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What changed in Phillips 66's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Phillips 66's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+397 added−404 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-21)

Top changes in Phillips 66's 2025 10-K

397 paragraphs added · 404 removed · 301 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+8 added−23 removed134 unchanged
Biggest changeAny of the foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident. 37 Further, we have exposure to cybersecurity incidents and the negative impacts of such incidents related to our critical data and proprietary information housed on third-party IT systems, including cloud-based systems.
Biggest changeWe also have exposure to cybersecurity incidents and the negative impacts of such incidents related to our critical data and proprietary information housed on third-party IT systems, including cloud-based systems. Additionally, authorized third-party IT systems or software can be compromised and used to gain access or introduce malware to our IT systems that can materially impact our business.
In order to maintain or increase throughput levels on our natural gas gathering and transportation pipeline systems and NGL pipelines and the asset utilization rates at our natural gas processing plants, we must continually obtain new supplies.
In order to maintain or increase throughput levels on our natural gas gathering and transportation pipeline systems and NGL pipelines and the asset utilization rates at our natural gas processing plants, we must continually obtain new supplies.
Any such actions may affect many aspects of our operations, including: • Establishing maximum margins that can be earned on sales of motor fuels or imposing financial penalties on profits earned above established maximum margins. • Limiting or prohibiting our ability to undertake turnaround or maintenance activities, or to cease operations at our refineries. • Requiring permits or other approvals that may impose unforeseen or unduly burdensome conditions or potentially cause delays in our operations. • Further limiting or prohibiting construction or other activities in environmentally sensitive or other areas. • Requiring increased capital costs to construct, maintain or upgrade equipment, facilities or infrastructure. • Restricting the locations where we may construct facilities or requiring the relocation of facilities. 31 For example, in March 2023, the California legislature 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 (maximum margin) and the imposition of a financial penalty for profits above the maximum margin, (ii) significantly expands reporting obligations relating to the maintenance and business of our California facilities, which includes reporting requirements to the California Energy Commission (CEC) for all participants in the transportation fuels industry supply chain in California, (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 facility turnaround and other maintenance activities in certain instances.
Any such actions may affect many aspects of our operations, including: • Establishing maximum margins that can be earned on sales of motor fuels or imposing financial penalties on profits earned above established maximum margins. • Limiting or prohibiting our ability to undertake turnaround or maintenance activities, or to cease operations at our refineries. • Requiring permits or other approvals that may impose unforeseen or unduly burdensome conditions or potentially cause delays in our operations. • Further limiting or prohibiting construction or other activities in environmentally sensitive or other areas. • Requiring increased capital costs to construct, maintain or upgrade equipment, facilities or infrastructure. • Restricting the locations where we may construct facilities or requiring the relocation of facilities. 26 For example, in March 2023, the California legislature 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 (maximum margin) and the imposition of a financial penalty for profits above the maximum margin, (ii) significantly expands reporting obligations relating to the maintenance and business of our California facilities, which includes reporting requirements to the California Energy Commission (CEC) for all participants in the transportation fuels industry supply chain in California, (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 facility turnaround and other maintenance activities in certain instances.
The price at which we purchase crude oil, natural gas, NGLs and renewable feedstocks and the prices at which we can ultimately sell our refined products depend upon factors beyond our control, including, but not limited to: • global and local demand; • production levels of feedstocks; • production levels of refined products by competitors; • import and export capabilities; • seasonality and weather conditions; • transportation availability and cost; • changes in energy prices; • economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives; • the impacts of the members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member producing nations that may agree to set production levels; • geopolitical risks, such as the ongoing global impact of conflicts in the Middle East and Eastern Europe; • technological advances affecting energy consumption and supply; and • consumer preferences and the use and availability of substitute products.
The price at which we purchase crude oil, natural gas, NGLs and renewable feedstocks and the prices at which we can ultimately sell our refined products depend upon factors beyond our control, including, but not limited to: • global and local demand; • production levels of feedstocks; • production levels of refined products by competitors; • import and export capabilities; • seasonality and weather conditions; • transportation availability and cost; • changes in energy prices; • economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives; • the impacts of the members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member producing nations that may agree to set production levels; • geopolitical risks, such as the ongoing global impact of conflicts in the Middle East, Eastern Europe and South America; • technological advances affecting energy consumption and supply; and • consumer preferences and the use and availability of substitute products.
As a result of these factors, a downgrade of credit ratings could have a material adverse impact on Phillips 66’s future operations and financial position. 40 The level of returns on pension and postretirement plan assets and the actuarial assumptions used for valuation purposes could affect our earnings and cash flows in future periods.
As a result of these factors, a downgrade of credit ratings could have a material adverse impact on Phillips 66’s future operations and financial position. The level of returns on pension and postretirement plan assets and the actuarial assumptions used for valuation purposes could affect our earnings and cash flows in future periods.
Item 1A. RISK FACTORS You should carefully consider the following risk factors in addition to the other information included in this Annual Report. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as the value of an investment in our securities.
Item 1A. RISK FACTORS You should carefully consider the following risk factors in addition to the other information included in this Annual Report. Each of these risk factors could adversely affect our business, operating results, financial condition, and reputation, as well as the value of an investment in our securities.
If we are not able to obtain new supplies of natural gas to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline.
If we are not able to obtain new supplies of natural gas and NGLs to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline.
Changes to laws, regulations, policies or standards regarding renewable fuels or the feedstocks used to produce our renewable fuels, elimination or reduction of incentives, as well as the cost of conforming with such updated laws, regulations, policies or standards could negatively impact the results of operations of our Renewable Fuels segment.
Changes to laws, regulations, policies or standards regarding renewable fuels or the feedstocks used to produce our renewable fuels, elimination or 22 reduction of incentives, as well as the cost of conforming with such updated laws, regulations, policies or standards could negatively impact the results of operations of our Renewable Fuels segment.
Accordingly, we may not be able to realize our expected returns from a large investment in a capital project, and this could negatively impact our results of operations, cash flows and our return on capital employed. 30 Plans we or our joint ventures may have to expand or construct assets or develop new technologies, and plans for our future performance are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of petroleum-based and renewables-based fuels.
Accordingly, we may not be able to realize our expected returns from a large investment in a capital project, and this could negatively impact our results of operations, cash flows and our return on capital employed. 25 Plans we or our joint ventures may have to expand or construct assets or develop new technologies, and plans for our future performance are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of petroleum-based and renewables-based fuels.
If legislative and regulatory initiatives cause a material decrease in the drilling of new wells and related servicing activities, it may reduce crude oil, natural gas and NGL supplies, negatively affecting the volume of products available to our Midstream segment and increasing feedstock prices for our Chemicals and Refining segments, resulting in a material adverse effect on our financial position, results of operations and cash flows. 35 Compliance with the EPA’s Renewable Fuel Standard (RFS) could adversely affect our financial results.
If legislative and regulatory initiatives cause a material decrease in the drilling of new wells and related servicing activities, it may reduce crude oil, natural gas and NGL supplies, negatively affecting the volume of products available to our Midstream segment and increasing feedstock prices for our Chemicals and Refining segments, resulting in a material adverse effect on our financial position, results of operations and cash flows. 30 Compliance with the EPA’s Renewable Fuel Standard (RFS) could adversely affect our financial results.
Federal, regional and state climate change and air emissions goals and regulatory programs are complex, subject to change and impose considerable uncertainty due to a number of factors including technological feasibility, legal challenges and potential changes in federal policy.
Federal, regional and state climate change and air emissions goals and regulatory programs are complex, subject to change and impose considerable uncertainty due to a number of factors including technological feasibility, legal challenges and changes in federal policy.
Our ability to achieve these goals depends on many factors, many of which are beyond our control, such as advancements that enable broad commercial deployment and use of lower-carbon technologies; global policies that fund and incentivize the development of a lower-carbon energy system; changes in consumer behavior and energy choices; the availability of materials throughout the supply chain; evolving regulatory requirements; competitor actions; the availability of renewable feedstocks; and acquisition and divestiture activities.
Our ability to achieve or maintain these goals depends on many factors, many of which are beyond our control, such as advancements that enable broad commercial deployment and use of lower-carbon technologies; global policies that fund and incentivize the development of a lower-carbon energy system; changes in consumer behavior and energy choices; the availability of materials throughout the supply chain; evolving regulatory requirements; competitor actions; the availability of renewable feedstocks; and acquisition and divestiture activities.
However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the United States could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions. 34 States have been and are expected to continue to adopt new and amended legislative and regulatory measures regarding climate change and GHG emissions controls.
However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the United States could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions. 29 States have been and are expected to continue to adopt new and amended legislative and regulatory measures regarding climate change and GHG emissions controls.
Any new opportunities also may depend on the viability of new assets or businesses that are contingent on public policy mechanisms including investment tax credits, subsidies, renewable portfolio standards and carbon trading plans. 32 These mechanisms have been implemented at the state and federal levels to support the development of renewable energy and other clean infrastructure technologies, but consistent regulatory policy is uncertain.
Any new opportunities also may depend on the viability of new assets or businesses that are contingent on public policy mechanisms including investment tax credits, subsidies, renewable portfolio standards and carbon trading plans. 27 These mechanisms have been implemented at the state and federal levels to support the development of renewable energy and other clean infrastructure technologies, but consistent regulatory policy is uncertain.
In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial and individual customers. 29 Our Midstream segment competes for natural gas supplies with other companies that provide midstream gathering and processing, transportation, fractionation and terminaling services, and a failure to grow or maintain throughput levels may negatively impact the results of operations of our business.
In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial and individual customers. 24 Our Midstream segment competes for natural gas supplies with other companies that provide midstream gathering and processing, transportation, fractionation and terminaling services, and a failure to grow or maintain throughput levels may negatively impact the results of operations of our business.
We may face other regulatory changes in the U.S. including, but not limited to, the enactment of tax law changes that adversely affect our industry, tariffs on imported material, components and feedstocks and retaliatory tariffs imposed by other countries on U.S. made goods, new emissions standards, restrictive flaring regulations, and more stringent requirements for environmental impact studies and reviews.
We may face other regulatory changes in the United States including, but not limited to, the enactment of tax law changes that adversely affect our industry, tariffs on imported material, components and feedstocks and retaliatory tariffs imposed by other countries on U.S. made goods, new emissions standards, restrictive flaring regulations, and more stringent requirements for environmental impact studies and reviews.
Our information technology and infrastructure, or information technology and infrastructure of our third-party service providers (e.g., cloud-based service providers), may be vulnerable to attacks by malicious actors or breached due to human error, malfeasance or other disruptions, including ransomware and other malware, phishing and social engineering schemes, deepfakes, malicious software, data privacy incidents, insiders or others with authorized access, attempts to gain unauthorized access to our data and systems, and other cybersecurity incidents.
Our information technology and infrastructure, including systems operated by third-party service providers (e.g., cloud-based service providers), may be vulnerable to attacks by malicious actors or breached due to human error, malfeasance or other disruptions, including ransomware and other malware, phishing and social engineering schemes, deepfakes, malicious software, data privacy incidents, insiders or others with authorized access, attempts to gain unauthorized access to our data and systems, and other cybersecurity incidents.
Factors associated with climate change legislation or regulation could result in increased operating costs, reduce demand for the refined petroleum products we produce and could otherwise have a material impact on our business. Currently, multiple legislative and regulatory measures to address GHG and other emissions are in various phases of consideration, promulgation, implementation or reversal.
Factors associated with climate change legislation or regulation could result in increased operating costs, reduced demand for the refined petroleum products we produce and could otherwise have a material impact on our business. Currently, multiple legislative and regulatory measures to address GHG and other emissions are in various phases of consideration, promulgation, implementation or reversal.
Our basis for approving large-scale capital-intensive projects, such as the recent conversion of our San Francisco Refinery into the Rodeo Complex, is the expectation that it will deliver an acceptable rate of return on the capital invested. We base these forecasted project economics on our best estimate of future market conditions including the regulatory and operating environment.
Our basis for approving large-scale capital-intensive projects, such as the recent conversion of our San Francisco Refinery into the Rodeo Complex, is the expectation that it will deliver an acceptable rate of return on capital employed. We base these forecasted project economics on our best estimate of future market conditions including the regulatory and operating environment.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our financial condition and cash flows. See Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements. Climate change and severe weather may adversely affect our and our joint ventures’ facilities and ongoing operations.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our financial condition and cash flows. See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements. Climate change and severe weather may adversely affect our and our joint ventures’ facilities and ongoing operations.
Finally, depending on the severity and duration of any extreme weather events or climate conditions, our operations may need to be modified and material costs incurred, which could materially and adversely affect our business, financial condition and results of operations. 33 There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results.
Finally, depending on the severity and duration of any extreme weather events or climate conditions, our operations may need to be modified and material costs incurred, which could materially and adversely affect our business, financial condition and results of operations. 28 There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results.
Competitors that have their own production or extensive retail outlets (and greater brand-name recognition) are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.
Competitors that have their own production or extensive retail outlets, including those with greater brand-name recognition, are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.
Competition Risks Refining, midstream and marketing competitors that produce their own feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage. The refining and marketing industry is highly competitive with respect to both feedstock supply and refined petroleum product markets.
Competition Risks Refining, midstream and marketing competitors that produce their own feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage. Our industry is highly competitive with respect to both feedstock supply and refined petroleum product markets.
Further, the standards for tracking and reporting on GHG emissions have not been harmonized and continue to evolve. Our selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of comparative data from period to period.
Further, the standards for tracking and reporting on GHG emissions have not been harmonized and continue to evolve. Our selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of comparable data from period to period.
The level of successful drilling activity and prices of, and demand for, natural gas and crude oil, as well as producers’ desire and ability to obtain necessary permits are some of the factors that may affect new supplies of natural gas and NGL.
The level of successful drilling activity and prices of, and demand for, natural gas and crude oil, as well as producers’ desire and ability to obtain necessary permits are some of the factors that may affect new supplies of natural gas and NGLs.
The level of successful drilling activity and prices of, and demand for, natural gas and crude oil, as well as producers’ desire and ability to obtain necessary permits are some of the factors that may affect new supplies of natural gas and NGL.
The level of successful drilling activity and prices of, and demand for, natural gas and crude oil, as well as producers’ desire and ability to obtain necessary permits are some of the factors that may affect new supplies of natural gas and NGLs.
For example, adverse effects on the financial performance of our operations in the state of California or the useful lives of the assets related to such operations may result in the recognition of material asset impairment charges and asset retirement obligations.
For example, adverse effects on the financial performance of our operations in the state of California or the useful lives of the assets related to such operations may result in the recognition of material asset impairment charges, accelerated depreciation and asset retirement obligations.
This could have a material adverse effect on our business, results of operations, financial position and cash flows, and our ability to make cash distributions. 28 Our investments in joint ventures decrease our ability to manage risk.
This could have a material adverse effect on our business, results of operations, financial position and cash flows, and our ability to make cash distributions. 23 Our investments in joint ventures decrease our ability to manage risk.
The Company has been and may again be subject to shareholder activism and the corporate actions advocated by the shareholder activist that may not align with the Company’s current business strategies and the best interests of all of the Company’s shareholders.
The Company has been and may again be subject to shareholder activism and the corporate actions advocated by the shareholder activist that may not align with the Company’s current business strategies and the best interests of all of the Company’s stakeholders.
Additionally, cities, counties, and other governmental entities in several states in the U.S. began filing lawsuits against energy companies in 2017, including Phillips 66, seeking damages allegedly associated with climate change, and the plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions.
Additionally, cities, counties, and other governmental entities in several states in the United States began filing lawsuits against energy companies in 2017, including Phillips 66, seeking damages allegedly associated with climate change, and the plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions.
The ability of the members of OPEC to agree on and to set crude oil price and production controls and changes in trade flows from events such as the war in Eastern Europe have also had, and are likely to continue to have, a significant impact on the market prices of crude oil and certain of our products.
The ability of the members of OPEC to agree on and to set crude oil price and production controls and changes in trade flows from events such as the conflicts in Eastern Europe and South America have also had, and are likely to continue to have, a significant impact on the market prices of crude oil and certain of our products.
Along with our own data and information collected in the normal course of our business, we and our partners collect and retain certain data that is subject to specific laws and regulations. The transfer and use of this data both domestically and across international borders is becoming increasingly complex.
Along with our own data and information collected in the normal course of our business, we and our suppliers and service providers collect and retain certain data that is subject to specific laws and regulations. The transfer and use of this data, both domestically and across international borders, is becoming increasingly complex.
Also, on December 15, 2022, CARB adopted its “2022 Scoping Plan for Achieving Carbon Neutrality,” which purports to provide a road map for California to achieve carbon neutrality (which it defines as removing as many carbon emissions from the atmosphere as it emits) by year 2045.
Also, in 2022, CARB adopted its “2022 Scoping Plan for Achieving Carbon Neutrality,” which purports to provide a road map for California to achieve carbon neutrality (which it defines as removing as many carbon emissions from the atmosphere as it emits) by year 2045.
Public health crises, epidemics and pandemics have had and could in the future have a material adverse effect on our business. Any future widespread health crises could materially and adversely impact our business. Our global operations expose us to risks associated with public health crises and outbreaks of epidemics, pandemics, or contagious diseases, such as the COVID-19 pandemic.
Public health crises, epidemics and pandemics have had and could in the future have a material adverse effect on our business. Any future widespread health crises could materially and adversely impact our business. Our global operations expose us to risks associated with public health crises and outbreaks of epidemics, pandemics, or contagious diseases.
Additionally, on August 25, 2022, the CARB adopted regulations that effectively ban the in-state sales of new cars containing internal combustion engines beginning in 2035.
Additionally, in 2022, the CARB adopted regulations that effectively ban the in-state sales of new cars containing internal combustion engines beginning in 2035.
Each of these risks could negatively affect our business, results of operations and financial condition. 41
Each of these risks could negatively affect our business, results of operations and financial condition. 35
In addition, a host of single-use plastic bans and taxes have been passed by countries around the world and counties and municipalities throughout the U.S.
In addition, a host of single-use plastic bans and taxes have been passed by countries around the world and counties and municipalities throughout the United States.
Hostilities in the Middle East, Eastern Europe or elsewhere or the occurrence or threat of future terrorist attacks could adversely affect the economies of the U.S. and other countries.
Hostilities in the Middle East, Eastern Europe and South America or elsewhere or the occurrence or threat of future terrorist attacks could adversely affect the economies of the United States and other countries.
Negative sentiment towards fossil fuels and increased attention to environmental and social matters, including climate change, could adversely affect our business, the market price for our securities and our access to and cost of capital.
Negative sentiment towards fossil fuels, increased attention to E&S matters, including climate change, and our efforts to report on these matters could adversely affect our business, the market price for our securities and our access to and cost of capital.
We rely on existing liquidity, financial resources and borrowing capacity to meet short-term obligations that would result from uninsured or underinsured liabilities arising from operating hazards, including but not limited to, explosions, fires, refinery or pipeline releases or other incidents involving our assets or operations, including weather events or natural disasters, which could reduce the funds available to us for capital and investment spending and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We rely on existing liquidity, financial resources and borrowing capacity to meet short-term obligations that would result from uninsured or underinsured liabilities arising from operating hazards, including but not limited to, explosions, fires, refinery or pipeline releases or other incidents involving our assets or operations, including weather events or natural disasters, which could reduce the funds available to us for capital and investment spending and could have a material adverse effect on our business, financial condition, results of operations and cash flows. 34 Deterioration in our credit profile could increase our costs of borrowing money, limit our access to the capital markets and commercial credit, and could trigger co-venturer rights under joint venture arrangements.
Processes and controls for reporting on E&S matters are subject to evolving and disparate standards of identification, measurement, and reporting on such metrics, including any climate change and E&S-related public company disclosure requirements adopted by the SEC or government agencies of other jurisdictions, and such standards may change over time, which could result in significant revisions to our current E&S practices and disclosures. 39 Our published GHG emissions intensity reduction goals and other E&S targets we may set in the future could negatively impact our business.
Processes and controls for reporting on E&S matters are subject to evolving and disparate regulations and standards of identification, measurement, and reporting on such metrics, including any climate change and E&S-related public company disclosure requirements adopted by the SEC or government agencies of other jurisdictions, and such standards remain uncertain and may change over time, which exposes us to unpredictable reporting obligations or business requirements and could result in significant revisions to our current E&S practices and disclosures.
Additionally, members of the investment community may screen companies such as ours for E&S performance before investing in our stock or participating in our financing activities.
As a result, we may face increasing pressure regarding our E&S disclosures and practices. Additionally, members of the investment community may screen companies such as ours for E&S performance before investing in our stock or participating in our financing activities.
Our infrastructure protection technologies and disaster recovery plans may not be able to prevent a technology systems breach or systems failure, which could have a material adverse effect on our financial position or results of operations. Furthermore, the continuing and evolving threat of cyberattacks has resulted in increased regulatory focus on prevention.
Our infrastructure protection technologies and disaster recovery plans may not be able to prevent a technology systems breach or systems failure, which could have a material adverse effect on our financial position or results of operations.
Cybersecurity and Data Privacy Risks • Cybersecurity incidents and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer. • Increasing regulatory focus on privacy and cybersecurity issues and expanding laws could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.
Increasing regulatory focus on privacy and cybersecurity issues and expanding laws and regulations could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.
If we are not able to obtain new supplies of natural gas to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline. This could have a material adverse effect on our business, results of operations, financial position and cash flows.
If we are not able to obtain new supplies of natural gas and NGLs to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline.
ConocoPhillips has indemnified us for certain matters, but may not be able to satisfy its obligations to us in the future. 25 Risks Related to Our Manufacturing and Operations Margins for the products we produce are cyclical and volatile due to changes in market conditions, which are largely dependent on factors beyond our control, and directly affect our earnings, financial condition and cash flows.
Risks Related to Our Manufacturing and Operations Margins for the products we produce are cyclical and volatile due to changes in market conditions, which are largely dependent on factors beyond our control, and directly affect our earnings, financial condition and cash flows.
Volatility in market demand for our petrochemical and plastics products and midstream transportation services and the risk of overbuild in these industries may negatively impact the results of operations of our businesses.
This could have a material adverse effect on our business, results of operations, financial position and cash flows. Volatility in market demand for our petrochemical and plastics products and midstream transportation services and the risk of overbuild in these industries may negatively impact the results of operations of our businesses.
Societal attitudes toward these products and their relationship to the environment may significantly affect our effectiveness in marketing our products. Government efforts to steer the public toward non-petroleum-based fuel dependent modes of transportation may foster a negative perception toward petroleum products or increase costs of our products, thus affecting the public’s attitude toward our major products.
Efforts by governments or other private interests to steer the public toward non-petroleum-based fuel dependent modes of transportation may foster a negative perception toward petroleum products or increase costs of our products, thus affecting the public’s attitude toward our major products.
Increasing attention to global climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs or otherwise adversely affect our business.
Continuing political and social concerns about climate change and other environmental and social (E&S) matters may result in changes to our business and significant expenditures, including litigation-related expenses. Increasing attention to global climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs or otherwise adversely affect our business.
Changes in prices that occur between the time we purchase feedstocks or products and when we sell the refined products could have a significant impact on our financial results.
Changes in prices that occur between the time we purchase feedstocks or products and when we sell the refined products could have a significant impact on our financial results. 21 Lower margins have in the past, and may in the future, lead us to reduce the amount of refined products we produce, which may reduce our results of operations and cash flows.
For example, our Renewable Fuels segment processes renewable feedstocks such as used cooking oil, vegetable oils, and other low-carbon intensity waste oils and byproducts to produce renewable fuels.
For example, our Renewable Fuels segment processes renewable feedstocks such as used cooking oil, vegetable oils, and other low-carbon intensity waste oils and byproducts to produce renewable fuels. If certain types of renewable feedstocks are excluded from generating credits, our financial condition and results of operations may be impacted.
Further, our pursuit of, or any failure or perceived failure to achieve such goals and targets within the timelines that we announce, or at all, could cause reputational harm, negatively impact our stock price and access to and cost of capital, and expose us to enforcement or litigation, among other negative impacts.
The pursuit of these targets, and any other climate-related or E&S goals we may announce, or any failure or perceived failure to achieve such goals and targets, could cause increased costs, cause reputational harm, negatively impact our stock price and access to and cost of capital funding, and expose us to enforcement or litigation, among other negative impacts, resulting from evolving standards for measuring, reporting, and disclosing climate-related and other E&S information.
Significant reductions in margins could require us to impair the carrying value of our assets (such as properties, plants and equipment, inventories or goodwill) and may adversely affect our ability to fund our capital priorities, including share repurchases and dividends. 26 The prices at which we buy our feedstocks are dependent on market conditions that are beyond our control, and changes in supply and demand for the feedstocks we process directly impact the results of our business.
Significant reductions in margins could require us to impair the carrying value of our assets (such as properties, plants and equipment, inventories, equity investments or goodwill) and may adversely affect our ability to fund our capital priorities, including share repurchases and dividends.
In the past, we and certain of our equity affiliates also have temporarily shut down facilities due to the threat of severe weather, such as hurricanes.
Interruptions may materially reduce productivity and thus, the profitability, of operations during and after downtime, including for planned turnarounds and scheduled maintenance activities. In the past, we and certain of our equity affiliates also have temporarily shut down facilities due to the threat of severe weather, such as hurricanes.
While we believe these lawsuits are an inappropriate vehicle to address the challenges associated with climate change and will vigorously defend against them, the ultimate outcome and impact to us of any such litigation cannot be predicted with certainty, and we could incur substantial legal costs associated with defending these and similar lawsuits in the future. 36 Additionally, governments and private parties are also increasingly filing lawsuits or initiating regulatory action based on allegations that certain public statements regarding climate change and other ESG-related matters and practices by companies are false or misleading “greenwashing” that violate deceptive trade practices and consumer protection statutes.
While we believe these lawsuits are an inappropriate vehicle to address the challenges associated with climate change and will vigorously defend against them, the ultimate outcome and impact to us of any such litigation cannot be predicted with certainty, and we could incur substantial legal costs associated with defending these and similar lawsuits in the future.
Generative artificial intelligence has contributed to an increase in the prevalence of such attacks and threats, expanding our potential exposure to disruptions.
Generative artificial intelligence has also contributed to an increase in the prevalence of such attacks and threats, expanding potential exposure to disruptions. Any of the foregoing could be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.
In addition, failure by Phillips 66 to maintain an investment grade rating could affect its business relationships with suppliers and operating partners.
This could require us to provide collateral, or other forms of security, which would increase our costs and restrict operational and financial flexibility. In addition, failure by Phillips 66 to maintain an investment grade rating could affect its business relationships with suppliers and operating partners.
If we are unable to meet the E&S standards set by these investors, we may lose investors, our stock price may be negatively impacted, our access to capital markets and lenders may be curtailed, and our reputation may be negatively affected. Our efforts to accurately report on E&S-related issues expose us to operational, reputational, financial, legal, and other risks.
If we are unable to meet the evolving E&S standards set by these investors, including in light of their varied and sometimes conflicting views regarding E&S matters, we may lose investors, our stock price may be negatively impacted, our access to capital markets and lenders may be curtailed, and our reputation may be negatively affected.
Efforts have also been made by governments and private parties to shut down energy assets by challenging operating permits, the validity of easements or the compliance with easement conditions.
Such lawsuits present a high degree of uncertainty regarding the extent to which energy companies face an increased risk of liability stemming from climate change or E&S disclosures and practices. Efforts have also been made by governments and private parties to shut down energy assets by challenging operating permits, the validity of easements or the compliance with easement conditions.
Additionally, certain states have recently passed legislation seeking to recover financial damages allegedly associated with climate change from fossil fuel companies like the Vermont Climate Superfund Act passed by the Vermont Legislature in May 2024.
Additionally, certain states have recently passed, or are considering, legislation seeking to recover financial damages allegedly associated with climate change from fossil fuel companies like the Vermont Climate Superfund Act passed in 2024. The future of the U.S. climate change strategy and the impact to our industry and operations due to further GHG regulation is unknown at this time.
Members of the investment community are also increasing their focus on environmental and social (E&S) matters, including practices related to GHG emissions, climate change, business resilience, diversity and inclusion, environmental justice and other E&S matters. As a result, we may face increasing pressure regarding our E&S disclosures and practices.
If these or similar efforts are continued, the market price of our securities, our ability to access capital markets or insure our operations, and our cost of capital may be negatively impacted. 33 Members of the investment community are also increasing their focus on E&S matters, including practices related to GHG emissions, climate change, business resilience, diversity and inclusion, environmental justice and other E&S matters.
Although we devote significant resources to prevent cybersecurity incidents and protect our system and data, we have experienced actual and attempted cybersecurity incidents, and while we do not believe that any of these incidents has had a material effect on our business, operations or financial condition, it is possible that a future incident may have such an effect.
While we do not believe that any of these incidents has had a material effect on our business, operations or financial condition, it is possible that a future incident may have such an effect. 32 A cybersecurity incident may also result in legal claims or proceedings against us by our shareholders, employees, customers, vendors, and governmental authorities (U.S. and non-U.S.).
Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties as a result. 38 Indebtedness, Capital Markets and Financial Risks Uncertainty and illiquidity in credit and capital markets can impair our ability to obtain credit and financing on acceptable terms and can adversely affect the financial strength of our business partners.
Indebtedness, Capital Markets and Financial Risks Uncertainty and illiquidity in credit and capital markets can impair our ability to obtain credit and financing on acceptable terms and can adversely affect the financial strength of our business partners.
Deterioration in our credit profile could increase our costs of borrowing money, limit our access to the capital markets and commercial credit, and could trigger co-venturer rights under joint venture arrangements. Our credit ratings could be lowered or withdrawn entirely by a rating agency if, in its judgment, the circumstances warrant.
Our credit ratings could be lowered or withdrawn entirely by a rating agency if, in its judgment, the circumstances warrant. If a rating agency were to downgrade our rating below investment grade, our borrowing costs would increase, and our funding sources could decrease.
If certain types of renewable feedstocks are excluded from generating credits, our financial condition and results of operations may be impacted. 27 Our operations are subject to planned and unplanned downtime, business interruptions, and operational hazards, any of which could adversely impact our ability to operate and could adversely impact our financial condition, results of operations and cash flows.
Our operations are subject to planned and unplanned downtime, business interruptions, and operational hazards, any of which could adversely impact our ability to operate and could adversely impact our financial condition, results of operations and cash flows. Our operating results are largely dependent on the continued operation of facilities and assets owned and operated by us and our equity affiliates.
This data is subject to governmental regulation at the federal, state, international, national, provincial and local levels in many areas of our business, including data privacy and security laws such as the European Union (EU) and United Kingdom (UK) versions of the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
This data is subject to governmental regulation at the federal, state, international, national, provincial and local levels in many areas of our business, including data privacy and cybersecurity laws. The regulatory landscape governing cybersecurity continues to evolve, and federal, state and international authorities are increasing their oversight of cybersecurity practices, incident reporting and the protection of critical energy infrastructure.
We do not produce crude oil and other feedstocks and must purchase all of the feedstocks we process.
The prices at which we buy our feedstocks are dependent on market conditions that are beyond our control, and changes in supply and demand for the feedstocks we process directly impact the results of our business. We do not produce crude oil and other feedstocks and must purchase all of the feedstocks we process.
To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements. Increasing regulatory focus on privacy and cybersecurity issues and expanding laws could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.
Furthermore, the continuing and evolving threat of cyberattacks has resulted in increased regulatory focus on prevention, and, to the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements.
Cybersecurity and Data Privacy Risks Cybersecurity incidents and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
Cybersecurity and Data Privacy Risks Cybersecurity incidents and other disruptions could compromise our information and systems resulting in disruption of operations, financial loss and reputational harm.
The pursuit of these targets, and any other climate-related or E&S goals we may announce, may increase our costs, require us to purchase emissions credits or offsets, or limit or negatively impact our business plans.
Our published GHG emissions intensity reduction goals and other E&S targets we may set in the future could negatively impact our business.
Removed
Summary of Risk Factors Risks Related to Our Manufacturing and Operations • Margins for the products we produce are cyclical and volatile due to changes in market conditions, which are largely dependent on factors beyond our control, and directly affect our earnings, financial condition and cash flows. • The prices at which we buy our feedstocks are dependent on market conditions that are beyond our control, and changes in supply and demand for the feedstocks we process directly impact the results of our business. • Changes to government policies relating to renewable feedstocks and renewable fuels that adversely affect programs like the renewable fuels standards program, low-carbon fuels standards and tax credits for processing certain renewable feedstocks impact our financial condition and results of operations. • Our operations are subject to planned and unplanned downtime, business interruptions, and operational hazards, any of which could adversely impact our ability to operate and could adversely impact our financial condition, results of operations and cash flows. • We are subject to interruptions of supply and offtake, as well as increased costs, as a result of our reliance on third-party transportation of crude oil or other feedstocks, NGL, refined petroleum and renewable fuels products. • Our investments in joint ventures decrease our ability to manage risk. • Public health crises, epidemics and pandemics have had and could in the future have a material adverse effect on our business.
Added
Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future.
Removed
Any future widespread health crises could materially and adversely impact our business.
Added
In January 2026, President Trump issued a memorandum directing the United States to withdraw from various international organizations and treaties related to climate change, and the administration has generally been pursuing a de-regulatory posture on environmental matters.
Removed
Competition Risks • Refining, midstream and marketing competitors that produce their own feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage. • Our Midstream segment competes for natural gas supplies with other companies that provide midstream gathering and processing, transportation, fractionation and terminaling services, and a failure to grow or maintain throughput levels may negatively impact the results of operations of our business. • Volatility in market demand for our petrochemical and plastics products and midstream transportation services and the risk of overbuild in these industries may negatively impact the results of operations of our businesses.
Added
Societal attitudes toward these products and their relationship to the environment may significantly affect our effectiveness in marketing our products.
Removed
Strategic Performance and Future Growth Risks • Large capital-intensive projects can take many years to complete, and the political and regulatory environments or market conditions could change significantly between the project approval date and the project startup date, negatively impacting expected project returns. • Plans we or our joint ventures may have to expand or construct assets or develop new technologies, and plans for our future performance are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of petroleum-based and renewables-based fuels.
Added
Additionally, governments and private parties are also increasingly filing lawsuits or initiating regulatory action based on allegations that certain public statements regarding climate change and other E&S-related matters and practices by 31 companies are false or misleading “greenwashing” that violate deceptive trade practices and consumer protection statutes. Such claims are included in lawsuits filed against energy companies, including Phillips 66.
Removed
Such risks could adversely impact our business and results of operations. • Political and economic developments could affect our operations and materially reduce our profitability and cash flows. • We may not be able to effectively identify, whether through acquisition, investment or development, lower-carbon opportunities on favorable terms, or at all, and failure to do so could limit our growth, our ability to participate in the energy transition, and our ability to meet our environmental goals and targets. • Our business could be negatively impacted as a result of shareholder activism. 24 Legal, Regulatory, and Environmental, Climate and Weather Risks • We are subject to a variety of legal proceedings and other claims arising out of our operations which may adversely impact our business and financial condition. • Climate change and severe weather may adversely affect our and our joint ventures’ facilities and ongoing operations. • There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results. • We expect to continue to incur substantial capital expenditures and operating costs to comply with existing and future environmental laws and regulations. • Factors associated with climate change legislation or regulation could result in increased operating costs, reduce demand for the refined petroleum products we produce and could otherwise have a material impact on our business. • Increased regulation of the fossil fuel industry, particularly with respect to hydraulic fracturing, could result in reductions or delays in the production of crude oil and natural gas, which could adversely impact our results of operations. • Compliance with the EPA’s Renewable Fuel Standard (RFS) could adversely affect our financial results. • Societal, technological, political and scientific developments around emissions and fuel efficiency may decrease demand for petroleum-based fuels. • Continuing political and social concerns about climate change and other Environmental, Social and Governance (ESG) matters may result in changes to our business and significant expenditures, including litigation-related expenses. • Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products due to recycling concerns, or new or more restrictive regulations and rules related to plastic waste could reduce demand for CPChem’s plastic products and could negatively impact our equity interest.
Added
Although we devote significant resources to prevent cybersecurity incidents and protect our system and data, we have experienced actual and attempted cybersecurity incidents.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThrough the ERM program, the CISO and other internal subject matter experts review potential cybersecurity threat scenarios, such as data theft, cash theft, widespread outages and business disruptions, and the potential consequences of such scenarios. The results of the risk assessment are shared with management and the Audit and Finance Committee.
Biggest changeRisk Management and Strategy As part of our ERM program, we conduct an annual evaluation of cybersecurity risks and share the results with management and the A&FC. The CISO and internal subject-matter experts review scenarios, such as data theft, cash theft, widespread outages, and business disruptions, and the potential consequences.
If the SIEM system identifies a potential security event, it can direct other controls to stop the activity and also generate alerts for detection and response. These alerts are monitored by a managed security service provider that augments our dedicated internal Security Operations Center team.
If the SIEM identifies a potential security event, it can direct controls to stop the activity and generate alerts for detection and response. Alerts are monitored by a managed security service provider that augments our dedicated internal Security Operations Center team.
Although we have experienced actual and attempted cybersecurity events and incidents on our networks and systems in the past, we do not believe that the risks from any of these events or incidents, individually or in the aggregate, have materially affected our business, operations, or financial condition, or are reasonably likely to have such an effect.
Materiality and Disclosure Practices We have experienced actual and attempted cybersecurity events and incidents on our networks and systems in the past; however, we do not believe that any of these events or incidents, individually, or in the aggregate, have materially affected our business, operations, or financial condition, or are reasonably likely to have such an effect.
We have a continuous monitoring program to detect and respond to potential cybersecurity threats in real-time. Log data from our technical controls are collected, aggregated, and correlated in a Security Information and Event Management (SIEM) system that identifies and categorizes events, as well as analyzes them.
We maintain a continuous monitoring program to detect and respond to potential threats in near real time. Log data from technical controls are collected, aggregated, and correlated in a Security Information and Event Management (SIEM) system that identifies and categorizes events and analyzes them.
Item 1C. CYBERSECURITY Management has implemented a comprehensive cybersecurity program that is designed to protect our information, and that of our customers and suppliers, against cybersecurity threats that may materially and adversely affect the confidentiality, integrity, and availability of our information systems.
Item 1C. CYBERSECURITY Management has implemented a comprehensive cybersecurity program designed to manage risks and to protect the confidentiality, integrity, and availability of our information systems and the information of our customers and suppliers from cybersecurity threats that could materially and adversely affect our business, operations, or financial condition.
Cybersecurity Governance Board of Directors The Audit and Finance Committee of the Board of Directors (the Audit and Finance Committee) is responsible for overseeing the company’s Enterprise Risk Management (ERM) program, including oversight of the processes management has implemented to assess, identify and manage risks associated with cybersecurity and information technology.
Cybersecurity Governance Board of Directors The Audit and Finance Committee (A&FC) of the Board of Directors oversees the company’s Enterprise Risk Management (ERM) program, including the processes that management uses to assess, identify, and manage risks associated with cybersecurity and information technology.
The company maintains an Enterprise Cybersecurity Incident Response Plan (ECIRP) which provides the framework for management’s response to cyber-related incidents and escalation protocols, including, when appropriate, prompt reporting to the Board of Directors.
The company maintains an Enterprise Cybersecurity Incident Response Plan (ECIRP) which provides the framework for management’s response to cyber-related incidents and escalation protocols, including, reporting to the Board of Directors when appropriate. Management The CISO has extensive cybersecurity knowledge and skills gained through company experience and prior law enforcement service, supported by advanced professional certifications.
Each year, we conduct audits across the company’s information technology and operation technology infrastructure, networks, systems, applications, and operational processes and procedures to evaluate compliance with our information security policies and standards. Process control network assurance audits are conducted on a rotating schedule that is risk-based and provides coverage across each major operational business area no greater than five years.
Audit and Third-party Assessments Our Internal Audit organization conducts audits across our information technology and operational technology environments to evaluate compliance with information security policies and standards. Process control network assurance audits are conducted on a risk‑based rotating schedule, providing coverage across each major operational business area at intervals no greater than five years.
In addition, we utilize a third-party risk management (TPRM) program to identify, assess, monitor, and mitigate risks associated with third-party relationships, including cybersecurity risks. The TPRM program is designed to help ensure proper controls and measures are in place to manage the potential risks and vulnerabilities associated with third parties.
Third‑Party Risk Management We operate a third‑party risk management (TPRM) program to identify, assess, monitor, and mitigate risks associated with third‑party relationships, including cybersecurity risks.
The CISO receives reports on cybersecurity threats on an ongoing basis, and in conjunction with management, regularly reviews risk management measures implemented by the company to identify, assess and mitigate data protection and cybersecurity risks.
In addition to internal capabilities, we regularly engage consultants and other third parties to assist with assessing, identifying, and managing cybersecurity risks. The CISO receives ongoing reporting on cybersecurity threats and, together with management, regularly reviews risk management measures to identify, assess, and mitigate data protection and cybersecurity risks.
These presentations may address a wide range of topics, such as the results of recent vulnerability assessments and third-party independent reviews, changes to the threat environment, technological trends and other recent developments, and peer and other third-party benchmarking. The Audit and Finance Committee makes regular reports to the Board of Directors on data protection and cybersecurity matters.
The A&FC receives written reports and periodic briefings from the Chief Information Security Officer (CISO) that address topics such as the results of vulnerability assessments, independent external reviews, changes to the threat environment, technology trends, and benchmarking. The A&FC provides regular reports to the Board of Directors on data protection and cybersecurity matters.
Our cybersecurity program includes processes and standards that leverage recognized cybersecurity frameworks, industry best practices and guidance from U.S. Government security directives that focus on cybersecurity and critical infrastructure.
The program includes processes and standards that leverage recognized cybersecurity frameworks, industry best practices, and U.S. Government guidance focused on cybersecurity and critical infrastructure. These processes are integrated with our enterprise risk management and incident response functions to support timely assessment, escalation, and disclosure when appropriate.
The CISO is responsible for the assessment and management of risks from cybersecurity threats and leads a team responsible for implementing, monitoring, and maintaining cybersecurity and data protection practices across the company.
The CISO is responsible for assessing and managing risks from cybersecurity threats and leads a team that implements, monitors, and maintains cybersecurity and data protection practices across the company. Personnel reporting to the CISO have relevant educational and industry experience in threat hunting and intelligence, digital standards, data privacy, cyber training, and security operations center management.
Removed
In carrying out this responsibility, the Audit and Finance Committee regularly receives written reports from the company’s Chief Information Security Officer (CISO) and periodic briefings from the CISO.
Added
The CISO also works closely with the company’s Senior Counsel, Brand, Cyber & Privacy, to oversee compliance with legal, regulatory, and contractual security requirements, and coordinates with our executive leadership, as well as other leaders from our legal and finance organizations to support timely materiality assessments and, where required, public disclosure.
Removed
Management At the management level, our CISO has extensive cybersecurity knowledge and skills gained from work experience at the company and with a law enforcement agency, as well as from obtaining advanced professional certifications.
Added
The TPRM program is designed to help confirm that appropriate controls and measures are in place to manage potential risks and vulnerabilities associated with third parties. 36 Our policies and procedures govern the lifecycle from initial due diligence, selection, and contracting through oversight and termination, and include provisions to address security incident notification and cooperation when appropriate.
Removed
The individuals who report directly to our CISO possess relevant educational and industry experience in the areas of cyber threat hunting and intelligence, digital standards, data privacy, cyber training, and cybersecurity operations center management. In addition to our internal cybersecurity capabilities, we also regularly engage consultants, or other third parties to assist with assessing, identifying, and managing cybersecurity risks.
Added
We also engage external cybersecurity experts to conduct assessments, penetration testing, and cybersecurity maturity assessments. Incident Response Our ECIRP provides a documented framework for responding to cybersecurity incidents, including investigating, containing, documenting, and mitigating incidents, with defined reporting to senior management and other key stakeholders and escalation to the Board, when appropriate.
Removed
Our CISO works closely with the company’s Senior Counsel, Intellectual Property and Data Protection, to oversee compliance with legal, regulatory and contractual security requirements. 42 Risk Management and Strategy On an annual basis, we conduct an evaluation of our cybersecurity risks as part of the ERM program.
Added
Our procedures include defined processes for prompt escalation of potentially material cybersecurity incidents to our management for materiality assessment and, if required, public disclosure in accordance with applicable securities laws and regulations. For additional information concerning cybersecurity risks, see “Item 1A. Risk Factors.”
Removed
Our policies and procedures aid in the governance from initial due diligence, selection, and contracting to termination. With respect to cybersecurity incident response, our ECIRP provides a documented framework for responding to cybersecurity incidents.
Removed
The ECIRP sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate. Our Internal Audit organization performs audits of our cybersecurity program.
Removed
In addition to the internal audits, we also engage external cybersecurity experts and auditors to conduct assessments, penetration testing, and cybersecurity maturity assessments.
Removed
For more information concerning cybersecurity risks we face, see the discussion in “Item 1A. Risk Factors” in this report.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn November 2024, Phillips 66 Company received an indictment from a federal grand jury in the United States District Court for the Central District of California alleging two counts of negligently violating the Clean Water Act and four counts of knowingly violating the Clean Water Act at its Los Angeles Refinery.
Biggest changeIf a specific request for stipulated penalties meeting the reporting threshold set forth in SEC rules is made pursuant to these decrees based on a given reported exceedance, we will separately report that matter and the amount of the proposed penalty. 37 Matters Previously Reported (unresolved or resolved since the quarterly report on Form 10-Q for the quarterly period ended September 30, 2025) In November 2024, Phillips 66 Company received an indictment from a federal grand jury in the United States District Court for the Central District of California alleging two counts of negligently violating the Clean Water Act and four counts of knowingly violating the Clean Water Act at the Carson portion of its Los Angeles Refinery.
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO) See “Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)” section of Note 9—Investments, Loans and Long-Term Receivables and Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding Legal Proceedings and other regulatory actions.
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO) See the “Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)” section of Note 9—Investments, Loans and Long-Term Receivables. See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding Legal Proceedings and other regulatory actions.
(Propel Fuels) filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding.
(Propel Fuels) filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.
Matters Previously Reported (unresolved or resolved since the quarterly report on Form 10-Q for the quarterly period ended September 30, 2024) As described further in the “Legal Proceedings” section of Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, on February 17, 2022, Propel Fuels, Inc.
Propel Fuels Litigation As described further in the “Legal Proceedings” section of Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, on February 17, 2022, Propel Fuels, Inc.
Except as otherwise set forth herein, we do not currently believe that the eventual outcome of any matters previously reported, but still unresolved, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Except as previously reported, we do not believe we are subject to any matters, individually or in the aggregate, that would have a material adverse effect on our business, financial condition, results of operations or cash flows. During the fourth quarter of 2025, there were no new matters and two material developments with respect to matters previously reported.
While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful.
While Phillips 66 Company believes the jury verdict is not legally or factually supported, there can be no assurances that such defense efforts will be successful. Until the final resolution of this matter, we may be exposed to losses in excess of the amount recorded, and such amounts may have a material adverse effect on our financial position.
Also in 2025, the Propel Court is expected to rule on Phillips 66 Company’s motions for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position.
On August 25, 2025, Phillips 66 Company filed three post-trial motions requesting that the Propel Court render judgment in favor of Phillips 66 Company, grant a new trial, and/or reduce the damages award. On October 20, 2025, the Propel Court denied Phillips 66 Company’s motions.
In 2025, the Propel Court is expected to rule on motions anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees. Propel Fuels has asked the Propel Court to grant treble damages and Phillips 66 Company has filed a brief in opposition to that request.
On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. Based on the willfulness finding, Propel Fuels asked the Propel Court to award $1.2 billion in exemplary damages, and Phillips 66 Company filed a brief in opposition to that request.
Removed
During the fourth quarter of 2024, two new matters arose, and there were material developments with respect to two matters previously reported, that resolved those matters, which are all described below.
Added
The matter relates to alleged wastewater permit violations. On January 20, 2026, a Deferred Prosecution Agreement was entered obligating Phillips 66 to pay an $8 million penalty to the U.S.
Removed
If a specific request for stipulated penalties meeting the reporting threshold set forth in SEC rules is made pursuant to these decrees based on a given reported exceedance, we will separately report that matter and the amount of the proposed penalty. 43 New Matters In December 2024, the Bay Area Air Quality Management District (BAAQMD) offered to settle 172 notices of alleged violations of air regulations by the Rodeo Complex dating back to 2016.
Added
Government and $28,572 in restitution to the Los Angeles County Sanitation Districts, update certain policies and training related to Clean Water Act compliance, and conduct auditing relating to Clean Water Act compliance at two operating facilities.
Removed
Settlement negotiations are underway, and resolution is expected in 2025.
Added
A hearing on exemplary damages was held on March 4, 2025, and the Propel Court awarded Propel Fuels $195 million in exemplary damages on July 30, 2025. On August 5, 2025, the Propel Court entered a final judgment against Phillips 66 Company in the amount of $833 million.
Removed
If convicted of all charges, Phillips 66 would face a statutory maximum fine exceeding $1 million. The matter relates to alleged wastewater permit violations and is ongoing.
Added
The judgment includes the $604.9 million jury verdict, $195 million of exemplary damages, and $33.3 million of pre-judgment interest at 7%. Post-judgment interest of 10% is accruing from the date of the final judgment.
Removed
To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.
Added
On November 14, 2025, Phillips 66 Company filed its Notice of Appeal, which has been assigned to Division Two of the First District Court of Appeal. Separately, on October 24, 2025, Propel Fuels filed additional motions with the Propel Court seeking attorney’s fees and costs.
Removed
On August 30, 2024, the Colorado Department of Public Health & Environment, Air Pollution Control Division (APCD) sent DCP Operating Company, LP (DCP) a Compliance Order on Consent alleging violations at its Enterprise Compressor Station of AQCC Regulation 7 and DCP’s permit conditions.
Added
Phillips 66 Company filed its opposition to that request on January 13, 2026, and once the record on this issue is complete, the Propel Court will rule on these motions. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position.
Removed
This matter was resolved in the fourth quarter of 2024 with an agreement to pay a penalty and an economic benefit reimbursement totaling less than $1 million. On May 12, 2023, the EPA, Region 6, sent DCP a Notice of Violation and Opportunity to Confer regarding alleged violations of 40 C.F.R. Part 60, Subpart OOOOa (NOV).
Removed
The NOV alleged non-compliances at the Artesia and Eunice Natural Gas Processing Plants in New Mexico. This matter was resolved in the fourth quarter of 2024 with an agreement to implement scheduled corrective actions and pay a penalty of $1.9 million.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePrior to that, he served as DCP Midstream’s President of Operations from January 2019 to December 2022. Zhanna Golodryga is Executive Vice President, Emerging Energy and Sustainability, a position she has held since October 2022. Previously, Ms. Golodryga served as Senior Vice President, Chief Digital and Administrative Officer from April 2017 to October 2022. Richard G.
Biggest changeBaldridge served as Interim Chief Executive Officer of DCP Midstream from January 2023 to May 2024. Prior to that, he served as DCP Midstream’s President of Operations from January 2019 to December 2022. Richard G. Harbison is Executive Vice President, Refining, a position he has held since June 2022. Mr.
Sutherland previously served as Executive Vice President and Chief Legal Officer of Norfolk Southern Corporation from April 2020 to January 2022 and Senior Vice President, Government Relations and Chief Legal Officer of Norfolk Southern Corporation from August 2019 to April 2020. Ann M. Kluppel is Vice President and Controller, a position she has held since May 2024. Ms.
Sutherland previously served as Executive Vice President and Chief Legal Officer of Norfolk Southern Corporation from April 2020 to January 2022 and Senior Vice President, Government Relations and Chief Legal Officer of Norfolk Southern Corporation from August 2019 to April 2020. Ann M. Kluppel is Senior Vice President and Controller, a position she has held since May 2024. Ms.
Kluppel previously served as General Auditor from August 2021 to May 2024. Prior to that, Ms. Kluppel served as Managing Director, Corporate Finance from January 2021 to August 2021, and as Manager, Midstream Financial Planning & Analysis from August 2018 to December 2020. 45 PART II
Kluppel previously served as General Auditor from August 2021 to May 2024. Prior to that, Ms. Kluppel served as Managing Director, Corporate Finance from January 2021 to August 2021, and as Manager, Midstream Financial Planning & Analysis from August 2018 to December 2020. 39 PART II
Harbison is Executive Vice President, Refining, a position he has held since June 2022. Mr. Harbison previously served as Vice President, San Francisco Refinery from March 2021 to May 2022; General Manager, San Francisco Refinery from June 2020 to February 2021; and Manager, Lake Charles Manufacturing Complex from February 2016 to May 2020. Brian M.
Harbison previously served as Vice President, San Francisco Refinery from March 2021 to May 2022; General Manager, San Francisco Refinery from June 2020 to February 2021; and Manager, Lake Charles Manufacturing Complex from February 2016 to May 2020. Brian M. Mandell is Executive Vice President, Marketing and Commercial, a position he has held since March 2019. Vanessa L.
Mandell is Executive Vice President, Marketing and Commercial, a position he has held since March 2019. Vanessa L. Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, a position she has held since January 2022. Ms.
Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, a position she has held since January 2022. Ms.
Mitchell is Executive Vice President and Chief Financial Officer, a position he has held since January 2016. Donald A. Baldridge is Executive Vice President, Midstream and Chemicals, a position he has held since June 2024. Previously, Mr. Baldridge served as Interim Chief Executive Officer of DCP Midstream from January 2023 to May 2024.
Lashier served as President and Chief Executive Officer of CPChem from August 2017 to April 2021. Kevin J. Mitchell is Executive Vice President and Chief Financial Officer, a position he has held since January 2016. Donald A. Baldridge is Executive Vice President, Midstream and Chemicals, a position he has held since June 2024. Previously, Mr.
Item 4. MINE SAFETY DISCLOSURES Not applicable. 44 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Name Position Held Age* Mark E. Lashier Chairman and Chief Executive Officer 63 Kevin J. Mitchell Executive Vice President and Chief Financial Officer 58 Donald A. Baldridge Executive Vice President, Midstream and Chemicals 55 Zhanna Golodryga Executive Vice President, Emerging Energy and Sustainability 69 Richard G.
Item 4. MINE SAFETY DISCLOSURES Not applicable. 38 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Name Position Held Age* Mark E. Lashier Chairman and Chief Executive Officer 64 Kevin J. Mitchell Executive Vice President and Chief Financial Officer 59 Donald A. Baldridge Executive Vice President, Midstream and Chemicals 56 Richard G. Harbison Executive Vice President, Refining 60 Brian M.
Lashier served Phillips 66 as President and Chief Executive Officer from July 2022 to May 2024 and as President and Chief Operating Officer from April 2021 to July 2022. Mr. Lashier served as President and Chief Executive Officer of CPChem from August 2017 to April 2021. Kevin J.
Lashier is Chairman and Chief Executive Officer, a position he has held since May 2024. Previously, Mr. Lashier served Phillips 66 as President and Chief Executive Officer from July 2022 to May 2024 and as President and Chief Operating Officer from April 2021 to July 2022. Mr.
There are no family relationships among any of the executive officers named above or any member of our Board of Directors. The Board of Directors annually elects the officers to serve until a successor is elected and qualified or as otherwise provided in our By-Laws.
The Board of Directors annually elects the officers to serve until a successor is elected and qualified or as otherwise provided in our By-Laws. Set forth below is the name, title and period of service of each executive officer identified above over the last five years. Mark E.
Harbison Executive Vice President, Refining 59 Brian M. Mandell Executive Vice President, Marketing and Commercial 61 Vanessa L. Allen Sutherland Executive Vice President, Government Affairs, General Counsel and Corporate Secretary 53 Ann M. Kluppel Vice President and Controller 57 * As of February 21, 2025.
Mandell Executive Vice President, Marketing and Commercial 62 Vanessa L. Allen Sutherland Executive Vice President, Government Affairs, General Counsel and Corporate Secretary 54 Ann M. Kluppel Senior Vice President and Controller 58 * As of February 20, 2026. There are no family relationships among any of the executive officers named above or any member of our Board of Directors.
Removed
Set forth below is the name, title and period of service of each executive officer identified above over the last five years. Mark E. Lashier is Chairman and Chief Executive Officer, a position he has held since May 2024. Previously, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed3 unchanged
Biggest changeAdditionally, HollyFrontier Corporation was included as a peer for periods prior to its acquisition by HF Sinclair Corporation in March 2022. 46 Issuer Purchases of Equity Securities Millions of Dollars Period Total Number of Shares Purchased* Average Price Paid per Share** Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*** Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1-31, 2024 2,660,930 $ 133.44 2,660,930 $ 3,750 November 1-30, 2024 945,973 130.28 945,973 3,627 December 1-31, 2024 1,089,842 120.96 1,089,842 3,495 Total 4,696,745 $ 129.90 4,696,745 * Includes repurchase of shares of common stock from company employees in connection with the company’s broad-based employee incentive plans, when applicable. ** Average price paid per share includes excise taxes. *** Since the inception of our share repurchase program in 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock.
Biggest changeAdditionally, HollyFrontier Corporation was included as a peer for periods prior to its acquisition by HF Sinclair Corporation in March 2022. 40 Issuer Purchases of Equity Securities Millions of Dollars Period Total Number of Shares Purchased* Average Price Paid per Share** Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*** Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1-31, 2025 752,451 $ 133.91 752,451 $ 2,484 November 1-30, 2025 589,535 138.39 589,535 2,402 December 1-31, 2025 700,247 136.03 700,247 2,307 Total 2,042,233 $ 135.93 2,042,233 * Includes repurchase of shares of common stock from company employees in connection with the company’s broad-based employee incentive plans, when applicable. ** Average price paid per share includes excise taxes. *** Since the inception of our share repurchase program in 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock.
The Peer Group consists of CVR Energy, Inc.; Delek US Holdings, Inc.; Dow Inc.; HF Sinclair Corporation; LyondellBasell Industries N.V.; Marathon Petroleum Corporation; ONEOK, Inc.; PBF Energy Inc.; Targa Resources Corp.; Valero Energy Corporation; Westlake Chemical Corporation; and The Williams Companies, Inc.
The 2025 Peer Group consists of CVR Energy, Inc.; Delek US Holdings, Inc.; Dow Inc.; HF Sinclair Corporation; LyondellBasell Industries N.V.; Marathon Petroleum Corporation; ONEOK, Inc.; PBF Energy Inc.; Targa Resources Corp.; Valero Energy Corporation; Westlake Chemical Corporation; and The Williams Companies, Inc.
Performance Graph The performance graph above shows the cumulative total shareholder return (TSR) of Phillips 66 common stock for the five years ended December 31, 2024, which assumes a $100 investment in our common stock on December 31, 2019, and reinvestment of dividends.
Performance Graph The performance graph above shows the cumulative total shareholder return (TSR) of Phillips 66 common stock for the five years ended December 31, 2025, which assumes a $100 investment in our common stock, and reinvestment of dividends.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Phillips 66’s common stock is traded on the New York Stock Exchange under the symbol “PSX.” At January 31, 2025, the number of shareholders of record of our shares was 27,494.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Phillips 66’s common stock is traded on the New York Stock Exchange under the symbol “PSX.” At January 31, 2026, the number of shareholders of record of our shares was 26,226.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

188 edited+76 added−63 removed115 unchanged
Biggest changeFollowing are reconciliations of income (loss) before income taxes to realized refining margins: 87 Millions of Dollars, Except as Indicated Realized Refining Margins Atlantic Basin/Europe Gulf Coast Central Corridor West Coast Worldwide Year Ended December 31, 2024 Income (loss) before income taxes $ (59) (68) 670 (908) (365) Plus: Taxes other than income taxes 85 111 98 93 387 Depreciation, amortization and impairments 211 262 172 538 1,183 Selling, general and administrative expenses 43 32 102 32 209 Operating expenses 1,024 1,170 557 976 3,727 Equity in (earnings) losses of affiliates 7 (2) (55) — (50) Other segment (income) expense, net 46 8 (45) 14 23 Proportional share of refining gross margins contributed by equity affiliates 107 — 809 — 916 Special items: Certain tax impacts (9) — — — (9) Legal settlement — (7) — — (7) Realized refining margins $ 1,455 1,506 2,308 745 6,014 Total processed inputs ( thousands of barrels ) 196,067 196,055 108,563 87,631 588,316 Adjusted total processed inputs ( thousands of barrels )* 196,067 196,055 200,290 87,631 680,043 Income (loss) before income taxes per barrel ( dollars per barrel )** $ (0.30) (0.35) 6.18 (10.38) (0.62) Realized refining margins ( dollars per barrel )*** 7.42 7.68 11.52 8.50 8.84 Year Ended December 31, 2023 Income before income taxes $ 816 1,744 2,241 539 5,340 Plus: Taxes other than income taxes 71 106 94 111 382 Depreciation, amortization and impairments 209 246 163 223 841 Selling, general and administrative expenses 42 19 77 31 169 Operating expenses 1,097 1,104 736 1,308 4,245 Equity in (earnings) losses of affiliates 8 (2) (445) — (439) Other segment (income) expense, net 16 17 (67) (3) (37) Proportional share of refining gross margins contributed by equity affiliates 90 — 1,257 — 1,347 Special items: Certain tax impacts (15) — — — (15) Realized refining margins $ 2,334 3,234 4,056 2,209 11,833 Total processed inputs ( thousands of barrels ) 182,213 206,356 102,774 116,615 607,958 Adjusted total processed inputs ( thousands of barrels )* 182,213 206,356 180,251 116,615 685,435 Income before income taxes per barrel ( dollars per barrel )** $ 4.48 8.44 21.81 4.63 8.78 Realized refining margins ( dollars per barrel )*** 12.80 15.67 22.50 18.95 17.26 * 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.
Biggest changeAs such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. 84 Millions of Dollars, Except as Indicated Realized Refining Margins Atlantic Basin/Europe Gulf Coast Central Corridor West Coast Worldwide Year Ended December 31, 2023 Income before income taxes $ 816 1,744 2,241 539 5,340 Plus: Taxes other than income taxes 71 106 94 111 382 Depreciation, amortization and impairments 209 246 163 223 841 Selling, general and administrative expenses 42 19 77 31 169 Operating expenses 1,097 1,104 736 1,308 4,245 Equity in (earnings) losses of affiliates 8 (2) (445) — (439) Other segment (income) expense, net 16 17 (67) (3) (37) Proportional share of refining gross margins contributed by equity affiliates 90 — 1,257 — 1,347 Special items: Certain tax impacts (15) — — — (15) Realized refining margins $ 2,334 3,234 4,056 2,209 11,833 Total processed inputs ( thousands of barrels ) 182,213 206,356 102,774 116,615 607,958 Adjusted total processed inputs ( thousands of barrels )* 182,213 206,356 180,251 116,615 685,435 Income before income taxes per barrel ( dollars per barrel )** $ 4.48 8.44 21.81 4.63 8.78 Realized refining margins ( dollars per barrel )*** 12.80 15.67 22.50 18.95 17.26 * Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. ** Income 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.
The ultimate impact on our financial performance, either positive or negative, from this and similar programs, will depend on a number of factors, including, but not limited to: • Whether and to what extent legislation or regulation is enacted. • The nature of the legislation or regulation, such as a cap and trade system, a tax on emissions or financial damages. • The GHG reductions required. 81 • The price and availability of offsets. • The demand for, amount and allocation of allowances. • Technological and scientific developments leading to new products or services. • Any potential significant physical effects of climate change, such as increased severe weather events, changes in sea levels and changes in temperature. • Whether, and the extent to which, increased compliance costs are ultimately reflected in the prices of our products and services.
The ultimate impact on our financial performance, either positive or negative, from this and similar programs, will depend on a number of factors, including, but not limited to: • Whether and to what extent legislation or regulation is enacted. • The nature of the legislation or regulation, such as a cap and trade system, a tax on emissions or financial damages. • The GHG reductions required. • The price and availability of offsets. 76 • The demand for, amount and allocation of allowances. • Technological and scientific developments leading to new products or services. • Any potential significant physical effects of climate change, such as increased severe weather events, changes in sea levels and changes in temperature. • Whether, and the extent to which, increased compliance costs are ultimately reflected in the prices of our products and services.
Selling, general and administrative expenses increased 11% in 2024, mainly driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels, Inc. (Propel Fuels). The increase was partially offset by lower employee-related expenses and selling expenses.
Selling, general and administrative expenses increased 11% in 2024, mainly driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels. The increase was partially offset by lower employee-related expenses and selling expenses.
The expected future cash flows used for impairment reviews and related fair value calculations are based on judgmental assessments, including future volumes, commodity prices, operating costs, margins, discount rates and capital project decisions, considering all available information at the date of review. 83 Investments in unconsolidated affiliates accounted for under the equity method are assessed for impairment when there are indicators of a loss in value, such as a lack of sustained earnings capacity or a current fair value less than the investment’s carrying amount.
The expected future cash flows used for impairment reviews and related fair value calculations are based on judgmental assessments, including future volumes, commodity prices, operating costs, margins, discount rates and capital project decisions, considering all available information at the date of review. 78 Investments in unconsolidated affiliates accounted for under the equity method are assessed for impairment when there are indicators of a loss in value, such as a lack of sustained earnings capacity or a current fair value less than the investment’s carrying amount.
Accrued liabilities for remediation activities are not reduced for potential recoveries from insurers or other third parties and are not discounted (except those assumed in a business combination, which we record on a discounted basis). 79 Many of these liabilities result from CERCLA, RCRA and similar state laws that require us to undertake certain investigative and remedial activities at sites where we conduct or once conducted operations, or at sites where our generated waste was disposed.
Accrued liabilities for remediation activities are not reduced for potential recoveries from insurers or other third parties and are not discounted (except those assumed in a business combination, which we record on a discounted basis). 74 Many of these liabilities result from CERCLA, RCRA and similar state laws that require us to undertake certain investigative and remedial activities at sites where we conduct or once conducted operations, or at sites where our generated waste was disposed.
Accounts outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR plus the applicable margin. In all instances, Phillips 66 Company retains the servicing of the accounts receivables transferred.
Accounts receivable outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR plus the applicable margin. In all instances, Phillips 66 Company retains the servicing of the accounts receivables transferred.
These collectively may lead to more climate-based claims for damages, and may result in longer agency review time for development projects to determine the extent of potential climate change. 80 • The EPA's 2015 Final Rule regulating GHG emissions from existing fossil fuel-fired electrical generating units under the Federal Clean Air Act, commonly referred to as the Clean Power Plan.
These collectively may lead to more climate-based claims for damages, and may result in longer agency review time for development projects to determine the extent of potential climate change. 75 • The EPA's 2015 Final Rule regulating GHG emissions from existing fossil fuel-fired electrical generating units under the Federal Clean Air Act, commonly referred to as the Clean Power Plan.
Business Combination In accounting for a business combination, assets acquired, liabilities assumed and noncontrolling interests are recorded based on estimated fair values as of the date of acquisition.
Business Combinations In accounting for a business combination, assets acquired, liabilities assumed and noncontrolling interests are recorded based on estimated fair values as of the date of acquisition.
Discharge of Senior Notes On September 20, 2024, we extinguished (i) the remaining $441 million outstanding principal amount of Phillips 66 Company’s 3.605% senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $650 million outstanding principal amount of Phillips 66’s 3.850% senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $1,100 million in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes.
Discharge of Senior Notes On September 20, 2024, we extinguished (i) the remaining $441 million outstanding principal amount of Phillips 66 Company’s 3.605% senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $650 million outstanding principal amount of Phillips 66’s 3.850% senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $1.1 billion in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes.
Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024. Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15, commencing on March 15, 2025.
Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024. Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15 of each year and commenced on March 15, 2025.
These increases were partially offset by before-tax gains totaling $137 million associated with the sales of our ownership interests in the South Texas Gateway Terminal and the Belle Chasse Terminal in 2023. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for more information regarding our sales of REX and Coop.
These increases were partially offset by before-tax gains totaling $137 million associated with the sales of our ownership interests in the South Texas Gateway Terminal and the Belle Chasse Terminal in 2023. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding our sales of REX and Coop.
Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at December 31, 2024.
Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at December 31, 2025.
In addition to the disclosures above, we have issued our 2024 Sustainability and People Report that is accessible on our website and provides more detailed information regarding our environmental, social and governance and human capital initiatives, including information on environmental metrics and other topics of interest to our stakeholders, which may not be considered material for U.S.
In addition to the disclosures above, we have issued our 2025 Sustainability and People Report that is accessible on our website and provides more detailed information regarding our environmental, social and governance and human capital initiatives, including information on environmental metrics and other topics of interest to our stakeholders, which may not be considered material for U.S.
The information contained in the Sustainability and People Report is not incorporated by reference into, and does not constitute a part of, this Annual Report. 82 CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with GAAP requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
The information contained in the Sustainability and People Report is not incorporated by reference into, and does not constitute a part of, this Annual Report. 77 CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with GAAP requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
The estimates used in determining fair values are based on assumptions believed to be reasonable, but which are inherently uncertain. Accordingly, actual results may differ materially from the estimated results used to determine fair value. See Note 5—Business Combinations, and Note 19—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information on our acquisitions.
The estimates used in determining fair values are based on assumptions believed to be reasonable, but which are inherently uncertain. Accordingly, actual results may differ materially from the estimated results used to determine fair value. See Note 5—Business Combinations, and Note 20—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information on our acquisitions.
Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility.
Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its accounts receivable, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility.
Federal Emergency Planning and Community Right-to-Know Act, which requires facilities to report toxic chemical inventories to local emergency planning committees and response departments. • U.S.
Federal Emergency Planning and Community Right-to-Know Act, which requires facilities to report toxic chemical inventories to local emergency planning committees and response departments. 72 • U.S.
Olefins and Polyolefins Capacity Utilization (percent) 97 % 96 91 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.
Olefins and Polyolefins Capacity Utilization (percent) 98 % 97 96 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.
An example of this in the fuels area is the Energy Independence and Security Act of 2007 (EISA). The law requires fuel producers and importers to provide additional renewable fuels for transportation motor fuels and stipulates a mix of various types. Renewable Identification Numbers (RINs) form the mechanism used by the U.S.
An example of this in the fuels area is the Energy Independence and Security Act of 2007 (EISA). The law requires fuel producers and importers to provide additional renewable fuels for transportation motor fuels and stipulates a mix of various types. RINs form the mechanism used by the U.S.
Shares of stock repurchased are held as treasury shares. 72 Contractual Obligations Our contractual obligations primarily consist of purchase obligations, outstanding debt principal and interest obligations, operating and finance lease obligations, and asset retirement and environmental obligations. Purchase Obligations Our purchase obligations represent agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms.
Shares of stock repurchased are held as treasury shares. 67 Contractual Obligations Our contractual obligations primarily consist of purchase obligations, outstanding debt principal and interest obligations, operating and finance lease obligations, and asset retirement and environmental obligations. Purchase Obligations Our purchase obligations represent agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms.
As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. 89 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.
As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. 85 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.
Net gain on dispositions increased $206 million in 2024, primarily due to a before-tax gain of $238 million associated with the sale of our ownership interest in REX, as well as a before-tax gain of $67 million associated with the foreign currency forward contracts entered into in connection with the sale of our ownership interest in Coop Mineraloel AG (Coop).
Net gain on dispositions increased $206 million in 2024, primarily due to a before-tax gain of $238 million associated with the sale of our ownership interest in REX, as well as a before-tax gain of $67 million associated with the foreign currency forward contracts entered into in connection with the sale of our ownership interest in Coop.
In 2024, we also recorded before-tax impairments in our Midstream and Refining segments related to certain crude oil processing and logistics assets in California. See Note 12—Impairments, in the Notes to Consolidated Financial Statements for more information regarding impairments.
In 2024, we also recorded before-tax impairments in our Midstream and Refining segments related to certain crude oil processing and logistics assets in California. See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding impairments.
For the year-ended December 31, 2024, we sold $125 million of accounts receivables in exchange for a $125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.
For the year ended December 31, 2024, we sold $125 million in accounts receivable in exchange for a $125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.
DCP LP Availability of Debt Financing DCP LP has a Baa3 credit rating, with a positive outlook, from Moody’s Investors Service and a BBB+ credit rating, with a stable outlook, from Standard and Poor’s. These ratings facilitate DCP LP’s access to a variety of lenders.
DCP LP Availability of Debt Financing DCP LP has a Baa2 credit rating, with a positive outlook, from Moody’s Investors Service and a BBB+ credit rating, with a stable outlook, from Standard and Poor’s. These ratings facilitate DCP LP’s access to a variety of lenders.
P66 Receivables’ sole activity consists of purchasing receivables from Phillips 66 Company, providing those receivables as collateral for P66 Receivables’ borrowings or on-selling certain of its receivables under the Receivables Securitization Facility.
P66 Receivables’ sole activity consists of purchasing accounts receivable from Phillips 66 Company, providing those accounts receivable as collateral for P66 Receivables’ borrowings or on-selling certain of its accounts receivable under the Receivables Securitization Facility.
The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At December 31, 2024 and 2023, no amounts were drawn under the Facility or the previous revolving credit facility, respectively.
The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At December 31, 2025 and 2024, no amounts were drawn under the Facility or the previous revolving credit facility.
See Note 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information regarding the sale of our ownership interest in REX.
See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information regarding the sale of our ownership interest in REX.
Collections on receivables in excess of amounts owed by P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its receivables to P66 Receivables under the Receivables Securitization Facility, and otherwise for distribution to Phillips 66 Company, in each case, subject to the terms set forth in the Receivables Securitization Facility.
Collections on accounts receivable in excess of amounts owed by P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its accounts receivable to P66 Receivables under the Receivables Securitization Facility, and otherwise for distribution to Phillips 66 Company, in each 61 case, subject to the terms set forth in the Receivables Securitization Facility.
DCP LP does not have any ratings triggers on any of its corporate debt that would cause an automatic default, and thereby impact access to liquidity, in the event of a rating downgrade by one or more rating agencies. 69 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.
DCP LP does not have any ratings triggers on any of its corporate debt that would cause an automatic default, and thereby impact access to liquidity, in the event of a rating downgrade by one or more rating agencies. 64 Off-Balance Sheet Arrangements Lease Residual Value Guarantees Under the operating lease agreement for our headquarters facility in Houston, Texas, we had the option at the end of the existing lease term to request to renew the lease, purchase the facility or assist the lessor in marketing it for resale.
See Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.
See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.
For the year ended December 31, 2024, DCP LP made cash distributions of $47 million to common unitholders other than Phillips 66 and its subsidiaries. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements for additional information regarding the DCP LP public common unit acquisition.
For the year ended December 31, 2025, DCP LP made cash distributions of $130 million to common unitholders other than Phillips 66 and its subsidiaries. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements for additional information regarding the DCP LP public common unit acquisition.
See Note 12—Impairments, in the Notes to Consolidated Financial Statements for information about impairments. 84 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.
See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information. 79 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.
For the years ended December 31, 2023 and 2022, we incurred expenses of $323 million and $478 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.
For the year ended December 31, 2023, we incurred expenses of $323 million 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.
As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. 90
As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. 86
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 December 31, 2023, we reported that we had been notified of potential liability under CERCLA and comparable state laws at 21 sites within the United States.
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 December 31, 2024, we reported that we had been notified of potential liability under CERCLA and comparable state laws at 19 sites within the United States and Puerto Rico.
Taxes other than income taxes decreased 53% in 2024, primarily due to an increase in tax credits generated from higher renewable diesel production and blending activity. Income tax expense decreased 78% in 2024, primarily due to lower income before income taxes. See Note 24—Income Taxes, in the Notes to Consolidated Financial Statements for more information regarding our income taxes.
Taxes other than income taxes decreased 53% in 2024, primarily due to an increase in tax credits generated from higher renewable diesel production and blending activity. 47 Income tax expense decreased 78% in 2024, primarily due to lower income before income taxes. See Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information regarding our income taxes.
The M&S capital budget of $154 million reflects the continued enhancement of our branded network. The Renewable Fuels capital budget of $74 million reflects investments at the Rodeo Complex related to feedstock optimization and logistics for renewable diesel and sustainable aviation fuel production.
The M&S capital budget of $80 million reflects the continued enhancement of our branded network. The Renewable Fuels capital budget of $40 million reflects investments at the Rodeo Complex related to feedstock optimization and logistics for renewable diesel and sustainable aviation fuel production.
See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information regarding restructuring costs.
See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information.
Debt Issuances On September 9, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.8 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.
On September 11, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.8 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.
Equity in earnings of affiliates decreased 12% in 2024, primarily due to lower equity earnings from WRB Refining LP (WRB) as a result of decreased margins, Rockies Express Pipeline LLC (REX) due to the sale of our ownership interest in 2024, South Texas Gateway Terminal due to the sale of our ownership interest in 2023, and Excel Paralubes LLC due to declining margins, partially offset by higher sales volumes and lower maintenance costs.
Equity in earnings of affiliates decreased 12% in 2024, primarily due to lower equity earnings from WRB as a result of decreased margins, REX due to the sale of our ownership interest in 2024, South Texas Gateway Terminal due to the sale of our ownership interest in 2023, and Excel Paralubes due to declining margins, partially offset by higher sales volumes and lower maintenance costs.
Asset Retirement and Environmental Obligations See Note 13—Asset Retirement Obligations and Accrued Environmental Costs, in the Notes to Consolidated Financial Statements for information regarding asset retirement and environmental obligations. 73 Capital Spending Our capital expenditures and investments represent consolidated capital spending.
Asset Retirement and Environmental Obligations See Note 13—Asset Retirement Obligations and Accrued Environmental Costs, in the Notes to Consolidated Financial Statements for information regarding asset retirement and environmental obligations. 68 Capital Spending Our capital expenditures and investments, excluding acquisitions, represent consolidated capital spending.
Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.
Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024.
Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain receivables in an amount not to exceed $500 million in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder.
Under the amended Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain accounts receivable in an amount not to exceed $1.25 billion in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder.
On June 14, 2024, we sold our 25% ownership interest in REX for cash proceeds of $685 million. On August 1, 2023, we sold our 25% ownership interest in the South Texas Gateway Terminal for approximately $275 million.
On June 14, 2024, we sold our 25% ownership interest in REX for cash proceeds of $685 million. On August 1, 2023, we sold our 25% ownership interest in the South Texas Gateway Terminal for approximately $275 million. On February 28, 2023, we sold the Belle Chasse Terminal for approximately $76 million.
The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows. These government obligations will yield sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes.
The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows. These government obligations yielded sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes on the applicable maturity dates.
EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT Phillips 66 is uniquely positioned as a leading integrated downstream energy provider operating with Midstream, Chemicals, Refining, Marketing and Specialties (M&S), and Renewable Fuels segments. At December 31, 2024, we had total assets of $72.6 billion. Executive Overview During 2024, we reported earnings of $2.1 billion and generated $4.2 billion in cash from operating activities.
EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT Phillips 66 is uniquely positioned as a leading integrated downstream energy provider operating with Midstream, Chemicals, Refining, Marketing and Specialties (M&S), and Renewable Fuels segments. At December 31, 2025, we had total assets of $73.7 billion. Executive Overview During 2025, we reported earnings of $4.4 billion and generated $5 billion in cash from operating activities.
The Midstream capital budget advances the integrated NGL wellhead-to-market value chain by strengthening our position in key basins, including by increasing gas processing capacity. In Refining, we plan to invest $822 million, including $414 million for sustaining capital. Refining growth capital of $408 million supports high-return, low-capital projects that will increase asset reliability and improve market capture.
The Midstream capital budget advances the integrated NGL wellhead-to-market value chain by strengthening our position in key basins, including by increasing gas processing, pipeline and fractionation capacity. In Refining, we plan to invest $1.1 billion, including $590 million for sustaining capital. Refining growth capital of $490 million supports high-return, low-capital projects that will increase asset reliability and improve market capture.
Phillips 66 also has a $5 billion uncommitted commercial paper program for short-term working capital needs that is supported by the Facility. Commercial paper maturities are contractually limited to less than one year. At December 31, 2024, $435 million of commercial paper had been issued under this program. At December 31, 2023, no borrowings were outstanding under this program.
Phillips 66 also has a $5 billion uncommitted commercial paper program for short-term working capital needs that is supported by the Facility. Commercial paper maturities are contractually limited to less than one year. At December 31, 2025, and 2024, $200 million and $435 million, respectively, of commercial paper had been issued under this program.
We expect these purchase obligations will be fulfilled with operating cash flows in the period when due. At December 31, 2024, our purchase obligations totaled $85.3 billion, with $31.2 billion due within one year. The majority of our purchase obligations are market-based contracts, including exchanges and futures, for the purchase of commodities such as crude oil and NGL.
We expect these purchase obligations will be fulfilled with operating cash flows in the period when due. At December 31, 2025, our purchase obligations totaled $76.9 billion, with $39.7 billion due within one year. The majority of our purchase obligations are market-based contracts, including exchanges and futures, for the purchase of commodities such as crude oil and NGL.
The decrease was primarily due to lower earnings, driven by a decline in realized refining margins, partially offset by more favorable working capital impacts. During 2023, cash generated by operating activities was $7.0 billion, a $3.8 billion decrease compared with 2022.
During 2024, cash generated by operating activities was $4.2 billion, a $2.8 billion decrease compared with 2023. The decrease was primarily due to lower earnings, driven by a decline in realized refining margins, partially offset by more favorable working capital impacts.
Thousands of Barrels Daily Marketing Refined Product Sales Gasoline 1,278 1,240 1,183 Distillates 1,010 957 967 Other 52 27 29 2,340 2,224 2,179 The M&S segment purchases for resale and markets refined products, mainly in the United States and Europe.
Thousands of Barrels Daily Marketing Refined Product Sales Gasoline 1,297 1,278 1,240 Distillates 1,006 1,010 957 Other 45 52 27 2,348 2,340 2,224 The M&S segment purchases for resale and markets refined products, mainly in the United States and Europe.
Our worldwide refining crude oil capacity utilization rate was 92% and 90% in 2023 and 2022, respectively. 60 Marketing and Specialties Year Ended December 31 2024 2023 2022 Millions of Dollars Income Before Income Taxes $ 1,011 1,897 2,072 Dollars Per Barrel Income Before Income Taxes U.S. $ 0.41 1.65 1.73 International 3.93 4.72 5.66 Realized Marketing Fuel Margins* U.S. $ 1.73 2.12 2.12 International 5.15 5.96 7.03 * 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.
Our worldwide refining crude oil capacity utilization rate was 95% and 92% in 2024 and 2023, respectively. 54 Marketing and Specialties Year Ended December 31 2025 2024 2023 Millions of Dollars Income Before Income Taxes $ 4,500 1,011 1,897 Dollars Per Barrel Income Before Income Taxes U.S. $ 1.09 0.41 1.65 International 28.39 3.93 4.72 Realized Marketing Fuel Margins* U.S. $ 1.95 1.73 2.12 International 5.58 5.15 5.96 * 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.
At December 31, 2024, $121 million of the sold accounts receivable remained outstanding, which represents our maximum potential future exposure under the guarantee. Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet.
At December 31, 2025 and 2024, $125 million and $121 million of the sold accounts receivable remained uncollected, respectively, which represents our maximum potential future exposure under the guarantee associated with the Receivables Securitization Facility. Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet.
See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s 2024 results. 2023 vs. 2022 Results from the Chemicals segment decreased $256 million in 2023, compared with 2022.
See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s 2025 results. 2024 vs. 2023 Results from the Chemicals segment increased $276 million in 2024, compared with 2023.
On March 29, 2024, DCP LP redeemed $300 million of its 5.375% Senior Notes due July 2025. After the redemption, an aggregate principal amount of $525 million remained outstanding. On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.
On 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.
Our new target aims to return greater than 50% of net cash provided by operating activities to shareholders through share repurchases and dividends.
Our financial target aims to return greater than 50% of net cash provided by operating activities, excluding working capital, to shareholders through share repurchases and dividends.
Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem. 2024 vs. 2023 Results from the Chemicals segment increased $276 million in 2024, compared with 2023. The increase was primarily due to improved margins driven by higher sales prices and lower feedstock costs, as well as increased volumes and decreased utility costs.
Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem. 2025 vs. 2024 Results from the Chemicals segment decreased $579 million in 2025, compared with 2024. The decrease was primarily due to reduced polyethylene margins driven by lower sales prices and higher feedstock costs, as well as increased utility costs.
Capitalized environmental costs were $111 million in 2024 and are expected to be approximately $168 million and $231 million, in 2025 and 2026, respectively. These amounts do not include capital expenditures made for other purposes that have an indirect benefit on environmental compliance.
Capitalized environmental costs were $243 million in 2025 and are expected to be approximately $306 million and $190 million, in 2026 and 2027, respectively. These amounts do not include capital expenditures made for other purposes that have an indirect benefit on environmental compliance.
On December 31, 2024, WRB distributed its Advance Term Loan with a principal balance of $290 million, including the right to receive any accrued but unpaid interest, to Phillips 66 Company, resulting in the reduction of our related party debt balance and our investment in WRB by $290 million. The distribution was recognized as a non-cash investing and financing transaction.
Related Party Advance Term Loan Agreements On December 31, 2024, WRB distributed its Advance Term Loan with a principal balance of $290 million, including the right to receive any accrued but unpaid interest, to Phillips 66 Company, resulting in the reduction of our related party debt balance and our investment in WRB by $290 million.
See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results. 62 Corporate and Other Millions of Dollars Year Ended December 31 2024 2023 2022 Loss Before Income Taxes Net interest expense $ (745) (629) (537) Corporate overhead and other (539) (672) (633) NOVONIX (3) (39) (442) Total Corporate and Other $ (1,287) (1,340) (1,612) Net interest expense consists of interest and financing expense, net of interest income and capitalized interest.
See the “Executive Overview and Business Environment” section for information on market factors impacting this year’s results. 57 Corporate and Other Millions of Dollars Year Ended December 31 2025 2024 2023 Loss Before Income Taxes Net interest expense $ (898) (745) (629) Corporate overhead and other (629) (539) (672) NOVONIX (13) (3) (39) Total Corporate and Other $ (1,540) (1,287) (1,340) Net interest expense consists of interest and financing expense, net of interest income and capitalized interest.
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. 76 Propel Fuels Litigation In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, a California company that distributes E85 and other alternative fuels through fueling kiosks.
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. 71 Propel Fuels Litigation In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc.
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 December 31, 2024, $14.4 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.
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 December 31, 2025, $16.0 billion of publicly held debt securities has been guaranteed by the Obligor Group.
Results for our Renewable Fuels segment are impacted by several factors, including the market price of renewable fuels, feedstock costs, throughput, operating costs, and the value of certain regulatory credits, as well as other market factors, largely determined by the relationship between supply and demand. 51 RESULTS OF OPERATIONS Consolidated Results A summary of income (loss) before income taxes by operating segment with a reconciliation to net income attributable to Phillips 66 follows: Millions of Dollars Year Ended December 31 2024 2023 2022 Midstream $ 2,638 2,819 5,176 Chemicals 876 600 856 Refining (365) 5,340 7,976 Marketing and Specialties 1,011 1,897 2,072 Renewable Fuels (198) 153 171 Corporate and Other (1,287) (1,340) (1,612) Income before income taxes 2,675 9,469 14,639 Income tax expense 500 2,230 3,248 Net income 2,175 7,239 11,391 Less: net income attributable to noncontrolling interests 58 224 367 Net income attributable to Phillips 66 $ 2,117 7,015 11,024 2024 vs. 2023 Net income attributable to Phillips 66 for the year ended December 31, 2024, was $2,117 million, compared with $7,015 million for the year ended December 31, 2023.
Results for our Renewable Fuels segment are impacted by several factors, including the market price of renewable fuels, feedstock costs, throughput, operating costs, and the value of certain regulatory credits, as well as other market factors, largely determined by the relationship between supply and demand. 44 RESULTS OF OPERATIONS Consolidated Results A summary of income (loss) before income taxes by operating segment with a reconciliation to net income attributable to Phillips 66 follows: Millions of Dollars Year Ended December 31 2025 2024 2023 Midstream $ 2,817 2,638 2,819 Chemicals 297 876 600 Refining (274) (365) 5,340 Marketing and Specialties 4,500 1,011 1,897 Renewable Fuels (380) (198) 153 Corporate and Other (1,540) (1,287) (1,340) Income before income taxes 5,420 2,675 9,469 Income tax expense 892 500 2,230 Net income 4,528 2,175 7,239 Less: net income attributable to noncontrolling interests 125 58 224 Net income attributable to Phillips 66 $ 4,403 2,117 7,015 2025 vs. 2024 Net income attributable to Phillips 66 for the year ended December 31, 2025, was $4,403 million, compared with $2,117 million for the year ended December 31, 2024.
The fair value of our investment in NOVONIX declined by $39 million during 2023, compared with a decline of $442 million during 2022. 63 CAPITAL RESOURCES AND LIQUIDITY Financial Indicators Millions of Dollars, Except as Indicated 2024 2023 2022 Cash and cash equivalents $ 1,738 3,323 6,133 Net cash provided by operating activities 4,191 7,029 10,813 Short-term debt 1,831 1,482 529 Total debt 20,062 19,359 17,190 Total equity 28,463 31,650 34,106 Percent of total debt to capital* 41 % 38 34 Percent of floating-rate debt to total debt 9 % 10 — * Capital includes total debt and total equity.
The fair value of our investment in NOVONIX declined by $3 million during 2024, compared with a decline of $39 million during 2023. 58 CAPITAL RESOURCES AND LIQUIDITY Financial Indicators Millions of Dollars, Except as Indicated 2025 2024 2023 Cash and cash equivalents $ 1,116 1,738 3,323 Net cash provided by operating activities 4,962 4,191 7,029 Short-term debt 1,038 1,831 1,482 Total debt 19,716 20,062 19,359 Total equity 30,241 28,463 31,650 Percent of total debt to capital* 39 % 41 38 Percent of floating-rate debt to total debt 2 % 9 10 * Capital includes total debt and total equity.
Dollars Per Gallon U.S. Average Wholesale Prices* Gasoline $ 2.64 2.93 3.30 Distillates 2.69 3.23 3.86 * On third-party branded refined product sales, excluding excise taxes.
Dollars Per Gallon U.S. Average Wholesale Prices* Gasoline $ 2.45 2.64 2.93 Distillates 2.62 2.69 3.23 * On third-party branded refined product sales.
We incur costs related to the prevention, control, abatement or elimination of environmental pollution. Expensed environmental costs were $849 million in 2024 and are expected to be approximately $923 million and $791 million in 2025 and 2026, respectively.
We incur costs related to the prevention, control, abatement or elimination of environmental pollution. Expensed environmental costs were $937 million in 2025 and are expected to be approximately $901 million and $916 million in 2026 and 2027, respectively.
We recognized an immaterial charge associated with the transfer of financial assets, which is included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the year ended December 31, 2024.
We recognized immaterial charges associated with the transfer of financial assets, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income for the years ended December 31, 2025 and 2024.
Corporate and Other Capital spending for Corporate and Other during the three-year period ended December 31, 2024, was $290 million, primarily related to information technology and facilities. 2025 Budget Our 2025 capital budget is $2.1 billion, including $998 million for sustaining capital and $1.1 billion for growth capital.
Corporate and Other Capital spending for Corporate and Other during the three-year period ended December 31, 2025, was $208 million, primarily related to information technology, energy research & innovation, and facilities. 2026 Budget Our 2026 capital budget is $2.4 billion, including $1.1 billion for sustaining capital and $1.3 billion for growth capital.
The Corporate and Other capital budget of $75 million will primarily fund information technology projects. 75 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.
The Corporate and Other capital budget of $70 million will fund spend associated with information technology projects and the redevelopment of our idled Los Angeles Refinery. 70 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.
Federal Oil Pollution Act of 1990, under which owners and operators of onshore facilities and pipelines as well as owners and operators of vessels are liable for removal costs and damages that result from a discharge of crude oil into navigable waters of the United States. • European Union Trading Directive resulting in the European Union Emissions Trading Scheme (EU ETS), which uses a market-based mechanism to incentivize the reduction of greenhouse gas (GHG) emissions, as well as the United Kingdom Emissions Trading Scheme (UK ETS), which replaced the EU ETS in the United Kingdom in 2021, following BREXIT. 77 These laws and their implementing regulations set limits on emissions and, in the case of discharges to water, establish water quality limits.
Federal Oil Pollution Act of 1990, under which owners and operators of onshore facilities and pipelines, as well as owners and operators of vessels are liable for removal costs and damages that result from a discharge of crude oil into navigable waters of the United States. • European Union Trading Directive resulting in the European Union Emissions Trading Scheme (EU ETS), which uses a market-based mechanism to incentivize the reduction of greenhouse gas (GHG) emissions, as well as the United Kingdom Emissions Trading Scheme (UK ETS).
See Note 16—Guarantees, in the Notes to Consolidated Financial Statements for additional information regarding guarantees. 71 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 December 31, 2024, was $20.1 billion and our total debt-to-capital ratio was 41%.
See Note 17—Guarantees, in the Notes to Consolidated Financial Statements for additional information regarding guarantees. 65 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 December 31, 2025, was $19.7 billion and our total debt-to-capital ratio was 39%.
Ultimately, the parties were not able to reach an agreement and negotiations were terminated in August 2018. On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.
On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.
Many of the delays associated with the permitting process are beyond the control of the applicant. Other countries and many states where we operate also have, or are developing, similar environmental laws and regulations governing these same types of activities.
In addition, there can be delays associated with notice and comment periods and the agency’s processing of the application. Many of the delays associated with the permitting process are beyond the control of the applicant. Other countries and many states where we operate also have, or are developing, similar environmental laws and regulations governing these same types of activities.
See Note 15—Debt, in the Notes to Consolidated Financial Statements for additional information regarding our outstanding debt principal and interest obligations. Finance and Operating Lease Obligations See Note 21—Leases, in the Notes to Consolidated Financial Statements for information regarding our lease obligations and timing of our expected lease payments.
Finance and Operating Lease Obligations See Note 22—Leases, in the Notes to Consolidated Financial Statements for information regarding our lease obligations and timing of our expected lease payments.
See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, and Note 30—Phillips 66 Partners LP, in the Notes to Consolidated Financial Statements for additional information on the DCP Midstream Merger and the Phillips 66 Partners merger, respectively. 54 Segment Results Midstream Year Ended December 31 2024 2023 2022 Millions of Dollars Income Before Income Taxes Transportation $ 1,292 1,310 1,176 NGL 1,346 1,509 4,000 Total Midstream $ 2,638 2,819 5,176 Thousands of Barrels Daily Transportation Volumes Pipelines* 3,053 3,069 3,089 Terminals 3,123 3,246 2,981 Operating Statistics Wellhead Volume (billion cubic feet per day)** 4.3 4.6 4.4 NGL production** 436 437 423 Pipeline Throughput–Y-Grade to Market*** 754 707 704 NGL fractionated 728 711 529 * Pipelines represent the sum of volumes transported through each separately tariffed consolidated pipeline segment, excluding NGL’s pipelines. * * Includes 100% of DCP Midstream Class A Segment’s volumes from August 18, 2022, forward. *** Represents volumes delivered to major fractionation market hubs, including Mont Belvieu, Sweeny and Conway.
See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, and Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information. 48 Segment Results Midstream Year Ended December 31 2025 2024 2023 Millions of Dollars Income Before Income Taxes Transportation $ 918 1,292 1,310 NGL 1,899 1,346 1,509 Total Midstream $ 2,817 2,638 2,819 Thousands of Barrels Daily Transportation Volumes Pipelines* 3,023 3,053 3,069 Terminals 3,092 3,123 3,246 Operating Statistics Wellhead Volume (billion cubic feet per day)** 4.3 4.3 4.6 NGL Production** 462 436 437 NGL Pipeline Throughput–Y-Grade to Market***† 917 754 707 NGL Fractionated† 896 728 711 * Pipelines represent the sum of volumes transported through each separately tariffed consolidated pipeline segment, excluding NGL’s pipelines. ** Includes 100% of DCP Midstream Class A Segment. *** Represents volumes delivered to fractionation market hubs, including Mont Belvieu, Sweeny and Conway.
International 2024 2023 2022 2024 2023 2022 Realized Marketing Fuel Margins Income before income taxes $ 303 1,151 1,177 447 532 647 Plus: Depreciation and amortization 38 23 14 116 76 72 Selling, general and administrative expenses 1,434 813 808 265 249 251 Equity in earnings of affiliates (29) (53) (71) (106) (116) (115) Other operating revenues* (467) (477) (508) (34) (31) (3) Other expense, net 61 27 24 20 14 3 Special items: Legal settlement (59) — — — — — Net gain on asset disposition — — — (67) — — Marketing margins 1,281 1,484 1,444 641 724 855 Less: margin for nonfuel related sales — — — 56 52 51 Realized marketing fuel margins $ 1,281 1,484 1,444 585 672 804 Total fuel sales volumes ( thousands of barrels ) 742,467 698,961 680,930 113,712 112,607 114,384 Income before income taxes per barrel ( dollars per barrel ) $ 0.41 1.65 1.73 3.93 4.72 5.66 Realized marketing fuel margins ( dollars per barrel )** 1.73 2.12 2.12 5.15 5.96 7.03 * Includes other nonfuel revenues and expenses. ** 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.
International 2025 2024 2023 2025 2024 2023 Realized Marketing Fuel Margins Income before income taxes $ 804 303 1,151 3,401 447 532 Plus: Depreciation and amortization 48 38 23 22 116 76 Selling, general and administrative expenses 1,088 1,434 813 262 265 249 Equity in earnings of affiliates (47) (29) (53) (10) (106) (116) Other operating revenues* (471) (467) (477) (36) (34) (31) Other expense, net 19 61 27 7 20 14 Special items: Legal settlement — (59) — — — — Net gain on asset disposition — — — (2,921) (67) — Marketing margins 1,441 1,281 1,484 725 641 724 Less: margin for nonfuel related sales — — — 57 56 52 Realized marketing fuel margins $ 1,441 1,281 1,484 668 585 672 Total fuel sales volumes ( thousands of barrels ) 737,601 742,467 698,961 119,808 113,712 112,607 Income before income taxes per barrel ( dollars per barrel ) $ 1.09 0.41 1.65 28.39 3.93 4.72 Realized marketing fuel margins ( dollars per barrel )** 1.95 1.73 2.12 5.58 5.15 5.96 * Includes other nonfuel revenues and expenses. ** 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.
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 2024, we generated $4.2 billion in cash from operations.
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 2025, we generated $5.0 billion in cash from operations and we received proceeds from asset dispositions of $3.5 billion.
The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels, at 11 refineries in the United States and Europe. 2024 vs. 2023 Results from the Refining segment decreased $5,705 million in 2024, compared with 2023.
The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels, as of December 31, 2025, at 10 refineries in the United States and Europe. 2025 vs. 2024 Results from the Refining segment increased $91 million in 2025, compared with 2024.
As a result of BREXIT, those types of entities in the United Kingdom are now subject to the UK ETS, rather than the EU ETS. • EU Renewable Energy Directive II, which increases the EU’s energy consumption from renewable sources in the electricity, heat, and transportation sectors to 32% by 2030. • United Kingdom’s Renewable Transport Fuel Obligation, which is intended to reduce the GHG emissions from fuel used in the United Kingdom transportation sector by encouraging the supply of renewable fuels. • California’s Senate Bill No. 32, which requires reduction of California's GHG emissions to 40% below the 1990 emission level by 2030, and Assembly Bill 398, which extends the California GHG emission cap and trade program through 2030.
Both UK and EU ETS impact factories, power stations and other installations across all UK/EU member states. • EU Renewable Energy Directive II, which increases the EU’s energy consumption from renewable sources in the electricity, heat, and transportation sectors to 32% by 2030. • United Kingdom’s Renewable Transport Fuel Obligation, which is intended to reduce the GHG emissions from fuel used in the United Kingdom transportation sector by encouraging the supply of renewable fuels. • California’s Senate Bill No. 32, which requires reduction of California's GHG emissions to 40% below the 1990 emission level by 2030, and Assembly Bill 398, which extends the California GHG emission cap and trade program through 2030.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe fair value of the fixed-rate financial instruments is estimated based on observable market prices. 91 Millions of Dollars, Except as Indicated Expected Maturity Date Fixed Rate Maturity Average Interest Rate Floating Rate Maturity Average Interest Rate Year-End 2024 2025 $ 584 5.19 % $ 1,210 5.05 % 2026 992 2.42 550 5.45 2027 1,250 5.22 — — 2028 1,300 3.84 — — 2029 1,200 4.14 — — Remaining years 12,776 4.94 — — Total $ 18,102 $ 1,760 Fair value $ 16,913 $ 1,760 Millions of Dollars, Except as Indicated Expected Maturity Date Fixed Rate Maturity Average Interest Rate Floating Rate Maturity Average Interest Rate Year-End 2023 2024 $ 1,100 1.32 % $ 350 6.38 % 2025 1,975 4.43 — — 2026 992 2.42 1,250 6.46 2027 1,250 5.22 25 6.51 2028 1,300 3.84 — — Remaining years 10,676 4.74 290 6.46 Total $ 17,293 $ 1,915 Fair value $ 16,718 $ 1,915 Foreign Currency Risk We are exposed to foreign currency exchange rate fluctuations related to our international operations.
Biggest changeMillions of Dollars, Except as Indicated Expected Maturity Date Fixed Rate Maturity Average Interest Rate Floating Rate Maturity Average Interest Rate Year-End 2024 2025 $ 584 5.19 % $ 1,210 5.05 % 2026 992 2.42 550 5.45 2027 1,250 5.22 — — 2028 1,300 3.84 — — 2029 1,200 4.14 — — Remaining years 12,776 4.94 — — Total $ 18,102 $ 1,760 Fair value $ 16,913 $ 1,760 Foreign Currency Risk We are exposed to foreign currency exchange rate fluctuations related to our international operations.
Factors that could cause actual results to differ materially from those in our forward-looking statements include: • Fluctuations in market conditions and demand impacting the prices of NGL, crude oil, refined petroleum products, renewable fuels, renewable feedstocks and natural gas prices and changes in refined product, marketing and petrochemical margins. • Changes in governmental policies relating to NGL, crude oil, natural gas, refined petroleum or renewable fuels 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 crude oil production and correspondingly, commodity prices. • 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. • Changes in the cost or availability of adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum and renewable fuels products. • The level and success of producers’ drilling plans and the amount 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 government policies relating to renewable fuels, climate change and GHG emissions that adversely affect programs like the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels. • Domestic and international economic and political developments including armed hostilities, such as the war in Eastern Europe, instability in the financial services and banking sector, excess inflation, expropriation of assets and changes in fiscal policy, including interest rates. 93 • The impact on commercial activity and demand for our 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, any asset dispositions, acquisitions, shutdowns or conversions that we may pursue, including the receipt of any necessary regulatory approvals or permits related to such action. • Potential disruption or interruption of our operations or those of our joint ventures due to litigation or governmental or regulatory action. • Damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks. • 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 pending or future litigation or other legal proceedings. • Liability 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. • Economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives. • 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 potential impact of activist shareholder actions or tactics. • The factors generally described in “Item 1A.
Factors that could cause actual results to differ materially from those in our forward-looking statements include: • Fluctuations in market conditions and demand impacting the prices of NGL, crude oil, refined petroleum products, renewable fuels, renewable feedstocks and natural gas prices and changes in refined product, marketing and petrochemical margins. • Changes in governmental policies relating to NGL, crude oil, natural gas, refined petroleum or renewable fuels 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 crude oil production and correspondingly, commodity prices. • 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. • Changes in the cost or availability of adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum and renewable fuels products. • The level and success of producers’ drilling plans and the amount 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 government policies relating to renewable fuels, climate change and GHG emissions that adversely affect programs like the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels. 89 • Domestic and international economic and political developments including armed hostilities, such as the war in Eastern Europe, instability in the financial services and banking sector, excess inflation, expropriation of assets and changes in fiscal policy, including interest rates. • The impact on commercial activity and demand for our 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, any asset dispositions, acquisitions, shutdowns or conversions that we may pursue, including the receipt of any necessary regulatory approvals or permits related to such action. • Potential disruption or interruption of our operations or those of our joint ventures due to litigation or governmental or regulatory action. • Damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks. • 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 pending or future litigation or other legal proceedings. • Liability 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. • Economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives. • 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 potential impact of activist shareholder actions or tactics. • The factors generally described in “Item 1A.
Consistent with this policy, we use derivative contracts to convert our exposure from fixed-price sales or purchase contracts, often specified in contracts with refined product customers, back to floating market prices. We also use futures, forwards, swaps and options in various markets to accomplish the following objectives: • Balance physical systems or meet our refinery requirements and market demand.
Consistent with this policy, we use derivative contracts to convert our exposure from fixed-price sales or purchase contracts, often specified in contracts with refined product customers, back to floating market prices. We also use futures, forwards, swaps and options in various markets to accomplish the following objectives: • Balance physical systems or meet our asset requirements and market demand.
Using Monte Carlo simulation, a 95% confidence level and a one-day holding period, the VaR for derivative commodity instruments issued or held at December 31, 2024 and 2023, was immaterial to our cash flows and results of operations. Interest Rate Risk Our use of fixed- or variable-rate debt directly exposes us to interest rate risk.
Using Monte Carlo simulation, a 95% confidence level and a one-day holding period, the VaR for derivative commodity instruments issued or held at December 31, 2025 and 2024, was immaterial to our cash flows and results of operations. Interest Rate Risk Our use of fixed- or variable-rate debt directly exposes us to interest rate risk.
For additional information about our use of derivative instruments, see Note 18—Derivatives and Financial Instruments, in the Notes to Consolidated Financial Statements. 92 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.
For additional information about our use of derivative instruments, see Note 19—Derivatives and Financial Instruments, in the Notes to Consolidated Financial Statements. 88 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, as amended.
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 SEC reporting purposes.
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 reporting purposes.
For additional information, see Note 9—Investments, Loans and Long-Term Receivables. Risk Monitoring Our Chief Executive Officer and Chief Financial Officer monitor risks to our business resulting from commodity prices, interest rates and foreign currency exchange rates.
Risk Monitoring Our Chief Executive Officer and Chief Financial Officer monitor risks to our business resulting from commodity prices, interest rates and foreign currency exchange rates.
Generally, we do not hedge our foreign currency risk. In October 2024, we entered into a foreign currency derivative instrument and recognized a before-tax gain of $67 million. The instrument is in connection with the sale of our 49% ownership interest in Coop, which closed in January 2025. This instrument was settled in January 2025.
In October 2024, we entered into a foreign currency derivative instrument in connection with the sale of our 49% ownership interest in Coop, and this instrument was settled upon closing of the sale in January 2025. See Note 9—Investments, Loans and Long-Term Receivables for additional information on these derivative instruments.
Added
The fair value of the fixed-rate financial instruments is estimated based on observable market prices. 87 Millions of Dollars, Except as Indicated Expected Maturity Date Fixed Rate Maturity * Average Interest Rate Floating Rate Maturity Average Interest Rate Year-End 2025 2026 $ 592 3.17 % $ 400 4.25 % 2027 1,250 5.22 — — 2028 1,300 3.84 — — 2029 1,200 4.14 — — 2030 1,150 3.71 — — Remaining years 13,625 5.21 — — Total $ 19,117 $ 400 Fair value $ 18,324 $ 400 * Includes junior subordinated notes issued in September 2025, see Note 15—Debt, in the Notes to Consolidated Financial Statements for additional information.
Added
Generally, we do not hedge our foreign currency risk. In May 2025, we entered into foreign currency forward contracts in connection with the sale of 65% of our interest in Germany and Austria Marketing and this instrument was settled upon closing of the sale in December 2025.

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