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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, the “company,” “we,” “our,” “us” and “Phillips 66” are used in this report to refer to the businesses of Phillips 66 and its consolidated subsidiaries.

Management’s Discussion and Analysis is the company’s analysis of its financial performance, financial condition, and significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to the company’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking. The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. The company does not undertake to update, revise or correct any of the forward-looking information included in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events unless required to do so pursuant to applicable law. Readers are cautioned that such forward-looking statements should be read in conjunction with the company’s disclosures under the heading: “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”

The term “earnings” as used in Management’s Discussion and Analysis refers to net income attributable to Phillips 66. The terms “results,” “before-tax income” or “before-tax loss” as used in Management’s Discussion and Analysis refer to income (loss) before income taxes.

EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT

Phillips 66 is uniquely positioned as a diversified and integrated downstream energy company operating with Midstream, Chemicals, Refining, and Marketing and Specialties (M&S) segments. At March 31, 2024, we had total assets of $76.4 billion. Our common stock trades on the New York Stock Exchange under the symbol PSX.

Executive Overview

In the first quarter of 2024, we reported earnings of $748 million and cash used in operating activities of $236 million, both of which were unfavorably impacted by lower realized refining margins and, in the case of operating cash flow, discretionary inventory builds. Additionally, we received proceeds from debt issuances, net of debt repayments, of $802 million, funded capital expenditures and investments of $628 million, repurchased $1.2 billion of common stock, and paid dividends on our common stock of $448 million. We ended the first quarter of 2024 with $1.6 billion of cash and cash equivalents and $3.5 billion of total committed capacity available under our revolving credit facility.

Rodeo Renewable Energy Complex

As part of the Rodeo Renewed project, we are converting the San Francisco Refinery into the Rodeo Renewable Energy Complex, expanding commercial scale production of renewable diesel and positioning Phillips 66 as a leader in renewable fuels production. The Rodeo Renewed project has progressed during the first quarter of 2024 with the facility now processing only renewable feedstocks and having 30,000 barrels per day of renewable fuels production capacity. The Rodeo Renewable Energy Complex is on track to increase production capacity to 50,000 barrels per day (800 million gallons per year) of renewable fuels by the end of the second quarter of 2024. The Rodeo Renewed project design also provides the capability of producing renewable jet fuel, a key component of sustainable aviation fuel. The project advances our strategy to expand our renewable fuels production, lower our carbon footprint, and provide reliable, affordable energy that we expect to create long-term value for our shareholders.

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Business Environment

The Midstream segment includes our Transportation and natural gas liquids (NGL) businesses. Our Transportation business contains fee-based operations not directly exposed to commodity price risk. Our NGL business, including DCP Midstream Class A Segment, DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills, LLC (DCP Southern Hills), contains both fee-based operations and operations directly impacted by NGL and natural gas prices. During the first quarter of 2024, NGL and natural gas prices decreased, compared with the first quarter of 2023, as the result of increased production and limited growth in export infrastructure.

The Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The chemicals and plastics industry is mainly a commodity-based industry where the margins for key products are based on supply and demand, as well as cost factors. The benchmark high-density polyethylene chain margin slightly decreased in the first quarter of 2024, compared with the first quarter of 2023, mainly due to lower polyethylene sales prices as a result of industry oversupply driven by recent capacity additions.

Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity, and other operating costs. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil. The composite 3:2:1 market crack spread for our business decreased to an average of $19.45 per barrel during the first quarter of 2024, from an average of $30.59 per barrel during the first quarter of 2023. The decrease in the composite market crack spread was primarily driven by lower global prices for gasoline and higher crude oil prices. The price of U.S. benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, increased to an average of $77.07 per barrel during the first quarter of 2024, from an average of $76.11 per barrel during the first quarter of 2023. The increase in crude production in the United States limited significant escalation in crude prices.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined petroleum products. While marketing fuel and lubricant margins are primarily driven by market factors, largely determined by the relationship between supply and demand, marketing fuel margins, in particular, are influenced by trends in spot prices, and where applicable, retail prices for refined petroleum products in the regions and countries where we operate.

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RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three months ended March 31, 2024, is based on a comparison with the corresponding periods of 2023.

Consolidated Results

A summary of income before income taxes by business segment with a reconciliation to net income attributable to Phillips 66 follows:

Millions of Dollars
Three Months Ended March 31
20242023
Midstream$554702
Chemicals205198
Refining1311,608
Marketing and Specialties404426
Corporate and Other(330)(283)
Income before income taxes9642,651
Income tax expense203574
Net income7612,077
Less: net income attributable to noncontrolling interests13116
Net income attributable to Phillips 66$7481,961

Our net income attributable to Phillips 66 in the first quarter of 2024 was $748 million, compared with $2 billion in the first quarter of 2023. The decrease in net income attributable to Phillips 66 was primarily due to a decline in realized refining margins, partially offset by lower income tax expense.

See the “Segment Results” section for additional information on our segment results and Note 19—Income Taxes, in the Notes to Consolidated Financial Statements, for additional information on income taxes.

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Statement of Income Analysis

Sales and other operating revenues for the first quarter of 2024 increased 4%, and purchased crude oil and products increased 10%. The increases were mainly due to higher prices for crude oil, while the increase in sales was also attributable to higher refined petroleum product sales volumes, partially offset by lower prices for NGL, natural gas and refined petroleum products.

Equity in earnings of affiliates decreased 14% in the first quarter of 2024. The decrease reflects lower equity earnings from WRB Refining LP (WRB), primarily due to lower realized refining margins.

Other income increased $49 million in the first quarter of 2024, primarily due to higher results from trading activities.

Impairments increased $157 million in the first quarter of 2024, primarily due to the recognition of before-tax impairment charges reported in our Refining and Midstream segments. Refer to Note 8—Properties, Plants and Equipment, in the Notes to Consolidated Financial Statements, for additional information.

Taxes other than income taxes decreased 20% in the first quarter of 2024. The decrease was primarily driven by tax credits received from renewable diesel blending activity, as well as lower property taxes.

Interest and debt expense increased 18% in the first quarter of 2024. The increase was primarily driven by higher average debt principal balances. See Note 10—Debt, in the Notes to Consolidated Financial Statements, for additional information regarding debt.

Income tax expense decreased 65% in the first quarter of 2024, primarily due to lower income before income taxes. See Note 19—Income Taxes, in the Notes to Consolidated Financial Statements, for information regarding our effective income tax rates.

Net income attributable to noncontrolling interests decreased 89% in the first quarter of 2024. The decrease reflects the impacts of the DCP Midstream, LP Merger (DCP LP Merger) in June 2023. See Note 2—DCP Midstream, LP Merger (DCP LP Merger), in the Notes to Consolidated Financial Statements for additional information.

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Segment Results

Midstream

Three Months Ended March 31
20242023
Millions of Dollars
Income (Loss) Before Income Taxes
Transportation$243306
NGL and Other306408
NOVONIX5(12)
Total Midstream$554702
Thousands of Barrels Daily
Transportation Volumes
Pipelines*2,9793,039
Terminals3,1093,203
Operating Statistics
NGL fractionated**679660
NGL production**417421
Wellhead Volume (Bcf/D)**4.44.5

** Pipelines represent the sum of volumes transported through each separately tariffed consolidated pipeline segment, excluding NGL pipelines.*

*** Includes 100% of DCP Midstream Class A Segment’s volumes.*

Dollars Per Gallon
Market Indicator
Weighted-Average NGL Price*$0.700.74
** Based on index prices from the Mont Belvieu market hub, which are weighted by NGL component mix.*

The Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services; NGL production, transportation, storage, fractionation, processing and marketing services; natural gas gathering, compressing, treating, processing, storage, transportation and marketing services; and condensate recovery. These activities are mainly in the United States. This segment also includes our investment in NOVONIX.

Results from our Midstream segment decreased $148 million in the first quarter of 2024.

Results from our Transportation business decreased $63 million in the first quarter of 2024, primarily due to a before-tax impairment charge of $59 million recognized in the first quarter of 2024 associated with certain crude processing and logistics assets in California, as well as a before-tax gain of $36 million recognized in the first quarter of 2023 associated with the sale of a terminal in Louisiana. These decreases were partially offset by higher pipeline tariffs and improved earnings from our equity affiliates primarily driven by increased volumes.

Results from our NGL and Other business decreased $102 million in the first quarter of 2024, primarily due to unfavorable pricing driven by falling natural gas prices and winter weather impacts.

The fair value of our investment in NOVONIX increased by $5 million in the first quarter of 2024, compared with a decline of $12 million in the first quarter of 2023.

See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

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Chemicals

Three Months Ended March 31
20242023
Millions of Dollars
Income Before Income Taxes$205198
Millions of Pounds
CPChem Externally Marketed Sales Volumes*5,9185,706
** Represents 100% of CPChem’s outside sales of produced petrochemical products, as well as commission sales from equity affiliates.*
Olefins and Polyolefins Capacity Utilization (percent)96%94

The Chemicals segment consists of our 50% interest in CPChem, which we account for under the equity method. CPChem uses NGL and other feedstocks to produce petrochemicals. These products are then marketed and sold or used as feedstocks to produce plastics and other chemicals. CPChem produces and markets ethylene and other olefin products. Ethylene produced is primarily consumed within CPChem for the production of polyethylene, normal alpha olefins and polyethylene pipe. CPChem manufactures and markets aromatics and styrenics products, such as benzene, cyclohexane, styrene and polystyrene, as well as manufactures and/or markets a variety of specialty chemical products. Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem.

Results from the Chemicals segment increased $7 million in the first quarter of 2024, primarily due to higher volumes and lower utility costs, partially offset by lower margins driven by decreased sales prices.

See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s results.

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Refining

Three Months Ended March 31
20242023
Millions of Dollars
Income (Loss) Before Income Taxes
Atlantic Basin/Europe$80142
Gulf Coast118705
Central Corridor210739
West Coast(277)22
Worldwide$1311,608
Dollars Per Barrel
Income (Loss) Before Income Taxes
Atlantic Basin/Europe$1.703.60
Gulf Coast2.4913.73
Central Corridor8.2028.42
West Coast(11.24)0.77
Worldwide0.9111.07
Realized Refining Margins*
Atlantic Basin/Europe$9.5516.13
Gulf Coast10.9121.28
Central Corridor13.2726.86
West Coast8.8916.53
Worldwide10.9120.72

** See the “Non-GAAP Reconciliations” section for a reconciliation of this non-GAAP measure to the most directly comparable measure under generally accepted accounting principles in the United States (GAAP), income (loss) before income taxes per barrel.*

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Thousands of Barrels Daily
Three Months Ended March 31
Operating Statistics20242023
Refining operations*
Atlantic Basin/Europe
Crude oil capacity537537
Crude oil processed472443
Capacity utilization (percent)88%82
Refinery production522438
Gulf Coast
Crude oil capacity529529
Crude oil processed475519
Capacity utilization (percent)90%98
Refinery production526580
Central Corridor
Crude oil capacity531531
Crude oil processed509475
Capacity utilization (percent)96%89
Refinery production527494
West Coast**
Crude oil capacity244319
Crude oil processed244281
Capacity utilization (percent)100%88
Refinery production266314
Worldwide
Crude oil capacity1,8411,916
Crude oil processed1,7001,718
Capacity utilization (percent)92%90
Refinery production1,8411,826
** Includes our share of equity affiliates.* *** As part of our plans to convert the San Francisco Refinery into a renewable fuels facility, in the first quarter of 2023, we ceased operations at the Santa Maria facility in Arroyo Grande, California, which reduced net crude throughput capacity from 120 MBD to 75 MBD. In October 2023, we further reduced net crude throughput capacity from 75 MBD to 52 MBD as we shut down one of the two crude units at the Rodeo facility. Effective January 1, 2024, net crude throughput capacity was 52 MBD. The remaining net crude throughput capacity came offline upon the shutdown of the Rodeo facility’s second crude unit in February 2024. Accordingly, effective January 1, 2024, we have excluded the Rodeo facility from the operating statistics above.*

The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the United States and Europe.

Results from our Refining segment decreased $1,477 million in the first quarter of 2024, primarily due to lower realized margins, partially offset by higher volumes. The decrease in realized margins in the first quarter of 2024 was primarily driven by lower market crack spreads, feedstock advantage and secondary product margins.

Our worldwide refining crude oil capacity utilization rate was 92% in the first quarter of 2024, compared with 90% in the first quarter of 2023. See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

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Marketing and Specialties

Three Months Ended March 31
20242023
Millions of Dollars
Income Before Income Taxes404426
Dollars Per Barrel
Income Before Income Taxes
U.S.$1.381.79
International5.084.93
Realized Marketing Fuel Margins*
U.S.$1.602.30
International6.926.45

** See the “Non-GAAP Reconciliations” section for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure, income before income taxes per barrel.*

Dollars Per Gallon
U.S. Average Wholesale Prices*
Gasoline$2.612.81
Distillates2.833.23
** On third-party branded petroleum product sales, excluding excise taxes.*
Thousands of Barrels Daily
Marketing Refined Petroleum Product Sales
Gasoline1,1961,111
Distillates970848
Other4319
2,2091,978

The M&S segment purchases for resale and markets refined petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Before-tax income from the M&S segment decreased $22 million in the first quarter of 2024. The decrease was primarily driven by lower U.S. marketing margins, partially offset by higher U.S. marketing volumes.

See the “Executive Overview and Business Environment” section for information on marketing fuel margins and other market factors impacting this quarter’s results.

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Corporate and Other

Millions of Dollars
Three Months Ended March 31
20242023
Loss Before Income Taxes
Net interest expense$(185)(124)
Corporate overhead and other(145)(159)
Total Corporate and Other$(330)(283)

Net interest expense consists of interest and financing expense, net of interest income and capitalized interest. Corporate overhead and other includes general and administrative expenses, technology costs, environmental costs associated with sites no longer in operation, business transformation restructuring costs, foreign currency transaction gains and losses, and other costs not directly associated with an operating segment.

Net interest expense increased $61 million in the first quarter of 2024. The increase was primarily driven by higher interest expense as a result of higher average debt principal balances, as well as lower interest income. See Note 10—Debt, in the Notes to Consolidated Financial Statements, for additional information regarding debt.

Corporate overhead and other costs decreased $14 million in the first quarter of 2024 primarily due to a decrease in consulting fees associated with our business transformation.

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CAPITAL RESOURCES AND LIQUIDITY

Financial Indicators

Millions of Dollars, Except as Indicated
March 31 2024December 31 2023
Cash and cash equivalents$1,5703,323
Short-term debt2,3251,482
Total debt20,15419,359
Total equity30,79331,650
Percent of total debt to capital*40%38
Percent of floating-rate debt to total debt4%10
** Capital includes total debt and total equity.*

To meet our short- and long-term liquidity requirements, we use a variety of funding sources but rely primarily on cash generated from operating activities and debt financing. During the first three months of 2024, we used $236 million of cash in our operations and we received proceeds from debt issuances, net of debt repayments, of $802 million. We used available cash primarily to repurchase shares of our common stock for $1.2 billion, fund capital expenditures and investments of $628 million, and pay dividends on our common stock of $448 million. During the first three months of 2024, cash and cash equivalents decreased to $1.6 billion.

Significant Sources of Capital

Operating Activities

During the first three months of 2024, cash used in our operations was $236 million, compared with cash provided by operations of $1.2 billion for the first three months of 2023. The decrease was primarily due to lower realized refining margins, as well as larger net unfavorable working capital impacts. The unfavorable working capital impacts were primarily driven by the effects of changes in commodity prices, the timing of payments and collections, and discretionary inventory builds.

Our short- and long-term operating cash flows are highly dependent upon refining and marketing margins, NGL prices and chemicals margins. Prices and margins in our industry are typically volatile, and are driven by market conditions over which we have little or no control. Absent other mitigating factors, as these prices and margins fluctuate, we would expect a corresponding change in our operating cash flows.

The level and quality of output from our refineries also impacts our cash flows. Factors such as operating efficiency, maintenance turnarounds, market conditions, feedstock availability, and weather conditions can affect output. We actively manage the operations of our refineries, and any variability in their operations typically has not been as significant to cash flows as that caused by margins and prices.

Equity Affiliate Operating Distributions

Our operating cash flows are also impacted by distribution decisions made by our equity affiliates. During the first three months of 2024, cash used in operations included aggregate distributions of $348 million from our equity affiliates, while cash from operations during the first three months of 2023 included aggregate distributions of $369 million from our equity affiliates. We cannot control the amount of future dividends from equity affiliates; therefore, future dividend payments by these equity affiliates are not assured.

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Senior Notes Issuances

On February 28, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, 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, commencing on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year, commencing on June 30, 2024.

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, 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 (2027 Notes).

  • $500 million aggregate principal amount of 5.300% Senior Notes due June 2033 (2033 Notes).

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

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 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 Secured Overnight Financing Rate (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 March 31, 2024, and December 31, 2023, no amount had been drawn under our revolving credit facilities.

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 March 31, 2024, $1.5 billion 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, which were repaid during the three months ended March 31, 2024.

Total Committed Capacity Available At March 31, 2024, and December 31, 2023, we had approximately $3.5 billion and $6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

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Off-Balance Sheet Arrangements

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 March 31, 2024. We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $171 million. These leases have remaining terms of one to ten years.

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

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 Court) denied Dakota Access’ writ of certiorari requesting the 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 the fall of 2024. The Record of Decision will follow within 30 to 60 days after 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 with an aggregate principal amount outstanding of $1.85 billion at March 31, 2024. In addition, Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66, 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 March 31, 2024, our 25% share of the maximum potential equity contributions under the CECU was approximately $467 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 $20 million annually, in addition to the potential obligations under the CECU at March 31, 2024.

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. As a result of the debt repayment on April 1, 2024, our share of the maximum potential equity contributions under the CECU decreased to approximately $215 million, and our share of scheduled interest payments on the notes that we could be required to support decreased to approximately $10 million annually.

See Note 11—Guarantees, in the Notes to Consolidated Financial Statements, for additional information regarding our guarantees.

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Capital Requirements

Capital Expenditures and Investments

For information about our capital expenditures and investments, see the “Capital Spending” section below.

Debt Financing

Our debt balance at March 31, 2024, and December 31, 2023, was $20.2 billion and $19.4 billion, respectively. Our total debt-to-capital ratio was 40% and 38% at March 31, 2024, and December 31, 2023, respectively.

On March 29, 2024, DCP LP early redeemed $300 million of its 5.375% Senior Notes due July 2025 at par with an aggregate principal amount of $825 million.

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.

During the three months ended March 31, 2024, we repaid $375 million of borrowings that were outstanding under DCP LP’s credit and accounts receivable securitization facilities at December 31, 2023.

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

Dividends

On February 7, 2024, our Board of Directors declared a quarterly cash dividend of $1.05 per common share. This dividend was paid on March 1, 2024, to shareholders of record as of the close of business on February 20, 2024. On April 3, 2024, our Board of Directors declared a quarterly cash dividend of $1.15 per common share. This dividend is payable on June 3, 2024, to shareholders of record as of the close of business on May 20, 2024.

Share Repurchases

Since July 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock under our share repurchase program. 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. For the three months ended March 31, 2024, we repurchased 8 million shares at an aggregate cost of approximately $1.2 billion. Since July 2012, we have repurchased 222 million shares under our share repurchase program at an aggregate cost of $19.2 billion. Shares of stock repurchased are held as treasury shares.

Employee Benefit Plan Contributions

During the three months ended March 31, 2024, we contributed $5 million to our U.S. pension and other postretirement benefit plans and $1 million to our international pension plans. We currently expect to make additional contributions of approximately $70 million to our U.S. pension and other postretirement benefit plans and approximately $4 million to our international pension plans during the remainder of 2024.

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Capital Spending

Millions of Dollars
Three Months Ended March 31
20242023
Capital Expenditures and Investments
Midstream$255124
Chemicals——
Refining351227
Marketing and Specialties1511
Corporate and Other716
Total Capital Expenditures and Investments$628378
Selected Equity Affiliates*
CPChem201142
WRB2445
$225187
** Our share of joint ventures’ capital spending.*

Midstream

During the first three months of 2024, capital spending in our Midstream segment included:

  • A contribution to Dakota Access to fund our 25% share of Dakota Access’ debt repayment in April 2024.

  • Expansion of gathering systems in the DJ Basin and Permian Basin.

  • Spending associated with other return projects, well connections, reliability and maintenance projects.

Chemicals

During the first three months of 2024, on a 100% basis, CPChem’s capital expenditures and investments were $401 million. The capital spending was primarily for the development of petrochemical projects on the U.S. Gulf Coast and in the Middle East, as well as sustaining, debottlenecking and optimization projects on existing assets. CPChem’s capital program was self-funded, and we expect CPChem to continue self-funding its capital program for the remainder of 2024.

Refining

Capital spending for the Refining segment during the first three months of 2024 was primarily for projects to produce renewable fuels, enhance the yield of higher-value products, and sustain the reliability and safety of our facilities.

Major capital activities included:

  • Construction of facilities to produce renewable fuels at the Rodeo Renewable Energy Complex.

  • Installation of facilities to improve market capture at the Lake Charles and Sweeny refineries, as well as the jointly owned Wood River Refinery.

  • Capital spend to improve reliability at the Ponca City, Lake Charles and Sweeny refineries, as well as the jointly owned Wood River Refinery.

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Marketing and Specialties

Capital spending for the M&S segment during the first three months of 2024 was primarily for the continued acquisition, development and enhancement of retail sites in Europe, spend associated with marketing and commercial fleet fueling businesses on the U.S. West Coast, and marketing-related information technology enhancements.

Corporate and Other

Capital spending for Corporate and Other during the first three months of 2024 was primarily related to information technology.

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Contingencies

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.

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.

Legal and Tax Matters

Our legal and tax matters are handled by our legal and tax organizations. These organizations apply their knowledge, experience and professional judgment to the specific characteristics of our cases and uncertain tax positions. We employ a litigation management process to manage and monitor the legal proceedings. 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. In the case of income tax-related contingencies, we monitor tax legislation and court decisions, the status of tax audits and the statute of limitations within which a taxing authority can assert a liability.

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Environmental

Like other companies in our industry, we are subject to numerous international, federal, state and local environmental laws and regulations. For a discussion of the most significant international and federal environmental laws and regulations to which we are subject, see the “Environmental” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K.

We are required to purchase renewable identification numbers (RINs) in the open market to satisfy the portion of our obligation under the Renewable Fuel Standard (RFS) that is not fulfilled by blending renewable fuels into the motor fuels we produce. For the three months ended March 31, 2024 and 2023, we incurred expenses of $93 million and $238 million, respectively, associated with our obligation to purchase RINs in the open market to comply with the RFS for our wholly owned refineries. These expenses are included in the “Purchased crude oil and products” line item on our consolidated statement of income. Our jointly owned refineries also incurred expenses associated with the purchase of RINs in the open market, of which our share was $59 million and $114 million for the three months ended March 31, 2024 and 2023, respectively. These expenses are included in the “Equity in earnings of affiliates” line item on our consolidated statement of income. The amount of these expenses and fluctuations between periods is primarily driven by the market price of RINs, refinery production, blending activities and renewable volume obligation requirements.

We occasionally receive requests for information or notices of potential liability from the Environmental Protection Agency (EPA) and state environmental agencies alleging that we are a potentially responsible party under the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or an equivalent state statute. On occasion, we also have been made a party to cost recovery litigation by those agencies or by private parties. These requests, notices and lawsuits assert potential liability for remediation costs at various sites that typically are not owned by us, but allegedly contain wastes attributable to our past operations. At March 31, 2024, and December 31, 2023, we had been notified of potential liability under CERCLA and comparable state laws at 21 sites within the United States.

Notwithstanding any of the foregoing, and as with other companies engaged in similar businesses, environmental costs and liabilities are inherent concerns in certain of our operations and products, and there can be no assurance that those costs and liabilities will not be material. However, we currently do not expect any material adverse effect on our results of operations or financial position as a result of compliance with current environmental laws and regulations.

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Climate Change

There has been a broad range of proposed or promulgated state, national and international laws focusing on greenhouse gas (GHG) emissions reduction, including various regulations proposed or issued by the EPA. These proposed or promulgated laws apply or could apply in states and/or countries where we have interests or may have interests in the future. Laws regulating GHG emissions continue to evolve, and while it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation, such laws potentially could have a material impact on our results of operations and financial condition as a result of increasing costs of compliance, lengthening project implementation and agency reviews, or reducing demand for certain hydrocarbon products.

For examples of legislation and regulation or precursors for possible regulation that do or could affect our operations, see the “Climate Change” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K.

We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and implement energy efficiency initiatives to reduce GHG emissions. Data on our GHG emissions, legal requirements regulating such emissions, and the possible physical effects of climate change on our coastal assets are incorporated into our planning, investment, and risk management decision-making. We are working to continuously improve operational and energy efficiency through resource and energy conservation efforts throughout our operations.

In February 2022, we announced a target to reduce our Scope 1 and Scope 2 GHG emissions intensity related to our operations by 50% of 2019 levels by the year 2050. The 2050 target builds upon our 2030 GHG emissions intensity targets to reduce Scope 1 and Scope 2 emissions from our operations by 30% and Scope 3 emissions from our energy products by 15% compared to 2019 levels.

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GUARANTOR FINANCIAL INFORMATION

We have various cross guarantees between Phillips 66 and its wholly owned subsidiary Phillips 66 Company (together, the Obligor Group) with respect to publicly held debt securities. Phillips 66 conducts substantially all of its operations through subsidiaries, including Phillips 66 Company, and those subsidiaries generate substantially all of its operating income and cash flow. Phillips 66 has fully and unconditionally guaranteed the payment obligations of Phillips 66 Company with respect to its publicly held debt securities. In addition, Phillips 66 Company has fully and unconditionally guaranteed the payment obligations of Phillips 66 with respect to its publicly held debt securities. All guarantees are full and unconditional. At March 31, 2024, $14 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

Summarized financial information of the Obligor Group is presented on a combined basis. Intercompany transactions among the members of the Obligor Group have been eliminated. The financial information of non-guarantor subsidiaries has been excluded from the summarized financial information. Significant intercompany transactions and receivable/payable balances between the Obligor Group and non-guarantor subsidiaries are presented separately in the summarized financial information.

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The summarized results of operations for the three months ended March 31, 2024, and the summarized financial position at March 31, 2024, and December 31, 2023, for the Obligor Group on a combined basis were:

Summarized Combined Statement of IncomeMillions of Dollars
Three Months Ended March 31, 2024
Sales and other operating revenues$26,834
Revenues and other income—non-guarantor subsidiaries2,561
Purchased crude oil and products—third parties15,508
Purchased crude oil and products—related parties5,212
Purchased crude oil and products—non-guarantor subsidiaries6,745
Income before income taxes198
Net income176
Summarized Combined Balance SheetMillions of Dollars
March 31 2024December 31 2023
Accounts and notes receivable—third parties$6,2166,716
Accounts and notes receivable—related parties1,3621,152
Due from non-guarantor subsidiaries, current1,3871,827
Total current assets14,98914,260
Investments and long-term receivables11,44211,242
Net properties, plants and equipment12,31412,242
Goodwill1,0471,047
Due from non-guarantor subsidiaries, noncurrent3,5102,995
Other assets associated with non-guarantor subsidiaries1,5741,666
Total noncurrent assets31,72731,010
Total assets46,71645,270
Due to non-guarantor subsidiaries, current$3,6683,153
Total current liabilities14,58713,162
Long-term debt13,79913,459
Due to non-guarantor subsidiaries, noncurrent10,53510,061
Total noncurrent liabilities30,16229,234
Total liabilities44,74942,396
Total equity1,9672,874
Total liabilities and equity46,71645,270

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NON-GAAP RECONCILIATIONS

Refining

Our realized refining margins measure the difference between (a) sales and other operating revenues derived from the sale of petroleum products manufactured at our refineries and (b) costs of feedstocks, primarily crude oil, used to produce the petroleum products. The realized refining margins are adjusted to include our proportional share of our joint venture refineries’ realized margins, as well as to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized refining margins are converted to a per-barrel basis by dividing them by total refinery processed inputs (primarily crude oil) measured on a barrel basis, including our share of inputs processed by our joint venture refineries. Our realized refining margin per barrel is intended to be comparable with industry refining margins, which are known as “crack spreads.” As discussed in “Executive Overview and Business Environment—Business Environment,” industry crack spreads measure the difference between market prices for refined petroleum products and crude oil. We believe realized refining margin per barrel calculated on a similar basis as industry crack spreads provides a useful measure of how well we performed relative to benchmark industry refining margins.

The GAAP performance measure most directly comparable to realized refining margin per barrel is the Refining segment’s “income (loss) before income taxes per barrel.” Realized refining margin per barrel excludes items that are typically included in a manufacturer’s gross margin, such as depreciation and operating expenses, and other items used to determine income (loss) before income taxes, such as general and administrative expenses. It also includes our proportional share of joint venture refineries’ realized refining margins and excludes special items. Because realized refining margin per barrel is calculated in this manner, and because realized refining margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income (loss) before income taxes to realized refining margins:

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Millions of Dollars, Except as Indicated
Realized Refining MarginsAtlantic Basin/ EuropeGulf CoastCentral CorridorWest CoastWorldwide
Three Months Ended March 31, 2024
Income (loss) before income taxes$80118210(277)131
Plus:
Taxes other than income taxes233828(3)86
Depreciation, amortization and impairments526244163321
Selling, general and administrative expenses76241047
Operating expenses2503011433271,021
Equity in (earnings) losses of affiliates1(1)(108)—(108)
Other segment (income) expense, net21(2)—1
Proportional share of refining gross margins contributed by equity affiliates33—298—331
Special items:
Legal settlement—(7)——(7)
Realized refining margins$4485186372201,823
Total processed inputs (thousands of barrels)46,91147,49225,65824,669144,730
Adjusted total processed inputs (thousands of barrels)*46,91147,49247,91224,669166,984
Income (loss) before income taxes per barrel (dollars per barrel)**$1.702.498.20(11.24)0.91
Realized refining margins (dollars per barrel)***9.5510.9113.278.8910.91
Three Months Ended March 31, 2023
Income before income taxes$142705739221,608
Plus:
Taxes other than income taxes22332533113
Depreciation, amortization and impairments50603854202
Selling, general and administrative expenses104211045
Operating expenses3652861663501,167
Equity in (earnings) losses of affiliates2(1)(200)—(199)
Other segment (income) expense, net205(1)125
Proportional share of refining gross margins contributed by equity affiliates26—402—428
Realized refining margins$6371,0921,1904703,389
Total processed inputs (thousands of barrels)39,47251,34926,00428,416145,241
Adjusted total processed inputs (thousands of barrels)*39,47251,34944,31528,416163,552
Income before income taxes per barrel (dollars per barrel)**$3.6013.7328.420.7711.07
Realized refining margins (dollars per barrel)***16.1321.2826.8616.5320.72
** Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate.*
*** Income (loss) before income taxes divided by total processed inputs.*
**** Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts.*

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Marketing

Our realized marketing fuel margins measure the difference between (a) sales and other operating revenues derived from the sale of fuels in our M&S segment and (b) costs of those fuels. The realized marketing fuel margins are adjusted to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized marketing fuel margins are converted to a per-barrel basis by dividing them by sales volumes measured on a barrel basis. We believe realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our refineries’ fuel production.

Within the M&S segment, the GAAP performance measure most directly comparable to realized marketing fuel margin per barrel is the marketing business’ “income before income taxes per barrel.” Realized marketing fuel margin per barrel excludes items that are typically included in gross margin, such as depreciation and operating expenses, and other items used to determine income before income taxes, such as general and administrative expenses. Because realized marketing fuel margin per barrel excludes these items, and because realized marketing fuel margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income before income taxes to realized marketing fuel margins:

Millions of Dollars, Except as Indicated
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
U.S.InternationalU.S.International
Realized Marketing Fuel Margins
Income before income taxes$241131273125
Plus:
Depreciation and amortization1018318
Selling, general and administrative expenses1866418162
Equity in earnings of affiliates(2)(25)(3)(22)
Other operating revenues*(108)(9)(108)(13)
Other expense, net121256
Special items:
Legal settlement(59)———
Marketing margins280191351176
Less: margin for nonfuel related sales—13—12
Realized marketing fuel margins$280178351164
Total fuel sales volumes (thousands of barrels)175,26925,781152,66225,380
Income before income taxes per barrel (dollars per barrel)$1.385.081.794.93
Realized marketing fuel margins (dollars per barrel)**1.606.922.306.45
** Includes other nonfuel revenues.*
*** Realized marketing fuel margins per barrel, as presented, are calculated using the underlying realized marketing fuel margin amounts, in dollars, divided by sales volumes, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts.*

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CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can normally identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions that convey the prospective nature of events or outcomes, but the absence of such words does not mean a statement is not forward-looking.

We based these forward-looking statements on our current expectations, estimates and projections about us, our operations, our joint ventures and entities in which we have equity interests, as well as the industries in which we and they operate, and our sustainability-related plans and goals. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report, as they are not guarantees of future performance and involve assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in any forward-looking statement. Our sustainability-related goals are not guarantees or promises and may change. Statements regarding our goals are not guarantees or promises that they will be met. The information included in, and any issues identified as material for purposes of, our sustainability reports shall not be considered material for U.S. Securities and Exchange Commission (SEC) reporting purposes. Factors that could cause actual results to differ materially from those in our forward-looking statements include:

  • Fluctuations in market conditions, including NGL, crude oil, refined petroleum product and natural gas prices and refining, marketing and petrochemical margins and demand.

  • Changes in governmental policies relating to NGL, crude oil, natural gas or refined petroleum products pricing, regulation or taxation, including exports.

  • Capacity constraints in, or other limitations on, the pipelines, storage and fractionation facilities to which we deliver natural gas or NGL and the availability of alternative markets and arrangements for our natural gas and NGL.

  • Actions taken by OPEC and non-OPEC oil producing countries impacting supply and demand and correspondingly, commodity prices.

  • Our ability to achieve the expected benefits of the DCP LP integration, including the realization of expected synergies.

  • Unexpected changes in costs or technical requirements for constructing, modifying or operating our facilities or transporting our products.

  • Unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemical products.

  • Lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum products.

  • The level and success of drilling and quality of production volumes around our midstream assets.

  • Our ability to timely obtain or maintain permits, including those necessary for capital projects.

  • Our ability to comply with government regulations or make capital expenditures required to maintain compliance.

  • Our ability to realize sustained savings and cost reductions from the company’s business transformation initiatives.

  • Changes to worldwide government policies relating to renewable fuels, climate change and greenhouse gas emissions that adversely affect programs like the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels.

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  • Domestic and international economic and political developments including armed hostilities, such as the Russia-Ukraine war, instability in the financial services and banking sector, excess inflation, rising interest rates, expropriation of assets and changes in fiscal policy.

  • The impact on commercial activity and demand for refined petroleum products from any widespread public health crisis, as well as the extent and duration of recovery of economies and demand for our products following any such crisis.

  • Failure to complete definitive agreements and feasibility studies for, and to complete construction of, announced and future capital projects on time and within budget.

  • Our ability to successfully complete, or any material delay in the completion of, asset dispositions or acquisitions that we pursue.

  • Potential disruption or interruption of our operations or those of our joint ventures due to litigation or other governmental or regulatory action.

  • Damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks.

  • Our ability to meet our sustainability goals, including reducing our GHG emissions intensity, developing and protecting new technologies, and commercializing lower-carbon opportunities.

  • Failure of new products and services to achieve market acceptance.

  • International monetary conditions and exchange controls.

  • Substantial investments required, or reduced demand for products, as a result of existing or future environmental rules and regulations, including GHG emissions reductions and reduced consumer demand for refined petroleum products.

  • Liability resulting from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations.

  • Changes in tax, environmental and other laws and regulations (including alternative energy mandates) applicable to our business.

  • Political and societal concerns about climate change that could result in changes to our business or operations or increase expenditures, including litigation-related expenses.

  • Changes in estimates or projections used to assess fair value of intangible assets, goodwill, and properties, plants and equipment and/or strategic decisions or other developments with respect to our asset portfolio that cause impairment charges.

  • Limited access to capital or significantly higher cost of capital related to changes to our credit profile or illiquidity or uncertainty in the domestic or international financial markets.

  • The creditworthiness of our customers and the counterparties to our transactions, including the impact of bankruptcies.

  • Cybersecurity incidents or other disruptions that compromise our information and expose us to liability.

  • The operation, financing and distribution decisions of our joint ventures that we do not control.

  • The factors generally described in Item 1A.—Risk Factors in our 2023 Annual Report on Form 10-K.

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Previous: Item 1. FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK