Item 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions of dollars, except par value)

			March 31, 2023						December 31, 2022
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	5,521					$	4,862
Receivables, net			9,688						11,919
Inventories			7,455						6,752
Prepaid expenses and other			671						600
Total current assets			23,335						24,133
Property, plant, and equipment, at cost			50,828						50,576
Accumulated depreciation			(20,048)						(19,598)
Property, plant, and equipment, net			30,780						30,978
Deferred charges and other assets, net			6,062						5,871
Total assets			$	60,177					$	60,982
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations			$	1,258					$	1,109
Accounts payable			10,498						12,728
Accrued expenses			1,168						1,215
Taxes other than income taxes payable			1,574						1,568
Income taxes payable			867						841
Total current liabilities			15,365						17,461
Debt and finance lease obligations, less current portion			10,173						10,526
Deferred income tax liabilities			5,280						5,217
Other long-term liabilities			2,292						2,310
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued			7						7
Additional paid-in capital			6,877						6,863
Treasury stock, at cost; 311,978,678 and 301,372,958 common shares			(21,637)						(20,197)
Retained earnings			40,935						38,247
Accumulated other comprehensive loss			(1,205)						(1,359)
Total Valero Energy Corporation stockholders’ equity			24,977						23,561
Noncontrolling interests			2,090						1,907
Total equity			27,067						25,468
Total liabilities and equity			$	60,177					$	60,982

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(millions of dollars, except per share amounts)

(unaudited)

									Three Months Ended March 31,
															2023						2022
Revenues (a)															$	36,439					$	38,542
Cost of sales:
Cost of materials and other															30,005						34,949
Operating expenses (excluding depreciation and amortization expense reflected below)															1,477						1,379
Depreciation and amortization expense															650						595
Total cost of sales															32,132						36,923
Other operating expenses															10						19
General and administrative expenses (excluding depreciation and amortization expense reflected below)															244						205
Depreciation and amortization expense															10						11
Operating income															4,043						1,384
Other income (expense), net															129						(20)
Interest and debt expense, net of capitalized interest															(146)						(145)
Income before income tax expense															4,026						1,219
Income tax expense															880						252
Net income															3,146						967
Less: Net income attributable to noncontrolling interests															79						62
Net income attributable to Valero Energy Corporation stockholders															$	3,067					$	905
Earnings per common share															$	8.30					$	2.21
Weighted-average common shares outstanding (in millions)															369						408
Earnings per common share – assuming dilution															$	8.29					$	2.21
Weighted-average common shares outstanding – assuming dilution (in millions)															369						408
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign operations															$	1,422					$	1,423

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions of dollars)

(unaudited)

									Three Months Ended March 31,
															2023						2022
Net income															$	3,146					$	967
Other comprehensive income (loss):
Foreign currency translation adjustment															134						13
Net gain (loss) on pension and other postretirement benefits															(7)						8
Net gain (loss) on cash flow hedges															57						(45)
Other comprehensive income (loss) before income tax expense															184						(24)
Income tax expense related to items of other comprehensive income (loss)															1						—
Other comprehensive income (loss)															183						(24)
Comprehensive income															3,329						943
Less: Comprehensive income attributable to noncontrolling interests															108						39
Comprehensive income attributable to Valero Energy Corporation stockholders															$	3,221					$	904

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(millions of dollars)

(unaudited)

			Valero Energy Corporation Stockholders’ Equity
			Common Stock						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total						Non- controlling Interests						Total Equity
Balance as of December 31, 2022			$	7					$	6,863					$	(20,197)					$	38,247					$	(1,359)					$	23,561					$	1,907					$	25,468
Net income			—						—						—						3,067						—						3,067						79						3,146
Dividends on common stock ($1.02 per share)			—						—						—						(379)						—						(379)						—						(379)
Stock-based compensation expense			—						39						—						—						—						39						—						39
Transactions in connection with stock-based compensation plans			—						(25)						25						—						—						—						—						—
Purchases of common stock for treasury			—						—						(1,465)						—						—						(1,465)						—						(1,465)
Contributions from noncontrolling interests			—						—						—						—						—						—						75						75
Other comprehensive income			—						—						—						—						154						154						29						183
Balance as of March 31, 2023			$	7					$	6,877					$	(21,637)					$	40,935					$	(1,205)					$	24,977					$	2,090					$	27,067
Balance as of December 31, 2021			$	7					$	6,827					$	(15,677)					$	28,281					$	(1,008)					$	18,430					$	1,387					$	19,817
Net income			—						—						—						905						—						905						62						967
Dividends on common stock ($0.98 per share)			—						—						—						(401)						—						(401)						—						(401)
Stock-based compensation expense			—						32						—						—						—						32						—						32
Transactions in connection with stock-based compensation plans			—						(27)						27						—						—						—						—						—
Purchases of common stock for treasury			—						—						(144)						—						—						(144)						—						(144)
Contributions from noncontrolling interests			—						—						—						—						—						—						165						165
Distributions to noncontrolling interests			—						—						—						—						—						—						(2)						(2)
Other comprehensive loss			—						—						—						—						(1)						(1)						(23)						(24)
Balance as of March 31, 2022			$	7					$	6,832					$	(15,794)					$	28,785					$	(1,009)					$	18,821					$	1,589					$	20,410

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

(unaudited)

			Three Months Ended March 31,
			2023						2022
Cash flows from operating activities:
Net income			$	3,146					$	967
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense			660						606
Loss (gain) on early retirement of debt, net			(11)						50
Deferred income tax expense (benefit)			54						(234)
Changes in current assets and current liabilities			(534)						(722)
Changes in deferred charges and credits and other operating activities, net			(145)						(79)
Net cash provided by operating activities			3,170						588
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))			(175)						(152)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)			(90)						(219)
Other VIEs			—						(13)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)			(235)						(453)
Deferred turnaround and catalyst cost expenditures of DGD			(24)						(6)
Purchases of available-for-sale (AFS) debt securities			(100)						—
Proceeds from sales and maturities of AFS debt securities			71						—
Other investing activities, net			4						2
Net cash used in investing activities			(549)						(841)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding VIEs)			750						939
Proceeds from borrowings of VIEs:
DGD			150						99
Other VIEs			14						28
Repayments of debt and finance lease obligations (excluding VIEs)			(973)						(1,738)
Repayments of debt and finance lease obligations of VIEs:
DGD			(156)						(102)
Other VIEs			(22)						(16)
Premiums paid on early retirement of debt			(5)						(48)
Purchases of common stock for treasury			(1,451)						(144)
Common stock dividend payments			(379)						(401)
Contributions from noncontrolling interests			75						165
Other financing activities, net			(1)						(10)
Net cash used in financing activities			(1,998)						(1,228)
Effect of foreign exchange rate changes on cash			36						(3)
Net increase (decrease) in cash and cash equivalents			659						(1,484)
Cash and cash equivalents at beginning of period			4,862						4,122
Cash and cash equivalents at end of period			$	5,521					$	2,638

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. The term “DGD,” as used in this report, may refer to Diamond Green Diesel Holdings LLC, its wholly owned consolidated subsidiary, or both of them taken as a whole.

These interim unaudited financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim period presented. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These interim unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022.

The balance sheet as of December 31, 2022 has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022.

Significant Accounting Policy

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in these interim unaudited financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

2. UNCERTAINTY

In September 2022, California adopted Senate Bill No. 1322 (SB 1322), which requires refineries in California to report monthly on the volume and cost of the crude oil they buy, the quantity and price of the wholesale gasoline they sell, and the gross gasoline margin per barrel, among other information. The provisions of SB 1322 were effective January 2023, and we began the required monthly reporting for our two California refineries at that time.

In March 2023, California adopted Senate Bill No. 2 (such statute, together with any regulations contemplated or issued thereunder, SBx 1-2), which, among other things, (i) authorizes the establishment of a maximum gross gasoline refining margin (max margin) and the imposition of a financial penalty for profits above a max margin, (ii) significantly expands the reporting obligations under SB 1322 and the

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Petroleum Industry Information Reporting Act of 1980, which include reporting requirements to the California Energy Commission (CEC) for all participants in the petroleum industry supply chain in California (e.g., refiners, marketers, importers, transporters, terminals, producers, renewables producers, pipelines, and ports), (iii) creates the Division of Petroleum Market Oversight within the CEC to analyze the data provided under SBx 1-2, and (iv) authorizes the CEC to regulate the timing and other aspects of refinery turnaround and maintenance activities in certain instances. The provisions of SBx 1-2 are expected to become effective June 26, 2023. The CEC has not yet undertaken rulemaking with respect to SBx 1-2, including the establishment of any max margin, the imposition of a financial penalty, restrictions on turnaround and maintenance activities, or determining the format and manner in which the increased data is to be reported, and it is uncertain when or whether any such rulemaking will occur. The increased reporting is substantial, requiring daily, weekly, monthly, and annual reporting of detailed operational and financial data on all aspects of our operations in California, much of it at the transaction level. In addition, the required operational data will include our plans for turnaround and maintenance activities at our two California refineries and how we expect to address the potential impacts on feedstock and product inventories in California as a result of such turnaround and maintenance activities.

We are reviewing and analyzing the provisions of SBx 1-2 and the possible impacts to our refining and marketing operations in California. While the CEC has not yet established a max margin, imposed a financial penalty for profits above a max margin, or imposed restrictions on turnaround and maintenance activities, the potential implementation of a financial penalty or any restrictions or delays on our ability to undertake turnaround or maintenance activities creates uncertainty due to the potential adverse effects on us. Any adverse effects on our operations or financial performance in California could indicate that the carrying value of our assets in California is not recoverable, which would result in an impairment loss that could be material. In addition, if the circumstances that trigger an impairment loss result in a reduction in the estimated useful lives of the assets, we may be required to recognize an asset retirement obligation that could be material. Other jurisdictions are contemplating similarly focused legislation or actions.

The ultimate timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments on us.

3. INVENTORIES

Inventories consisted of the following (in millions):

			March 31, 2023						December 31, 2022
Refinery feedstocks			$	1,820					$	1,949
Refined petroleum products and blendstocks			4,120						3,579
Renewable diesel feedstocks and products			827						583
Ethanol feedstocks and products			366						328
Materials and supplies			322						313
Inventories			$	7,455					$	6,752

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of March 31, 2023 and December 31, 2022, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $6.0 billion and $6.3 billion, respectively. Our non-LIFO inventories accounted for $1.3 billion and $1.6 billion of our total inventories as of March 31, 2023 and December 31, 2022, respectively.

4. DEBT

Public Debt

In February 2023, we used cash on hand to purchase and retire a portion of the following notes (in millions):

Debt Purchased and Retired						Principal Amount
6.625% Senior Notes due 2037						$	62
3.650% Senior Notes due 2051						26
4.000% Senior Notes due 2052						45
Various other Valero and Valero Energy Partners (VLP) Senior Notes						66
Total						$	199

In February 2022, we issued $650 million of 4.000 percent Senior Notes due June 1, 2052. Proceeds from this debt issuance totaled $639 million before deducting the underwriting discount and other debt issuance costs. The proceeds and cash on hand were used to purchase and retire a portion of the following notes in connection with cash tender offers that we publicly announced and completed in February 2022 (in millions):

Debt Purchased and Retired						Principal Amount
3.65% Senior Notes due 2025						$	72
2.850% Senior Notes due 2025						507
4.375% VLP Senior Notes due 2026						168
3.400% Senior Notes due 2026						653
Total						$	1,400

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):

															March 31, 2023
			Facility Amount						Maturity Date						Outstanding Borrowings						Letters of Credit Issued (a)						Availability
Committed facilities:
Valero Revolver			$	4,000					November 2027						$	—					$	6					$	3,994
Canadian Revolver			C$	150					November 2023						C$	—					C$	5					C$	145
Accounts receivable sales facility			$	1,300					July 2023						$	—					n/a						$	1,300
Committed facilities of VIEs (b):
DGD Revolver (c)			$	400					March 2024						$	100					$	75					$	225
DGD Loan Agreement (d)			$	25					April 2023						$	25					n/a						$	—
IEnova Revolver (e)			$	830					February 2028						$	710					n/a						$	120
Uncommitted facilities:
Letter of credit facilities			n/a						n/a						n/a						$	158					n/a

---

(a)Letters of credit issued as of March 31, 2023 expire at various times in 2023 through 2024.

(b)Creditors of the VIEs do not have recourse against us.

(c)The variable interest rate on the DGD Revolver was 6.460 percent and 5.880 percent as of March 31, 2023 and December 31, 2022, respectively.

(d)The amounts shown for this facility represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation. The variable interest rate on the DGD Loan Agreement was 7.173 percent and 6.672 percent as of March 31, 2023 and December 31, 2022, respectively. We expect this facility to be renewed prior to its maturity date.

(e)The variable interest rate on the IEnova Revolver was 8.443 percent and 7.393 percent as of March 31, 2023 and December 31, 2022, respectively.

Activity under our credit facilities was as follows (in millions):

			Three Months Ended March 31,
			2023						2022
Borrowings:
Accounts receivable sales facility			$	750					$	300
DGD Revolver			150						99
IEnova Revolver			14						28
Repayments:
Accounts receivable sales facility			(750)						(300)
DGD Revolver			(150)						(99)
IEnova Revolver			(21)						(15)

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Disclosures

“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):

									Three Months Ended March 31,
															2023						2022
Interest and debt expense															$	152					$	157
Less: Capitalized interest															6						12
Interest and debt expense, net of capitalized interest															$	146					$	145

5. EQUITY

Treasury Stock

We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described below) and with respect to our employee stock-based compensation plans.

During the three months ended March 31, 2023 and 2022, we purchased for treasury 10,993,341 shares and 1,545,873 shares, respectively. On October 26, 2022, our Board authorized our purchase of up to $2.5 billion of our outstanding common stock with no expiration date (the October 2022 Program). On February 23, 2023, our Board authorized our purchase of up to an additional $2.5 billion of our outstanding common stock with no expiration date (the 2023 Program),which is in addition to the amount remaining under the October 2022 Program. As of March 31, 2023, we had $899 million remaining available for purchase under the October 2022 Program and $2.5 billion available for purchase under the 2023 Program.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):

			Three Months Ended March 31,
			2023																								2022
			Foreign Currency Translation Adjustment						Defined Benefit Plans Items						Gains (Losses) on Cash Flow Hedges						Total						Foreign Currency Translation Adjustment						Defined Benefit Plans Items						Gains (Losses) on Cash Flow Hedges						Total
Balance as of beginning of period			$	(1,168)					$	(183)					$	(8)					$	(1,359)					$	(562)					$	(441)					$	(5)					$	(1,008)
Other comprehensive income (loss) before reclassifications			137						—						37						174						13						(3)						(64)						(54)
Amounts reclassified from accumulated other comprehensive loss			—						(7)						(15)						(22)						—						7						46						53
Effect of exchange rates			—						2						—						2						—						—						—						—
Other comprehensive income (loss)			137						(5)						22						154						13						4						(18)						(1)
Balance as of end of period			$	(1,031)					$	(188)					$	14					$	(1,205)					$	(549)					$	(437)					$	(23)					$	(1,009)

6. VARIABLE INTEREST ENTITIES

Consolidated VIEs

We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of March 31, 2023, the significant consolidated VIEs included:

• DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominately animal fats, used cooking oils, and inedible distillers corn oils) into renewable diesel and renewable naphtha; and

• Central Mexico Terminals, a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

The assets of the consolidated VIEs can only be used to settle their own obligations and the creditors of the consolidated VIEs have no recourse to our other assets. We generally do not provide financial guarantees to the VIEs. Although we have provided credit facilities to some of the VIEs in support of their construction or acquisition activities, these transactions are eliminated in consolidation. Our financial position, results of operations, and cash flows are impacted by the performance of the consolidated VIEs, net of intercompany eliminations, to the extent of our ownership interest in each VIE.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents summarized balance sheet information for the significant assets and liabilities of the consolidated VIEs, which are included in our balance sheets (in millions):

			DGD						Central Mexico Terminals						Other						Total
March 31, 2023
Assets
Cash and cash equivalents			$	92					$	—					$	26					$	118
Other current assets			1,246						10						32						1,288
Property, plant, and equipment, net			3,759						676						77						4,512
Liabilities
Current liabilities, including current portion of debt and finance lease obligations			$	443					$	748					$	7					$	1,198
Debt and finance lease obligations, less current portion			686						—						12						698
December 31, 2022
Assets
Cash and cash equivalents			$	133					$	—					$	16					$	149
Other current assets			1,106						7						32						1,145
Property, plant, and equipment, net			3,785						681						79						4,545
Liabilities
Current liabilities, including current portion of debt and finance lease obligations			$	626					$	737					$	21					$	1,384
Debt and finance lease obligations, less current portion			693						—						—						693

Nonconsolidated VIEs

We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These nonconsolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):

			Pension Plans												Other Postretirement Benefit Plans
			2023						2022						2023						2022
Three months ended March 31
Service cost			$	28					$	38					$	1					$	2
Interest cost			30						21						3						2
Expected return on plan assets			(50)						(48)						—						—
Amortization of:
Net actuarial (gain) loss			(2)						13						(1)						—
Prior service credit			(5)						(4)						(1)						(1)
Net periodic benefit cost			$	1					$	20					$	2					$	3

The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income (expense), net.”

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. EARNINGS PER COMMON SHARE

Earnings per common share was computed as follows (dollars and shares in millions, except per share amounts):

									Three Months Ended March 31,
															2023						2022
Earnings per common share:
Net income attributable to Valero stockholders															$	3,067					$	905
Less: Income allocated to participating securities															10						3
Net income available to common stockholders															$	3,057					$	902
Weighted-average common shares outstanding															369						408
Earnings per common share															$	8.30					$	2.21
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders															$	3,067					$	905
Less: Income allocated to participating securities															10						3
Net income available to common stockholders															$	3,057					$	902
Weighted-average common shares outstanding															369						408
Effect of dilutive securities															—						—
Weighted-average common shares outstanding – assuming dilution															369						408
Earnings per common share – assuming dilution															$	8.29					$	2.21

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan (OSIP) or our 2011 OSIP. Dilutive securities include participating securities as well as outstanding stock options.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.

Contract Balances

Contract balances were as follows (in millions):

			March 31, 2023						December 31, 2022
Receivables from contracts with customers, included in receivables, net			$	6,073					$	7,189
Contract liabilities, included in accrued expenses			45						129

During the three months ended March 31, 2023 and 2022, we recognized as revenue $120 million and $69 million that was included in contract liabilities as of December 31, 2022 and 2021, respectively.

Remaining Performance Obligations

We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of March 31, 2023, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

Segment Information

We have three reportable segments — Refining, Renewable Diesel, and Ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

• The Refining segment includes the operations of our petroleum refineries, the associated activities to market our refined petroleum products, and the logistics assets that support our refining operations. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.

• The Renewable Diesel segment represents the operations of DGD, a consolidated joint venture as discussed in Note 6, and the associated activities to market renewable diesel and renewable

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

naphtha. The principal products manufactured by DGD and sold by this segment are renewable diesel and renewable naphtha. This segment sells some renewable diesel to the Refining segment, which is then sold to that segment’s customers.

• The Ethanol segment includes the operations of our ethanol plants and the associated activities to market our ethanol and co-products. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the Refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.

Operations that are not included in any of the reportable segments are included in the corporate category.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables reflect information about our operating income by reportable segment (in millions):

			Refining						Renewable Diesel						Ethanol						Corporate and Eliminations						Total
Three months ended March 31, 2023
Revenues:
Revenues from external customers			$	34,407					$	935					$	1,097					$	—					$	36,439
Intersegment revenues			3						745						223						(971)						—
Total revenues			34,410						1,680						1,320						(971)						36,439
Cost of sales:
Cost of materials and other (a)			28,510						1,331						1,131						(967)						30,005
Operating expenses (excluding depreciation and amortization expense reflected below)			1,261						86						130						—						1,477
Depreciation and amortization expense			572						58						20						—						650
Total cost of sales			30,343						1,475						1,281						(967)						32,132
Other operating expenses			10						—						—						—						10
General and administrative expenses (excluding depreciation and amortization expense reflected below)			—						—						—						244						244
Depreciation and amortization expense			—						—						—						10						10
Operating income by segment			$	4,057					$	205					$	39					$	(258)					$	4,043
Three months ended March 31, 2022
Revenues:
Revenues from external customers			$	36,813					$	595					$	1,134					$	—					$	38,542
Intersegment revenues			4						386						127						(517)						—
Total revenues			36,817						981						1,261						(517)						38,542
Cost of sales:
Cost of materials and other (a)			33,606						755						1,104						(516)						34,949
Operating expenses (excluding depreciation and amortization expense reflected below)			1,193						51						135						—						1,379
Depreciation and amortization expense			549						26						20						—						595
Total cost of sales			35,348						832						1,259						(516)						36,923
Other operating expenses			18						—						1						—						19
General and administrative expenses (excluding depreciation and amortization expense reflected below)			—						—						—						205						205
Depreciation and amortization expense			—						—						—						11						11
Operating income by segment			$	1,451					$	149					$	1					$	(217)					$	1,384

---

(a)Cost of materials and other for our Renewable Diesel segment is net of the blender’s tax credit on qualified fuel mixtures of $246 million and $156 million for the three months ended March 31, 2023 and 2022, respectively.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):

									Three Months Ended March 31,
															2023						2022
Refining:
Gasolines and blendstocks															$	15,048					$	15,560
Distillates															16,838						17,444
Other product revenues															2,521						3,809
Total refining revenues															34,407						36,813
Renewable Diesel:
Renewable diesel															876						595
Renewable naphtha															59						—
Total Renewable Diesel revenues															935						595
Ethanol:
Ethanol															763						875
Distillers grains															334						259
Total ethanol revenues															1,097						1,134
Revenues															$	36,439					$	38,542

Total assets by reportable segment were as follows (in millions):

			March 31, 2023						December 31, 2022
Refining			$	46,852					$	48,484
Renewable Diesel			5,390						5,217
Ethanol			1,628						1,551
Corporate and eliminations			6,307						5,730
Total assets			$	60,177					$	60,982

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

			Three Months Ended March 31,
			2023						2022
Decrease (increase) in current assets:
Receivables, net			$	2,381					$	(2,653)
Inventories			(641)						(940)
Prepaid expenses and other			(37)						(77)
Increase (decrease) in current liabilities:
Accounts payable			(2,269)						2,744
Accrued expenses			(61)						(120)
Taxes other than income taxes payable			(23)						36
Income taxes payable			116						288
Changes in current assets and current liabilities			$	(534)					$	(722)

Changes in current assets and current liabilities for the three months ended March 31, 2023 were primarily due to the following:

• The decrease in receivables was primarily due to a decrease in sales volumes in March 2023 compared to December 2022;

• The increase in inventories was due to an increase in inventory volumes valued at higher unit prices; and

• The decrease in accounts payable was due to a decrease in crude oil and other feedstock volumes purchased combined with a decrease in related prices in March 2023 compared to December 2022.

Changes in current assets and current liabilities for the three months ended March 31, 2022 were primarily due to the following:

• The increase in receivables was primarily due to an increase in refined petroleum product prices in March 2022 compared to December 2021;

• The increase in inventories was primarily due to an increase in inventory unit prices and higher inventory levels in March 2022 compared to December 2021; and

• The increase in accounts payable was due to an increase in crude oil and other feedstock prices in March 2022 compared to December 2021, partially offset by a decrease in crude oil and other feedstock volumes purchased.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash flows related to interest and income taxes were as follows (in millions):

			Three Months Ended March 31,
			2023						2022
Interest paid in excess of amount capitalized, including interest on finance leases			$	82					$	93
Income taxes paid, net			616						204

Supplemental cash flow information related to our operating and finance leases was as follows (in millions):

			Three Months Ended March 31,
			2023												2022
			Operating Leases						Finance Leases						Operating Leases						Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows			$	102					$	27					$	97					$	20
Financing cash flows			—						49						—						41
Changes in lease balances resulting from new and modified leases			67						47						79						100

There were no significant noncash investing and financing activities during the three months ended March 31, 2023 or 2022, except as noted in the table above.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of March 31, 2023 and December 31, 2022.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

			March 31, 2023
																					Total Gross Fair Value						Effect of Counter- party Netting						Effect of Cash Collateral Netting						Net Carrying Value on Balance Sheet						Cash Collateral Paid or Received Not Offset
			Fair Value Hierarchy
			Level 1						Level 2						Level 3
Assets
Commodity derivative contracts			$	616					$	—					$	—					$	616					$	(425)					$	(74)					$	117					$	—
Physical purchase contracts			—						2						—						2						n/a						n/a						2						n/a
Investments of certain benefit plans			71						—						6						77						n/a						n/a						77						n/a
Investments in AFS debt securities			85						139						—						224						n/a						n/a						224						n/a
Total			$	772					$	141					$	6					$	919					$	(425)					$	(74)					$	420
Liabilities
Commodity derivative contracts			$	425					$	—					$	—					$	425					$	(425)					$	—					$	—					$	(1)
Blending program obligations			—						46						—						46						n/a						n/a						46						n/a
Physical purchase contracts			—						5						—						5						n/a						n/a						5						n/a
Foreign currency contracts			9						—						—						9						n/a						n/a						9						n/a
Total			$	434					$	51					$	—					$	485					$	(425)					$	—					$	60

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			December 31, 2022
																					Total Gross Fair Value						Effect of Counter- party Netting						Effect of Cash Collateral Netting						Net Carrying Value on Balance Sheet						Cash Collateral Paid or Received Not Offset
			Fair Value Hierarchy
			Level 1						Level 2						Level 3
Assets
Commodity derivative contracts			$	830					$	—					$	—					$	830					$	(705)					$	(8)					$	117					$	—
Physical purchase contracts			—						4						—						4						n/a						n/a						4						n/a
Investments of certain benefit plans			72						—						6						78						n/a						n/a						78						n/a
Investments in AFS debt securities			56						165						—						221						n/a						n/a						221						n/a
Total			$	958					$	169					$	6					$	1,133					$	(705)					$	(8)					$	420
Liabilities
Commodity derivative contracts			$	705					$	—					$	—					$	705					$	(705)					$	—					$	—					$	(149)
Blending program obligations			—						55						—						55						n/a						n/a						55						n/a
Physical purchase contracts			—						4						—						4						n/a						n/a						4						n/a
Foreign currency contracts			2						—						—						2						n/a						n/a						2						n/a
Total			$	707					$	59					$	—					$	766					$	(705)					$	—					$	61

A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:

• Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 12. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy.

• Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

• Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• Investments in AFS debt securities consist primarily of commercial paper and U.S. government treasury bills and have maturities within one year. The securities were reflected in the following balance sheet line items, depending on their original maturities when acquired (in millions):

			March 31, 2023																		December 31, 2022
			Level 1						Level 2						Total						Level 1						Level 2						Total
Cash and cash equivalents			$	7					$	91					$	98					$	—					$	125					$	125
Prepaid expenses and other			78						48						126						56						40						96
Investments in AFS debt securities			$	85					$	139					$	224					$	56					$	165					$	221

The securities categorized in Level 1 are measured at fair value using a market approach based on quoted prices from national securities exchanges, and the securities categorized in Level 2 are measured at fair value using a market approach based on quoted prices from independent pricing services. The amortized cost basis of the securities approximates fair value. Realized and unrealized gains and losses were de minimis for the three months ended March 31, 2023 and the year ended December 31, 2022.

• Blending program obligations represent our liability for the purchase of compliance credits needed to satisfy our blending obligations under various government and regulatory blending programs, such as the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS), the California Low Carbon Fuel Standard, the Canada Clean Fuel Regulations, and similar programs in other jurisdictions in which we operate (collectively, the Renewable and Low-Carbon Fuel Programs). The blending program obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.

• Foreign currency contracts consist of foreign currency exchange and purchase contracts and foreign currency swap agreements related to our foreign operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are valued based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy.

Nonrecurring Fair Value Measurements

As previously disclosed in our annual report on Form 10-K for the year ended December 31, 2022, we concluded that our ethanol plant located in Lakota, Iowa (Lakota ethanol plant) was impaired as of December 31, 2022, which resulted in an asset impairment loss of $61 million. The fair value of the Lakota ethanol plant was determined using a combination of the income and market approaches and was classified in Level 3. We employed a probability-weighted approach to possible future cash flow scenarios, including the use of peer company metrics and comparison to a recent sales transaction.

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of March 31, 2023 and December 31, 2022, except as noted above.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial Instruments

Our financial instruments include cash and cash equivalents, investments in AFS debt securities, receivables, payables, debt obligations, operating and finance lease obligations, commodity derivative contracts, and foreign currency contracts. The estimated fair values of cash and cash equivalents, receivables, payables, and operating and finance lease obligations approximate their carrying amounts; the carrying value and fair value of debt is shown in the table below (in millions).

									March 31, 2023												December 31, 2022
			Fair Value Hierarchy						Carrying Amount						Fair Value						Carrying Amount						Fair Value
Financial liabilities:
Debt (excluding finance lease obligations)			Level 2						$	9,037					$	8,862					$	9,241					$	8,902

Investments in AFS debt securities, commodity derivative contracts, and foreign currency contracts are recognized at their fair values as shown in “Recurring Fair Value Measurements” above.

12. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks primarily related to the volatility in the price of commodities, foreign currency exchange rates, and the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 11), as summarized below under “Fair Values of Derivative Instruments.” The effect of these derivative instruments on our income and other comprehensive income (loss) is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss).”

Risk Management Activities by Type of Risk

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of feedstocks (primarily crude oil, waste and renewable feedstocks, and corn), the products we produce, and natural gas used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, such as futures and options. Our positions in commodity derivative instruments are monitored and managed on a daily basis by our risk control group to ensure compliance with our stated risk management policy that has been approved by our Board.

We primarily use commodity derivative instruments as cash flow hedges and economic hedges. Our objectives for entering into each type of hedge is described below.

*•*Cash flow hedges – The objective of our cash flow hedges is to lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

*•*Economic hedges – Our objectives for holding economic hedges are to (i) manage price volatility in certain feedstock and product inventories and (ii) lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

As of March 31, 2023, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).

						Notional Contract Volumes by Year of Maturity
						2023						2024
Derivatives designated as cash flow hedges:
Refined petroleum products:
Futures – long						3,596						—
Futures – short						10,298						—
Derivatives designated as economic hedges:
Crude oil and refined petroleum products:
Futures – long						63,657						1
Futures – short						66,797						—
Corn:
Futures – long						74,645						20
Futures – short						117,265						410
Physical contracts – long						36,409						388

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions related to our foreign operations that are denominated in currencies other than the local (functional) currencies of our operations. To manage our exposure to these exchange rate fluctuations, we often use foreign currency contracts. These contracts are not designated as hedging instruments for accounting purposes and therefore are classified as economic hedges. As of March 31, 2023, we had foreign currency contracts to purchase $561 million of U.S. dollars. Of these commitments, $526 million matured on or before April 25, 2023 and the remaining $35 million will mature by April 28, 2023.

Renewable and Low-Carbon Fuel Programs Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. To manage this risk, we enter into contracts to purchase these credits. Some of these contracts are derivative instruments; however, we elect the normal purchase exception and do not record these contracts at their fair values. The Renewable and Low-Carbon Fuel Programs require us to blend a certain volume of renewable and low-carbon fuels into the petroleum-based transportation fuels we produce in, or import into, the respective jurisdiction to be consumed therein based on annual quotas. To the degree we are unable to blend at the required quotas, we must

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

purchase compliance credits (primarily Renewable Identification Numbers (RINs)). The cost of meeting our credit obligations under the Renewable and Low-Carbon Fuel Programs was $413 million and $302 million for the three months ended March 31, 2023 and 2022, respectively. These amounts are reflected in cost of materials and other.

Fair Values of Derivative Instruments

The following table provides information about the fair values of our derivative instruments as of March 31, 2023 and December 31, 2022 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 11 for additional information related to the fair values of our derivative instruments.

As indicated in Note 11, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The following table, however, is presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts:

			Balance Sheet Location						March 31, 2023												December 31, 2022
						Asset Derivatives						Liability Derivatives						Asset Derivatives						Liability Derivatives
Derivatives designated as hedging instruments:
Commodity contracts			Receivables, net						$	117					$	42					$	61					$	44
Derivatives not designated as hedging instruments:
Commodity contracts			Receivables, net						$	499					$	383					$	769					$	661
Physical purchase contracts			Inventories						2						5						4						4
Foreign currency contracts			Receivables, net						—						—						—						—
Foreign currency contracts			Accrued expenses						—						9						—						2
Total									$	501					$	397					$	773					$	667

Market Risk

Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies approved by our Board. Market risks are monitored by our risk control group to ensure compliance with our stated risk management policy. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss)

The following table provides information about the gain (loss) recognized in income and other comprehensive income (loss) due to fair value adjustments of our cash flow hedges (in millions):

Derivatives in Cash Flow Hedging Relationships						Location of Gain (Loss) Recognized in Income on Derivatives												Three Months Ended March 31,
									2023						2022
Commodity contracts:
Gain (loss) recognized in other comprehensive income (loss)						n/a																		$	95					$	(164)
Gain (loss) reclassified from accumulated other comprehensive loss into income						Revenues																		38						(119)

For cash flow hedges, no component of any derivative instrument’s gains or losses was excluded from the assessment of hedge effectiveness for the three months ended March 31, 2023 and 2022. For the three months ended March 31, 2023 and 2022, cash flow hedges primarily related to forward sales of renewable diesel. The estimated deferred after-tax gain that is expected to be reclassified into revenues within the next 12 months as a result of the hedged transactions that are forecasted to occur as of March 31, 2023 was not material. For the three months ended March 31, 2023 and 2022, there were no amounts reclassified from accumulated other comprehensive loss into income as a result of the discontinuance of cash flow hedge accounting. The changes in accumulated other comprehensive loss by component, net of tax, for the three months ended March 31, 2023 and 2022 are described in Note 5.

The following table provides information about the gain (loss) recognized in income on our derivative instruments with respect to our economic hedges and our foreign currency hedges and the line items in the statements of income in which such gains (losses) are reflected (in millions):

Derivatives Not Designated as Hedging Instruments						Location of Gain (Loss) Recognized in Income on Derivatives												Three Months Ended March 31,
									2023						2022
Commodity contracts						Revenues																		$	(7)					$	(4)
Commodity contracts						Cost of materials and other																		83						(595)
Commodity contracts						Operating expenses (excluding depreciation and amortization expense)																		1						3
Foreign currency contracts						Cost of materials and other																		(3)						(2)
Foreign currency contracts						Other income (expense), net																		—						34