS process proceeds. In this lawsuit, the Tribe purports to introduce new evidence regarding the pipeline’s proximity to a reservoir and attempts to relitigate arguments about the need for injunctive relief to support its position that the Supreme Court should halt pipeline operations. A consortium of 13 states has joined Dakota Access as intervenors. The consortium argues that the pipeline reduces pollution compared to other modes of transportation and that Dakota Access is integral to the health of regional energy and agriculture markets. The Tribe’s prior request for a shutdown was denied in May 2021. This latest lawsuit seeking a shutdown does not change the current deadline for the issuance of the final EIS.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access. On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $1 billion aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share of the repayment, or $250 million, with a capital contribution of $171 million in March 2024 and $79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024. At December 31, 2024, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.

In addition, Phillips 66 Partners and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering. Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At December 31, 2024, our 25% share of the maximum potential equity contributions under the CECU was approximately $215 million. If the pipeline is required to cease operations, it may have a material adverse effect on our results of operations and cash flows. Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at December 31, 2024.

At December 31, 2024 and 2023, the aggregate book value of our investments in Dakota Access and ETCO was $883 million and $640 million, respectively.

Investment Dispositions

On December 10, 2024, we sold our equity interests in certain pipeline and terminaling assets in North Dakota for cash proceeds of approximately $143 million and recorded an immaterial before-tax loss on the sale.

On August 1, 2024, we sold our ownership interests in certain gathering and processing assets in Louisiana and Alabama for cash proceeds of $173 million and recognized a before-tax gain of $18 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.

On June 14, 2024, we sold our 25% ownership interest in Rockies Express Pipeline LLC for cash proceeds of $685 million and recognized a before-tax gain of $238 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.

Subsequent Investment Dispositions

On January 30, 2025, we sold our 25% ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $853 million. The equity investment balance was $776 million as of December 31, 2024.

On January 31, 2025, we sold our 49% ownership interest in Coop Mineraloel AG (Coop). We received cash proceeds of 1.06 billion Swiss francs, consisting of a sales price of approximately 977 million Swiss francs and a final dividend relating to financial year 2024 of 83 million Swiss francs from Coop that was paid on January 30, 2025. We also settled the foreign currency forward contracts entered into in connection with the asset sale, in which we sold 1.06 billion Swiss francs in exchange for $1.24 billion U.S. dollars. We recognized a before-tax unrealized gain of $67 million from the foreign currency forward contracts in the “Net gain on dispositions” line item on our consolidated income statement for the year ended December 31, 2024, which is reported in our M&S segment. The equity investment balance was $164 million as of December 31, 2024.

Related Party Loans

We and our co-venturer have from time to time provided member loans to WRB. At December 31, 2024 and 2023, no member loans were outstanding.

Equity Affiliate Distributions

Total cash distributions received from affiliates were $1,525 million, $1,396 million, and $1,832 million for the years ended December 31, 2024, 2023 and 2022, respectively. In addition, at December 31, 2024, retained earnings included approximately $3.7 billion related to the undistributed earnings of affiliated companies.

Summarized Equity Affiliate Financial Information

Summarized 100% financial information for all affiliated companies accounted for under the equity method, on a combined basis, as of and for the year ended December 31 was:


	Millions of Dollars
	2024		2023	2022

Revenues	$	42,069	42,078	60,981
Income before income taxes	4,846		5,350	7,616
Net income	4,674		5,160	7,414
Current assets	6,820		6,759	7,511
Noncurrent assets	46,480		46,241	46,527
Current liabilities	6,494		5,750	5,592
Noncurrent liabilities	9,304		10,980	11,412
Noncontrolling interests	2		2	2

Note 10—Properties, Plants and Equipment

Our investment in PP&E is recorded at cost. Investments in refining and processing facilities are generally depreciated on a straight-line basis over a 25-year life, pipeline assets over a 45-year life, terminal assets over a 35-year life, and gathering systems over a 35-year life. The company’s investment in PP&E, with the associated accumulated depreciation and amortization (Accum. D&A), at December 31 was:


	Millions of Dollars
	2024				2023
	Gross PP&E		Accum. D&A	Net PP&E	Gross PP&E	Accum. D&A	Net PP&E

Midstream	$	26,187	4,820	21,367	26,124	4,382	21,742
Chemicals	—		—	—	—	—	—
Refining	22,274		11,991	10,283	23,110	12,150	10,960
Marketing and Specialties	2,091		1,267	824	1,997	1,166	831
Renewable Fuels	3,716		1,669	2,047	2,311	953	1,358
Corporate and Other	1,688		945	743	1,650	829	821
	$	55,956	20,692	35,264	55,192	19,480	35,712

See Note 4—Restructuring for information regarding our intention to cease operations at our Los Angeles Refinery. See Note 5—Business Combinations and Note 19—Fair Value Measurements, for additional information on the DCP Midstream Merger, accounting treatment and the associated fair value measurements. See Note 12—Impairments, for information regarding PP&E impairments.

On August 30, 2024, we sold certain Midstream gathering and processing assets in Texas for cash proceeds of $41 million and recognized a before-tax loss of $9 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024.

In the first quarter of 2024, we transferred $1 billion in gross PP&E and $656 million of accumulated depreciation and amortization from our Refining segment to our Renewable Fuels segment in connection with the conversion of the San Francisco Refinery to the Rodeo Complex and the change in composition of our operating segments recast in the second quarter of 2024. See Note 29—Segment Disclosures and Related Information, for information regarding changes to our operating segments.

Note 11—Goodwill and Intangibles

The carrying amount of goodwill by segment at December 31 was:


	Millions of Dollars
	Midstream		Marketing and Specialties	Total






Balance at December 31, 2022	$	626	860	1,486


Goodwill assigned to acquisitions	—		64	64
Balance at December 31, 2023	626		924	1,550

Goodwill assigned to acquisitions	22		3	25

Balance at December 31, 2024	$	648	927	1,575

On July 1, 2024, we acquired Pinnacle Midstream in our Midstream segment and recognized goodwill of $21 million associated with this acquisition. In August 2023, we acquired a marketing business on the U.S. West Coast in our M&S segment and recognized goodwill of $67 million associated with this acquisition. Refer to Note 5—Business Combinations, for additional information.

Intangible Assets

Intangible Assets with Indefinite Useful Lives

The gross carrying value of indefinite-lived intangible assets at December 31 consisted of the following:


	Millions of Dollars

	2024		2023

Trade names and trademarks	$	503	504
Refinery air and operating permits	109		196

	$	612	700

Intangible Assets with Finite Useful Lives

The net book value of our amortized intangible assets was $549 million at December 31, 2024, and $220 million at December 31, 2023. These balances include accumulated amortization of $408 million and $234 million, at December 31, 2024 and 2023, respectively. The amortized intangible assets are primarily related to customer relationships.

For the years ended December 31, 2024, 2023 and 2022, amortization expense was $53 million, $33 million and $27 million, respectively. Expected expenses beyond 2025 are less than $50 million per year. The amortization expenses are expected to be $130 million in 2025, which is primarily related to our plan to cease operations at our Los Angeles Refinery. The book value of the amortized intangible assets, which were previously considered indefinite-lived, associated with our Los Angeles Refinery was $80 million at December 31, 2024. Refer to Note 4—Restructuring, for additional information regarding our plan to cease operations at our Los Angeles Refinery.

On July 1, 2024, we acquired Pinnacle Midstream in our Midstream segment and recorded additions of $256 million in amortizable intangible assets, which have a weighted-average amortization period of 20 years. Also during 2024, we recorded additions of $17 million in amortizable intangible assets associated with the acquisition of a marketing business on the U.S. West Coast in our M&S segment. In August 2023, we acquired a marketing business on the U.S. West Coast in our M&S segment and recorded additions of $146 million in amortizable intangible assets.

Note 12—Impairments


	Millions of Dollars

	2024		2023	2022

Midstream	$	346	3	1
Refining	106		10	13
Marketing and Specialties	3		3	—
Corporate and Other	1		8	46
Total impairments	$	456	24	60

For the year ended December 31, 2024, we recorded before-tax impairments totaling $456 million, which included $346 million recorded in our Midstream segment and $106 million recorded in our Refining segment. Midstream segment impairments included $224 million related to certain gathering and processing assets in Texas, $35 million related to an equity investment in a crude pipeline in Oklahoma, and $28 million related to certain crude gathering assets in Texas. Before-tax impairments for the year ended December 31, 2024 also included $163 million related to certain crude oil processing and logistics assets in California, of which $104 million was reported in our Refining segment and $59 million was reported in our Midstream segment.

These impairment charges are included within the “Impairments” line item on our consolidated income statement. See Note 19—Fair Value Measurements, for additional information on the determination of fair value used to record these impairments.

Note 13—Asset Retirement Obligations and Accrued Environmental Costs

Asset retirement obligations and accrued environmental costs at December 31 were:


	Millions of Dollars
	2024		2023

Asset retirement obligations	$	771	537
Accrued environmental costs	439		446
Total asset retirement obligations and accrued environmental costs	1,210		983
Asset retirement obligations and accrued environmental costs due within one year*	(81)		(119)
Long-term asset retirement obligations and accrued environmental costs	$	1,129	864

** Classified as a current liability on the consolidated balance sheet, under the caption “Other accruals.”*

Asset Retirement Obligations

We have asset retirement obligations that we are required to perform under law or contract once an asset is permanently taken out of service. Our recognized asset retirement obligations primarily involve asbestos abatement at our current refineries, or at sites we own that were previously utilized as refineries; decommissioning, removal or dismantlement of certain assets at refineries that have ceased or will cease operations; decommissioning, removal or dismantlement of certain midstream pipelines and processing facilities; and dismantlement or removal of assets at certain leased international marketing sites. Most of our asset retirement obligations are not expected to be paid until many years in the future and are expected to be funded from general company resources at the time of removal.

Our overall asset retirement obligation changed as follows during the years ended December 31:


	Millions of Dollars
	2024		2023

Balance at January 1	$	537	565
Accretion of discount	27		25
New obligations	261		—
Changes in estimates of existing obligations	33		23
Spending on existing obligations	(25)		(58)
Asset dispositions	(55)		(23)
Foreign currency translation	(7)		5
Balance at December 31	$	771	537

During the year ended December 31, 2024, our asset retirement balance increased $234 million. This increase was primarily due to new obligations of $205 million associated with the expected cessation of operations at the Los Angeles Refinery in the fourth quarter of 2025. See Note 4—Restructuring, for additional information.

Accrued Environmental Costs

Of our total accrued environmental costs at December 31, 2024, $280 million was primarily related to cleanup at current domestic refineries, or at sites we own that were previously utilized as domestic refineries, and underground storage tanks at U.S. service stations; $111 million was associated with non-operated sites; and $48 million was related to sites at which we have been named a potentially responsible party under federal or state laws. A large portion of our expected environmental expenditures have been discounted as these obligations were acquired in various business combinations. Expected expenditures for acquired environmental obligations were discounted using a weighted-average discount rate of approximately 5%. At December 31, 2024, the accrued balance for acquired environmental liabilities was $239 million. The expected future undiscounted payments related to the portion of the accrued environmental costs that have been discounted are: $12 million in 2025, $30 million in 2026, $12 million in 2027, $15 million in 2028, $18 million in 2029, and $219 million in the aggregate for all years after 2029.

Note 14—Earnings Per Share

The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, adjusted for noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.


	2024			2023		2022
	Basic		Diluted	Basic	Diluted	Basic	Diluted
Amounts Attributed to Phillips 66 Common Stockholders (millions):
Net Income Attributable to Phillips 66	$	2,117	2,117	7,015	7,015	11,024	11,024
Income allocated to participating securities	(10)		(10)	(11)	—	(10)	—

Net income available to common stockholders	$	2,107	2,107	7,004	7,015	11,014	11,024

Weighted-average common shares outstanding (thousands):	418,607		420,174	448,381	450,136	469,436	471,497
Effect of share-based compensation	1,567		1,714	1,755	3,074	2,061	2,234
Weighted-average common shares outstanding—EPS	420,174		421,888	450,136	453,210	471,497	473,731

Earnings Per Share of Common Stock (dollars)	$	5.01	4.99	15.56	15.48	23.36	23.27

Note 15—Debt

Short-term and long-term debt at December 31 was:


	Millions of Dollars
	December 31, 2024
	Phillips 66		Phillips 66 Company	Phillips 66 Partners	DCP LP	Total






3.605% Senior Notes due February 2025	$	—	—	59	—	59

5.375% Senior Notes due July 2025	—		—	—	525	525
1.300% Senior Notes due February 2026	500		—	—	—	500
3.550% Senior Notes due October 2026	—		458	34	—	492
5.625% Senior Notes due July 2027	—		—	—	500	500
4.950% Senior Notes due December 2027	—		750	—	—	750
3.750% Senior Notes due March 2028	—		427	73	—	500
3.900% Senior Notes due March 2028	800		—	—	—	800
5.125% Senior Notes due May 2029	—		—	—	600	600
3.150% Senior Notes due December 2029	—		570	30	—	600
8.125% Senior Notes due August 2030	—		—	—	300	300
2.150% Senior Notes due December 2030	850		—	—	—	850
5.250% Senior Notes due June 2031	—		1,200	—	—	1,200
3.250% Senior Notes due February 2032	—		—	—	400	400
5.300% Senior Notes due June 2033	—		900	—	—	900
4.650% Senior Notes due November 2034	1,000		—	—	—	1,000
4.950% Senior Notes due March 2035	—		600	—	—	600
6.450% Senior Notes due November 2036	—		—	—	300	300
6.750% Senior Notes due September 2037	—		—	—	450	450
5.875% Senior Notes due May 2042	1,500		—	—	—	1,500

5.600% Senior Notes due April 2044	—		—	—	400	400
4.875% Senior Notes due November 2044	1,700		—	—	—	1,700
4.680% Senior Notes due February 2045	—		442	8	—	450
4.900% Senior Notes due October 2046	—		605	20	—	625
3.300% Senior Notes due March 2052	1,000		—	—	—	1,000
5.650% Senior Notes due June 2054	—		500	—	—	500
5.500% Senior Notes due March 2055	—		600	—	—	600

Commercial paper due January 2025 at 4.695% at year-end 2024	435		—	—	—	435



Uncommitted Facility due July 2025 at 5.300% at year-end 2024	—		400	—	—	400
Receivables Securitization Facility due September 2025 at 5.182% at year-end 2024	—		375	—	—	375
Floating Rate Term Loan due June 2026 at 5.445% at year-end 2024	—		550	—	—	550
Other	1		—	—	—	1
Debt at face value	7,786		8,377	224	3,475	19,862
Finance leases						352
Software obligations						17
Net unamortized discounts, debt issuance costs and acquisition fair value adjustments						(169)
Total debt						20,062
Short-term debt						(1,831)
Long-term debt						$	18,231


	Millions of Dollars
	December 31, 2023
	Phillips 66		Phillips 66 Company	Phillips 66 Partners	DCP LP	Total




0.900% Senior Notes due February 2024	$	800	—	—	—	800
2.450% Senior Notes due December 2024	—		277	23	—	300
3.605% Senior Notes due February 2025	—		441	59	—	500
3.850% Senior Notes due April 2025	650		—	—	—	650
5.375% Senior Notes due July 2025	—		—	—	825	825
1.300% Senior Notes due February 2026	500		—	—	—	500
3.550% Senior Notes due October 2026	—		458	34	—	492
5.625% Senior Notes due July 2027	—		—	—	500	500
4.950% Senior Notes due December 2027	—		750	—	—	750
3.750% Senior Notes due March 2028	—		427	73	—	500
3.900% Senior Notes due March 2028	800		—	—	—	800
5.125% Senior Notes due May 2029	—		—	—	600	600
3.150% Senior Notes due December 2029	—		570	30	—	600
8.125% Senior Notes due August 2030	—		—	—	300	300
2.150% Senior Notes due December 2030	850		—	—	—	850
3.250% Senior Notes due February 2032	—		—	—	400	400
5.300% Senior Notes due June 2033	—		500	—	—	500
4.650% Senior Notes due November 2034	1,000		—	—	—	1,000
6.450% Senior Notes due November 2036	—		—	—	300	300
6.750% Senior Notes due September 2037	—		—	—	450	450
5.875% Senior Notes due May 2042	1,500		—	—	—	1,500

5.600% Senior Notes due April 2044	—		—	—	400	400
4.875% Senior Notes due November 2044	1,700		—	—	—	1,700
4.680% Senior Notes due February 2045	—		442	8	—	450
4.900% Senior Notes due October 2046	—		605	20	—	625
3.300% Senior Notes due March 2052	1,000		—	—	—	1,000
Securitization facility due August 2024	—		—	—	350	350
Floating Rate Term Loan due June 2026 at 6.456% at year-end 2023	—		1,250	—	—	1,250
Floating Rate Advance Term Loan due 2035 at 6.096% at year-end 2023—related party	25		—	—	—	25
Floating Rate Advance Term Loan due 2038 at 6.490% at year-end 2023—related party	265		—	—	—	265
Revolving Credit Facility due 2027 6.512% at year-end 2023	—		—	—	25	25
Other	1		—	—	—	1
Debt at face value	9,091		5,720	247	4,150	19,208
Finance leases						305
Software obligations						13
Net unamortized discounts, debt issuance costs and acquisition fair value adjustments						(167)
Total debt						19,359
Short-term debt						(1,482)
Long-term debt						$	17,877

Maturities of borrowings outstanding at December 31, 2024, inclusive of net unamortized discounts and debt issuance costs, for each of the years from 2025 through 2029 are $1,831 million, $1,578 million, $1,262 million, $1,331 million and $1,228 million, respectively.

Issuances

On September 9, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.8 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:

$600 million aggregate principal amount of 5.250% Senior Notes due 2031 (Additional 2031 Notes).
$600 million aggregate principal amount of 4.950% Senior Notes due 2035 (2035 Notes).
$600 million aggregate principal amount of 5.500% Senior Notes due 2055 (2055 Notes).

Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024. Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15, commencing on March 15, 2025.

On February 28, 2024, Phillips 66 Company issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:

$600 million aggregate principal amount of 5.250% Senior Notes due 2031 (2031 Notes).
$400 million aggregate principal amount of 5.300% Senior Notes due 2033 (Additional 2033 Notes).
$500 million aggregate principal amount of 5.650% Senior Notes due 2054 (2054 Notes).

Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.

On March 29, 2023, Phillips 66 Company issued $1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:

$750 million aggregate principal amount of 4.950% Senior Notes due December 2027.
$500 million aggregate principal amount of 5.300% Senior Notes due June 2033.

Repayments

On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450% Senior Notes due December 2024 with an aggregate principal amount of $300 million.

On March 29, 2024, DCP LP redeemed $300 million of its 5.375% Senior Notes due July 2025. After the redemption, an aggregate principal amount of $525 million remained outstanding.

On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.

On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900% senior notes due February 2024 with an aggregate principal amount of $800 million.

On May 19, 2023, DCP LP redeemed its 5.850% junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $550 million. On the date of redemption, our carrying value of DCP LP’s junior subordinated notes was $497 million, which resulted in a $53 million before-tax loss. DCP LP’s junior subordinated notes were adjusted to fair value on August 17, 2022, in connection with the consolidation of DCP LP. See Note 19—Fair Value Measurements, for additional information regarding the fair value of DCP LP’s junior subordinated notes.

On March 15, 2023, DCP LP repaid its 3.875% senior unsecured notes due March 2023 with an aggregate principal amount of $500 million.

Discharge of Senior Notes

On September 20, 2024, we extinguished (i) the remaining $441 million outstanding principal amount of Phillips 66 Company’s 3.605% senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $650 million outstanding principal amount of Phillips 66’s 3.850% senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $1,100 million in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes. The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows. These government obligations will yield sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes. Phillips 66 and Phillips 66 Company are no longer the primary obligors under the Discharged Notes. The transfer of the government obligations to the trustee was accounted for as a transfer of financial assets. If the trustee is unable to apply the government obligations to fund the remaining principal and interest payments on the Discharged Notes, then the Company’s obligations under the Indenture with respect to the Discharged Notes will be revived and reinstated. We deem the likelihood of such event to be remote with no impact to the legal isolation of the assets. Accordingly, the senior notes and the government obligations were derecognized on our balance sheet at December 31, 2024. For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.

Term Loan Agreement

On March 27, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing during a 90-day period commencing on the closing date, which borrowing was contingent upon the completion of the DCP LP Merger. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement bear interest at either: (a) the adjusted term Secured Overnight Financing Rate (SOFR) in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. At December 31, 2024 and 2023, $550 million and $1.25 billion were borrowed under the Term Loan Agreement, which matures in June 2026, respectively.

Related Party Advance Term Loan Agreements

At December 31, 2023, borrowings outstanding under our Advance Term Loan agreements with WRB totaled $290 million. Borrowings under these agreements were due between 2035 and 2038 and bore interest at a floating rate based on an adjusted term SOFR plus an applicable margin, payable on the last day of each month. On December 31, 2024, WRB distributed its Advance Term Loan with a principal balance of $290 million, including the right to receive any accrued but unpaid interest, to Phillips 66 Company, resulting in the reduction of our related party debt balance and our investment in WRB by $290 million. The distribution was recognized as a non-cash investing and financing transaction.

Accounts Receivable Securitization

On September 30, 2024, Phillips 66 Company entered into a 364-day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility). Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility. Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain receivables in an amount not to exceed $500 million in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder. Accounts outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR plus the applicable margin. In all instances, Phillips 66 Company retains the servicing of the accounts receivables transferred.

P66 Receivables’ sole activity consists of purchasing receivables from Phillips 66 Company, providing those receivables as collateral for P66 Receivables’ borrowings or on-selling certain of its receivables under the Receivables Securitization Facility. P66 Receivables is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of P66 Receivables’ assets prior to assets or value in P66 Receivables becoming available to P66 Receivables’ equity holders. The assets of P66 Receivables, including any funds of P66 Receivables that may be commingled with funds of any of its affiliates for purposes of cash management and related efficiencies, are not available to pay creditors of Phillips 66 Company, Phillips 66 or any affiliate thereof. Collections on receivables in excess of amounts owed by P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its receivables to P66 Receivables under the Receivables Securitization Facility, and otherwise for distribution to Phillips 66 Company, in each case, subject to the terms set forth in the Receivables Securitization Facility. The amount available for borrowing or sale of receivables may be limited by the availability of eligible receivables and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.

Sales of accounts receivables under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. P66 Receivables guarantees payment, in full, for accounts receivables sold to the purchasers. Cash receipts from the sale of accounts receivables under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities. For the year-ended December 31, 2024, we sold $125 million of accounts receivables in exchange for a $125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction. We recognized an immaterial charge associated with the transfer of financial assets, which is included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the year ended December 31, 2024. At December 31, 2024, $121 million of the sold accounts receivable remained outstanding, which represents our maximum potential future exposure under the guarantee.

Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet. Borrowings are secured by the accounts receivables, held by P66 Receivables, which remain reported as accounts receivables on the consolidated balance sheet. At December 31, 2024, we had outstanding borrowings of $375 million under the Receivables Securitization Facility, secured by approximately $4.6 billion of accounts receivable held by P66 Receivables.

At December 31, 2024, we had no unused capacity under the Receivables Securitization Facility.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On January 13, 2025, we entered into a $200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2025 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2025 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR plus the applicable margin, (b) the adjusted daily simple SOFR plus the applicable margin or (c) the base rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At February 21, 2025, no amount had been drawn under the 2025 Uncommitted Facility.

On June 25, 2024, we entered into a $400 million uncommitted credit facility (the 2024 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2024 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2024 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2024 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR, (b) the adjusted daily simple SOFR or (c) the reference rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At December 31, 2024, the entire $400 million had been drawn under the 2024 Uncommitted Facility.

On February 28, 2024, we entered into a new $5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029. The Facility replaced our previous $5 billion revolving credit facility dated as of June 23, 2022, with Phillips 66 Company as the borrower and Phillips 66 as the guarantor, and the previous revolving credit facility was terminated. The Facility contains customary covenants similar to the previous revolving credit facility, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Facility has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Facility, in whole or in part, without premium or penalty. We have the option to increase the overall capacity to $6 billion, subject to certain conditions. We also have the option to extend the scheduled maturity of the Facility for up to two additional one-year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment. Outstanding borrowings under the Facility bear interest at either: (a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin; or (b) the reference rate (as described in the Facility) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At December 31, 2024 and 2023, no amounts were drawn under the Facility or the previous revolving credit facility, respectively.

Phillips 66 also has a $5 billion uncommitted commercial paper program for short-term working capital needs that is supported by the Facility. Commercial paper maturities are contractually limited to less than one year. At December 31, 2024, $435 million of commercial paper had been issued under this program. At December 31, 2023, no borrowings were outstanding under this program.

DCP Midstream Class A Segment

On March 15, 2024, DCP LP terminated its $1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $350 million of borrowing capacity. At December 31, 2023, DCP LP had $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility, both of which were repaid during the three months ended March 31, 2024.

Total Committed Capacity Available

At December 31, 2024, and 2023, we had $4.6 billion and $6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

Note 16—Guarantees

At December 31, 2024, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantees and expect future performance to be either immaterial or have only a remote chance of occurrence.

Lease Residual Value Guarantees

Under the operating lease agreement for our headquarters facility in Houston, Texas, we have the option, at the end of the lease term in September 2025, to request to renew the lease, purchase the facility or assist the lessor in marketing it for resale. We have a residual value guarantee associated with the operating lease agreement with a maximum potential future exposure of $514 million at December 31, 2024. We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $175 million. These leases have remaining terms of one to ten years.

Guarantees of Joint Venture Obligations

In March 2019, Phillips 66 Partners and its co-venturers in Dakota Access provided a CECU in conjunction with a senior unsecured notes offering. See Note 9—Investments, Loans and Long-Term Receivables, for additional information regarding Dakota Access and the CECU.

At December 31, 2024, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to five years. The maximum potential future exposures under these guarantees were approximately $189 million. Payment would be required if a joint venture defaults on its obligations.

Indemnifications

Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, employee claims, and real estate tenant defaults. The provisions of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, which generally have indefinite terms and potentially unlimited exposure. At December 31, 2024 and 2023, the carrying amount of recorded indemnifications was $125 million and $159 million, respectively.

We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information to support the reversal. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. At December 31, 2024 and 2023, environmental accruals for known contamination of $100 million and $114 million, respectively, were included in the carrying amount of the recorded indemnifications noted above. These environmental accruals were primarily included in the “Asset retirement obligations and accrued environmental costs” line item on our consolidated balance sheet. For additional information about environmental liabilities, see Note 13—Asset Retirement Obligations and Accrued Environmental Costs and Note 17—Contingencies and Commitments.

Additionally, P66 Receivables has guaranteed all borrowings and receivables sold under our Receivables Securitization Facility. See Note 15—Debt for information regarding the guarantee under our Receivables Securitization Facility.

Indemnification and Release Agreement

In 2012, in connection with our separation from ConocoPhillips, we entered into an Indemnification and Release Agreement. This agreement governs the treatment between ConocoPhillips and us of matters relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the separation. Generally, the agreement provides for cross indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.

Note 17—Contingencies and Commitments

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain. See Note 24—Income Taxes, for additional information about income-tax-related contingencies.

Other than with respect to the legal matters described herein, based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental

We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using information available at the time. We measure estimates and base contingent liabilities on currently available facts, existing technology and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring contingent environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

Although liability for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to such joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites for which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit, although some of the indemnifications are subject to dollar and time limits.

We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those pertaining to sites acquired in a business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings. See Note 13—Asset Retirement Obligations and Accrued Environmental Costs, for a summary of our accrued environmental liabilities.

Legal Proceedings

Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.

Propel Fuels Litigation

In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc. (Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks. Ultimately, the parties were not able to reach an agreement and negotiations were terminated in August 2018. On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. In 2025, the Propel Court is expected to rule on motions anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees. Propel Fuels has asked the Propel Court to grant treble damages and Phillips 66 Company has filed a brief in opposition to that request. Also in 2025, the Propel Court is expected to rule on Phillips 66 Company’s motions for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position. As a result of the jury verdict, the Company has recorded an accrual of $604.9 million which is included in the “Selling, general and administrative expenses” line on our consolidated statement of income for the year ended December 31, 2024, and is reported in the M&S segment. In addition, the accrued amount is reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of December 31, 2024. However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process. Because of the uncertainties associated with ongoing litigation, we are unable to estimate the range of reasonably possible loss that may be attributable to exemplary damages, if any, in excess of the amount accrued. If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly. While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful. To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.

Other Contingencies

We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.

At December 31, 2024, we had performance obligations secured by letters of credit and bank guarantees of $804 million related to various purchase and other commitments incident to the ordinary conduct of business.

Long-Term Throughput Agreements and Take-or-Pay Agreements

We have certain throughput agreements and take-or-pay agreements in support of third-party financing arrangements. The agreements typically provide for crude oil transportation to be used in the ordinary course of our business. At December 31, 2024, the estimated aggregate future payments under these agreements were on average $315 million per year for each year from 2025 through 2029 and $369 million in aggregate for all years after 2029. For the years ended December 31, 2024, 2023 and 2022, total payments under these agreements were $319 million, $319 million and $323 million, respectively.

Note 18—Derivatives and Financial Instruments

Derivative Instruments

We use financial and commodity-based derivative contracts to manage exposures to fluctuations in commodity prices, interest rates and foreign currency exchange rates, or to capture market opportunities. Because we do not apply hedge accounting for commodity derivative contracts, all realized and unrealized gains and losses from commodity derivative contracts are recognized in our consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business are reported net in the “Other income” line item on our consolidated statement of income. Unrealized gains on the foreign currency derivative entered into in connection with the sale of our 49% ownership interest in Coop are reported in the “Net gain on dispositions” line item on our consolidated statement of income. Cash flows from all our derivative activity for the periods presented appear in the operating section on our consolidated statement of cash flows.

Purchase and sales contracts with firm minimum notional volumes for commodities that are readily convertible to cash are recorded on our consolidated balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception, whereby the contracts are recorded on an accrual basis. We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business. All other derivative instruments are recorded at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see Note 19—Fair Value Measurements.

Commodity Derivative Contracts—We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks and renewable fuels, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited amount of trading not directly related to our physical business, all of which may reduce our exposure to fluctuations in market prices. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades.

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.


	Millions of Dollars
	December 31, 2024					December 31, 2023
	Commodity Derivatives			Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet	Commodity Derivatives		Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet
	Assets		Liabilities	Assets	Liabilities
Assets
Prepaid expenses and other current assets	$	1,021	(922)	—	99	2,148	(2,005)	—	143
Other assets	—		—	—	—	19	(2)	—	17
Liabilities
Other accruals	1,136		(1,226)	46	(44)	1,034	(1,127)	18	(75)
Other liabilities and deferred credits	60		(71)	16	5	—	(14)	—	(14)
Total	$	2,217	(2,219)	62	60	3,201	(3,148)	18	71

At December 31, 2024, and 2023, there was no material cash collateral received or paid that was not offset on our consolidated balance sheet.

The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:


	Millions of Dollars
	2024		2023	2022

Sales and other operating revenues	$	35	137	(128)

Other income	48		99	79
Purchased crude oil and products	(5)		(269)	(348)
Net gain (loss) from commodity derivative activity	$	78	(33)	(397)

The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from nonderivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward purchase and sales contracts. The percentage of our derivative contract volumes expiring within the next 12 months was more than 90% at December 31, 2024 and 2023.


	Open Position Long / (Short)
	2024	2023
Commodity
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)	(22)	(22)
Natural gas (billions of cubic feet)	(14)	(25)

Credit Risk from Derivative and Financial Instruments

Financial instruments potentially exposed to concentrations of credit risk consist primarily of trade receivables and derivative contracts.

Our trade receivables result primarily from the sale of products from, or related to, our refinery operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of 30 days or less. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on a probability assessment of credit loss. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments or master netting arrangements to mitigate credit risk with counterparties that both buy from and sell to us, as these agreements permit the amounts owed by us to others to be offset against amounts owed to us.

The credit risk from our derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit risk because these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements, typically on a daily basis, until settled.

Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit ratings. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.

The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were immaterial at December 31, 2024 and 2023.

Note 19—Fair Value Measurements

Recurring Fair Value Measurements

We carry certain assets and liabilities at fair value, which we measure at the reporting date using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:

Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.
Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.
Level 3: Fair value measured with unobservable inputs that are significant to the measurement.

We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement. However, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable.

We used the following methods and assumptions to estimate the fair value of financial instruments:

Cash and cash equivalents—The carrying amount reported on our consolidated balance sheet approximates fair value.
Accounts and notes receivable—The carrying amount reported on our consolidated balance sheet approximates fair value.
Derivative instruments—The fair value of our exchange-traded contracts is based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and is reported as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or nonexchange quotes, we classify those contracts as Level 2 or Level 3 based on the degree to which inputs are observable.

Physical commodity forward purchase and sales contracts and over-the-counter (OTC) financial swaps are generally valued using forward quotes provided by brokers and price index developers, such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. When forward market prices are not available, we estimate fair value using the forward price of a similar commodity, adjusted for the difference in quality or location. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, physical commodity purchase and sales contracts and OTC swaps are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Physical and OTC commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a midmarket pricing convention (the midpoint between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

When applicable, we determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.

When applicable, we determine the fair value of foreign currency derivatives based on observable market data and classify the resulting fair values as Level 2.

Rabbi trust assets—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.

*•*Investment in NOVONIX—At December 31, 2024, our investment in NOVONIX was 13.75%, which is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

*•*Other investments—Includes other marketable securities with observable market prices.

*•*Debt—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated primarily based on observable market prices.

The following tables display the fair value hierarchy for our financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown on a gross basis in the hierarchy sections of these tables, before the effects of counterparty and collateral netting. The following tables also reflect the effect of netting derivative assets and liabilities with the same counterparty for which we have the legal right of offset and collateral netting.

The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:


	Millions of Dollars
	December 31, 2024
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	2,137	—	—	2,137	(2,111)	—	—	26
OTC instruments	—		7	—	7	—	—	—	7
Physical forward contracts	—		70	3	73	(7)	—	—	66

Rabbi trust assets	153		—	—	153	N/A	N/A	—	153
Investment in NOVONIX	36		—	—	36	N/A	N/A	—	36
Foreign currency derivative	—		67	—	67	N/A	N/A	—	67
	$	2,326	144	3	2,473	(2,118)	—	—	355

Commodity Derivative Liabilities
Exchange-cleared instruments	$	2,173	—	—	2,173	(2,111)	(62)	—	—


Physical forward contracts	—		45	1	46	(7)	—	—	39

Floating-rate debt	—		1,760	—	1,760	N/A	N/A	—	1,760
Fixed-rate debt, excluding finance leases and software obligations	—		16,913	—	16,913	N/A	N/A	1,020	17,933
	$	2,173	18,718	1	20,892	(2,118)	(62)	1,020	19,732


	Millions of Dollars
	December 31, 2023
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	3,075	54	—	3,129	(3,039)	—	—	90
OTC instruments	—		1	—	1	—	—	—	1
Physical forward contracts	—		70	1	71	(2)	—	—	69

Rabbi trust assets	155		—	—	155	N/A	N/A	—	155
Investment in NOVONIX	39		—	—	39	N/A	N/A	—	39

	$	3,269	125	1	3,395	(3,041)	—	—	354

Commodity Derivative Liabilities
Exchange-cleared instruments	$	3,057	41	—	3,098	(3,039)	(18)	—	41

Physical forward contracts	—		50	—	50	(2)	—	—	48
Floating-rate debt	—		1,915	—	1,915	N/A	N/A	—	1,915
Fixed-rate debt, excluding finance leases and software obligations	—		16,718	—	16,718	N/A	N/A	408	17,126
	$	3,057	18,724	—	21,781	(3,041)	(18)	408	19,130

The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, the foreign currency derivative is recorded in the “Prepaid expenses and other current assets” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet. See Note 18—Derivatives and Financial Instruments, for information regarding where the assets and liabilities related to our commodity derivatives are recorded on our consolidated balance sheet.

Nonrecurring Fair Value Measurements

Equity Investments and PP&E

In the fourth quarter of 2024, we remeasured the carrying value of an equity method investment in a crude pipeline in Oklahoma to fair value. Fair value was determined using an income approach. The valuation resulted in a Level 3 nonrecurring fair value measurement.

In the second and third quarters of 2024, we remeasured the carrying value of the net PP&E and equity method investment in certain crude gathering, and gathering and processing asset groups in Texas to fair value. Fair value was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

In the first quarter of 2024, we remeasured the carrying value of the net PP&E of certain crude oil processing and logistics assets in California to fair value. Fair value was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

See Note 12—Impairments, for additional information regarding before-tax impairments recorded in 2024.

DCP Midstream Merger

On August 17, 2022, we and Enbridge agreed to merge DCP Midstream and Gray Oak Holdings with DCP Midstream as the surviving entity. As a result, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills, and accordingly, accounted for the business combination using the acquisition method of accounting, which required DCP Midstream Class A Segment’s, DCP Sand Hills’ and DCP Southern Hills’, assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet. See Note 5—Business Combinations, for additional information on the DCP Midstream Merger.

Equity Method Investments

The fair value of the investments we acquired that are accounted for under the equity method was $2,034 million. The fair value of these assets was determined using the income approach. The income approach used discounted cash flow models that require various observable and non-observable inputs, such as margins, tariffs and rates, utilization, volumes, product costs, operating expenses, capital expenditures, terminal-year values and risk-adjusted discount rates. These valuations resulted in Level 3 nonrecurring fair value measurements.

PP&E

The fair value of PP&E was $13,030 million. The fair value of these assets was determined primarily using the cost approach. The cost approach used assumptions for the current replacement costs of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. The fair value of properties was determined using a sales comparison approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

Debt

The fair value of DCP LP’s senior and junior subordinated notes was measured using a market approach, based on the average of quotes for the acquired debt from major financial institutions. These valuations resulted in Level 2 nonrecurring fair value measurements.

Noncontrolling Interests

As a result of our consolidation of DCP Midstream Class A Segment, the noncontrolling interests held in DCP Midstream Class A Segment were recorded at their fair values on the DCP Midstream Merger date. These noncontrolling interests on the DCP Midstream Merger date primarily included Enbridge’s indirect economic interest in DCP LP, the public holders of DCP LP’s common units and the public holders of DCP LP’s preferred units. The fair value of the noncontrolling interests in DCP LP’s common units was based on their unit market price as of the date of the DCP Midstream Merger, August 17, 2022. The fair value of the noncontrolling interests in DCP LP’s publicly traded preferred units was based on their respective market price as of the date of the DCP Midstream Merger, August 17, 2022. These valuations resulted in Level 1 nonrecurring fair value measurements. The fair value of the noncontrolling interests in DCP LP’s other preferred units was based on an income approach that used projected distributions that were discounted using an average implied yield of DCP LP’s publicly traded preferred units and expected redemption dates. This valuation resulted in a Level 2 nonrecurring fair value measurement.

Gains Related to DCP Midstream Merger

In connection with the DCP Midstream Merger, we recognized before-tax gains totaling $2,831 million from remeasuring our previously held equity investments to their fair values and a before-tax gain of $182 million related to the transfer of a 35.75% indirect economic interest in Gray Oak Pipeline to our co-venturer. The fair values of our previously held equity interest in DCP Midstream and the equity interest in Gray Oak Pipeline we transferred were primarily based on DCP LP’s publicly traded common unit market price on the effective date of the DCP Midstream Merger, August 17, 2022, the cash consideration contributed and obligations that were deemed to be effectively settled. This valuation resulted in Level 1 nonrecurring fair value measurements. The fair values of our previously held equity interests in DCP Sand Hills and DCP Southern Hills were determined using the income approach. The income approach used discounted cash flow models that require various observable and non-observable inputs, such as tariffs, volumes, operating expenses, capital expenditures, terminal-year values and risk-adjusted discount rates. These valuations resulted in Level 3 nonrecurring fair value measurements.

Note 20—Equity

Preferred Stock

Phillips 66 has 500 million shares of preferred stock authorized, with a par value of $0.01 per share, none of which have been issued.

Treasury Stock

On October 25, 2023, our Board of Directors approved a $5 billion increase to our share repurchase authorization. Since the inception of our share repurchase program in 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock, and we have repurchased 238 million shares at an aggregate cost of $21.5 billion. In 2024, we repurchased 24.2 million shares at an aggregate cost of $3.4 billion. Our share repurchase authorizations do not expire. Any future share repurchases will be made at the discretion of management and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans. Shares of stock repurchased are held as treasury shares.

Our Board of Directors separately authorized two transactions in 2014 and 2018, which resulted in the repurchase of 52.4 million shares of Phillips 66 common stock with an aggregate value of $4.6 billion.

In March 2022, in connection with the Phillips 66 Partners merger, we issued 41.8 million shares of common stock from our treasury stock with an aggregate cost of $3.4 billion. See Note 30—Phillips 66 Partners LP, for information on the merger with Phillips 66 Partners.

Common Stock Dividends

On February 12, 2025, our Board of Directors declared a quarterly cash dividend of $1.15 per common share, payable March 5, 2025, to holders of record at the close of business on February 24, 2025.

Noncontrolling Interests

At December 31, 2024 and 2023, our noncontrolling interests primarily represented Enbridge’s indirect economic interest in DCP LP. On June 15, 2023, as part of the DCP LP Merger, we acquired all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further information on the DCP LP Merger and preferred unit redemptions.

Note 21—Leases

We lease marine vessels, pipelines, storage tanks, railcars, service station sites, office buildings, corporate aircraft, land and other facilities and equipment. In determining whether an agreement contains a lease, we consider our ability to control the asset and whether third-party participation or vendor substitution rights limit our control. Certain leases include escalation clauses for adjusting rental payments to reflect changes in price indices, as well as renewal options and/or options to purchase the leased property. Renewal options have been included only when reasonably certain of exercise. There are no significant restrictions imposed on us in our lease agreements with regards to dividend payments, asset dispositions or borrowing ability. Certain leases have residual value guarantees, which may require additional payments at the end of the lease term if future fair values decline below contractual lease balances.

We discount lease obligations using our incremental borrowing rate. We separate costs for lease and service components for contracts involving marine vessels, consignment service stations, and refining processing equipment. For these contracts, we allocate the consideration payable between the lease and service components using the relative standalone prices of each component. For contracts involving all other asset types, we account for the lease and service components on a combined basis. For short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised, we do not recognize the right-of-use (ROU) asset and corresponding lease liability on our consolidated balance sheet.

The following table indicates the consolidated balance sheet line items that include the ROU assets and lease liabilities for our finance and operating leases at December 31:


	Millions of Dollars
	2024			2023
	Finance Leases		Operating Leases	Finance Leases	Operating Leases
Right-of-Use Assets

Prepaid expenses and other current assets	$	—	20	—	—
Net properties, plants and equipment	323		—	298	—
Other assets	—		1,300	—	1,116
Total right-of-use assets	$	323	1,320	298	1,116

Lease Liabilities
Short-term debt	$	30	—	25	—
Other accruals	—		421	—	362
Long-term debt	322		—	280	—
Other liabilities and deferred credits	—		934	—	790
Total lease liabilities	$	352	1,355	305	1,152

Future minimum lease payments at December 31, 2024, for finance and operating lease liabilities were:


	Millions of Dollars

		Finance Leases		Operating Leases

2025		$	44	476
2026		46		342
2027		37		254
2028		38		175
2029		34		101
Remaining years		284		178
Future minimum lease payments		483		1,526
Amount representing interest or discounts		(131)		(171)
Total lease liabilities		$	352	1,355

Our finance lease liabilities relate primarily to our marketing business, service station consignment agreements with a marketing joint venture, and a crude oil terminal in the United Kingdom. The lease liability for the terminal finance lease is subject to foreign currency translation adjustments each reporting period.

Components of net lease cost for the years ended December 31 were:



	Millions of Dollars
	2024		2023	2022
Finance lease cost
Amortization of right-of-use assets	$	33	30	24
Interest on lease liabilities	13		9	9
Total finance lease cost	46		39	33
Operating lease cost	478		390	387
Short-term lease cost	88		76	63
Variable lease cost	53		55	19
Sublease income	(19)		(12)	(13)
Total net lease cost	$	646	548	489

Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31 was:



	Millions of Dollars
	2024		2023	2022
Operating cash outflows—finance leases	$	13	15	11
Operating cash outflows—operating leases	473		390	392
Financing cash outflows—finance leases	28		19	32

During the years ended December 31, 2024, 2023 and 2022, we recorded noncash ROU assets and corresponding operating lease liabilities totaling $547 million, $398 million and $269 million, respectively, related to new and modified lease agreements.

The weighted-average remaining lease terms and discount rates for our lease liabilities at December 31 were:



	2024		2023
Weighted-average remaining lease term—finance leases (years)	13.0		13.4
Weighted-average remaining lease term—operating leases (years)	4.9		4.9

Weighted-average discount rate—finance leases	4.4	%	3.9
Weighted-average discount rate—operating leases	4.8		4.5

Note 22—Pension and Postretirement Plans

The following table provides a reconciliation of the projected benefit obligations and plan assets for our pension plans and accumulated benefit obligations for our other postretirement benefit plans:


	Millions of Dollars
	Pension Benefits					Other Benefits
	2024			2023		2024	2023
	U.S.		Int’l.	U.S.	Int’l.
Change in Benefit Obligations
Benefit obligations at January 1	$	2,260	752	2,209	675	150	156
Service cost	116		14	108	13	3	3
Interest cost	114		32	118	31	7	8
Plan participant contributions	—		3	—	2	7	7


Actuarial loss (gain)	68		(48)	58	30	(8)	2
Benefits paid	(209)		(34)	(233)	(33)	(22)	(26)


Foreign currency exchange rate change	—		(22)	—	34	—	—
Benefit obligations at December 31	$	2,349	697	2,260	752	137	150

Change in Fair Value of Plan Assets
Fair value of plan assets at January 1	$	2,139	778	1,778	707	—	—
Actual return on plan assets	172		14	203	44	—	—
Company contributions	19		5	391	20	15	19
Plan participant contributions	—		3	—	2	7	7
Benefits paid	(209)		(34)	(233)	(33)	(22)	(26)

Foreign currency exchange rate change	—		(15)	—	38	—	—
Fair value of plan assets at December 31	$	2,121	751	2,139	778	—	—

Funded Status at December 31	$	(228)	54	(121)	26	(137)	(150)

Amounts recognized in the consolidated balance sheet for our pension and other postretirement benefit plans at December 31 include:


	Millions of Dollars
	Pension Benefits					Other Benefits
	2024			2023		2024	2023
	U.S.		Int’l.	U.S.	Int’l.
Amounts Recognized in the Consolidated Balance Sheet
Noncurrent assets	$	—	181	—	157	—	—
Current liabilities	(60)		—	(55)	—	(15)	(20)
Noncurrent liabilities	(168)		(127)	(66)	(131)	(122)	(130)
Total recognized	$	(228)	54	(121)	26	(137)	(150)

Included in accumulated other comprehensive loss at December 31 were the following before-tax amounts that had not been recognized in net periodic benefit cost:


	Millions of Dollars
	Pension Benefits					Other Benefits
	2024			2023		2024	2023
	U.S.		Int’l.	U.S.	Int’l.

Unrecognized net actuarial loss (gain)	$	141	(16)	111	2	(54)	(51)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):


	Millions of Dollars
	Pension Benefits					Other Benefits
	2024			2023		2024	2023
	U.S.		Int’l.	U.S.	Int’l.
Sources of Change in Other Comprehensive Income
Net actuarial gain (loss) arising during the period	$	(49)	18	20	(26)	8	(2)

Amortization of net actuarial loss (gain) and settlements	19		—	28	(3)	(5)	(6)


Total recognized in other comprehensive income	$	(30)	18	48	(29)	3	(8)

The accumulated benefit obligations for all U.S. and international pension plans were $2,218 million and $609 million, respectively, at December 31, 2024, and $2,101 million and $661 million, respectively, at December 31, 2023.

Information for U.S. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31 was:


	Millions of Dollars
	Pension Benefits
	2024			2023
	U.S.		Int’l.	U.S.	Int’l.


Accumulated benefit obligations	$	100	134	101	136
Fair value of plan assets	—		13	—	13

Information for U.S. and international pension plans with a projected benefit obligation in excess of plan assets at December 31 was:


	Millions of Dollars
	Pension Benefits
	2024			2023
	U.S.		Int’l.	U.S.	Int’l.

Projected benefit obligations	$	2,349	139	2,260	144

Fair value of plan assets	2,121		13	2,139	13

Components of net periodic benefit cost for all defined benefit plans are presented in the table below:


	Millions of Dollars
	Pension Benefits							Other Benefits
	2024			2023		2022		2024	2023	2022
	U.S.		Int’l.	U.S.	Int’l.	U.S.	Int’l.
Components of Net Periodic Benefit Cost
Service cost	$	116	14	108	13	123	28	3	3	4
Interest cost	114		32	118	31	100	21	7	8	5
Expected return on plan assets	(153)		(45)	(126)	(43)	(135)	(56)	—	—	—
Amortization of prior service credit	—		—	—	—	—	(1)	—	—	(2)
Amortization of net actuarial loss (gain)	12		—	11	(3)	21	12	(5)	(6)	(2)
Settlement losses	7		—	17	—	53	9	—	—	—
Net periodic benefit cost (credit)*	$	96	1	128	(2)	162	13	5	5	5

** Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.*

In determining net periodic benefit cost, we amortize prior service costs on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan. For net actuarial gains and losses, we amortize 10% of the unamortized balance each year. The amount subject to amortization is determined on a plan-by-plan basis.

The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for years ended December 31:


	Pension Benefits					Other Benefits
	2024			2023		2024	2023
	U.S.		Int’l.	U.S.	Int’l.
Assumptions Used to Determine Benefit Obligations:
Discount rate	5.75	%	4.99	5.35	4.36	5.70	5.45
Rate of compensation increase	4.25		3.74	4.30	3.34	—	—
Interest crediting rate on cash balance plan	4.88		—	3.98	—	—	—

Assumptions Used to Determine Net Periodic Benefit Cost:
Discount rate	5.35	%	4.36	5.70	4.64	5.45	5.70
Expected return on plan assets	7.50		5.86	7.50	5.91	—	—
Rate of compensation increase	4.30		3.34	4.30	3.32	—	—
Interest crediting rate on cash balance plan	3.98		—	3.88	—	—	—

For both U.S. and international pension plans, the overall expected long-term rate of return is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. We rely on a variety of independent market forecasts in developing the expected rate of return for each class of assets.

For the year ended December 31, 2024, actuarial losses resulted in increases in our U.S. pension benefit obligations of $68 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $48 million. For the year ended December 31, 2023, actuarial losses resulted in increases in our U.S. and international pension benefit obligations of $58 million and $30 million, respectively. The primary driver for the actuarial losses in 2024 was changes in demographic experience. The primary driver for the actuarial gains in 2024 was increases in the discount rates. The primary driver for the actuarial losses in 2023 was decreases in the discount rates.

For the year ended December 31, 2024, the weighted-average actual return on plan assets was 7%, which resulted in an increase in our U.S. and international plan assets of $172 million and $14 million, respectively. For the year ended December 31, 2023, the weighted-average actual return on plan assets was 10%, which resulted in an increase in our U.S. and international plan assets of $203 million and $44 million, respectively. The primary driver of the return on plan assets in 2024 and 2023 was fluctuations in the equity and fixed income markets.

Our other postretirement benefit plans for health insurance are contributory. Effective December 31, 2012, we terminated the subsidy for retiree medical plans. Since January 1, 2013, eligible employees have been able to utilize notional amounts credited to an account during their period of service with the company to pay all, or a portion, of their cost to participate in postretirement health insurance. In general, employees hired after December 31, 2012, will not receive credits to an account, but will have unsubsidized access to health insurance through the plan. The cost of health insurance will be adjusted annually by the company’s actuary to reflect actual experience and expected health care cost trends. The measurement of the accumulated benefit obligation assumes a health care cost trend rate of 6.75% in 2025 that declines to 5% by 2032.

Plan Assets

The investment strategy for managing pension plan assets is to seek a reasonable rate of return relative to an appropriate level of risk and provide adequate liquidity for benefit payments and portfolio management. We follow a policy of diversifying pension plan assets across asset classes, investment managers, and individual holdings. As a result, our plan assets have no significant concentrations of credit risk. Asset classes that are considered appropriate include equities, fixed income, cash, real estate and infrastructure investments and insurance contracts. Plan fiduciaries may consider and add other asset classes to the investment program from time to time. The target allocations for plan assets are approximately 44% equity securities, 34% debt securities, 10% real estate investments and 12% in all other types of investments as of December 31, 2024. Generally, the investments in the plans are publicly traded, therefore minimizing the liquidity risk in the portfolio.

The following is a description of the valuation methodologies used for the pension plan assets.

Fair values of equity securities and government debt securities are based on quoted market prices.
Fair values of corporate debt securities are estimated using recently executed transactions and market price quotations. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices.
Fair values of cash and cash equivalents approximate their carrying amounts.
Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the insurance company to the plans’ participants.
Fair values of investments in common/collective trusts (CCT) and real estate and infrastructure investments, which include a CCT, limited partnerships, and other real estate funds, are valued at the net asset value (NAV) as a practical expedient. The NAV is based on the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. These investments valued at NAV are not classified within the fair value hierarchy, but are presented in the fair value table to permit reconciliation of total plan assets to the amounts presented in the fair value table.

The fair values of our pension plan assets at December 31, by asset class, were:


	Millions of Dollars
	U.S.					International
	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
2024
Equity securities	$	298	—	—	298	—	—	—	—
Government debt securities	330		—	—	330	—	—	—	—
Corporate debt securities	—		109	—	109	—	—	—	—

Cash and cash equivalents	28		—	—	28	21	—	—	21
Insurance contracts	—		—	—	—	—	—	190	190

Total assets in the fair value hierarchy	656		109	—	765	21	—	190	211
Common/collective trusts measured at NAV					1,079				419
Real estate and infrastructure investments measured at NAV					277				121
Total	$	656	109	—	2,121	21	—	190	751


	Millions of Dollars
	U.S.					International
	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
2023
Equity securities	$	295	—	—	295	—	—	—	—
Government debt securities	388		—	—	388	—	—	—	—
Corporate debt securities	—		101	—	101	—	—	—	—
Cash and cash equivalents	31		—	—	31	4	—	—	4
Insurance contracts	—		—	—	—	—	—	13	13

Total assets in the fair value hierarchy	714		101	—	815	4	—	13	17
Common/collective trusts measured at NAV					1,013				636
Real estate and infrastructure investments measured at NAV					311				125
Total	$	714	101	—	2,139	4	—	13	778

The following table is a reconciliation of the changes in our Level 3 plan asset balance:


	Millions of Dollars
	2024		2023

Balance at January 1	$	13	13
Transfer in	186		—
Actual return on plan assets	(6)		—
Foreign currency exchange rate change	(3)		—
Balance at December 31	$	190	13

Our funding policy for U.S. plans is to contribute at least the minimum required by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as amended. Contributions to international plans are subject to local laws and tax regulations. Actual contribution amounts are dependent upon plan asset returns, changes in pension obligations, regulatory environments, and other economic factors. In 2025, we expect to contribute approximately $75 million to our U.S. pension plans and other postretirement benefit plans and $5 million to our international pension plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid to plan participants in the years indicated:


	Millions of Dollars
	Pension Benefits			Other Benefits
	U.S.		Int’l.

2025	$	266	26	16
2026	224		28	16
2027	227		29	15
2028	225		33	15
2029	231		34	15
2030-2034	1,168		183	69

Defined Contribution Plans

Most U.S. employees are eligible to participate in the Phillips 66 Savings Plan (Savings Plan). Employees can contribute up to 75% of their eligible pay, subject to certain statutory limits, in the Savings Plan to a choice of investment funds. For the years ended December 31, 2024, 2023, and 2022, Phillips 66 provided a company match of participant contributions up to 8% of eligible pay. For the years ended December 31, 2023 and 2022, Phillips 66 provided an additional Success Share contribution ranging from 0% to 4% of eligible pay based on management discretion.

For the years ended December 31, 2024, 2023 and 2022, we recorded expense of $155 million, $196 million and $210 million, respectively, related to our contributions to the Savings Plan.

Note 23—Share-Based Compensation Plans

Share-based payment awards, including stock options, stock appreciation rights, stock awards (including restricted stock and Restricted Stock Unit (RSU) awards), cash awards, and performance awards, are granted to our employees, nonemployee directors and other plan participants by the Human Resources and Compensation Committee (HRCC) of our Board of Directors under the applicable Omnibus Stock and Performance Incentive Plan of Phillips 66. Prior to May 11, 2022, share-based payment awards were granted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2013 P66 Omnibus Plan). On May 11, 2022, Phillips 66’s shareholders approved the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2022 P66 Omnibus Plan), which replaced the 2013 P66 Omnibus Plan. No future awards will be made under the 2013 P66 Omnibus Plan. As of December 31, 2024, approximately 12 million shares of Phillips 66’s common stock remained available to be issued to settle share-based payment awards under the 2022 P66 Omnibus Plan.

Total share-based compensation expense recognized in income and the associated income tax benefit for the years ended December 31 were:


	Millions of Dollars
	2024		2023	2022

Restricted stock units	$	121	130	101
Performance share units	83		139	68
Stock options	4		19	17
Other	2		9	24
Total share-based compensation expense	$	210	297	210

Income tax benefit	$	(84)	(87)	(55)

Restricted Stock Units

Generally, RSUs are granted annually under the provisions of the applicable Phillips 66 incentive plan, and vest either ratably over three years following the grant date or cliff vest at the end of three years for awards granted in 2024 and 2023. For awards granted prior to 2023, RSUs cliff vest at the end of three years. The grant date fair value is equal to the average of the high and low market price of our stock on the grant date. The recipients receive a quarterly dividend equivalent cash payment until the RSU is settled by issuing one share of our common stock for each RSU at the end of the service period. RSUs granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date for RSUs granted in 2024 and 2023, and six months after the grant date for RSUs granted prior to 2023. Special RSUs are granted to attract or retain key personnel and the terms and conditions may vary by award.

The following table summarizes our RSU activity from January 1, 2024, to December 31, 2024:


				Millions of Dollars
	Stock Units	Weighted-Average Grant-Date Fair Value		Total Fair Value

Outstanding at January 1, 2024	3,532,083	$	89.80
Granted	873,735	145.65
Forfeited	(95,752)	117.15
Issued	(1,448,659)	83.34		$	206
Outstanding at December 31, 2024	2,861,407	$	109.20

Not Vested at December 31, 2024	1,945,190	$	109.41

At December 31, 2024, the remaining unrecognized compensation cost from unvested RSU awards was $88 million, which will be recognized over a weighted-average period of 19 months, the longest period being 34 months.

During 2023 and 2022, we granted RSUs with a weighted-average grant-date fair value of $100.39 and $88.16, respectively. During 2023 and 2022, we issued shares with an aggregate fair value of $126 million and $102 million, respectively, to settle RSUs.

Performance Share Units

Under the applicable Phillips 66 incentive plan, senior management is annually awarded restricted performance share units (PSUs) with three-year performance periods. These awards vest when the HRCC approves the three-year performance results, which represents the grant date. Retirement-eligible employees may retain a prorated share of the award if they retire prior to the grant date. PSUs are classified as liability awards and compensation expense is recognized over the three-year performance periods.

PSUs granted under the applicable Phillips 66 incentive plan are settled by cash payments equal to the fair value of the awards, which is based on the market prices of our stock near the end of the performance periods. The HRCC must approve the three-year performance results prior to payout. Dividend equivalents are not paid on these awards.

PSUs granted under prior incentive compensation plans were classified as equity awards. These equity awards are settled upon an employee’s retirement by issuing one share of our common stock for each PSU held. Dividend equivalents are paid on these awards.

The following table summarizes our PSU activity from January 1, 2024, to December 31, 2024:


				Millions of Dollars
	Performance Share Units	Weighted-Average Grant-Date Fair Value		Total Fair Value

Outstanding at January 1, 2024	534,261	$	37.57
Granted	1,007,525	130.22
Forfeited	—	—
Issued	(102,168)	36.83		$	14
Cash settled	(1,007,525)	130.22		131
Outstanding at December 31, 2024	432,093	$	37.75

At December 31, 2024, there was no remaining unrecognized compensation cost from unvested PSU awards.

During 2023 and 2022, we granted PSUs with a weighted-average grant-date fair value of $102.66 and $71.82, respectively. During 2023 and 2022, we issued shares with an aggregate fair value of $13 million and $9 million, respectively, to settle PSUs. During 2023 and 2022, we cash settled PSUs with an aggregate fair value of $36 million and $18 million, respectively.

Stock Options

Stock options granted under the provisions of the applicable Phillips 66 incentive plan and earlier plans permit purchases of our common stock at exercise prices equivalent to the average of the high and low market price of our stock on the date the options were granted. The options have terms of 10 years and vest ratably over three years following the grant date, with one-third of the options becoming exercisable each year on the grant date anniversary. Options granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date for options granted in 2023 and six months after the grant date for options granted prior to 2023. No options were granted in 2024.

The following table summarizes our stock option activity from January 1, 2024, to December 31, 2024:


						Millions of Dollars
	Options	Weighted-Average Exercise Price		Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value

Outstanding at January 1, 2024	5,117,914	$	87.89
Granted	—	—		$	—
Forfeited	(10,201)	97.05
Exercised	(1,051,247)	82.26				$	68

Outstanding at December 31, 2024	4,056,466	$	89.32

Vested at December 31, 2024	3,915,693	$	88.93			$	171

Exercisable at December 31, 2024	3,220,753	$	87.62			$	147

The weighted-average remaining contractual terms of vested options and exercisable options at December 31, 2024, were 5.75 and 5.35 years, respectively. During 2024, we received $86 million in cash and realized an income tax benefit of $16 million from the exercise of options. At December 31, 2024, the remaining unrecognized compensation expense from unvested options was $2 million, which will be recognized over a weighted-average period of 13 months, the longest period being 18 months.

During 2023 and 2022, we granted options with a weighted-average grant-date fair value of $27.45 and $17.02, respectively. During 2023 and 2022, employees exercised options with an aggregate intrinsic value of $52 million and $42 million, respectively.

The following table provides the significant assumptions used to calculate the grant-date fair values of options granted in 2023 and 2022, as calculated using the Black-Scholes-Merton option-pricing model:


	2023		2022

Risk-free interest rate	3.84	%	1.97
Dividend yield	3.80	%	5.10
Volatility factor	35.19	%	33.67
Expected life (years)	6.78		6.61
No options were granted in 2024.

We calculate the volatility factor using historical Phillips 66 end-of-week closing stock prices. We periodically calculate the average period of time elapsed between grant dates and exercise dates of past grants to estimate the expected life of new option grants.

Other

As a result of the DCP Midstream Merger, we began consolidating DCP Midstream Class A Segment starting on August 18, 2022. DCP Midstream Class A Segment had a Long-Term Incentive Plan under which phantom units, performance units and distribution equivalent rights were awarded to key employees. On June 15, 2023, DCP Midstream Class A Segment’s share-based payment awards were converted to Phillips 66 share-based payment awards and are included in the share-based payment award tables above. Share-based compensation expense recognized for DCP Midstream Class A Segment’s share-based payment awards totaled $23 million for the period from August 18, 2022, through December 31, 2022, and $6 million for the period from January 1, 2023, through June 14, 2023.

See Note 4—Restructuring and Note 5—Business Combinations, for additional information regarding the DCP Midstream Merger and associated accounting treatment.

Note 24—Income Taxes

Components of income tax expense (benefit) were:


	Millions of Dollars
	2024		2023	2022
Income Tax Expense (Benefit)
Federal
Current	$	662	661	1,263
Deferred	(282)		830	1,171
Foreign
Current	78		394	492
Deferred	95		(23)	(109)
State and local
Current	11		335	173
Deferred	(64)		33	258
	$	500	2,230	3,248

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes, among other provisions, changes to the U.S. corporate income tax system, including a 15% minimum tax based on adjusted financial statement income as defined in the IRA, which was effective after December 31, 2022. We did not owe corporate alternative minimum tax in 2024 or 2023 as the regular U.S. tax liability exceeded the corporate alternative minimum tax. The IRA also included provisions that allow a company to purchase transferable tax credits. In 2024 and 2023, we executed agreements to purchase eligible tax credits for a total of $485 million and $262 million, respectively. In 2024 and 2023, we paid $551 million and $196 million to our counterparties, respectively. These tax credits were used to offset estimated tax payments in 2024 and 2023.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were:


	Millions of Dollars
	2024		2023
Deferred Tax Liabilities
Properties, plants and equipment, and intangibles	$	3,493	3,320
Investment in joint ventures	1,864		1,979
Investment in subsidiaries	2,511		2,628

Other	318		268
Total deferred tax liabilities	8,186		8,195

Deferred Tax Assets
Benefit plan accruals	355		362
Loss and credit carryforwards	162		151
Asset retirement obligations and accrued environmental costs	299		127
Other financial accruals and deferrals	91		68
Inventory	82		34
Other	299		274
Total deferred tax assets	1,288		1,016
Less: valuation allowance	137		121
Net deferred tax assets	1,151		895
Net deferred tax liabilities	$	7,035	7,300

At December 31, 2024, the loss and credit carryforward deferred tax assets were primarily related to a foreign tax credit carryforward in the United States of $128 million; a state tax net operating loss carryforward of $26 million; and capital loss and net operating loss carryforwards in the United Kingdom of $9 million. State net operating loss carryforwards begin to expire in 2040. Foreign tax credit carryforwards, which have a full valuation allowance against them, begin to expire in 2029. The other loss and credit carryforwards, all of which relate to foreign operations, and have a full valuation allowance against them, have indefinite lives.

Valuation allowances have been established to reduce deferred tax assets to an amount that will, more likely than not, be realized. During the year ended December 31, 2024, our total valuation allowance balance increased by $16 million. Based on our historical taxable income, expectations for the future and available tax planning strategies, management expects the remaining net deferred tax assets will be realized as offsets to reversing deferred tax liabilities and the tax consequences of future taxable income.

Earnings of our foreign subsidiaries and foreign joint ventures after December 31, 2017, are generally not subject to incremental income taxes in the United States or withholding taxes in foreign countries upon repatriation. As such, we only assert that the earnings of one of our foreign subsidiaries are indefinitely reinvested. At December 31, 2024 and 2023, the unrecorded deferred tax liability related to the undistributed earnings of this foreign subsidiary was not material.

A deferred income tax liability has not been recognized on the excess of the book basis over the tax basis of an investment in a controlled foreign subsidiary that is essentially permanent in duration. Recognition of a deferred tax liability will only be required if it becomes apparent that this subsidiary will be sold or liquidated in the foreseeable future. At December 31, 2024, the temporary difference resulting from the investment book basis exceeding the tax basis was $1,745 million. Determination of the unrecognized deferred income tax liability related to this temporary difference is not practicable given the variables involved in performing such a calculation. During the fourth quarter of 2024, we entered into a definitive agreement to sell our ownership interest in Coop. In connection with the anticipated sale, we recorded a U.S. deferred tax liability of $36 million for the excess of book over tax basis in this investment. The sale of Coop closed in January 2025. See Note 9—Investments, Loans and Long-Term Receivables, for additional information.

We file tax returns in the U.S. federal jurisdiction and in many foreign and state jurisdictions. Unrecognized tax benefits reflect the difference between positions taken on income tax returns and the amounts recognized in the financial statements.

The following table is a reconciliation of the changes in our unrecognized income tax benefits balance:


	Millions of Dollars
	2024		2023	2022

Balance at January 1	$	116	54	54
Additions for tax positions of current year	—		—	1
Additions for tax positions of prior years	—		66	2
Reductions for tax positions of prior years	(28)		(4)	(3)


Balance at December 31	$	88	116	54

Included in the balance of unrecognized income tax benefits at December 31, 2024, 2023 and 2022, were $87 million, $100 million and $37 million, respectively, which, if recognized, would affect our effective income tax rate. With respect to various unrecognized income tax benefits and the related accrued liabilities, we do not expect any to be recognized or paid within the next twelve months.

At December 31, 2024, 2023 and 2022, accrued liabilities for interest and penalties, net of accrued income taxes, totaled $1 million, $8 million and $7 million, respectively. These accruals increased our results for the year ended December 31, 2024, by $7 million and decreased our results for the years ended December 31, 2023 and 2022, by $1 million and $3 million, respectively.

Audits in significant jurisdictions are generally complete as follows: United Kingdom (2022), Germany (2017) and United States (2020). Certain issues remain in dispute for audited years, and unrecognized income tax benefits for years still subject to or currently undergoing an audit are subject to change. As a consequence, the balance in unrecognized income tax benefits can be expected to fluctuate from period to period. Although it is reasonably possible such changes could be significant when compared with our total unrecognized income tax benefits, the amount of change is not estimable.

The amounts of U.S. and foreign income before income taxes, with a reconciliation of income tax at the federal statutory rate to the recorded income tax expense (benefit), were:


	Millions of Dollars				Percentage of Income (Loss) Before Income Taxes
	2024		2023	2022	2024		2023	2022
Income before income taxes
United States	$	1,796	7,887	12,628	67.1	%	83.3	86.3
Foreign	879		1,582	2,011	32.9		16.7	13.7
	$	2,675	9,469	14,639	100.0	%	100.0	100.0

Federal statutory income tax	$	562	1,989	3,074	21.0	%	21.0	21.0
State income tax, net of federal income tax benefit	(43)		290	341	(1.6)		3.1	2.3
Noncontrolling interests	(2)		(51)	(74)	(0.1)		(0.5)	(0.5)


Non-taxable equity earnings	(44)		(42)	(33)	(1.6)		(0.4)	(0.2)
Tax law changes	—		—	(25)	—		—	(0.2)
Discount on purchased credits	(36)		(15)	(4)	(1.3)		(0.2)	—
Tax on outside basis difference in foreign investment	36		—	—	1.3		—	—
Other*	27		59	(31)	1.0		0.6	(0.2)
	$	500	2,230	3,248	18.7	%	23.6	22.2

** “Other” is primarily attributable to foreign operations.*

For the years ended December 31, 2024, 2023 and 2022, income tax benefits of $14 million, $113 million and $323 million, respectively, are reflected in “Capital in Excess of Par” on the consolidated statement of changes in equity.

Note 25—Accumulated Other Comprehensive Loss

Changes in the balances of each component of accumulated other comprehensive loss were as follows:


	Millions of Dollars
	Defined Benefit Plans		Foreign Currency Translation	Hedging	Accumulated Other Comprehensive Loss

December 31, 2021	$	(398)	(45)	(2)	(445)
Other comprehensive income (loss) before reclassifications	204		(291)	—	(87)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss, prior service credit and settlements	72		—	—	72
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	276		(291)	—	(15)

December 31, 2022	(122)		(336)	(2)	(460)
Other comprehensive income (loss) before reclassifications	(12)		179	(3)	164
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss, prior service credit and settlements	14		—	—	14
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	2		179	(3)	178

December 31, 2023	(120)		(157)	(5)	(282)
Other comprehensive loss before reclassifications	(31)		(105)	—	(136)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	11		—	—	11
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive loss	(20)		(105)	—	(125)


December 31, 2024	$	(140)	(262)	(5)	(407)

** Included in the computation of net periodic benefit cost. See Note 22—Pension and Postretirement Plans, for additional information.*

Note 26—Cash Flow Information

In the third quarter of 2024, we began presenting the line item “Capital expenditures and investments” on our consolidated statement of cash flows exclusive of acquisitions, net of cash acquired. Prior period information has been reclassified for comparability.

Supplemental Cash Flow Information


	Millions of Dollars
	2024		2023	2022



Cash Payments (Receipts)
Interest	$	901	816	572
Income taxes*	1,186		1,397	2,071
** 2024 and 2023 include $551 million and $196 million of cash paid to counterparties to purchase IRA eligible tax credits.*


	Millions of Dollars
	2024		2023	2022



Non-cash investing activities
Derecognition of government obligations	$	1,100	—	—
Reduction of WRB investment balance	290		—	—

Non-cash financing activities
Derecognition of Discharged Notes	$	(1,100)	—	—
Distribution of Advance Term Loan from WRB	(290)		—	—

See Note 15—Debt, for additional information regarding the above non-cash activities.

Note 27—Other Financial Information


	Millions of Dollars
	2024		2023	2022
Interest and Debt Expense
Incurred
Debt	$	919	842	611
Other	9		86	41
	928		928	652
Capitalized	(21)		(31)	(33)
Expensed	$	907	897	619

Other Income
Interest income	$	158	269	82
Unrealized investment gain (loss)—NOVONIX	—		(38)	(433)
Gain related to merger of businesses	—		—	3,013
Other, net*	85		128	75
	$	243	359	2,737
** Includes derivatives-related activities. See Note 18—Derivatives and Financial Instruments, for additional information.*

Research and Development Expenses	$	15	27	42

Advertising Expenses	$	51	54	56

Foreign Currency Transaction (Gains) Losses
Midstream	$	—	—	—
Chemicals	—		—	—
Refining	—		19	(7)
Marketing and Specialties	3		2	(2)
Renewable Fuels	2		3	(8)
Corporate and Other	6		(2)	8
	$	11	22	(9)

Note 28—Related Party Transactions

Significant transactions with related parties were:


	Millions of Dollars
	2024		2023	2022

Operating revenues and other income (a)(d)	$	4,443	4,623	6,111
Purchases (b)(d)	20,620		17,208	21,244
Operating expenses and selling, general and administrative expenses (c)	299		295	281

(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the M&S segment, including OnCue and CF United. We also sold certain feedstocks and intermediate products to WRB and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our equity affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.

(b)We purchased crude oil, refined petroleum products, NGL and solvents from WRB. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various equity affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel Paralubes for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline equity affiliates for transporting crude oil, refined petroleum products and NGL.

(c)We paid consignment fees to CF United, and utility and processing fees to various equity affiliates.

(d)As a result of the DCP Midstream Merger, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. As such, transactions with these parties after August 17, 2022, are not presented in the table above.

Note 29—Segment Disclosures and Related Information

Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments. This resulted in changes to the composition of our operating segments, as well as measurement changes for certain activities between our operating segments. The primary effects are summarized below. Prior period information has been recast for comparability.

Establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in our Refining, M&S and Midstream operating segments.
Change in method of allocating results for certain Gulf Coast distillate export activities from our M&S operating segment to our Refining operating segment.
Reclassification of certain crude oil and international clean products trading activities between our M&S operating segment and our Refining operating segment.
Change in reporting of our investment in NOVONIX from our Midstream operating segment to Corporate and Other.

Our operating segments are:

1)**Midstream—**Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and NGL transportation, storage, fractionation, gathering, processing and marketing services in the United States. In addition, this segment exports liquefied petroleum gas to global markets.

2)**Chemicals—**Consists of our 50% equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.

3)**Refining—**Refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels. This segment includes 11 refineries in the United States and Europe.

4)**Marketing and Specialties—**Purchases for resale and markets refined products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

5)**Renewable Fuels—**Processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, business transformation restructuring costs, our investment in NOVONIX, and various other corporate activities. Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets. See Note 4—Restructuring, for additional information regarding restructuring costs.

Intersegment sales are at prices that we believe approximate market.

Through our implementation of ASU No. 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker (CODM), who is our Chief Executive Officer. The measure of segment profit or loss reviewed by our CODM is “income (loss) before income taxes.” The CODM uses segment income (loss) before income taxes to allocate resources to each segment predominantly in the annual budgeting and forecasting process. The CODM compares budget-to-actual segment income (loss) before income taxes on a monthly and quarterly basis and considers trend analyses as well as other market factors when making decisions about allocating capital and personnel to the segments. The measure of segment assets reported on our consolidated balance sheet reviewed by our CODM is “Total Assets.”

Analysis of Results by Operating Segment


	Millions of Dollars
	Year Ended December 31, 2024
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	16,012	—	34,793	90,318	1,995	35	—	143,153
Intercompany revenues	2,775		—	50,171	2,129	3,567	15	(58,657)	—
Total sales and other operating revenues	18,787		—	84,964	92,447	5,562	50	(58,657)	143,153
Equity in earnings of affiliates	591		863	50	276	(1)	—	—	1,779
Net gain on dispositions	263		—	(8)	66	—	—	—	321
Other income	11		—	3	42	10	186	(9)	243
Total Revenues and Other Income	19,652		863	85,009	92,831	5,571	236	(58,666)	145,496

Costs and Expenses
Purchased crude oil and products	13,429		—	79,850	89,572	5,664	—	(58,553)	129,962
Operating expenses*	1,876		(3)	3,727	70	370	12	(113)	5,939
Selling, general and administrative expenses*	213		(10)	209	1,932	51	419	—	2,814
Depreciation and amortization	920		—	1,077	179	64	123	—	2,363
Impairments	346		—	106	3	—	1	—	456
Taxes other than income taxes	216		—	387	59	(382)	49	—	329
Interest and debt expense	—		—	—	—	—	907	—	907
Other segment items**	14		—	18	5	2	12	—	51
Total Costs and Expenses	17,014		(13)	85,374	91,820	5,769	1,523	(58,666)	142,821

Income (loss) before income taxes	$	2,638	876	(365)	1,011	(198)	(1,287)	—	2,675
** These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.*
*** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”*


	Millions of Dollars
	As of and for the Year Ended December 31, 2024
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Total Consolidated
Interest Income	$	—	—	—	—	—	158	158
Investments In and Advances to Affiliates	3,080		7,819	2,381	719	16	2	14,017
Total Assets	28,334		7,842	19,599	9,799	3,142	3,866	72,582
Capital Expenditures and Investments	751		—	582	85	375	66	1,859


	Millions of Dollars
	Year Ended December 31, 2023
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	15,780	—	34,241	95,931	1,412	35	—	147,399
Intercompany revenues	2,824		—	57,985	3,000	3,534	13	(67,356)	—
Total sales and other operating revenues	18,604		—	92,226	98,931	4,946	48	(67,356)	147,399
Equity in earnings of affiliates	648		586	439	345	(1)	—	—	2,017
Net gain on dispositions	130		—	(13)	3	(3)	(2)	—	115
Other income	5		—	86	(11)	8	259	12	359
Total Revenues and Other Income	19,387		586	92,738	99,268	4,950	305	(67,344)	149,890

Costs and Expenses
Purchased crude oil and products	13,126		—	81,726	95,808	4,667	—	(67,241)	128,086
Operating expenses*	1,844		(3)	4,245	57	98	16	(103)	6,154
Selling, general and administrative expenses*	441		(11)	169	1,336	8	582	—	2,525
Depreciation and amortization	923		—	831	122	8	93	—	1,977
Impairments	3		—	10	3	—	8	—	24
Taxes other than income taxes	229		—	382	40	12	44	—	707
Interest and debt expense	—		—	—	—	—	897	—	897
Other segment items**	2		—	35	5	4	5	—	51
Total Costs and Expenses	16,568		(14)	87,398	97,371	4,797	1,645	(67,344)	140,421

Income (loss) before income taxes	$	2,819	600	5,340	1,897	153	(1,340)	—	9,469
** These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.*
*** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”*


	Millions of Dollars
	As of and for the Year Ended December 31, 2023
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Total Consolidated
Interest Income	$	—	—	—	—	—	269	269
Investments In and Advances to Affiliates	3,749		7,341	2,802	824	18	2	14,736
Total Assets	29,052		7,357	21,013	10,834	2,012	5,233	75,501
Capital Expenditures and Investments	625		—	586	101	753	90	2,155


	Millions of Dollars
	Year Ended December 31, 2022
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	16,189	—	40,234	112,569	963	35	—	169,990
Intercompany revenues	2,932		—	69,807	2,144	2,475	9	(77,367)	—
Total sales and other operating revenues	19,121		—	110,041	114,713	3,438	44	(77,367)	169,990
Equity in earnings of affiliates	914		842	747	464	1	—	—	2,968
Net gain on dispositions	(1)		—	1	—	—	7	—	7
Other income	3,009		—	43	35	(4)	(367)	21	2,737
Total Revenues and Other Income	23,043		842	110,832	115,212	3,435	(316)	(77,346)	175,702

Costs and Expenses
Purchased crude oil and products	15,496		—	96,808	111,638	3,222	—	(77,232)	149,932
Operating expenses*	1,401		(9)	4,731	50	37	15	(114)	6,111
Selling, general and administrative expenses*	255		(5)	151	1,304	5	458	—	2,168
Depreciation and amortization	567		—	860	110	7	85	—	1,629
Impairments	1		—	13	—	—	46	—	60
Taxes other than income taxes	146		—	285	38	2	59	—	530
Interest and debt expense	—		—	—	—	—	619	—	619
Other segment items**	1		—	8	—	(9)	14	—	14
Total Costs and Expenses	17,867		(14)	102,856	113,140	3,264	1,296	(77,346)	161,063

Income (loss) before income taxes	$	5,176	856	7,976	2,072	171	(1,612)	—	14,639
** These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.*
*** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”*


	Millions of Dollars
	As of and for the Year Ended December 31, 2022
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Total Consolidated
Interest Income	$	—	—	—	—	—	82	82
Investments In and Advances to Affiliates	4,254		6,785	2,484	881	19	2	14,425
Total Assets	30,179		6,785	21,009	9,812	715	7,942	76,442
Capital Expenditures and Investments	737		—	607	87	323	134	1,888

Geographic Information

Long-lived assets, defined as net PP&E plus investments and long-term receivables, by geographic location at December 31 were:


	Millions of Dollars
	2024		2023	2022

United States	$	47,889	49,124	48,286
United Kingdom	1,341		1,406	1,349
Germany	325		394	391
Other countries	87		90	87
Worldwide consolidated	$	49,642	51,014	50,113

Note 30—Phillips 66 Partners LP

On March 9, 2022, we completed a merger between us and Phillips 66 Partners. The merger resulted in the acquisition of all limited partnership interests in Phillips 66 Partners not already owned by us in exchange for 41.8 million shares of Phillips 66 common stock issued from treasury stock. Phillips 66 Partners common unitholders received 0.50 shares of Phillips 66 common stock for each outstanding Phillips 66 Partners common unit. Phillips 66 Partners’ perpetual convertible preferred units were converted into common units at a premium to the original issuance price prior to being exchanged for Phillips 66 common stock. Upon closing, Phillips 66 Partners became a wholly owned subsidiary of Phillips 66 and its common units are no longer publicly traded. The merger was accounted for as an equity transaction.

Note 31—New Accounting Standards

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),” which will require additional disclosure of certain costs and expenses within the notes to the consolidated financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the provisions of ASU 2024-03 and the incremental disclosures that will be required in our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which enhances the transparency, effectiveness, and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. Upon adoption, the provisions of ASU 2023-09 will require additional disclosures within Note 24—Income Taxes, and Note 26—Cash Flow Information.

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